Friday was an uncertain day at the highs as the $SPDR S&P 500 ETF(SPY.US)$ closed on the edge of the downside territory while $SPDR DOW 30 ETF(DIA.US)$ and $PowerShares QQQ Trust, Series 1(QQQ.US)$ posted in red. This gave the QQQ another new ATH close on the strength of its gap-up higher at the open.

In US news this weekend Congress affirmed and President Trump marked the new spending bill to avoid a government shutdown. This bill raised spending to $1.4 Trillion and in the process eliminated taxes used to pay for some of the Obamacare programs. It also avoids the possibility of another government shutdown until at least Sep. 30th 2020.

In International news, China declared that one year from now it will decrease its tariffs on 144 items (706 items were at that point in this program in 2019). This implies a sum of 850 items will be charged import tariffs below the WTO most favored tariff rates.

On the action side

The bulls seem to have cleared a path for Santa to continue his rally into year-end. The Fed continues to quietly inject tens of billions of liquidity into markets daily through the whole QE program. Meanwhile, a Phase-one Trade Deal seems done, earnings are finished and markets are ignoring impeachment. At this point, remember that volume will be light this week as the market participants are going to take time off for the holidays. Continue to plan on taking profits along the way, and close the losses to protect yourself and wait for another decent entry to come to you.

SPY Liquidity Premium

Speaking of uncertainty, market participants tend to trade securities that have the most liquidity. We characterize liquidity as an instrument that enables the traders to get in and out rapidly. ETF such as SPY, and QQQ based on a wide acceptance no matter if participants are retail or institutional could provide the investors with good liquidity. So when there is a lot of uncertainties waving around the market, traders tend to place their trades in ETFs over the individual underlying.

And SPY Liquidity Premium indicator thereby is a good measurement of how much uncertainty is out there. At the point when ETF volume is quite different from the volume in underlying stocks ( in this case which is SPY volume to S&P 500 index volume), we often see there is a market turning point about to take place in the near term.

The indicator above shows a trending higher SPY volume to the volume in the S&P 500, it is regularly a sign that uncertainty is reaching a peak and the market is about to have its turning point.

OEX Put/Call Ratio

OEX stands for the S&P 100, it is an index made up of the 100 largest companies in the S&P 500.

Unlike the total equity put/call ratio, due to the higher general premium of index options as opposed to equity options, OEX put/call usually considered in a non-contrarian indicator. When the put/call ratio is low, we often see the market coincide with extreme OEX put/call quotes, when the put/call ratio is low, it usually indicates we are near a market low and conversely, when the put/call ratio is highs, implying OEX traders are betting heavily on a market slides.

Economic Calendar

Besides, here are the big bets detected from the options chain on 12/20.