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Trading Opportunities Should Abound in December

John Darsie

We talked this morning about the need for rest in this market to close out what has been a volatile November, and that's exactly what we got. The major US indices finished mixed, but all closed within 0.1% of the flat line. The fiscal cliff negotiations between Republicans and Democrats continue to dominate the headlines, but over the last two days the market has been able to shrug off pessimistic comments.

President Barack Obama and House Speaker John Boehner continue to act as the principal public voices for their respective parties. President Obama remains hopeful that enough Republicans will break rank to pass his budget proposal, while Speaker Boehner says Republicans are only willing to compromise if the Democrats agree to spending cuts. Earlier in the week the market sold off when Senate Majority Leader Harry Reid stated he saw little progress in the budget talks, but it appears the market is starting to develop a thicker skin.

The financials showed relative weakness today, with Citigroup (NYSE:C) the weakest of the bunch, dropping 1.8%. Weakness in the financial sector, which has been most sensitive to the fiscal cliff talks, is perhaps evidence that there is still pent up anxiety over the budget debate.

Apple (AAPL) continues to build a lower range below its 200-day, which will be a major hurdle for the stock to overcome in December. If AAPL can continue to bounce, it would be a major help to the broader market.

Facebook (FB) continues its impressive rally that started the day the IPO lock-up expired for 800 million shares (35% of the float). Many pundits believe Facebook stock would drop when such a large wave of supply hit the open market, but it appears insiders are not eager to sell their stock. FB has been in a steep uptrend since that day (November 14th), and has fully filled the large earnings gap from late July.

December should bring more volatility as the fiscal cliff situation plays out, and we will measure the composure of this rally at each step of the way. If you are trading the market, make sure to take our Free Online Trading Course to gain valuable technical insights that you will be able to use right away.

*DISCLOSURES: Marc Sperling is long FB, SPY, AOL, FSLR, ZNGA calls, ZNGA, ANTH, S, AOL, FSLR calls, XHB, JAZZ, FSLR calls, AIG, FB calls, RIMM calls, PCYC, BIDU calls, AAPL calls, SHOS.