Today did not start off very auspiciously, with the bears mounting an attack on the 11,400 support level in the Dow, actually driving it down to 11,424 early on. But that's as far as they got. For the second day in a row, they were beaten back, and we ended up gaining 42 points leaving us solidly along the upper edge of the rising RTC channel. The holding of this important technical support level is quite bullish and the bearish action that could have brought us out of the RTC channel today did not materialize. Similarly, the VIX today was unable to break out over its own resistance level of 18 and after yesterday's doji, posted a big red candle - also bullish for stocks.
Note also that the House finally passed the tax cut bill (which to be fair isn't really a tax cut, but rather an extension of the status quo in taxes) late this evening. The removal of all the uncertainty associated with this issue for so long now can only be good news for the markets.
Finally, we are passing out of the historical mid-December sag and gearing up for the full effect of the Santa Claus rally, which typically really gets going in the last six trading days before the last day of the year, according to The Stock Trader's Almanac. Since Santa already gave us a few early presents back at the start of December, one can only conclude that he's got more goodies in his sleigh for us, and not lumps of coal.
So I'm now reaching for my long hat and the green trend arrow remains in place.
I dumped my puts on GE today for a small loss. GE ended the day up a respectable 1.6%, so the insurance wasn't needed. I could have saved a little money by not making this trade yesterday, but I slept better last night. It still looked like a good idea at the time from a technical perspective. I'm also looking for an entry point to AUY, with the recent dip in gold. I expect to find one in a day or two.
Love Is the Refuge of the Way
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