9:00am (EST)
The market ended mixed on Tuesday following a midday swoon into negative territory and a rebound into the close. With many Wall Street traders on spring break this week, volume has been light that tends to lead to choppy and volatile sessions.
The bears pushed the wiggle room we gave the bulls coming into the week as Tech and the small-caps tested their 200-day MA’s (moving averages). We have said a close below key support levels could have us joining the bears, and at some point this will happen, but as long as the trading ranges stays intact, with a chance of higher highs, we’re sticking with the bulls.
The Dow advanced 89 points, or 0.6%, to close at 16,262. The blue-chips made an opening run to 16,272 but reversed course shortly afterwards to test a low of 16,063. The 200-point recovery and close above 16,200 and the 100-day MA was bullish and gets 16,350 back on the bulls radar. Support is at 16,000 and it would be safe to say if 16,000 cracks, we will get aggressive with index put options.
The S&P 500 added a 12-pack, or 0.7%, to end at 1,843. The index reached a peak of 1,843 shortly after the open but faded down to 1,816 in the afternoon. Support at 1,810 kept the bears from pushing 1,800 and will be the magic number to go short. The bulls managed to push a higher high of 1,844 into the close and a move above 1,850 and the 100-day MA gets 1,875 back in the mix.
The Nasdaq added 11 points, or 0.3%, to settle at 4,034. Tech tried to clear resistance at 4,050 after kissing 4,054 at the start of trading before tumbling over 100 points to a low of 3,946. The bears came within 4 points of triggering the 200-day MA. The close above 4k keeps the bulls in the game for a possible push to 4,100-4,200 but another close below this level will likely lead to further weakness.
The Russell 2000 popped 4 points, or 0.4%, to finish at 1,119. The small-caps tried to clear resistance at 1,125 after testing 1,123 but fell below the 1,100 level to 1,095 intraday. A close below 1,100 and the 200-day MA (1,106) will likely lead to 1,075-1,050 while a finish above 1,125 could lead to another run at 1,150.
The S&P 500 Volatility Index ($VIX, 15.61, down 0.50) traded down to 15.57 on the open before zooming to resistance at 17.50 and holding. A close above this level would favor the bears while a drop below 15 helps the bulls.
Tuesday’s turnaround may have been the flush that weeded the weaker hands out of the market. We have talked about the bearishness in recent weeks reaching an extreme but that the 3-year S&P 500 chart showed the uptrend still intact. We have talked about the VIX, Monday/ Friday closes and trading ranges getting stretched.
Our current trades are holding up well and while we have plenty of room to add new ones, we are still being a little selective with our new candidates due to the volatility. We have started to lock-in profits in some of them and we continue to be patient as we wait for the next MAJOR trend to develop. There are plenty of opportunities for 1 and 2-day trades but our timing has to be flawless. In the meantime, we can relax, enjoy our monster winners, and wait for the action to come to us.
As we head from desk to press, futures look like this: Dow (+70); S&P 500 (+8); Nasdaq 100 (+16).
