• Again, we're seeing the pull-forward effect.

Oracle (ORCL) accelerates the payments of its second-, third- and fourth-quarter dividends. Again, we are seeing the pull-forward effect.  

2013 will be known as the Year without a Dividend.

• You short if you believe a secondary is imminent -- otherwise, there are better plays out there.

If you are playing an AIG (AIG) short here, then it seems as though you are just playing a bet on the secondary. There doesn't appear to be anything technically pointing to a large downside in the stock without a secondary. There are better financials out there to short than AIG based on the technical picture.

AIG

Source: StockCharts.com

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Fundamentally speaking, I don't foresee any major announcements from AIG before the end of the year, so outside of the secondary, I don't see the downside catalyst which positions AIG as a better short than other names out there. A short position is a bet on a secondary that results in dilution. (Is there any other kind for AIG at the moment?)

It looks pretty simple to me: you short if you believe a secondary is imminent -- otherwise, there are better plays out there.

• Trading rumor headlines is skewed toward risk rather than reward.

The market pops quickly on the House Republican counteroffer without even seeing the details of the offer. I will not follow the headline reactions as it seems like a very losing proposition. The only headline I may follow is one that announces a deal is actually signed/agreed.

Seeing the market immediately pop on any headline that has even a remotely positive slant tells me that the market will make a significant rally once a deal is reached. This could come from a much lower point, especially if we start sliding down the fiscal slope.

Trading the offer or rumor headlines is skewed toward risk rather than reward. Unless you have a super computer, I see no reason to chase that trade.

• Put spreads seem to be the way to go in this name.

AutoZone (AZO) is great at buying one thing -- its own stock. It actually makes it a tough short, but it doesn't necessarily make it an impossible trade.

New auto sales are doing very, very well, which doesn't always bode well for AutoZone. I don't remember the last time AutoZone missed, but if it misses or does not increase a share buyback, I expect this one to get hit.

AutoZone (AZO)

Source: StockCharts.com

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Resistance sits at $390 on the stock, so in looking at a short position, that is the number I want to use for an option strike since it is the same place I would stop out on any short trade. Support on the current ascending triangle is tight and right where the stock sits this afternoon. This creates the potential for a $10 to $20 downside if the report is disappointing. My approach here is to use a December $390-360 put spread for about $11.90.

Clearly, this isn't a cheap put spread, but I approach it in this manner. If I were going to buy 20 put spreads priced at $1.20, then I buy two of these. If I would have bought 50 put spreads at $1.20, then I buy five. Big numbers scare people, but simply work out the trade as everything were divided by 10, then back into it.

• The technical picture has a great deal of risk to it in the short run, but overall, gold seems to paint a very clear picture for entry and exit.

Gold still doesn't scream buy to me. In fact, I still disagree with many talking heads I've seen who have said gold is a buy no matter what happens with the fiscal cliff. The technical picture has a great deal of risk to it in the short run, but overall, gold seems to paint a very clear picture for entry and exit.

At first I did not see much on the daily chart for the SPDR Gold Trust (GLD). Then, when I enlarged the chart and shortened the time frame, the bullish channel jumped out at me. I initially thought, Hey, GLD is a buy here at the bottom of this channel with $165 as my stop. And I wouldn't blame anyone for pursuing that trade.

GLD Daily

Source: StockCharts.com

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When you take your eyes back a little further, however, the rounding top becomes very clear. This cup changes the potential of the bullish channel to the bearish handle on an inverted cup-and-handle pattern. There has been no short-side trigger yet, however, so GLD isn't exactly doomed. It could easily bounce to $168 and for the bulls, the longer GLD stays in the handle, the better. If enough time passes, the pattern will become voided. The risk, though, is losing support on this channel. If we see GLD pass under $165, then I will target $158 on a downside move. I will not hesitate to buy puts on GLD.

To me, though, the clear trade, the higher-probability trade, the trade where reward outweighs risk is in the weekly chart.

GLD Weekly

Source: StockCharts.com

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Right now, there is no action today. There may be no action tomorrow.

Here's the trade plan from both the long side and the short side. On the long side, I will buy half a position on a break over $172.50 and the remaining half over $175 looking for $200. On the short side, I will enter a half short position under $165 on the close, then a full position under $162.50. The target here is $152. I would put the stops $2.50 away from my first entry, so the risk will be $3.75 for either position with a potential reward many times the risk. This may be setting up as the best early trade for 2013 once it triggers.

• Watch for charts that show lower highs and higher lows as prices converge.

