9:00am (EST)
The bulls were held hostage to start Monday’s session as the bears quickly used their momentum from Friday to push the market near its lows for the year. However, once we saw the early fight shortly after the open we knew the bulls were not going to go away quietly. In our afternoon update, we mentioned we could see a final-hour surge which is exactly how things played out with all three major indexes finishing in positive territory by the close.
The Dow added 69 points, or 0.6%, to settle at 11,061 and back above the 11,000 level. The index fell to a low of 10,824 shortly after lunch which was just above the 10,800 level we said to watch for in our Weekly Wrap. Blue-chip component 3M (MMM, $78.22, up $1.57) accounted for 12 of the Dow’s win total after its 2% pop. The next area of resistance for the Dow lies at 11,200 then 11,350-11,400.
The S&P 500 gained 6 points, or 0.7%, to end at 1,162. The index reached a low of 1,136 which was between our downside targets of 1,150-1,140. There is risk down to 1,125 but the bulls are looking for a run past 1,175 today.
The Nasdaq showed the most strength after popping 27 points higher, or 1.1%, to settle at 2,495. We were cheering for a close above 2,500 but the index still went out on its highs for the session. Another 15 and we would have made it.
We said yesterday Tech was getting cheap and we have already started our Christmas shopping. We have recommended to our subscribers that they should do the same thing by getting into some January call options, NOW.
We believe we have found a few good options as we look to add to our current list of trades. The market is showing signs that it could go lower but the bulls could be gathering their energy for one last bull charge for 2011.
We still need to get through September and October and yesterday was only the second time this month the Dow finished higher. While there could be a test to new lows, we are leaning more towards a retest to the top of the current trading range this week.
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