The mini-trading range the indexes have been in for 2 weeks could be ready to crack as the daily 1% moves continue. The bulls and bears are trading heavy blows as each try to break resistance and support. While today’s action is favoring the bears we still believe a push to new highs are coming next week as long as support holds.
The Dow is currently lower by 127 points and the bulls will need to hold 13,850 into the close. There is further support at 13,800 but a close below this level would be bearish.
The S&P 500 is down a dozen points to 1,499. The dip below 1,500 is not too worrisome unless 1,495 doesn’t hold. A close below this level could get 1,475 in play.
The Nasdaq is declining 28 points to 3,140 and is back below 3,150. There is further risk down to 3,125 and a close below this level would favor the bears.
We are waiting for the market to make its next big move and we do believe the bulls will get one last run in before a pullback but we also remain cautious. We reminded our subscribers last week that stocks and the market often take the stairs up and the elevator down so we are keeping our portfolio light. We do have a few open trades to play further upside movement but we don’t have too many short position or put options open to play a pullback, yet. We have started looking at a few of them to prepare for a March pullback but also remember calling a market top is never easy.
In the meantime, we have got off to a 14-3 start for the year as far as open and closed trades. This is a good start for the year so we can afford to be patient as trading ranges can also form. While we are expecting another 2%-3% move higher over the near-term, the pros are expecting a 5%-10% pullback.
The market could continue its range bound moves throughout February so we have to prepare for that as well – as long as support holds.
We have important updates on our current trades so we have to roll but watch the second half of trading to see if there is a rebound or if the bears do further damage. Subscribers, check the Members Area for the updates and we will be back in the morning with a full report.