MomentumOptionsTrading.com Midday Update for 5/22/14
Tug-a-War Continues/ Profit Alert (GM)
Futures were showing a strong open after midnight but had weakened dramatically ahead of the opening bell this morning.
The bears are trying to establish their lost momentum following yesterday’s rebound by the bulls but the action has been choppy and more bullish than bearish. There is still another half of trading to go to look for signs of a rollover or a continued run to challenge record highs.
I was looking specifically for Tuesday and Wednesday to provide the clues needed to predict the next possible trend. However, those two days cancelled each other out as the trading ranges stayed intact.
I have been doing extended research this week in preparation for June and July and I have talked about crucial support and resistance levels for weeks. This May has been the tightest range in decades for the major indexes and the important thing to remember – the longer a trading range lasts, the bigger the breakout or breakdown will be.
The Dow has traded in a 1,000-point range and the S&P 500 has traded in a 100-point range all year long. At some point, there will be a 1,000-point move and 100-point move in both indexes by the end of the summer.
The goal is to be patient and to continue to wait for ALL of the technical indicators to line up before loading up on directional call or put plays. In the meantime, it’s a stock picker’s market with opportunities to go both long and short.
Heading into the second half of trading, the Dow is up 17 points to 16,550 while the S&P 500 is gaining 6 points to 1,894. The Nasdaq is higher by 23 points to 4,155 (bullish) and the Russell 2000 is adding 11 points to 1,114. The VIX is at 11.79 and near 52-week lows.
Subscribers, check the Members Area for the updates. Side Note: See my notes on APOL today as shares are down nearly 9% and is a current put option recommendation.