8:50am (EST)
The market ended mixed on Tuesday after the bulls battled back by the close to square things up. The bears ruled much of the session and took a bite out of Tech which was down more than 1% intraday before losing their grip by the closing bell.
The Dow traded in a tight 90-point range before finishing less than a point higher at 12,807. The high was 12,840 while the low was 12,749. Short-term support is at 12,700-12,600 while resistance is up ahead at 13,000.
The S&P 500 traded to a high of 1,360 but the low of 1,349 was a hair under our 1,350 support target. The index ended lower by 4 points to 1,356 by the close. A breakdown here leads down to 1,334-1,325 while 1,375 will remain in play for a possible trip to 1,400 as resistance.
The Nasdaq was in the green for all of 6 seconds after the opening bell and spent the entire day swimming in red ink. The bears were able to take the index below 2,850 and down to 2,825 before settling with a loss of 20 points which put Tech at 2,840. Tech is 6% away from hitting Nasdaq 3,000 but it appears we might get a 6% move the other way if the bears have their say. A move back below 2,700 and down to 2,675 would represent the perfect buying opportunity in our minds so let’s see how it plays out.
We should also note a 6% correction or pullback on the S&P puts the index at 1,275 while a 6% correction in the Dow would mean 12,000 for the blue-chips. A 6% pop in the S&P would mean 1,440-1,450 while a 6% jump in the Dow gets it to 13,600 from current levels.
If we were in Vegas and were betting on the over/ under – or if we were on Jeopardy – we would take the Bears for $400, Chuck. These downside targets represent major support levels which were resistance as we outlined them during the bull run that has lasted since October 2010.
The good news, if you are bullish, is that we still expect the major indexes to close near our targets of Dow 14,000; S&P 1,450-1,500; Nasdaq 3,400 for 2011. We went on record with these targets on January 19, 2011 for those of you keeping tabs.
And this just in…we have an option trade on our Watch List this morning that could return 670% by mid-September if we are right. In other words, a $65 investment in one option contract could be worth $500 in 4 months or $650 (10 contracts) could turn into $5,000. The options are at 65 cents and could hit $5 and we may release the trade TODAY if we close one of current ones out. Folks, they say a picture is worth a thousand words. Well, we hope the chart we show you today is worth $5,000.
We also have a lot more charts to cover in our Members Area on where we think the market is headed over the next 6 months and for May so we have to roll. Subscribers, check for the updates.
If you are not a subscriber but would like to see the incredible opportunity before your eyes, click here.
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