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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 27th, 2012
9:00am (EST)
The pros will tell you one of the first rules of trading is “don’t fight the Fed”. In other words, when the Fed is pumping money into the “system”, the market usually goes up. Ben Bernanke’s is making sure of that.
Wall Street rallied on Monday after comments made by the Fed Chairman saying supportive monetary policies would remain in place and that another round of quantitative easing could be a possible. Bernanke said the U.S. economy would need to grow more rapidly to produce enough jobs to further bring down the unemployment rate.
This spurred a huge relief rally following last week’s slight pullback as the bulls reclaimed resistance.
The Dow jumped 161 points, or 1.2%, to finish at 13,241. The blue-chips went out near their high and easily cleared the 13,200 level.
The S&P 500 soared 19 points, or 1.4%, to settle at 1,416. The index reclaimed the 1,400 level and closed above last week’s 52-week high of 1,414 which gets 1,425-1,450 back into the mix.
The Nasdaq surged double-nickels (55 points), or 1.8%, to end at 3,122. Tech also closed at its peak and is less than 1% away from our near-term target of 3,250.
The Russell 2000 zoomed 16 points, or nearly 2%, to close at 846. The S&P Volatility Index ($VIX, 14.26, down 0.56) fell 4% while gold and silver rebounded. Gold closed at $1,688 an ounce, up $25, while silver added 60 cents to end $32.76 an ounce.
Futures are showing a slow start as we head to press and look like this: Dow (-9), S&P 500 (-2), Nasdaq (-1). We have a NEW TRADE we are releasing this morning and we are going to try to get into the options at the open using limit orders. Subscribers, pay close attention to the trade instructions and be sure to check the Hard Stops for some of our current trades which moved up as we lock in further gains.
Tags: Ben Bernanke comments, gold silver prices, VIX
Posted in Gold, Hot Stocks, Market Analysis | 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
Tuesday, March 6th, 2012
1:15pm (EST)
We said March Madness would come early and that volatility would pick up in the market. Today’s weakness is all about the Greek debt situation, which is back in the front burner. There is a Thursday night deadline for Greece and its bondholders to come to an agreement over the debt bond swap in which the creditors would lose nearly 75% of their value on the bonds. It’s been nice not having to write about this situation for a few weeks but Greece is the word today.
We have spent a lot of time talking about the 5-week trading range we have been in and that there was a good chance this week that the market would move out of this range. We cited Wednesday’s Apple announcement of the iPad3 and Friday’s jobs figures as the two key events that would make or break the bulls push higher.
Often times when resistance is being tested, the indexes tend to overshoot these levels which we have been calling our “fluff” targets”. We said the Dow would move 1,000 points back in late November when the index was at 11,800 and we said the blue-chips would run into resistance at 12,800. We hit this mark in January. We also said if the Dow closed above this level there would be a chance at 13,000. If this level was cleared we said to watch for 13,250. To the downside, we said short-term support was at 12,900 and then 12,800 which is exactly where the Dow has been hovering. The index is currently down 193 points to 12,770.
We also said to look for a close above 1,375 for the S&P 500, which we haven’t gotten, and that if there were further weakness the bulls would need to hold 1,350. The index is down 20 points to 1,344 after opening at 1,363.63 which now bring 1,325-1,300 into the picture.
The Nasdaq is lower by 40 points to 2,910. Tech opened at 2,917and we said a dip below 2,925 would bring 2,900-2,850 into play. Here we are. Apple (AAPL, $529.07, down $4.09) is also lower and another clue we said to watch for.
The S&P Volatility Index (VIX, 21.55, up 1.98) is up 14% and above 20 for the first time since mid-February. This was another clue we said to watch for in Sunday’s Weekly Wrap.
We said there may be an opportunity to add a NEW TRADE or two today and that is what we are doing. Subscribers, check the Members Area for the updates and be sure to use limit orders to get the best fill prices.
Tags: Apple, iPad3, Nasdaq, Russell 2000, VIX
Posted in Market Analysis, Market Commentary, VIX | Comments Off
Friday, March 2nd, 2012
9:00am (EST)
The market traded in another tight range on Thursday following the haymakers that were thrown during Wednesday’s session. Despite the panic displayed by many of the talking heads and Wall Street pros this week who have called for a lower market, the bulls come into today’s session with a slight lead for the week. Although the blue-chips are flat, the Nasdaq and S&P are showing decent gains.
The Russell 2000, which we cover in our Weekly Wrap and on Monday mornings, is worrying us a little and is down for the week but we are keeping an eye on this as well. The S&P Volatility Index (VIX, 17.26, down 1.17) dropped like a rock, falling 6%, which favors the bulls. Today’s action could determine the winner because it is still close so let’s go see where we are at and what the bears need to do.
The Dow gained 23 points, or 0.2%, to finish at 12,980. The blue-chips traded up to 13,032 in the AM but fell to a low of 12,943 in the final hour of trading before rebounding. The index is up 2 points for the week as the bulls and bears have each won 2 sessions apiece.
The S&P jumped 8 points, or 0.6%, to settle at 1,374. The index clipped 1,376 at the open and faded but held positive territory all day long. The bulls have won 3 sessions this week and we would love to see a close above 1,380 but will settle for 1,375. A close below 1,365 would give the bears the win for the week.
The Nasdaq popped double-deuces (22 points), or 0.7%, to end at 2,989. Tech continues to dance with our 3,000 fluff target and kissed a high of 2,996. Although the index didn’t crack 3K, it is still up 26 ticks for the week which is almost 1%.
The Russell 2000 added 4 points, or 0.5%, to close at 815. The index traded up to 824 but continues to struggle with the 830 level. The index needs to gain a dozen points to finish in positive territory for the week.
We’ve been able to close a few more call option trades this week for some decent gains so let’s go see where we’re at. Subscribers, check the Members Area for the updates.
Tags: Nasdaq market summary, Russell 2000, VIX
Posted in Market Analysis, VIX | Comments Off
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Market Pulls Back as Bears Attack
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