Minding the Gap: A Holiday Bonus for Ol' MTK?

Since the middle of 2007, it has been a Naz kind of year, as evidenced by this daily chart comparing the performances of the Nasdaq-100 Index/NDX, Dow Jones Wilshire 5000 Total Market Index/DWC, Russell 2000 Index/RUT, and Standard & Poor's 500/GSPC (Yahoo! Finance: tinyurl.com/2bdm85).

Even so, all of us here at the completely fictional home office of the Druids Investment Group (Can You DIG It?) believe the NDX may be able to kick it up a notch over the last four trading days of 2007.

I have three reasons for this belief, as follows:

-- First, the NDX already has a certain amount of momentum, as indicated by the above-linked chart.

-- Second, the NDX has been the best performer of the four above-referenced indices during the Santa Claus Rally periods in the 21st century, as shown by the relevant charts to which I linked in this blog post here ("Santa Claus May Have a Rally in the Bag for Us This Year": tinyurl.com/yu822z).

-- Third, and most important, the NDX gapped up smartly last Friday (StockCharts.com: tinyurl.com/2whaxx). Moreover, it not only maintained but also built on its gain yesterday. Sure, a bit more volume both days would have been welcome, but, hey, it's Christmas!

As any preacher worth his or her salt will tell you, faith without works is dead. Accordingly, I acted on my belief yesterday with three transactions in the Simulator portfolio as I went long the Ultra QQQ ProShares/QLD and Ultra Technology ProShares/ROM exchange-traded funds, and short the UltraShort QQQ ProShares/QID ETF.

Of course, it would not be Christmas without the Grinch. Graciously playing the role this year is the Bespoke Investment Group, which noted in a blog post yesterday afternoon: "The Nasdaq closed up today for the fifth straight day for the first time since October 10th and the twelfth time since the start of 2006. Following prior streaks, the Nasdaq's average return has been a decline of 0.21%, with positive returns in only five out of twelve days" ("Nasdaq Up Five Days in a Row": tinyurl.com/2ubgdl).

Bah, humbug!

Read the full analyst report on QID

Read the full analyst report on QLD

Read the full analyst report on ROM