There are so many different technical patterns out there, it is difficult to know one from another. They can be hard to see sometimes, difficult to interpret at other times, and still some can exist yet not really matter, since they may be in the context of an uptrend or downtrend, thus rendering them moot. The good news is that you don't have to know them all. Many traders will focus on just a few. Some may know many of the patterns but only trade one. Some traders play them all. It really comes down to the individual trader's comfort level, expertise and ability to commit time to the study.

I find the pennant pattern one of interest, but I have to say it isn't one I trade a lot of the time. The pennant sets up the same as a symmetrical triangle but has one main difference: It is not a continuation pattern. In reality, these two share the same identity, and we often don't give it an official name until after the trade has occurred. If the stock breaks out of the pennant in the same direction as it was headed before the pattern was formed, then it becomes a symmetrical triangle rather than just a pennant. In the end, it really does not matter what name is given if you made a profitable trade. For simplicity's sake, I stick with the term "pennant." 

What I am looking for here is just a series of lower highs and higher lows as the prices converge. I do not want to see the highs and lows actually meet completely, though. If so, then I throw the pattern out. It is void at that stage. The simple play here to buy the break over resistance or short the break under support. Volume is generally used as the confirmation here, but I will take the trade regardless. The lower the volume on the break, the smaller the position I will use. There is no perfect pennant, but the more times the stock touches the support and resistance, the better. We need to see at least six touches overall, three on each side, but the more the better.

Obviously, there are secondary and even tertiary indicators which can be included, but for folks who are just starting to get into this aspect of trading, sticking with price and volume can work very well. Here are three charts. The first, China Mobile (CHL), shows a pennant still in progress, while the other two show completed patterns in Aware (AWRE) and URS (URS) that both broke out of to the upside. There were no other indicators necessary for either of these beyond price and volume, which can be clearly seen on the charts.

CHL

StockCharts.com

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AWRE

StockCharts.com

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URS

StockCharts.com

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• The fund should remain a short position under this key level.

The short for iShares Barclays 20+ Year Treasury Bond (TLT) hit on the last trigger with the stochastics break. I am adding that pattern to the Bollinger Band triggers, as those have played out very well as of late vs. the longer-term short. In other words, TLT is still just a trading/opportunity short.

It's held support nicely so far in the current session, but is facing a short-term bearish pattern here. TLT should stay a short under $125 and would become an aggressive trading short under $123.50. But you should not be short the fund if it gets back above $125.50.

• Wait for the bounce to buy.

Momentum is dead on Mellanox Technologies (MLNX). Don't be the head here.

Mellanox Technologies (MLNX)

Source: StockCharts.com

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Yes, it appears to be close to some support, although I have $67.50 and $62.50 as potential price targets. Wait for the bounce to buy. I would be comfortable around $62.50 the most. A bounce off those levels should mark a short-term bottom if nothing fundamentally changes. A move over $71.50-72 could be worth a play to $77, but keep a stop just under $70. If I touch this one, I will stay very small and very nimble.

• It has hit a price target and a resistance point.

With no company-specific news, it is interesting to see Sina (SINA) weak today with Qihoo 360 Technology (QIHU) very strong. These were both centers of my attention on Friday.

Sina looks very weak technically with a drop under $45 potential disaster for bulls, so it was a short preference of mine with Qihoo acting as the long alternative for those looking to get long exposure in the sector and the country. Today, technicals win here.

Sina (SINA)

Source: StockCharts.com

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Qihoo 360 Technology (QIHU)

Source: StockCharts.com

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I am going to take profits on half my Qihoo position here as it has hit a price target ($27), which is a resistance point.

• Goldman Sachs seems to think so, and I agree.

Goldman Sachs (GS) to your portfolio: Dude, you're getting long Dell (DELL).

Goldman upgrades Dell from a Sell to a Buy, and I shudder to say that I agree with them. This one looks headed for $11.10 based on the recent breakout, but longer term, I want to buy Dell on the dips and continue to accumulate.

Dell (DELL)

Source: StockCharts.com

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The Goldman price target of $13 matches up well to the next major resistance at the gap. It is possible that Dell catches fire next year as the next turnaround type of trade -- the revival of the tech dinosaur.

Bob Byrne has talked often about putting together some old tech names in a portfolio, which includes Dell, Microsoft (MSFT), Intel (INTC), Cisco Systems (CSCO) and Hewlett-Packard (HPQ). I have dubbed it Jurassic Tech, but the concept has merit.

I do like Dell here and will look to add this one on pullbacks. I'm a buyer around the $10 level to go with the other names already mentioned, except Hewlett-Packard, which is the one on the list outside of Dell I do not own. I did trade Dell around earnings but am on the sidelines right now looking to get in.

• I am not going to trade or invest based on the special dividend thesis.

