MomentumOptionsTrading.com Morning Update for 6/13/2014
Friday the 13th Could Get Spooky/ VIX Closes Above 12.50
The bears got their 2-straight win on Thursday following continued geopolitical tensions concerning Iraq and slightly disappointing economic news. The indexes closed below near-term support that served as prior resistance and the bulls will need a good Friday to regain their momentum. Hopefully 13 is their lucky number.
The Dow declined 109 points, or 0.7%, to close at 16,734. The blue-chips traded down to 16,703 and the close below 16,800 gets 16,600-16,500 back in play. A close back above this level keeps 17,000 in the mix.
The S&P 500 fell 13 points, or 0.7%, to finish at 1,930. The index tested a low of 1,925.78 and I mentioned any dips below 1,940 could lead to a back test to 1,925. There is further risk to 1,909-1,900 on a close below this level. A 0.5%-1% move higher gets the bulls back near 1,940-1,950.
The Nasdaq dropped 34 points, or 0.8%, to end at 4,297. Tech tried to recover the opening barrage and hold the 4,300 level but the bears pushed a low of 4,284 late in the day and got the close below support. I talked about risk to 4,275-4,250 on a finish below this level and today’s close will be crucial to both sides as to how next week might play out.
The Russell 2000 fell 7 points, or 0.6%, to settle at 1,159.40. The small-caps traded to a low of 1,156 and in between the downside targets of 1,160-1,150 I have talked about this week. The is “stretch” to 1,140 on extreme selling but a close below 1,150-1,140 might suggest a short-term top is in. The bulls need to clear 1,175 today or Monday and why both days will be super important on determining how the rest of June might play out.
The S&P Volatility Index ($VIX, 12.56, up 0.96) traded to a high of 12.81 and finished just above the 12.50 level. I have talked about risk to this level all week and a continued close above 12.50 would be bearish going into next week. There could be a stretch to 13.50 but the bulls cannot afford to go there today. A finish below 11.50 would be a good sign continued all-time highs are in store for the market.
There are some important trade updates this morning as I have placed Hard Stops on a few of our trades to ensure the positions remain profitable. I could also have a New Trade today with an early alert or midday update so check you emails throughout the morning.