9:00am (EST)
The bulls made a stand on Wednesday following better-than-expected pending home sales and continued strength in auto sales. The Energy sector also rebounded which helped the market post strong gains as the major indexes rallied 2%-3% yesterday.
The National Association of Realtors gave the bulls their first breath of fresh air after reporting soon to be home sales for April came in at a 6% monthly increase versus expectations for a 5% pop.
The Auto sector gave the bulls more air to breathe after they reported a 19% increase in domestic sales for May with a seasonally adjusted annualized rate of 11.6 million vehicles sold.
The bulls also showed strength into the closing bell which usually happens when there is one last rally cry. As a result, the Dow posted a double triple-digit gain of 226 points, or 2.3%, to settle at 10,249. We mentioned in our Weekly Wrap we could see the Dow make one last run up to 10,400-500 so we have been expecting this.
The S&P 500 added 28 points, or 2.6%, to finish at 1,098 but fell shy of the 1,100 mark which is its first wave of resistance. This is the main number we have been watching over the last few weeks and clearly the bulls are having trouble with it. Still, there is a chance of 1,150 if the bulls keep pushing.
As far as the Nasdaq, the index gained 59 points, or 2.6%, and closed at 2,281. We said the first top was the 2,300 level and maybe a chance for 2,400 so keep an eye on these levels.
So far, the market has followed our game plan as we have added 4 new trades over the past couple of days. Our goal was to get into these trades on one last rally and our hand is almost full as we get ready to rumble with the bulls. Although they made a brief comeback, we still believe the market gets another curveball.
We want to make it clear that trading options in this type of environment can be scary, nerve-racking, and pins-and-needles type drama. It is also high risk/ high reward. Like we said yesterday, it is important to plan your trades on where you think the market is heading over the next six weeks. Remember, all you want is price action and a lot of people are reading this tape wrong and getting crushed.
This morning is full of economic news as the market is currently digesting weekly jobless claims and the latest monthly ADP Employment Report. Friday is when we get the Labor Department’s figures on employment. Water cooler talk is that the number has already leaked and judging by our President’s remarks on Wednesday (and some other high ranking officials) maybe yesterday’s rally was just that.
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