Get RSS Feed
9:00am (EST)
Well, that was easy…
The bulls continued their red-hot ”September to Remember” tour by staging another impressive rally that easily pushed the market to the verge of breakout territory. We had a feeling when we were doing our Weekly Wrap on Sunday that the bulls would push the action ahead of today’s Federal Open Market Committee’s (FOMC) monetary-policy announcement but we were a bit surprised on just how close they came to taking out our targets ahead of today’s fireworks.
The big event will hit Wall Street at 2:15pm (EST) and the market will likely make a very strong move north or south. Of course, the devil will be in the details but most “experts” are expecting the Fed to hold off on expanding its quantitative easing (QE) program. If you recall, Bernanke came to the market’s rescue several weeks ago and started buying Treasury’s, saying, the Fed would do whatever it takes to keep the U.S. out of a “double-dip” recession - which by the way is over. Recession over you say? More on that subject in a minute…
The Dow was strong all session as it surged 146 points, or 1.4%, and settled at 10,753. The index traded to a high of 10,774 and came within spitting distance of our 10,800 top. The Dow finished above the 10,700 level for the first time since mid-May and, believe it or not, Cisco Systems (CSCO, $21.75, down $0.11) was the only Dow component that didn’t make it to the party on Monday.
The S&P 500 added 17 points, or 1.5%, to close at 1,142. A lot of technicians were watching the 1,130 level as confirmation that a new bull market has begun and the index closed above this level for the first time since mid-May. Our target is 1,150 as a “possible” top and the index traded to a high of 1,144 yesterday. However, if the 1,150 level is taken out then we could easily see another 50 points, quickly, to the upside.
The Nasdaq once again led the race as it actually surpassed our target of 2,350 by zooming 40 points, or 1.7%, to finish at 2,355. The index also took out its June intra-day high of 2,341 and could test the April high of 2,500+ if the bulls throw a haymaker and knock the bears out.
The one thing that “concerns” us though about the September rally is the lack of volume which does not seem to confirm the recent run the bulls are on. However, we doubt the Fed will announce another “QE” package until the end of the year and the only thing that could spook this market is if the Fed says something scary in their statement.
Perhaps yesterday’s rally all came down to a report that declared the U.S. is “officially” out of the recession. The National Bureau of Economic Research said that the recent recession ended more than a year ago and if we were to go into another one, it would officially mark the start of a NEW recession. Let’s see, so the recession that started in late 2007 ended last summer? Interesting…
Futures were slightly higher to start today’s session and got a nudge after housing starts came a little while ago. They jumped 10.5% to an annualized rate of 598,000 while building permits increased to 569,000. Wall Street was expecting a number of 545,000 with building permits coming in at 560,000.
As we head to press, Dow futures are higher by 17 points to 10,687 while the S&P 500 futures are up by 2 points to 1,138 The Nasdaq 100 futures are showing an advance of 5 points to 1,986.
Futures Showing Strong Start
Wednesday, September 1st, 2010
9:10am (EST)
When we left you yesterday at 1pm, the market was slightly higher, and we were waiting to hear the “minutes” from the latest Federal Open Market Committee (FOMC) meeting. Once the language started to hit Wall Street, the market quickly surrendered its gains and headed south.
There was nothing new in the Fed’s minutes as they revealed the pace of the economic recovery has slowed in recent months. Although there were some Fed members that wanted more supportive measures, many agreed the recovery is not clicking on all cylinders.
The cautious comments pushed the market back into negative territory before the bulls battled back to make it a respectable fight. Yesterday also marked the end of the month and the August numbers weren’t pretty.
The Dow managed to hold the 10,000 level after dropping below it at the start of trading. The index added 5 points and finished at 10,014 but traded to a low of 9,941. The gains were capped at 10,073 and current resistance remains 10,100-10,200. Our downside target for the Dow is 9,800 and then 9,500. For the month of August, the index fell 4.3%.
The S&P 500 stayed below our 1,050 target but added a half-point to finish at 1,049. The index traded to a low of 1,040 and support held (for now) as we mentioned this would be a popular battle ground yesterday. A break below this region sets us up for a test down to 1,020 and then 1,000. From there we are looking for 950. As for August, the index dropped 4.7%.
The Nasdaq once again lagged its counterparts and slipped 6 points, finishing at 2,114. For the month, the index tanked 6.2% but is still finding support at the 2,100 level.
Look for resistance to be tested at the open as futures are showing a strong start this morning despite a worse than expected ADP jobs report.
Dow futures are up 102 points to 10,108 while the S&P 500 futures are higher by 12 points to 1,061. The Nasdaq 100 futures are showing a 26 point pop and are at 1,792.
There is more economic news on the way today and we are expecting another wild and choppy session. Subscribers, check for the updates in the Members Area this morning.
Tags: FOMC, option picks, stock options trading
Posted in Market Analysis, Market Commentary | Comments Off