Have to Respect the Uptrend

VIX is approaching its yearly low and the market continues to inch its way higher, giving the SPX a record of 14 wins and 2 losses so far in December.
By Jill Malandrino ,

The market inched its way higher Wednesday to give the S&P 500 a record of 14 wins and 2 losses so far in December. We do have jobless claims and sentiment numbers tomorrow, but will it be enough to do anything? One thing is for certain...get ready for some random, light volume, trading action tomorrow and keep don't let your emotions get the best of you and stick to discipline. Anemic volume and thin trading means that positions could potentially get whipped around.

The Dow Jones Industrial Average ended up 26.33 points, or 0.23%, to close at 11,559. The S&P 500 rose 4.24 points, or 0.34%, to close at 1258, and the NASDAQ was up 3.87 points, or 0.15%, to finish at 2671.

The sectors performed somewhat mixed as financials and utilities were the only clear outperformers today, with energy, staples, and industrials around the tape, and the rest of the groups lagging. Financials were up 1.1%, led by regional and large-cap banks, with the BKX up 1.9%. Tech was off small, underperforming on weakness in RHT earnings.

The CBOE Volatility IndexI:VIX approached its yearly low of $15.22, but interestingly enough, January and February strike volatility was elevated, a forecast of a bounce in the "fear index". VIX closed down 6.31%, at $15.45, on overall put contract volume of 129,000 compared to 232,000 call contracts. The elevated volatility suggests market makers are pricing in large price movement as VIX trades below its ten-day moving average of $17.21 and its 50-day average of $19.32.

SPDR S&P 500 ETF (SPY) - Get Report volatility remained low as traders project that the uptrend is more than just a Santa Clause rally. SPY traded higher by $0.39, to close at $125.78. January put option implied volatility is at 15, February at 17 and March at 19, below its 26-week average of 22, suggesting decreasing near-term price movement.

The PowerShares QQQ Trust (QQQQ) volatility is below normal levels as 2010 winning momentum traders position for 2011. The Qs closed down $0.01, at $54.88. January put option implied volatility is at 17, February is at 19 and March is at 20, versus its six-month average of 22, indicating low near-term price movement compared to outer months.

The following economic data are expected to be released on Thursday: Durable Goods, Personal Income and Outlays and Jobless Claims due out at 8:30 a.m. EST, Consumer Sentiment at 9:55 a.m. EST, New Home Sales at 10:00 a.m. EST and the EIA Natural Gas Report at 10:30 a.m. EST. There are no notable companies reporting tomorrow and no economic data on Friday as the markets are closed in observance of Christmas.

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