MomentumOptionsTrading.com Morning Update for 7/8/2014
Bulls Hold Near-Term Support
The bears got their third-straight Monday win as the market tested near-term support. Although the bulls held the losses in check, some of the closes were bearish as Wall Street prepares for the start of 2Q earnings season.
The Dow dropped 44 points, or 0.3%, to close at 17,024. The blue-chips hovered around the 17,000 level throughout the session following a dip to 16,992 on the open. There is additional support at 16,800-16,600 but higher highs are in store if the bulls can hold 17K today.
The S&P 500 fell 8 points, or 0.4%, to close at 1,977. The index traded down to 1,974.88 after the midday update on Monday and I mentioned the bulls needed to hold 1,975 to start the week. They did but a continued attack by the bears could lead to 1,960-1,950.
The Nasdaq declined 34 points, or 0.8%, to settle at 4,451. The bulls held the 4,450 level into the closing bell following a test to 4,447. I mentioned support at 4,400-4,350 could come into play if the bears got below 4,450. If the bulls can clear 4,475 again, they will likely push 4,500.
The Russell 2000 tanked 21 points, or 1.8%, to end at 1,186. The small-caps opened at 1,204 and slipped below the 1,200 level an hour into trading. The worrisome part is the bears also cracked 1,190 with the index going out near its session low. A close back above 1,190-1,200 needs to come quickly as there is risk to 1,175-1,170 on a continued pullback.
The S&P Volatility Index ($VIX, 11.33, up 1.01) traded to a high of 11.54 but the bulls held 11.50 into the close. There is risk to 12.50 and a finish above this level bears watching as 13.50-15 could come quickly. A close back below 11-10.50 would be bullish.
I closed two trades yesterday for a slight profit and a scratch. I have updated the current trades and there could be New Trade(s) this afternoon depending on how the morning plays out.