Go ahead. Declare a special dividend. Everyone's doing it. Come on. Just one little special dividend. You know you want to.

Sadly, I imagine that is the conversation in a nutshell between some major institutional investors, executives and their Board of Directions. So now we have a bevy of companies set to pay special dividends this December.

I would say you can trade these plays, but I would not be an investor in the names for a few reasons.

First, this is not going to become a recurring theme. One and done here. There will be many traders jumping into these names on the announcement, but few who will remain once the particular stock is ex-dividend, I won't be surprised to see more than half the companies that declare special dividends underperform the broader market as well as their sector peers for the month and quarter following their ex-dividend date.

Second, the pull forward effect. There is an increased probability that any anticipated or possible dividend increase for the next one to two years will be now pulled forward into this year. Granted, this is fantastic from a tax standpoint, but how will this weigh on forward stock performance? Stocks that already attract investors due to their consistent and increasing payouts/dividends may lose some of those investors post special dividend if all of a sudden their dividend becomes static while other companies continue to increase their dividends throughout 2013 and 2014. This is a similar thesis to a retailer pulling forward sales with major discounts or the government's Cash for Clunkers program, which pulled forward new car sales.

Third, where is the dividend coming from? Many companies are pulling the dividends from existing cash, which makes you wonder if this is a business or personal decision. Were there insiders with large stock holdings leaning on the company to get cash into their hands at a lower rate? Does this mean the companies have no better foreseeable use for the cash? These dividends seem like a short-term, rash reaction to a possible tax increase. These dividends are not strategic long-term business decisions, which is a bit disappointing actually if you are a long-term investor. And what about the companies taking on debt to pay the special dividend? Yes, rates are low, but once the dividend is paid, it is paid and the debt still remains. This worries me more than any of the other concerns. I will steer clear of these names.

In the end, these dividends are not special. They are not a reason to invest in a stock. They are not a decision driven by business but rather politicians and possibilities. Tread carefully if you are chasing here. I am not going to trade or invest based on the special dividend thesis. If you catch a name before the announcement, then I would use the initial pop over the first two days to take profits and move on.

• This year-end just so happens to be trickier with the fiscal cliff looming.

Cliff diving or rock climbing the cliff? Neither is easy. Both are risky. And it is where we will live for the next month. So, what to do about the risk? I've talked with a few money managers who are concerned about December. Their concern isn't necessarily about the fiscal cliff itself but more about losing positive returns for the year.

Whether you are up a few percentage points or double digits, there is always the concern about giving up gains especially so close to the end of the year. So, what to do? How do these folks go about protecting their portfolios into the year end? Each portfolio or position is unique, but I'll get to a few basic approaches today and throughout the week.

The end of the month, the end of the quarter and the biggie, the end of the year. The end of the year is the same to a money manager as a college or high school reunion are to some folks. The end of the year is a time to measure ourselves. It is a time to look back and recognize what you did well and what you can do better. It is still only a single day, like a reunion, but what makes it special is this day forces us to measure ourselves.

Call it unfair if you must. I mean, who is to say how well your performance could look if we used a day in February or April to start the measurement on performance?Or if we ended the measurement right now or one week after the new year? The measurement point, given that it is a single point, must be chosen. That's it -- plain and simple.

So games may be played and actions taken that are out of character -- all because of this one day. Think of it as trying to lose 15 pounds before your next reunion or renting a car much nicer than the one you really own. Hell, you may never have rented a car or a limo in your life, but for this one time, you are willing to do it. You may know you are going to put that 15 pounds on within days after the reunion, but it won't stop you from trying to lose the weight. It is the same for managers.

Some places hedge or neutralize their portfolios, knowing they will immediately remove said hedges within days after the first of the year. The hedges may actually have much more to do with their fear of losing a good year than an actual market view. It is a short-term reaction without an investment thesis. It is a business decision rather than an investment decision.

This year-end is a little more complex with the looming fiscal cliff. Taking on hedges in preparation for the fiscal cliff would be a justified investment thesis. The issue with money managers taking the full-on hedge approach into year-end is whether the hedges were an investment thesis or business decision.

The managers I've talked to who have asked me about hedging ideas or approaches seemed genuine in their concern about the fiscal cliff and downside potential for equities. Of course, we are all genuine in this business. Feel free to insert your own sneer or sarcastic remark at this point. But getting past the sarcasm, this is an important time to understand what is going on within your portfolio and why.

There is no reason to hedge in December just to print a good year, especially if your investment thesis is long term and not tactically oriented. Be certain the fiscal cliff isn't just an excuse. We have enough excuses coming out of Washington already.