Bears Push Support, Bulls Hold
The bears made a little noise on Hump Day but the bulls held support with Tech holding down the fort. The losses were minor but we take take notice on a few developments that are worth noting.
The Dow fell 25 points, or 0.2%, to finish at 15,542. The blue-chips made another run at 15,600 and reached 15,602 on the open before quickly fading and bottoming at 15,496 late in the day. The dip below 15,500 needs to be watched as it could get 15,400-15,350 in play while a close above 15,600 gets 15,800-16,000 on the radar.
The S&P 500 slipped a 6-pack, or 0.4%, to settle at 1,685. The index tested 1,698 again before a 16-point drop to 1,682. We have mentioned a close below 1,680-1,675 could be a warning sign 1,650 comes back into the picture. A finish above 1,700 could be good for a run to 1,725.
The Nasdaq added a third of a point to end at 3,579. Tech traded up to 3,606 like we figured but we didn't like the pullback below 3,575 to 3,573. It may be as far as the bears get this week but a close below 3,575 could lead to a quick drop to 3,550-3,500. Apple (AAPL, $440.51, up $21.52) saved the bulls from a wipeout and Facebook (FB, $26.51, up $0.38) should provide some stability following its surge past $30 in after-hours last night on better-than-expected earnings.
The Russell 2000 gave back 8 points, or 0.8%, to close at 1,042. The small-caps came within a point of triggering another all-time intraday high after reaching 1,055.85 but failed to hold 1,050 after trading down to 1,042. We are giving the bulls to 1,040 before we stick one foot out the exit door and start closing the rest of our bullish positions.
The S&P 500 Volatility Index ($VIX, 13.18, up 0.52) jumped 4% and traded to a high of 13.49 as it held green all session long. We have warned of a close above 13.50 and yesterday's peak got our attention as it could lead to 15 and chaos.
We are still bullish but yesterday's action felt funny and theirs is nothing wrong with taking profits and reducing risk like we did on a number of trades. The indexes could also be setting up for a trading range and they can be hard to navigate so we want to continue to trade light and wait for confirmation on the next trend.
As we head to press, futures look like this: Dow (-74); S&P 500 (-6); Nasdaq 100 (+4).