The market traded lower on Monday ahead of this week’s big events as the bears tried to find an opening to slow down the bulls momentum. Much of the action stayed south of the boarder and the few attempts to turn green were brushed back, including the one in the final few minutes of trading.
We made a mental note the bulls lost Monday’s session as we said they needed a win but by the fraction the bears won, it might not have as much impact depending on the rest of the week and Friday’s close.
The Dow declined 22 points, or 0.2%, to end at 13,971. The blue-chips traded to a low of 13,940 before recovering some of their losses but didn’t have the fight to push 14,000 or resistance at 14,200. The lows were higher than last week’s low and dip to support so the damage was minimal.
The S&P 500 slipped less than a point, or 0.1%, to settle at 1,517. The index traded down to 1,513 and held 1,510. This will be our first clue a test to 1,500 is coming this week if 1,510 drops. If this level holds then we are looking for a trip to 1,525+. The index did traded into positive territory briefly before the close and set another 52-week high of 1,518.31 before giving it back.
The Nasdaq fell 2 points, or 0.1%, to finish at 3,192 even. Tech showed some strength late in the day but backed off 3,194 into the close. We are still expecting a pop past 3,200 and possibly up to 3,225-3,250 over the near-term but anything below 3,175 would be a momentum killer this week. Yesterday’s low was 3,182.
The S&P 500 Volatility Index ($VIX, 12.94, down 0.08) inched up to 13.42 but closed below 13 which was bullish while the Russell 2000 held its own by losing just 3-quarters of a point to close at 913.
One stock we have mentioned over the years that we love to hate and is getting attention again is Moody’s (MCO, $45.49, up $2.12). We were just thinking to ourselves last month how amazing it was shares had hit double-nickels ($55) as we have hated the stock since the $20’s and into the $30’s.
We often made fun of Moody’s as they were always an “after the fact” downgrade firm and got a lot of credit for doing nothing with no blame during the financial crisis in 2008. We missed last Monday and Tuesday’s plunge from $55 to $49 to $45 and last Friday’s low was $40.67.
There could still be a profitable option trade in Moody’s and we will check the chart work and our research to see if a rebound is coming or a test to the $30’s is in the works. Remember, you can read some of our past articles on Moody’s by typing in the company’s name or ticker symbol in the search box on our website.
Futures were showing a lower open on geopolitical tensions last night but have improved throughout the morning as we head towards the bell. We said this could be one of the skeletons in the closet that could derail or pose headwinds for the market so we will have to keep an eye on North Korea. As we head to press, futures look like this: Dow (+12); S&P 500 (+1); Nasdaq 100 (-1).
We have added a few more possible plays to our Watch List, some calls and some put options, so stay ready in case we close current positions and open new ones as we expect volatility to start picking up. Subscribers, check the Members Area for the updates.