MomentumOptionsTrading.com Morning Update for 7/10/2014
Flip-Flopping Continues as Dow Tests 17K
The talking heads had their pompoms out on Wednesday as the bulls rebounded to clear the first waves of resistance. I mentioned there were a number of suit-and-ties panicking on the 2-day pullback but there were bullish signs the indexes would hold support and resume their push towards all-time highs. (read more…)
The Dow gained 79 points, or 0.5%, to end at 16,985. The blue-chips traded to a high of 16,998 and nearly cleared 17,000. This level is still serving as resistance and a close above gets all-time highs back in play. Near-term support is at 16,900-16,800.
The S&P 500 jumped 9 points, or 0.5%, to settle at 1,972. The index reached a peak of 1,974 and came within a point of clearing 1,975. The bulls hurdled 1,970 but there is still risk to 1,960-1,950.
The Nasdaq added 27 points, or 0.6%, to finish at 4,419. Tech opened at 4,403 and above 4,400 which was a good sign further gains would come. The bulls reached 4,421 and I talked about 4,425-4,450 serving as near-term resistance. The bears are still shooting for a close below 4,400-4,375 this week.
The Russell 2000 advanced a over a point, or 0.1%, to close at 1,173.81. The small-caps pushed 1,177 intraday but could’t hold 1,175. Support at 1,170 held but there is further danger to 1,160-1,150.
The S&P 500 Volatility Index ($VIX, 11.65, down 0.33) simmered down after falling to 11.50 intraday. I have been highlighting the 11.50-12.50 area this week and it was no surprise to see the bears hold this level. I talked about a short-term top at 12.51 but the bulls are still walking on eggshells.
I could have a New Trade today as Fastenal (FAST, $49.01, down $0.49) reports earnings ahead of tomorrow’s open. I want to watch the option action before making an official recommendation so expect an update during the midday report.
Ahead of the open, futures look like this: Dow (-142); S&P 500 (-17); Nasdaq 100 (-34).