MomentumOptionsTrading.com Morning Update for 9/5/2013
Bears Fail to Hold Resistance
The bulls won their second-straight session following a nice push past the first wave of resistance but there are still hurdles for them to clear before we would jump back on the bandwagon. The bears had a tremendous August and are still looking to keep the action near the middle to bottom of the ranges.
The Dow jumped 97 points, or 0.7%, to close at 14,930 on Wednesday. The blue-chips traded to a high of 14,956 after an opening dip to 14,799. The bulls didn’t clear 15,000, but the close back above 14,900 was bullish. If the Dow can clear 15K today it would get the 100-day MA and 15,200 back in play. Support at 14,800 has been steady but there is risk down to 14,600 on a close below this level.
The S&P 500 added 13 points, or 0.8%, to finish at 1,653. The index made a solid move past 1,650 and finally cleared this level after 6 sessions of trying. The high checked-in at 1,655 after a test to 1,637 on the open and the next wave of resistance is up ahead at 1,675. Support is at 1,625.
The Nasdaq soared 36 points, or 1%, to settle at 3,649.04. Tech cleared the 3,650 after trading up to 3,651.78 and closed a point under resistance. The index did clear 3,625 like we wanted to see and nearly knocked out 3,650 that gave the bulls some wiggle room as they try to build a base above 3,600.
The Russell 2000 advanced 9 points, or 0.9%, to end right on 1,025. The small-caps triggered resistance at 1,025 after trading to a high of 1,025.61 and sets up another r run at 1,040. The bigger test lies at 1,050 but yesterday’s close was bullish. Watch 1,013 for a downside break that could lead to 1,000 on a reversal.
The S&P 500 Volatility Index ($VIX, 15.88, down 0.73) fell 4% and is back in the 15’s after an opening pop to 17.01. The bulls need to get below this level and then 13.50 to set up another run to previous all-time highs. The bears are still trying to get a close above 17.50 to cause some fear and panic but have also had trouble clearing resistance.
Futures are showing a slightly higher open this morning: Dow (-1); S&P 500 (+1); Nasdaq 100 (+5).
We have an earnings trade in play this morning that could be a huge triple-digit winner for us depending on how the stock opens. The company warned they would miss Wall Street’s estimates a few weeks ago and we got our subscribers in ahead of the news as we were looking at the stock from a technical basis.
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