MomentumOptionsTrading.com Morning Update for 6/19/2014
S&P Triggers Fresh All-Time Highs, VIX Tumbles to 52-Week Lows
The market broke out of a week long trading range after the Fed hinted short-term interest rates wouldn’t rise. The Fed heads announced another $10 billion cut to its monthly bond purchases citing an improving labor market and the combination of both pleased Wall Street.
The Dow roared 98 points higher, or 0.6%, to close at 16,906. The blue-chips traded in negative territory throughout the session ahead of the news and reached a low of 16,755 before ending near session highs. The bulls came within 60 points of clearing their all-time high of 16,970 and remain on track to clear 17,000. Support has moved up to 16,800-16,700.
The S&P 500 surged 15 points, or 0.8%, to settle at 1,956.98. The bears pushed 1,939 but fresh support at 1,940 held until the run to an intraday all-time high of 1,957.74. I have talked about fluff to 1,975-2,000 as long as 1,950 holds.
The Nasdaq zoomed 25 points, or 0.6%, to end at 4,362.84. Tech tested 4,320 but held support at 4,325-4,300 before coming within a 6-pack of its 52-week high of 4,371.71. The talking heads really weren’t mentioning this story but the bulls are making a run towards 4,400-4,500 and my December fluff targets again. They came close in March.
The Russell 2000 jumped 6 points, or 0.6%, to finish at 1,183. Support at 1,175-1,170 was tested following the dip to 1,170 but the small-caps rebounded to end near session highs. The bulls are a little over 1% from testing the 1,200 level again.
The S&P 500 Volatility Index ($VIX, 10.61, down 1.45) tanked 12% and kissed a low of 10.57. Despite the market pullback for much of the session, the VIX also traded lower as was another telling sign a breakout to new highs could come if Yellen said all the right things. Like a broken record, I have talked about the VIX tripping single-digits and this will be a hot topic once it does. The see-saw is now tipping towards a test below 10 sooner rather than later with Friday’s June option expiration coming into the picture. As long as 11.50 holds, 9ish is a real possibility this week or next.
There are a number of trades that continue to perform well and I have once again raised the trailing Stop Limit orders to protect the phenomenal gains they are showing.
Heading from desk to press, futures look like this: Dow (+5); S&P 500 (+1); Nasdaq 100 (+2).
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