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Shortened trading session ends mixed

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Today's shortened trading session finished mixed with oil service, forest and paper products and utility stocks showing better gains. On the weak side, airlines stocks traded lower as depicted by the AMEX Airline Index (XAL.X), which traded down 3.5%.

Biotechnology Index Chart - Daily Interval

The BTK.X finished off its best levels of the session, but still remains what I feel is the "key index" for bullish NASDAQ traders to be watching, if not trading long. On December 12th we felt the test of the 50-day would be a good test for this index and the first real technical test for a major index since the September lows. In early October, it was our feeling that this was perhaps the strongest "tech" index and the recent bounce from the 50-day still has things looking bullish here. Bulls want to see a move above the $600 level, which will most likely have the MACD indicator crossing over and bringing some momentum traders back into the index and driving prices higher. Retracement shows resistance near the $620 level and that remains near-term resistance.

Oil Service Index Chart - Daily Interval

The Oil Service Index (OSX.X) led sector winners today with a 2.42% gain. Key resistance remains the $90 level, but a break above there could have the sector running to the 200-day MA at $96.98 or $100 level. Early last week we turned bullish in our commentary for shares of BJ Services (NYSE:BJS) near the $30 level as that "oil service" stock was making headway against its 200-day moving average on good volume. Today, shares of BJ Services finished the session at $32.03 (+2.03%). What an "oil service" bull wants to see is for an early-identified leader to lead and sector bulls have been getting that from BJS.

Airline Index Chart - Daily Interval

The Airline Index (XAL.X) has been drifting lower and this weekend's attempted "shoe bombing" on an American Airlines flight en route from Paris to Miami, later diverted to Boston didn't help investor psychology toward the group. With "tax loss selling" season at hand for individual investors, this weekends news may have pushed some investors to take there losses as frustration builds with this sector. Shares of AMR Corp. (NYSE:AMR) fell 3% to $21.19, US Airways (NYSE:U) fell 6.9% to $5.59, UAL Corporation (NYSE:UAL) fell 3.3% to $12.58, while Continental Airlines (NYSE:CAL) fell 2.7% to $24.36. Shares of Southwest Airlines (NYSE:LUV) fell just 0.95% to $18.65.

The stock markets are closed here in the U.S. tomorrow. Have a happy and safe holiday!

Jeff Bailey
Senior Market Technician
Option Investor

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