It is always hard to time a market top but if the bulls can’t get off the mat, we may have witnessed one last week.
The technical picture from our weekend chart work showed a continued test to new lows and the downside targets we outlined this morning have already come into play. If the indexes close below our near-term targets, our worry that the Dow could move 3,000 points could become a strong threat real soon.
If you have not looked at our chart work, please log into the Members Area today or sometime tonight to examine them as the market is at a crucial phase.
The bulls got good news this morning after Caterpillar (CAT, $89.63, up $3.46) came in with better-than-expected results. We mentioned there was a good chance the company comes in with a big miss or a huge earnings beat as the suit-and-ties forecasts were all over the map.
Of course, the bigger news after the close today will be Apple’s (AAPL, $549.93, up $3.86) numbers and the move in extending trading will determine Tuesday’s market direction. We believe the company will report an incredible quarter but Apple is famous for sandbagging future guidance. Perhaps this time will be different.
There is also a bevy of other headlines news due out this week and we expect the recent volatility to continue. We mentioned this morning this could be the week that determines the next TREND as the indexes either fall out of their 2-month trading range or hold it.
The seesaw is favoring the bears but we all know what happens when the fat kid gets off the other end.
As we head from desk to press, here is how we look: the Dow is down 37 points to 15,841 while the S&P 500 is lower by 9 points to 1,780. The Nasdaq is declining 49 points to 4,078 and the Russell 2000 is off 16 points to 1,128. The S&P 500 Volatility Index ($VIX, 18.10, up 0.04) is flat and was up 4% as we head into the second half of trading.
Although the market is sappy, we have another Profit Alert to make you happy. It appears the short-term momentum in Ariad Pharmaceuticals (ARIA, $8.20, down $0.79) has waned along with most of the Biotech sector today and the pullback has stopped us out of a very successful trade. The February 8 calls (ARIA140222C00008000, $1.20, down $0.60) have taken a hit today but after closing a quarter of the position last week and having our Stop Limit in place, we banked a 183% return on this recommendation!
Subscribers, check the Members Area for the updates as we also have a NEW TRADE!!! Also, stay locked-and loaded into the close as we could have additional Profit Alerts and / or New Trades!