The bears snapped a 3-session losing streak on Tuesday as the bulls were unable to recover from the ambush at the open. Futures were weak as we headed to press so we knew it was going to be an uphill battle to get back to even. The blue-chips fell triple-digits at one point but the strength in Tech (and the Financial stocks) helped keep losses in check despite worries of a “hard landing” for China.
The Dow dropped 69 points, or 0.5%, to finish at 13,170. The index fell just below near-term support at 13,200 and we can imagine Wall Street traders getting nervous if we edge back down to 13,000. Yesterday’s low was 13,123. One bright spot was Bank of America (BAC, $9.81, up $0.28) which is a current covered call trade of ours for the Weekly Wrap. Shares pushed double-digits again after reaching a high of $9.97 yesterday. We started recommending shares at $5 back in December.
The S&P 500 slipped 4 points, or 0.3%, to close at 1,405. The index traded down to 1,397 on the open but was able to reclaim 1,400 by the close. There is further risk down to 1,375 but 1,425-1,450 is still in play.
The Nasdaq declined 4 points, or 0.1%, to settle at 3,074. Tech battled back from a low of 3,050 which was a nice round number and further support is at 3,000 should the bears keep the pressure on. We still believe the bulls will make a run at 3,250 before a pullback comes and yesterday’s action off the lows was encouraging which shows the bulls resiliency.
We still see a few choppy sessions ahead of us but if the bulls can get through March, we could see a big April with our near-term targets for the indexes being achieved. Remember, we said the back half of March is usually bearish with the first half bullish and so far the market is following that script. Our homework over the weekend showed any pullback we get could be mild before the market sets new 52-week highs in April (or sooner).
Futures are mixed as we head to press and look like this: Dow (+9); S&P 500 (+1); Nasdaq 100 (-2).
We have a NEW TRADE that we are spreading out to play longer-term options on so our goal is to get these options at the open. These are “cheap” out-of-the-money calls on a stock we feel is going to explode at some point this year.
Subscribers, check the Members Area for the specific trade instructions and why we like this trade a ton.