Quieter Times Ahead

Friday closed with a narrow range and very high volume.
Which is very normal for quadruple expiration day. NYSE was the best volume we’ve seen since Nov 30th and the Nasdaq the best since mid September. Closing the week the Dow is at all time highs, SPX at levels we saw Nov 2000. Nasdaq Compx and Nas 100, just under November’s multi-year highs leaving us with a nice week. The market still sits in range and isn’t getting far. Makes me wonder if we’ll see any expansion as the month progresses and we finish the year out. Just keeping green on the year would be what the big money would like to see and not be forced into profit taking until 2007.

Crude finished the day up 92 cents to close at $63.43. Which gives the week a boost to be up about 2%, thanks to the OPEC announcement to cut supplies starting in February. Nigeria is still seeing some uprisings and that is causing some concern over exports from there. Gold falling off to close down $11.80 at $619.10. Down almost 2% and back to levels we haven’t seen since October 31st.

The week ahead has a fair amount of big economic reports. So that should keep the volatility nice for us. Friday the VIX and the VXN hit new lows, the prior low from November 22nd left the market very complacent and setup a small pullback that came with a lot of sideways digestive action for the week to follow. Don’t just assume we will pullback Monday, the prior new highs took several days to see any drop across the broader markets. So this is more of a time for capital preservation than top picking. I do think there is some opportunity and reason for the market to pullback. We are short term overbought and that should allow for some correction and for a buying opportunity. Every drop has created a buying opportunity. This is the last full week of trading for the year.

It is hard to believe 2006 is coming to a close. So keep in mind as we enter next week holidays will impact volume. That does not mean it will be dead, it just means it will be quieter at times. Which creates more chop and narrow ranges and probably quiet afternoons. This week should provide some nice opportunity as many folks clear up positions and get ready for the holidays.

Economic data for the week of December 18th—22nd
Monday 08:30 Current Account, Tuesday 08:30 Housing Starts, 08:30 Building Permits, 08:30 PPI, 08:30 Core PPI, Wednesday 10:30 Crude Inventories, Thursday 08:30 Chain Deflator-Final, 08:30 GDP-Final, 08:30 Initial Claims, 10:00 Leading Indicators, 12:00 Philadelphia Fed, Friday 08:30 Durable Orders, 08:30 Personal Income, 08:30 Personal Spending, 10:00 Mich Sentiment Rev.

Some earnings due out this week: Monday pre market — JOYG, SCS and after the bell FCEL, HOV, ORCL, QTWW. Tuesday pre market — CC, MS, SCHL and after the bell CHAP, DRI, PALM. Wednesday pre market — KMX, FDO, FDX and after the bell CAN, BBBY, COGN, FINL, NKE, PAYX. Thursday pre market — AGE, AM, CCL, GIS, SMSC and after the bell MU, RIMM, SHFL, TIBX. Friday nothing of interest.

ES (S&P 500 e-mini) Monday’s pivot is 1440.25, the weekly is 1433.50. Intra day Support: 1436.50, 1433.50, 1431.50, 1428.25. Resistance: 1440.25, 1442.75, 1444.25, 1445.50, 1447.75. 60 minute chart is below.

ER (Russell 2000 e-mini) Monday’s pivot is 801.60, the weekly is 799.10. Intra day Support: 798.90, 796.7, 795.2, 793.8. Resistance: 801.60, 802.10, 803.00, 804, 805.40, 807.20. 60 minute chart is below

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