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Putting It to the Market

Much of the action is in put buying.

The Market

I'd like to report that there was a lot going on in the market today, but it seems the only place there was any action was in put buying. More specifically, buying of VIX puts.

The total put/call ratio was off the charts at 119%. You would have thought the market was getting crushed today with the ratio that high. I'd like to report it was all VIX puts, but the other various ratios leaned high as well. But it was the put/call ratio for the VIX that soared to 121%. Recall that it was over 118% last Thursday. These are big bets on the VIX going down.

As we have discussed, a high put/call ratio for the VIX does not mean the VIX needs to rally, but it often does. It is now pushing down toward its lower end of the range at 11, so it seems to me VIX calls might be more appropriate, but then I am not an options person.

What I do know is that the higher put/call ratio has definitely turned the 10-day moving average of the put/call ratio and the equity put/call ratio up. And the direction of the moving average is what matters over time. And an upward move in the moving average tends to mean a market that corrects.

But I will also repeat what I have said for days: I still think we are more likely to chop than we are to collapse. I think today was a perfect example of it as traders tried to rally the market hard, with the S&P up about 10 points at the high, but in the end it closed up just over four points, having flirted with going negative at one point.

We remain overbought on both an intermediate-term and a short-term basis. That means it will be hard to get upside momentum going. It also means we've lost that upside momentum. The last week or two have brought us more sloppy action than anything else. This is the period of time that I tend to make money here and lose it there, so yes, I think raising cash is not a bad idea. We had a terrific buying opportunity in late October/early November. There will be others. I can and will be patient.

New Ideas

The questions about FireEye (FEYE:Nasdaq) arrive often, and if it holds $13 and can then get over $14, that would be a massive improvement for this stock. Under $13 and it continues to be mired in sideways/going-nowhere mode.

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Las Vegas Sands (LVS) - Get Free Report has an unfulfilled downside target of $52 and possibly $50 to fill that gap below. But you know how it's been in this market -- once the stock looks weak, it rallies. If it doesn't, that would be a change.

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Today's Indicator

The 30-day moving average of the advance/decline line is overbought.

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Q&A

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The two breakouts noted on the chart of Patterson-UTI Energy (PTEN:Nasdaq) measure to the $26-$29 area, which we see has essentially been tagged. It’s possible I might like the chart again down in the $24-ish area, but for now I think rallies will run into resistance near $29, so I am not terribly interested in buying.

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I admit I have been eyeing the chart of Budweiser (BUD) - Get Free Report as a possible head-and- shoulders bottom, but it is very small and considering it has been such a dog in 2016 it might not be able to rally until the calendar turns to 2017. That being said, over this $105 area we get a measured target near $110. So perhaps we shall say that as long as it stays over $100, it has a chance at forming this pattern.

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I am intrigued at the attempt to bottom in Mylan (MYL:Nasdaq). If it can hold $37 then I think it has a much better chance at crossing this downtrend line and rallying toward the $41-$42 area. But remember my sense on health care and drugs is going to be that there should be no marriages, just quick dates and trading. It will take a long time to build bases in these names.

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