The market is giving back Friday’s gains as the overseas zombies have come under attack that has put pressure on the euro. Spain’s head zombie, Prime Minister Mariano Rajoy, is being asked to resign following a corruption scandal on where he was getting kickbacks ($34K a year but he is denying any wrongdoing, naturally) while Italy’s PM, Silvio Berlusconi, is trying to get back into the political rat race which could threaten current reforms.
Economic news here at home was mixed as Factory Orders came in at 1.8% versus expectations for a rise to 2.3%. Meanwhile, the ISM (New York) number of 56.7 was ahead of forecasts for a print of 53. The reports didn’t help or hinder the market and today’s pullback to support that was prior resistance is normal – as long as it holds.
Despite today’s dip, there have been a number of analysts who have come out and matched our yearend price targets for the market. Our long-term subscribers know we like to make our market calls after January is complete and last year we came pretty close to nailing these numbers if we include January’s closing prices for the indexes.
Of course, forecasts can change but we like to have a road map on where we believe the market will be over the longer-term. We are also equally concerned on where the indexes will be at in 2 days, 2 weeks and 2 months because this is where we make our bread-and-butter.
We continue to remind readers that calling a market top is never easy and while today’s pullback has the talking heads in panic mood, we still believe the Dow and S&P will challenge their 52-week peaks before a major pullback. This week could be choppy with a slight trading range but we are expecting a bullish option expiration week that starts next Monday.
The areas we are looking for the bulls to hold are Dow 13,850; S&P (500) 1,495; Nasdaq 3,125. As we head to press, the Dow is down 135 points to 13,875 while the S&P 500 is lower by 15 points to 1,498. Tech is declining 39 points to 3,140.
We have spent much of the morning researching a NEW TRADE and we listed a number of new candidates on Friday. We said we might swing the bat on an earnings trade or 2 and we like one of the pitches coming our way. We also have action to take on a trade that is on hold.
Subscribers, check the Members Area for the New Trade and for the current updates.