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Thursday, May 10th, 2012
9:00am (EST)
The bulls were behind the 8-ball again on Wednesday as the bears pushed March lows at the open. The rebound came on word Greece would get its latest schedule debt bailout which gave the bulls energy. We won’t waste our words on geopolitical news this morning but the end result was a lower high and a lower low for the market which is bearish.
The Dow fell 97 points, or 0.8%, to close at 12,835. The blue-chips traded to a low of 12,748 (-184 points) but recovered half their losses to finish above support at 12,800.
The S&P 500 fell 9 points, or 0.7%, to settle at 1,354. The index kissed a low of 1,343 which opens the door for a test down to 1,325-1,300. The selling pressure will pick up steam on a drop under 1,340 if support at 1,350 is tested again today.
The Nasdaq gave back a 12-pack, or 0.4%, to end at 2,934. Tech once again traded down to exactly 2,900 and could see an accelerated sell-off down to 2,850-2,800 if the bears can get under this level.
The Russell 2000 slipped 4 points and closed at 788 but touched a low of 781. Meanwhile, the S&P 500 Volatility Index (VIX, 20.08, up 1.03) closed above 20 and was up 5% for the session after reaching a peak of 21.59. A move above 22.5 could cause chaos.
Cisco Systems (CSCO, $18.78, up $0.07) reported earnings after the bell last night and beat Wall Street’s estimates, but as we have seen with a number of other companies, Cisco guided lower for the coming quarter. Shares were down 9% in extended trading and were at $17.
We have added 4 charts this morning. Two are for the Dow and S&P, the other 2 charts are for our NEW TRADES we are trying to get into at the open.
As we head to press, futures look like this: Dow (+40), S&P 500 (+9), Nasdaq 100 (+11).
Subscribers, please use limit orders to get the best fills.
Tags: Cisco System earnings, CSCO earnings, Option Trades, VIX
Posted in Earnings, VIX | Comments Off
Thursday, April 5th, 2012
9:00am (EST)
The bears continued with their assault on the bulls Wednesday and made a strong push towards the second wave of support after pushing the market lower by 1%. Although there was a slight bounce off the bottom, the bears clearly have the momentum going into the last trading session of the week as the market is closed on Friday.
The Dow dropped 125 points, or 0.95%, to close at 13,074. The blue-chips traded to a low of 13,020 but the bulls were able to hold 13,000 which has been strong support since late March. A close below this level would bring 12,800-12,750 into the picture. A close above 13,200 today would be bullish for next week.
The S&P 500 fell 14 points, or 1%, to settle at 1,398.96. The index finished below the 1,400 level after testing a low of 1,394 which puts 1,375 back on the radar. If the bulls can manage a 2-point bucket by the close we can at least say they held support although they will lose the week.
The Nasdaq gave back 45 points, or 1.5%, to end at 3,068. Tech touched a low of 3,052 and we have been warning our subscribers to watch for a break below 3,050. This level was tested 3 times a few weeks ago after the move past resistance and is now trying to hold as short-term support. A close above 3,100 would provide temporary relief if the bulls can manage a 1% pop today but that might be asking a bit too much.
The Russell 2000 declined 14 points, or 1.7%, to finish at 820. The index kissed 817 intraday and failed to hold 830 which is where the bulls need to finish at today. The S&P Volatility Index ($VIX, 16.44, up 0.78) traded to a high of 17.74 which was enough for us to take notice. Although the VIX failed to close above 17.50, we said to watch this area as a possible warning sign for a trend change.
The market is still in a “range” but is on the verge of another big move. While this week’s action points to more bearishness, we are still waiting on confirmation. The bulls have been here before and still have some unfinished business but today’s action should give us a better idea on if there will be a breakdown, or, another bounce off support.
Futures are showing another lower start and look like this: Dow (-44); S&P 500 (-5), Nasdaq 100 (-2). Subscribers, check the Members Area for the updates and be on the lookout for possible Profit Alerts today.
Tags: Dow support resistance, Russell 2000, VIX
Posted in Market Analysis, Market Commentary, VIX | Comments Off
Wednesday, April 4th, 2012
1:05pm (EST)
The bears are cracking support and the VIX is popping as mixed economic news and a Fed hangover continue to hamper the market.
