The market ended mixed on Monday as the bulls made an incredible effort to square things up with the bears but fell just short before the closing bell. Tech was strong and managed to finish in the green but the Dow and S&P 500 extended their losing streaks to three-straight sessions.
The Dow was looking at a triple-digit loss shortly after the open but gained some of it back to only finish down 37 points, to 11,637. The index traded to a low of 11,573 before bouncing back. We are still looking for the index to run towards 12,000 with support coming in at 11,500.
The S&P 500 slipped 2 points and settled at 1,269. We were looking for the index to hold 1,270 but support is strong at 1,250-1,260. We believe the index can still chase 3,000 but we are watching support at 1,250.
The Nasdaq was down over 20 points at one point but managed to close with a 4 point pop to settle 2,707. We were glad to see the index hold the 2,700 level but there is strong support at 2,550-2,500. We are still looking for the Nasdaq to test 3,000.
Turning to earnings, Alcoa (AA, $16.49, up $0.07) reported a profit of $258 million, or $0.24 a share, versus $277 million, or $0.28 a share in the year ago period. Revenue checked in at $5.65 billion, up from $5.4 billion a year ago. The suit-and-ties were looking for a profit of $0.19 a share on revenue of $5.7 billion.
We mentioned yesterday shares had surged nearly 20% over the last few weeks and this was a classic buy-the-rumor sell-the news event. Alcoa also gave a rosy outlook but there was some nervousness when they said they face some sales “headwinds” with China as the country tries to curb inflation.
Shares were down slightly last night in extended trading, falling $0.28, or 1.7%, to $16.21. There is strong support at $15 but Alcoa could bounce back today and challenge its 52-week high of $17.60, down the road, if $16 holds.
And who said stock picking was a lost art? Our option trades got a nice pop yesterday as Tech held strong. We have profiled quite a few “under-the-radar” stocks that have flourished but they are starting to get noticed. When a stock moves from $27 to $32 in a month or from $12 to $16+ in 6 weeks, they get noticed. Good for us we got our subscribers in before the crowd and while these stocks have gained 20%-25% the options have returned triple-digit profits using less capital.
This, folks, is the beauty of options.
As we head to press, futures are up: Dow futures (+57), S&P 500 (+7), Nasdaq 100 (+12). We have a lot to cover inside our Members Area so let’s go check the updates.