MomentumOptionsTrading.com Morning Update for 7/17/2014
The bulls pushed fresh highs on Wednesday but the divergence continued as the small-caps lagged once again. (read more…)
The Dow advanced 77 points, or 0.5%, to close at 17,138 on Wednesday. The blue-chips traded in positive territory throughout the session and reached an all-time intraday high of 17,139. The index is still on track to push my Dow 17,300 target as long as support holds at 17,000-16,800 on any pullback.
The S&P gained 8 points, or 0.4%, to finish at 1,981. The index traded to a high of 1,783.94 and came within spitting distance of its all-time high of 1,985.59. If cleared, a run to 2,000 is a strong possibility. The bulls will try and hold support at 1,975-1970 on any dips.
The Nasdaq added 9 points, or 0.2%, to settle at 4,425. Tech made another run at 4,450 after pushing 4,448.87 on the open but failed to clear this level for the third-straight session. A move above resistance will likely lead to 4,500 as long as support holds at 4,400-4,375.
The Russell 2000 slipped 2 points, or 0.2%, to end at 1,151. The small-caps nearly cleared 1,160 on the open after pushing 1,159.96 but faded down to 1,148.18 and made a lower low for the week. I mentioned there is risk to 1,140-1,125 on a continued pullback and the struggle with 1,160 has been frustrating for the bulls.
The S&P 500 Volatility Index ($VIX, 11, down 0.96) traded to a low of 10.59 and closed below the 11.50 level. The 52-week low is at 10.28.
Today is a huge day for earnings with nearly 20 companies I am following reporting and tomorrow is July option expiration. The bears will try to use volatility to their advantage but if the bulls can get past the next two days, my extended fluff targets from early June will likely trigger and the VIX could be in the single-digits.
There are a number of current trades that got some nice pops on Wednesday’s run to higher highs and there is an earnings trade in play today. I have given specific instructions on how to trade the options this morning so follow the plan.
Heading from desk to press, futures look like this: Dow (-20); S&P 500 (-4); Nasdaq 100 (-7).