Bulls on Track for Weekly Win
Believe it or not, the bulls are up for the week if current levels hold with the Dow being the weakest link. We have seen the 50-day MA's (moving averages) come into play and while the action is still being played out, we have warned not to go overboard loading up on short positions.
While there has been an opportunity to make some cash riding the bears backs this month, we have done well trading the tricky trading range as we have closed 11-outta-12 winning trades since mid-July and we are 40-15 since late April as we said the market would surge to new highs.
In late July, we started preparing for a test back to the bottom of the trading ranges after our yearend targets were being triggered. The suit-and-ties raised their estimates, of course, and now they are all jumping ship.
There have been a few trading ranges this year that have looked much like the current one the market is in and we have learned to be patient until we get confirmation across the board that a new, bearish trend is developing. There is still a chance the June lows come into play and we will talk more technical smack in our Weekly Wrap but our message is that we need to continue to be patient and take profits when we can.
One stock we want to talk about before we relax and watch the second half of trading as we begin our weekend is Nasdaq OMX Group (NDAQ, $30.16, up $0.14). It is a direct play on the Nasdaq. Shares fell 3.4% yesterday, or over a buck, as a result of yesterday's trading halt fiasco and are trending lower today.
We did well playing call options when shares were just under $29 and had cleared major resistance. We said there would be a quick run past $30 and a week later we were out of the trade for a 79% win. We plan to do some chart work this weekend to see if there is another call play on deck for a possible rebound, or, a put option trade for a break below $30.
Shares peaked at $34.41 in mid-July and could retest 52-week highs at some point this year or fall to $26. We will be looking at longer-term options and a possible straddle or strangle option trade so stay tuned.
Of course, we have to put our 2 cents worth on shares of Microsoft. Although their CEO has had his share of criticism, he is about $600 million richer today given the stock's pop. It will be interesting to see the changing of the guard at Microsoft and there could be some more upside in shares if rumors of a breakout start to surface. We would love to see Bill Gates come back to the throne but that isn't likely to happen.
Either way, we are happy and so are our subscribers as they banked a 200% win this morning.
As far as the current action, the bulls are trying to end the week on a positive note and a nice comeback win. The Dow is up 16 points to14,980 while the S&P 500 is higher by 3 points to 1,660. The Nasdaq is advancing 13 points to 3,651 as the bulls try to hold 3,650 into the close. The Russell 2000 is down a point to 1,035. The small-caps need to be watched carefully into the close for possible clues for next week.
We have some last minute updates before we roll and we will be back Sunday night with the Weekly Wrap (30-3 for the year, 74-5 since 2011). Speaking of which, we have gotten a ton or requests to run the Weekly Wrap special again as traders have told their friends and co-workers about us.