Before the bell, the ADP Employment Change numbers failed to lift futures although they came in better-than-expected. The report showed that 209,000 jobs were created compared to a forecast for a print of 206,000 jobs. ADP also revised its February numbers to an increase of 230,000 jobs, versus a previous gain of 216,000 jobs.
The indexes took another leg down following the ISM Services report which slipped to 56 in March, down from 57.3 in February. The index had a print of 56.8 so this was a double negative.
The Dow is down 143 points to 13,056 while the S&P is lower by 16 points to 1,397. The Nasdaq is showing a decline of 53 points and is at 3,060.
The S&P Volatility Index ($VIX, 17.09, up 1.43) is up 9% and has traded to a high of 17.74.
It is hard to call market tops and we still need confirmation but our chart work is paying off once again as the clues we have given you for a pullback are coming into play.
We have gotten some nice pin action today with our current put options so let’s go check the tape inside our Members Area. We will be back Thursday morning with the latest and greatest.
Tags: ADP Employment Change report, S&P Volatility Index, VIX spike
Posted in Economic News, Market Analysis, VIX | Comments Off
Wednesday, April 4th, 2012
9:00am (EST)
The bears made some noise yesterday after hearing the Fed turned its back on the bulls with the release of the latest FOMC minutes. Ben Bernanke provided some enthusiasm last Monday when Wall Street took some of his words as though there would be one last round of quantitative easing (QE) but yesterday, the Fed said it was “less inclined” to do so.
A “couple” of the Fed members thought more QE might be needed if the economic recovery loses momentum and in January, the minutes said the same thing. However, January’s minutes said there were a “few” committee members who would be in favor of further easing, if needed.
The market was already in the red by the time the Fed announcement came out but worsened after traders headed for the exits.
The Dow fell 65 points, or 0.5%, to close at 13,199. The blue-chips finished just below 13,200 and traded down to 13,131.
The S&P 500 dropped a six-pack, or 0.4%, to settle at 1,413. The index traded to a low of 1,404 and was able to hold the 1,400 level but failed to break into positive territory after two attempts in the morning.
The Nasdaq gave back the other 6-pack, or 0.2%, to end at 3,113. Tech managed to see a little green, hitting 3,128 shortly after the open but tested a low of 3,097.
Despite the weakness, the S&P Volatility Index (^VIX, 15.66, up 0.02) was only up fractionally but did trade up to 16.65. We gave specific targets to watch for as far as confirmation on a breakdown in our Weekly Wrap and Monday Morning Outlook but we aren’t there, yet. Also, the trend is still up the indexes but we gave specific targets to watch for as well on when a trend change could occur.
Timing a market bottom or pullback is never easy so the trick is to build positions slowly. We have started adding put options to our portfolio with longer-dated options and we have a number of trades that look juicy on our Watch List. We aren’t sure when the fat lady will sing but the bulls bus is warming up.
Futures are showing a nasty open as we head to press and look like this: Dow (-110); S&P 500 (-12); Nasdaq 100 (-20).
Our current put option trades got some nice pin action yesterday and we have set HARD STOPS on a few of them to protect profits. We may also release a NEW TRADE from our Watch List if we like the prices so stay locked-and-loaded. Subscribers, check the Members Area for the updates.
Tags: put options, S&P Volatility Index, VIX
Posted in Market Analysis, Market Commentary, VIX | Comments Off
Tuesday, March 13th, 2012
9:00am (EST)
The market finished mixed on Monday with the bulls and bears each splitting the indexes if we include the small-caps. Yesterday’s action was timid to say the least as the major indexes traded in a tight range ahead of today’s FOMC Rate decision.
Although volatility has picked up in recent weeks, we mentioned in our Weekly Wrap that the Monday’s before triple-witching in March are typically bullish with the Blue-Chips posting gains nearly 70% of the time over the past 25 years.
True to form, the Dow added 38 points, or 0.3%, to finish at 12,959. The blue-chips traded within a 76-point range with the high coming in at 12,976.
The S&P added less than a point (0.22), or 0.02%, to end at 1,371. The index traded in the red for much of the morning following an initial pop at the open but recovered in the afternoon and traded to a high of 1,373. The low checked-in at 1,366.69.
