I'm assuming a lot of the individual owners will just plow it right back into MSFT shares. Since MSFT is on nearly every index, index funds will be free to invest per their plans, which should inject liquidity into the market. However, option expiration is just around the corner on Dec. 17, and we've had a decent sell-off into that window the past 4-years.
Dec. 2000 we sold off 15% the last two days of op-ex after rising 20% from the 1st to the 11th (it ended a wash).
Dec. 2001 the same thing happened - up 10% from the 3rd to the 6th, and down 10% into the 20th, the day prior to expiration.
Dec. 2002 we reached a high the first trading day in December and dropped 13-1/2% from there into the day prior to expiration.
Dec. 2003 we reached a high the 3rd trading day of the month, up less than 2% from the 1st trading day's low. We dropped about 5% from the high into the Tuesday the week prior to expiration. We hovered in a narrow range and visited within 1.2% of those lows just 2-days before expiration.
In fact, with the exception of 1991, 1998, and 1999, every December in the past 16-years has followed the above pattern (high early in the month, given back by expiration). 1998 and 1999 were bubble years, and that probably accounts for the aberation there. 1991 I'm not sure what's up there, but it could have been due to some IPO's or something.
Same with the mid-80's with MSFT.
Anyway, the pattern has been, with little exception, a rise into early December, and a drop into expiration. I've been anticipating this and I expect this year the pattern may play out in spite of MSFT's dividend.
I'm looking for a rise to NDX 1626 by December 8 with a dump to NDX 1520 by December 17th. We'll see if the market cooperates.
After that I anticipate the NDX will go on a 1-month, 200-point tear to 1720 or so.
AI
