Bulls Lose Late Day Lead but Tech, Small-Caps Shine
We said yesterday in our midday update to pay attention to the flat action as it lulled Wall Street to sleep but traders woke up after fresh all-times were triggered in the afternoon. The bears also woke up as the pulled the bulls back in before the closing bell as the Dow and S&P 500 ended flat for a second-straight session but the Nasdaq and Russell 2000 made some nice moves to keep the momentum going.
The Dow gained a fifth of a point to settle at 16,072.80. The blue-chips dipped to a low of 16,070 shortly after the open but the 2-point loss was as far as the bears got as the index spent the majority of the session in the green. The high checked-in at 16,120 as the bulls continue to push our fluff targets of 16,250-16,300 but the ending was disappointing. Support at 16,000 is building a nice floor and backup is at 15,800 in case there is a hiccup.
The S&P 500 added a fourth of a point, or 0.01%, to finish at 1,802.75. The index made a quick trip down to 1,800.77 an hour into the session before reaching a peak of 1,808.42. The bulls are a little over 1% away from clearing our first fluff target of 1,825 and could dance with 1,850 in December if cleared. However, a close below 1,800 needs to be watched as it could lead to 1,775 again.
The Nasdaq surged 23 points, or 0.6%, to end at 4,019. We have said the bulls haven't traveled this far NOT to kiss round number resistance and the close above 4K was the first since 2K. The dip to 3,989 after the opening bell was a head fake for those betting against Tech, as the Nasdaq surged to a high of 4,026.99. We have said a close above 4,000 could lead to 4,200 over the near-term and with Apple (AAPL, $533.40, up $9.66) waking up this was a good sign.
The Russell 2000 jumped 10 points, or 0.9%, to close at 1,134. The small-caps were the real story as we have been mentioning they could lead the next leg higher. The index held positive territory from start to finish and reached an intraday all-time high of 1,136.24. We have said a close above 1,125 could be the springboard for a pop to 1,150-1,175. Support will now try to hold at prior resistance (1,125) on a back test with further help at 1,110-1,000. These will be important layers to watch on the Russell 2000 in the future for a possible trend change but as you can see, the bulls are building a nice base heading into 2014 if the zombies don't mess things up in December.
The S&P 500 Volatility Index ($VIX, 12.81, up 0.02) fell below 12.50 late in the day to 12.49 after testing 13 on the open. The late day pullback pushed the VIX higher into the close but 13.50 held all session and is our first warning sign on lightening up on call options.
As we head to press, futures look like this: Dow (+6); S&P 500 (+1); Nasdaq 100 (+1).