The Nasdaq dropped 5 points, or 0.2%, to settle at 2,983. Tech peaked at 2,994 shortly after the open but spent the rest of the day below the breakeven line. The index kissed a low of 2,973 but stayed above 2,950 which had been prior resistance. We would still like to see a close above 3,000 this week.
The Russell 2000 slipped 3 points, or 0.3%, to close 814. The index pretty much traded in-step with the Nasdaq, seeing early gains up to 819, before fading 30 minutes after the open. The small-caps reached a low of 811 but easily held the 800 level.
Speaking of volatility, the S&P Volatility Index (VIX, 15.64, down 1.47) dropped nearly 9% to the mid-teens despite the flat action yesterday. For those of you that have been with us since November, you know we have been calling for the VIX to reach these levels when the index was above 30. At the time, the S&P 500 was testing the 1,150 area and we said the index would push 1,250-1,300 by the end of January and that the VIX would be cut in half. Roll out the red carpet.
We have used the VIX, along with many other technical (and emotional) indicators, as a guide to when a pullback could begin. We often hear the Wall Street pros say the VIX is an unreliable tool but it has worked magic for us. We have covered the March blueprints and what to look for over the few weeks, starting with the Fed’s decision on rates today.
We have outlined clear support and resistance levels so make sure you look at yesterday’s charts which are crystal clear. Once our clues fall into place, we will either get a continued rally or one whale of a pullback and we plan to be positioned perfectly as our portfolio will be light and tight going into next week. If the circumstances are right, we could have room for up to 10 NEW trades over the next few weeks. Of course, we also don’t want to push the action so we will need to be patient if there aren’t any good setups.
We said we might get lucky and time a possible market pullback just right so let’s see how the rest of the week plays out along with our current trades.
Futures are showing a strong open. Dow futures are up 56 points 12,953. S&P futures are higher 7 points to by 1,374 while Nasdaq futures are up a dozen points to 2,659. Subscribers, check the Members Area for the updates.
Tags: FOMC meeting, Russell 2000 support and resistance, VIX
Posted in Market Analysis, Trade Update, Trading Psychology, VIX | Comments Off
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Bears Win Second Straight
Thursday, April 5th, 2012
9:00am (EST)
The bears continued with their assault on the bulls Wednesday and made a strong push towards the second wave of support after pushing the market lower by 1%. Although there was a slight bounce off the bottom, the bears clearly have the momentum going into the last trading session of the week as the market is closed on Friday.
The Dow dropped 125 points, or 0.95%, to close at 13,074. The blue-chips traded to a low of 13,020 but the bulls were able to hold 13,000 which has been strong support since late March. A close below this level would bring 12,800-12,750 into the picture. A close above 13,200 today would be bullish for next week.
The S&P 500 fell 14 points, or 1%, to settle at 1,398.96. The index finished below the 1,400 level after testing a low of 1,394 which puts 1,375 back on the radar. If the bulls can manage a 2-point bucket by the close we can at least say they held support although they will lose the week.
The Nasdaq gave back 45 points, or 1.5%, to end at 3,068. Tech touched a low of 3,052 and we have been warning our subscribers to watch for a break below 3,050. This level was tested 3 times a few weeks ago after the move past resistance and is now trying to hold as short-term support. A close above 3,100 would provide temporary relief if the bulls can manage a 1% pop today but that might be asking a bit too much.
The Russell 2000 declined 14 points, or 1.7%, to finish at 820. The index kissed 817 intraday and failed to hold 830 which is where the bulls need to finish at today. The S&P Volatility Index ($VIX, 16.44, up 0.78) traded to a high of 17.74 which was enough for us to take notice. Although the VIX failed to close above 17.50, we said to watch this area as a possible warning sign for a trend change.
The market is still in a “range” but is on the verge of another big move. While this week’s action points to more bearishness, we are still waiting on confirmation. The bulls have been here before and still have some unfinished business but today’s action should give us a better idea on if there will be a breakdown, or, another bounce off support.
Futures are showing another lower start and look like this: Dow (-44); S&P 500 (-5), Nasdaq 100 (-2). Subscribers, check the Members Area for the updates and be on the lookout for possible Profit Alerts today.
Tags: Dow support resistance, Russell 2000, VIX
Posted in Market Analysis, Market Commentary, VIX | Comments Off