It was another flat but mixed to up day for Wall Street on Wednesday as the indexes got a bid at the open which helped the bulls push new 52-week peaks. The market started to fade an hour into the action as the bears tried to stymie the rally but their efforts were fruitless as the bulls took 3-out-of-4.
We mentioned yesterday the baby steps the bulls are taking are frustrating a lot of investors and pros and is not getting noticed. We heard one “money manager” say the small to mid-cap stocks have been underperforming as of late but that isn’t true as both the Russell 2000 and S&P 400 set new 52-week highs again yesterday.
We have also heard for 6 weeks to buy “put” protection because most of the funds managers or slick talking pros have missed the rally and have expected a pullback. At some point, they will be right but instead of playing the downside they will then tell you to wait for better prices and to stay out of the market. Many of them do not know how to play the downside. We do and will when it comes.
The Dow fell 36 points, or 0.3%, to close at 13,982. The blue-chips traded up to 14,029 shortly after the open but spent the rest of the session in the red before bottoming at 13,945. It was a lower low than Tuesday but higher than Monday’s dip to 13,940. Short-term support is at 13,900-13,850 and a break below 13,800 will be our clue to go short. The bulls are still pushing for a run at 14,200 over the near-term.
The S&P 500 added a point, or 0.1%, to settle at 1,520. The index traded to another 52-week high of 1,524.69 and came thisclose to triggering our 1,525 target. The S&P 500 is making a run at 1,550-1,575 and a close above 1,525 should bring some buyers off the sidelines. Yesterday’s low was 1,515 and is still comfortably ahead of 1,510 which is our early warning sign 1,500 or worse will come back into play.
The Nasdaq showed some strength by adding 10 points, or 0.3%, to end at 3,196. Tech finally cleared our 3,200 target after trading up to 3,205 but slipped back below this level shortly before lunch. The index held positive territory all day long but still faces risk down to 3,150-3,100 on a pullback.
The Russell 2000 gained 3 points, or 0.3%, to finish at 920, and another all-time high. The small-cap kissed 921 and came with a half-percent, or 4 points, of triggering our 925 target. Meanwhile, the S&P 500 Volatility Index (^VIX, 12.98, up 0.34) jumped 3% but stayed below 13 after trading up to 13.19.
Cisco Systems (CSCO, $21.14, up $0.17) beat estimates by 3 cents after the bell last night as revenues were up 5%. The company has a history of “beating by a penny” and the quarter was decent although they said Europe was still a challenge. Despite the better-than-expected numbers, shares slipped 2% in after-hours trading last night.
Futures were mixed when Cinderalla turned into a pumpkin but turned lower ahead of Europe’s open which will put Wall Street in the hole to start the day: Dow (-43); S&P 500 (-4); Nasdaq 100 (-9).
We have added seven, yes 7, more trades to the Watch List and we are going to try and start to list our favorite plays in order from the top. This means the trades near the top of our Watch List have the best chance of becoming “official recommendations” as we wait for their current patterns to play out before the next big move in the stock or index comes.
As we wind down a few more current trades this week, we will have room for up to 4-5 new trades by as early as next week. Subscribers, check the Members Area for the updates to get zoned in.