Market Volatility takes a break (DIS, AMD)

You can’t read yesterday market as anything other than bullish. Equities were up and volatility was down.

We’re seeing small caps start to outperform. They’ve been lagging all year. If they make weekly closes above their previous swing highs, that could start a short-covering that pushes up equities through the end of the year.

Traders are waiting for a dip opportunity on IWM following this breakout today. We have seen IWM really make a big move higher once it breaks out of a consolidation level like we have seen it in recently.

At the same time, you may see a rotation out of some of the tech sector as money managers try to put their capital to work and cover up their mistakes.

For now, its important that one doesn’t plan to fight the trend. Couple of stocks that make the cut:

Long DIS Dec 6th $150 calls for $2  (up 7.05%) – We’ve been bullish on Disney’s stock for quite a while. Fundamentally, they keep hitting on all cylinders. Technically, the chart keeps its nice uptrend intact. The pattern looks great here to take out the upper trendline on its next move.

DIS hourly chart

Long AMD Dec 13th $39 puts for $1.20  (down 11.52%) – Semiconductors led the market charge higher. If we get another leg (which looks like it may happen), I expect we’ll see a rotation out of this sector. With the massive run AMD had recently, it seems a good time to play a reversal here. Plus I have the famous money pattern reversal here to play with.