The bulls ended their Monday swoons as they battled back from a lower open to reclaim resistance. Things didn’t start off well but the market shrugged off China’s worries and the sequester cuts here at home to end in positive territory following a tight trading range.
The Dow gained 38 points, or 0.3%, to finish at 14,127. The blue-chips tested support at 14,000 on the open and kissed 14,030 but cleared 14,100 by the closing bell which was bullish. The next target for the bulls will be the all-time intraday high of 14,196 and is now just 70 points, or 0.5%, away.
The S&P 500 jumped 7 points, or 0.5%, to settle at 1,525.20. We have been waiting for a close above 1,525 for a possible run to 1,550-1,575 and yesterday’s pop did the trick. The test down to 1,512 at the open wasn’t enough to crack 1,510 which now gives the bulls a 1% cushion.
The Nasdaq was up a 12-pack, or 0.4%, to close at 3,182. Tech cleared our 3,175 target but the real test comes at 3,200. If cleared, the bulls could make a run to 3,225-3,250 over the next few weeks. The index did trade down to 3,154 after the opening bell but held 3,150.
The Russell 2000 advanced 2 points, or 0.2%, to end at 916. The small-caps went out at the highs for the day but failed to clear 920 that is the green light to 932 and all-times highs again. The low checked in at 908 but there won’t be panic again until 900 falls.
The S&P 500 Volatility (VIX, 14.01, down 1.35) dropped 9% and is back below 15. We mentioned to watch for another test down to 13.50 or a break above 17.50 and yesterday’s high was 16.16. Some of the suit-and-ties don’t follow the VIX and have blown it off but it is still giving us very good clues on market direction.
Copper stayed flat at $3.51 and held $3.50 after trading down to $3.48. We are waiting for a close above $3.55 as one of the clues the market could zoom higher from here while a close below $3.50 could confirm a market top is in.
There are major economic reports due out the rest of the week that will sway market direction so while the near-term appears to be up, keep one eye on the exit door if there is a 1% pullback and support is tested.
Futures are showing a higher open as we head to press and look like this: Dow (+29); S&P 500 (+3); Nasdaq 100 (+11). Subscribers, check the Members Area for the updates.