The Market gapped down rather moderately at the open and then traded sideways till the P.M. when buyers stepped up and helped the Market close little changed. At the close, the DJIA was down just 53 points, the S&P500 down 2 points, and the Nasdaq100 finished flat. While it was another day of volatility, we remained in a range that we seem to be establishing. All three indices bounced off their 20D-SMA’s intra-day. Perhaps that’s where we will find short term support. All three indices remain above their 50D-EMA’s. The indices remain above some important support levels and their 200D-EMA. The DJIA dropped just below its 50% retracement level of 10355. Seems to be hovering here last several sessions. We remain near a congestion area and may become range bound short term. The Financials (XLF), traded slightly lower, closing at 14.59, down .04. Support remains 14.50, 14.40, 14.30, 14.15, and 14.00. Resistance now at 14.60, 14.75, 15.00 and 15.30. GOLD(GLD) fell below support of 107.00 intra-day, but managed to recover and close up .95 to 108.31. Right at its 50D-SMA. Support remains near 107.00. It closed just above its 20 and 50D-EMA. The VIX changed little to 20.10.
Long term, after retracing over 50% of recent correction, the Market is having difficult time getting through a congestion area. Short term, bias had reversed to the upside, but we remain right near congestion area. Near term, a little roller coaster action the last few sessions, but we are remaining within support and resistance areas. Possibly settling into a range. Today’s futures(at 8:15am) are mostly flat versus fair value. Economic growth indicators and U.S. Treasury funding remain the key Market movers.
Major Economic Reports Today:
GDP-8:30am Chicago PMI-9:45am Mich. Sentiment-9:55am Existing Home Sales-10:00am
MAJOR INDICES- Short term support and resistance levels.
DJIA-(close 10321) SP500-(close 1102) N100-(close 1812)
S R S R S R
10297 10355 1100 1108 1812 1820
10288 10500 1099 1115 1803 1830
10277 10540 1098 1120 1801 1840
10200 10614 1097 1130 1800 1845
10150 10650 1089 1134 1798 1850
10000 10725 1080 1135 1783 1872
9941 1070 1143 1775 1880
9925 1059 1758
In XHB (Homebuilders SPDR), we saw buyers of downside protective puts, specifically 15,000 March 15 strike puts. Earlier in the week there were buyers of September 14 puts, delta neutral, so investors are likely protecting long equity positions against weakness, and/or anticipating a spike in volatility levels in the sector. In IWF (Russell 1000 Growth), we saw what looks like an overwriter (selling calls against an underlying long equity position). The May 53 calls were sold in size, which are significantly out of the money, so we believe a holder of IWF is earning premium income against a long position in the ETF, and basically saying that the IWF will not run past $53 between now and May.
VIX(Volatility Index) –Closed 20.10. Has bounced off the 20 area several times in recent months. Resistance on upside at 22.50 and 24.00. The VXX (iPath VIX short term future) closed at a new low on 2/19 at 27.05. It remains weak as we closed below at 26.74.
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Disclosure: No positions