Bulls Looking for Third Time to be a Charm
It remains to be seen if today's slight push past resistance holds as the bulls try for the third-straight session to clear AND hold resistance. All signs continue to point towards a breakout and new highs into March but we mentioned the Fed Head's testimony tomorrow could play a key role in helping or hurting the bullish case for stocks.
The zombies will be eager beavers to get more details on Janet Yellen's comments from the recession following the release of the Fed transcripts from 2008. In addition, the recently declining economic numbers and outlook have been atrocious so they will be asking questions on quantitative easing.
We are also taking a wait-and-see approach as we prepare for a possible breakout or breakdown. We have listed a few index options on our Watch List to play the market's next major move and our portfolio is in great shape to add new trades as we continue to cash out call options on the market's rebound.
While we do have a few put positions that are underwater, they are still a good insurance policy at this point. We learned our lesson from last February not to load up on false breakdowns and this is what happened at the beginning of the month this year. The market has been resilient ever since the 6%-8% dip in the indexes and we have penciled-in higher fluff targets and a possible rally into March.
Again, today's close and tomorrow's reaction to the Fed Speak should give us the clues we are looking for to confirm the next leg higher - along with Friday's close.
As we make the turn, the Dow is up 40 points to 16,219 while the S&P 500 is higher by a 4 points to 1,849. The Nasdaq is gaining 22 points to 4,309 and has cleared 4,300 again. The Russell 2000 is advancing 10 points to 1,184 and is testing its official/ unofficial all-rime highs.
The one troublesome sign for the bulls is the S&P 500 Volatility Index ($VIX, 13.91, up 0.24). The VIX is up 2% and has kissed 14.49. A close above 15 would be bearish but the bulls have wiggle room up to 17.50 that is now the new no flinching target until triggered.