9:05am (EST)
The market went on another wild ride on Tuesday as the battle between the bulls and bears heats up. We mentioned last week the market could experience some extra volatility due to options expiration week which is this Friday for the May contracts.
The bears started the session with an early lead which easily led to a break below our near-term targets by our afternoon update. However, we said there could be a bounce as buyers started to come in at the lows which helped fuel the rebound into the close.
A weaker dollar and some strength from the Financial sector helped the bulls camp but Tech was the most impressive as it bounced back to finish in the green. We mentioned yesterday that moving averages (MA’s) can get “stretched” which is happening with the Nasdaq and S&P after they fell through their 50-day MA’s yesterday. Major support and resistance levels can be tricky to read which is why you have to factor in other variables.
If the bears had pushed just a little harder, perhaps, we would be having a different conversation. However, they let the bulls get up off the canvas so it’s time to review what the action meant for the rest of the week.
The Dow dropped 69 points and closed at 12,479 and below our near-term support level. We said there was further support down to 12,350 and the index fell to 12,378 intraday. A break below 12,350 triggers 12,200 but you might as well pencil in Dow 12,000 because investors will start jumping ship if this level doesn’t hold. If 12,500 is cleared, resistance will be at 12,700-12,800.
The S&P slipped less than a point to settle at 1,328. The index traded to a low of 1,318 after breaking 1,325 but closed above this level by the bell. Support is at 1,300 with resistance remaining at 1,345-1,350.
The Nasdaq added a point to finish at 2,783. The index went out at its highs for the day after kissing a low of 2,759 but, more importantly, held the 2,750 level. Resistance is at 2,800-2,825.
Futures are slightly higher as we head to press which should lead to a green open.
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