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 November 22, 2015

We are fortunate to live in a free country where we are allowed to express our feelings. No

matter what people say there is a freedom here for both men and women which all enjoy whether

they are visitors to our shores or residents. To learn how precious this freedom is, travel to

another country where these freedoms are not permitted and you will understand all too quickly

how lucky we are. Along with these freedoms comes a responsibility for those who reap their

benefits to protect them.

The current increase in wages is not going to solve the economic problems of average wage

earner. Raising interest rates certainly won’t help those living on the edge. We agree that the

FOMC cannot remain at zero indefinitely but something is really wrong with their thesis. We

have been at zero interest rates for almost a decade and have not seen the economy expand. That

is because the benefits of zero interest rates flows to the wealthiest of the population and not the

average worker. Until the FOMC begins to understand this, we are doomed to this shallow

economic expansion.

Our tax code is antiquated and oppressive….it takes scholars to understand and interpret the

rules. The system is so screwed up that multi-millionaires like Warren Buffett with enormous

passive income get both Medicare and social security. Remember the time when Buffett stated

that he pays less in taxes than does his secretary? Yes they paid into the system but do they

really need those few dollars to survive. We would rather see the money returned to the coffers

and keep the system going for a while longer. As to the tax code, a Value Added Tax would be

a fair tax to the average tax payer. All those people demanding cash for services rendered would

finally pay their fair share. There should be a levy for earnings from both passive and ordinary

incomes that are greater than $250.000 and the rest of us should not have to pay any tax or a very

moderate flat tax.. We should sell the real-estate that the IRS owns and return the money to the

people. Government employees and the congress should get the same health care that we are

forced to deal with. Congressional pensions should be cut to ribbons. Do they really need that

money? They are in the service of the people not to take advantage of the people.

Back to the markets. We are in a seasonally strong period for our market. The end of the year is

approaching and many portfolio managers are playing catch-up with the markets trying to out-

perform them. As to the terrorist attacks, Mr. Market basically has always tended to bounce

back quickly from these incidents. It is almost as though the market is telling the terrorist that

the terrorists have no control over the financial markets. The market can be brought to its knees

with events like Bear and Lehman but that is different.

The S&P 500 rallied 9.5 handles (points) in the Friday session leaving a bullish looking

candlestick on the chart. This rally has lasted five days and as such is getting over-extended.

We would not be surprised to see some slight retreat or backing and filling before the next rally

begins. This is a shortened trading week as we American’s celebrate Thanksgiving on Thursday

and shopping on Friday, known as “Black Friday.” It is such an important shopping day for the

retailers that the markets close early to allow shoppers to abandon their posts in favor of the

Mall. All the indicators that we follow continue to point higher. Most of the day’s volume was

seen at 2089 which was also a frequently traded price along with 2090 and 2084 to 2086. The 60

minute0.2% by 3-box point and figure chart has an upside target of 2169.65. The daily 1% by 3-

box point and figure chart has an upside target of 2542.39. Our chart shows us that it is possible

to see this index at 2154 or by December 15. Naturally, if the market fails at 2110.25, all best to

the upside are off. That said, we have a more ominous view of the market for 2016’s first

quarter which, we believe will be difficult.

The NASDAQ 100 rallied 30 handles (points) in the Friday session. All the indicators that we

follow continue to point higher with room to the upside. Yes, we have been up for the past five

trading days and it is likely that we will have a small retreat within a day or so, but the seasonals

remain favorable. The Bollinger Bands look as though they are about ready to begin expanding

again which would bring additional volatility into the market. The most frequently traded price

in the Friday session was 4683.9-4684 also which was the high volume area for the day. The 60

minute 0.2% by 3-box chart has an upside target of 4795.95 and looks very positive. The daily

1% by 3-box point and figure chart has a new downside target of 4058.33 and a slightly older

upside target of 6350.61. We would be inclined to believe the downside number for the time

being remembering that the seasonality is positive. The bottom line is; we are slightly

overbought and have been rallying for a number of days, it is quite likely that we will pull back a

tad from these levels. Thursday the markets are closed and Friday is a half day so most of the

action will be seen by the close of Wednesday’s session.

The Russell 2000 rallied 9.40 handles (points) in the Friday session trying to catch up to the

other indices. This index retreated in the Thursday session but put in a very bullish looking

candlestick in the Friday session. Both the RSI and stochastic indicators are pointing higher with

plenty of room to the upside. Clearly the majority of the volume was seen near the close. The

high volume area was 1173, which was the last print of the day. The most frequently traded

number was 1172.40. The 17 by 3-box reversal point and figure chart remains bullish for the

moment. These small capitulation companies generally do not have the global exposure that is

seen in the large multi-nationals therefore the strong US Dollar has less effect on their earnings.

Crude Oil closed close to the lows in the Friday session. The low of 38.99 was a horizontal

support line. There is a lower support line at 37.75. The chart looks awful. The channel

downtrend levels are 38.90 and 41.29. The indicators are all oversold and we are seeing a

possible signal to go long in our own indicators. There are some small divergences seen here in

the other indicators also. Although we are making significantly lower levels in price, the

indicators are not making lower lows. This tells us to watch this chart very carefully for a

possible change of direction. The 60 minute 0.7 by 3-box point and figure chart has a downside

target of 37.61. The chart looks awful. The daily 0.9% by 3-box chart has a downside target of

29.84 again an awful looking chart unless you are short the market. The most frequently traded

price in the Friday session was 41.90. At least the Market Profile chart looks fairly stable for the

moment. That comment is the most positive comment we can make about crude oil.

Gold retreated slightly in the Friday session. Wondering why gold rallied with the US Dollar?

Instability in the world leads to a renewed interest in the safety of gold. Have no fear, it is short

lived unless the US Dollar retreats or something else blows up. The chart is the worst looking

chart we have seen in a long time. We do see divergences in the indicators telling us to be wary

and careful. The downward trending channel lines are 1087.34 and 1056.97. The most

frequently traded price in the Friday session was 1082. The RSI is pointing lower at almost

oversold levels, the stochastic is curling over but not issuing a sell-signal. Our own indicator has

issued a buy-signal. The daily 0.9% by 3-box point and figure chart has a downside target of

1046.03. The 60 minute 0.25% by 3-box point and figure chart has a downside target of 1003.62

which looks really possible. Trust the trend lines not so much the indicators. Remember the

indicators are there to tell you to become alert and pay more attention which, they are clearly

doing at this time. You should not rely on indicators for buys or sells.

The US Dollar index rallied in the Friday session. We are near high of 100.38 seen in March of

this year. The last time the US Dollar was on an aggressive upside rally of this magnitude was as

it approached the highs of 121.29 in July of 2001. The next leg higher should take us to 100.38

then 102. None of this is good for our ability to export US made stuff insomuch as it becomes

very expensive for others to buy. The footnote is, if the product is unique enough it will be

bought if it represents value. As to commodities they will continue to slide under the thumb of

the strong US Dollar. The high volume area of the session was 99.60. The most frequently

traded price was 99.18 much of which was traded in the overnight session. The daily 0.6% by 3-

box point and figure chart has an upside target of 100.7032. This chart looks positive. The 60

minute 0.2% by 3-box point and figure chart also looks positive with an upside target of

105.3559. The Market Profile chart looks rather flat. We would not be surprised to see some

backing and filling in the index.

Quarterly

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.

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