Ten Talking Heads in a Box
The business channels may have had a first yesterday as we counted 10 talking heads in a box during the Nasdaq's shutdown. We reported the news as it was unfolding and it affected our trading plans as we wanted to add a new trade or two. We also realize that these types of environments are tricky to trade and make investors nervous but we are here to walk you through the chaos.
The bulls were making a nice push higher towards resistance on Thursday before the Nasdaq went dark and when trading resumed, shortly after 3pm (EST), there was another push higher into the close. The 3-hour delay was certainly a black eye for the Nasdaq but it didn't slow the bulls momentum.
The Dow added 66 points, or 0.4%, to finish at 14,963. The blue-chips traded to a high of 14,989 but newly formed resistance at 15,000 proved to be a challenged. The index ended a 6-session slide and the bulls would like to clear this level ahead of the weekend. The bears obviously don't as they eyeball 14,800.
The S&P 500 gained 14 points, or 0.9%, to settle at 1,656. The index reached a peak of 1,659.55 and had its head above the 50-day MA (1,658.87) but still closed below this level for the fourth-straight session. A close above this level could get 1,675 back in play while a drop back below 1,650 keeps 1,625-1,600 in play.
The Nasdaq jumped 39 points, or 1.1%, to close at 3,638. Tech ended a point of its high and cleared 3,625 in the process. This gets 3,650 bacl in action and a close above this level would be bullish. If the bulls are unable to hold 3,625 look for another test down to 3,600 today.
The Russell 2000 advanced 14 points, or 1.4%, to end at 1,036. The small-caps also went out at session highs but failed to kiss 1,040. This area had served as strong support up until this week and is now trying to hold as resistance. A close above this level would be bullish heading into next week while a finish under 1,025 by the close would be bearish. The 50-day MA for the Russell is at 1,021.21 so the bulls have a 1.5% cushion before they are in danger again.
The S&P 500 Volatility Index ($VIX, 14.76, down 1.18) was trading just below 15 on the shutdown of the Nasdaq after peaking at 15.26. This was a slightly bullish sign but a close below 13.50 would confirm a temporary bottom is in. Another trip above 15 keeps 17.50, and possibly 20, in the mix.
We have been so close to adding new trades this week and we have been thrown a few curveballs as the Fed minutes were too volatile to trade and the flub by the Nasdaq yesterday kept us out of a couple of trades we liked. One was an earnings play and the other was on a stock we feel is headed below $50.
Let's see how the action is during the first 30 minutes of trading as we could have a new trade and we could also have a few Profit Alerts. If we take action we will send out an alert. We have added a few more new candidates as possible options trades for today or next week so make sure you check them out to see what we are looking at.
As we head to press, futures look like this: Dow (+6); S&P 500 (+2); Nasdaq (+4).