Double, double toil and trouble; FIRE BURN, AND CALDRON BUBBLE! Quadruple Witch week along with FOMC decision.....

1. Option Queen Letter
By the Option Royals
Jeanette Young, CFP®
, CMT, M.S. and Jordan Young, CMT
4305 Pointe Gate Drive
Livingston, New Jersey 07039
www.OptnQueen.com
optnqueen@aol.com
December 14, 2015, 2015
The November ‘Jobs Report” goosed the financials creating one of the best rallies we have seen
in a very long while. Was it because the “Jobs Report” was just so good or because the data
supports an interest rate increase perhaps at the next FOMC meeting? We are not sure which it
was but the results were notable.
Last week the financial futures rolled to the March expiry and this Friday, the December contract
will expire. This activity generally puts some upside pressure on the averages as shorts cover and
roll their positions forward.
As to Donald Trump, we have been silent on the topic of the GAFE King. Love him or hate him,
the man is a marketing genius. We have never seen a candidate with 24/7 press coverage. For
months on end Trump has managed to get and keep his name in front of the press on a daily
basis. As to what he says; while some is totally outrageous and we do not agree with it, we
believe that this country is looking for leadership and he is saying as well as showing that he is
indeed a leader. In today’s politically correct matrix in which modern candidates operate Trumps
message resonates decisive leadership. What the public fails to realize is that some of the
outrageous thing he says he would do would likely never get done after all, this is a democracy
and not a dictator ship.
To the elected officials in the USA, the American people are sick and tired of PC do nothing
behavior. The American people are looking for leaders that are not afraid of taking a stand and
really representing the people. What this country does not need, are more do nothing politicians
with allegiances to special interest groups. Representatives that vote in pay raises for themselves
in the middle of the night and qualify as the most over paid, when considering work done,
employees in the world. Talk about do nothing geeze!
As to the markets; Rocky Road is a great ice-cream but not great in the market place.
The S&P 500 dropped like a stone in the Friday session and teased the 1998.50 support line. The
danger here is, that should that neckline of an “M” formation fail, on a closing basis, then the
door will be open to 1861. This formation is truly ominous for the market. We warn that a
breach of one day will be a tease, but a two-breach is a good signal. In other words, we need to
close below the neckline for two days. Generally when you take the one day signal you suffer
from a snap-back rally that is why we like to see two-days for confirmation. Both the stochastic

2. indicator and the RSI continue to point lower. Our own indicator is now giving us a buy-signal.
Remember divergences should be used as an alert signaling a need for more focus. Divergences
tells us something is wrong. The chart also tells us that the market will test the 1998.50 level just
to see if it holds. We have the combination of an FOMC meeting this week and a quadruple
witch expiration. Clearly once the FOMC meeting is past, the market will feel a sense of relief
and could rally on any news that shows the direction of the FOMC. The daily 1% by 3-box point
and figure chart is beginning to turn negative closing below the internal downtrend line. The 60
minute 0.2% by 3-box chart clearly shows the damage the recent decline has made to this chart.
Tread lightly and proceed with caution.

4. The NASDAQ 100 retreated in the Friday session but is not in as bad a position as is the S&P
500. The neckline of the double top is 4455. Although it appears that this index will probably
test this level, that activity is less probable in this index than in the S&P 500 breaking its
neckline. Should the market retreat and remove that level, it would open the door to another 100
handles to the downside. All the indicators that we follow are lower and although none has
given the hint of a buy-signal as yet, they look as though they might do so in a few days. The 60
minute 0.2% point and figure chart looks awful. The daily 1% by 3-box point and figure chart

5. looks better than the 60 minute chart. That said, the prices need to stabilize or we can expect to
see much lower levels. The Market Profile chart clearly illustrates how downward lopsided the
trade was in the Friday session. Proceed with caution!

6. The Russell 2000 retreated in the Friday session. Both the stochastic indicator and the RSI are
issuing a buy-signal. Our own indicator continues to point lower. The Bollinger Bands are again
expanding showing the increased volatility in this index. The downtrend channel is very steep
and not sustainable. We can expect to see a bounce in this index. The quality of the bounce will
be most important to us. The 11 by 3-box point and figure chart clearly illustrates the downdraft

7. seen in this index. The market tends to buy this index as we move into January. The small
capitalization stocks sold for tax loss are repurchased causing this index to rebound.

9. The US Dollar index retreated in the Friday session. We see mixed signals from the indicators.
They seem to want to go higher but are not issuing a buy-signal as yet. The US Dollar index
seems to be suffering from a reversal of direction. We are stair stepping lower. We need to
close above 98.155 and 98.88 for a reversal from down to up. Surprisingly, commodities
continue their steep decline even in the face of a retreating US Dollar. This behavior is not
unusual when the markets suffer wild swings. Perhaps the US Dollar went too far too fast and
now is regrouping. Actually we don’t believe that we believe that once the FOMC increases
rates, it is likely that the US Dollar will retreat a bit further. There are far too many US Dollar
bulls and the trade is lopsided. When everybody believes that something is going to happen, it
likely will not happen. The most frequently traded price and the highest volume was seen at
97.60-97.625. The daily 0.5 by 3-box point and figure chart has an upside target of 114.2243,
that is an old target. The 60 minute 0.2% by 3-box chart has a downside target of 92.895.

11. Crude oil has no friend and continues to implode. It is important to note, that the spread between
Brent and WTI has narrowed considerably. Yes, the product will bounce….eventually. Right
now it looks more like a falling knife than a measurable trade. After the emotion is removed
from the trade we see support at 32.48. It is quite likely that should crude oil trade down to that
level, that it will remove that old low just to print a new one. The downward trending channel
lines are 40.216 and 34.562. We closed below the lower Bollinger Band indicating that it is
likely that we will see a bounce in this product. The RSI is curling upward although both the
stochastic indicator and our own indicator are issue a buy-signal. The most frequently traded
price in the Friday session was 36.54. The daily 0.9 by 3-box point and figure chart has a
downside target of 34.75. The chart continues to look awful. The 60 minute 0.5% by 3-box
point and figure chart has a downside target of 32.5. Again as with the daily chart, there is
nothing positive to report on this chart.

14. Gold closed higher in the Friday session leaving a bullish engulfing candle on the chart. The
indicators are mixed. The RSI is pointing lower from neutral levels, our own indicator is issuing
a buy-signal and the stochastic indicator looks as though it is ready to issue a sell-signal. The
Bollinger Bands are becoming very narrow. This is generally an indication of a violent move
coming in the near future. For us to become bullish on gold it needs to close above 1088.80.
The daily 1% by 3-box point and figure chart has a downside target of 930.64. The 60 minute
0.25% by 3-box point and figure chart has a downside target of 1039.32 and an upside target of

15. 1160.01. The most frequently traded price in the Friday session was 1076. There were more
downside prints than there were upside prints yet the bulls won the game closing up on the day.
Caution is warranted in this trade.

17. Risk
Trading futures, options on futures and retail off-exchange foreign currency transactions involves
substantial risk of loss and is not suitable for all investors.
Past performance is not necessarily indicative of future results.
Copywrite 2015 The Option Royals