9:00am (EST)
The bears had a slight edge for the week heading into Wednesday’s session but the bulls used another round of strong earnings and better-than expected economic data to push the market to fresh 2 and 3 years highs (again).
The only number we have been watching this week is 1,334 which represented a double or a 100% rise from the S&P 500’s low of 667 back in 2009. We said last Friday that “1,325 Changes Everything” and only confirmed our target of 1,350 was in the cards. The index battled 1,334 for 3 sessions before breaking through yesterday after gaining 8 points to close at 1,336. Back in mid-January we said if the bulls could get past 1,300 then we could see 1,450-1,500 in 2011. However, let’s get to 1,350 first.
The Dow actually traded into our target zone of 12,300-12,350 after kissing 12,303 but finished the day at 12,288, up 61 points. If the upper-end of our zone is taken out then the bulls will be gunning for 12,500-12,600 over the near-term with a run to 13,000 coming if the momentum can last until April.
As for the Nasdaq, the index finished at 2,825, up 21 points, and closed right in the middle of our 2,800-2,850 targets. Of course, we have been mentioning a run to 3,000 since the beginning of the year and a break above here gets the bulls there.
With 3 down and 2 to go, the bulls now have the momentum back in their favor for the week and futures are pointing towards a flat open this morning. Friday is option expiration day for February calls and puts and we have been penciling in a flat to down week because of this. We have also been mentioning support which held on Tuesday but the market is still putting in higher highs and higher lows which is what we want to see.
Either way, if we can get through this week holding support or breaking resistance then we continue to believe the bulls can run until springtime. As the weather breaks, consumers are still going to be spending and Ben Bernanke will still be printing $3 billion a day. We aren’t sure where this will all end up – good or bad – but enjoy the ride while it lasts.
Earlier this week we closed one trade for a 25% return although we were Charlie Brown-ed after the call options we recommended doubled from $1 to $2 yesterday. Oh good grief! However, our frustrations were cured when another trade of ours was up nearly 300%. We locked in half profits on Electronic Arts’ (ERTS, $18.93, up $0.40) strong move yesterday but we think the story is just getting started with this company.
The 52-week high is $20.24 for EA and shares touched $20.20 on Wednesday. Just saying…
We are excited about our current trades and we continue to lock in profits when we can. For 2011, we have closed 14-out-of-15 winning trades and you can get the results by emailing us. Or, if you are a current subscriber, you can check the Members Area now to get all of our option trade updates and access to all of our portfolios and track record results.
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