The bulls were riding a 2-week winning streak and looked determined to make it 3-in-a-row coming into Monday’s session which has been a bullish day, historically, during the week of October expiration week. The bears had their own plans and were trying to hold the top of the current trading range after the bulls pushed resistance on Friday.
Needless to say, the market fell back into its pattern following Monday’s 2% drop as Germany came to the bears rescue. There was a lot of hype from the previous weekend that Europe was speeding up “the plan” to have something in place to deal with its debt crisis but Germany seems to think the top brass is struggling to come up with a comprehensive plan capable of stabilizing the region. Although the drubbing was unexpected, the bulls did manage to hold the first wave of support.
Tuesday started off sketchy as the bears had some follow-through momentum, but the bulls battled back by halftime and used a huge rally of their own to “stretch” resistance. The Dow was able to close above 11,600 while the S&P 500 closed right on our 1,225 target after kissing a high of 1,233. The Nasdaq was above 2,650 and had Apple (AAPL, $392.87, down $2.44) on deck.
What we thought was going to be a good Wednesday turned into a drubbing for Tech after Apple came up short versus Wall Street’s expectations. Shares fell 6% on the day and finished below $400 after the company posted a rare miss in their quarterly profits. The Nasdaq was able to hold 2,600 while the S&P held 1,200 which were signs the bulls still wanted to push the action.
Thursday’s action was mixed but the volatility remained despite great corporate earnings and in-line jobless claims. The Dow traded in a 200-point range but ended higher while the S&P dipped below 1,200 but held and ended higher. The Nasdaq slipped a six-pack and closed below 2,600 but we said not to worry.
Going into Friday’s session, we had a good feeling about the day. The Doors were jamming in the background as we headed to press and all that was left was to “break on through to other side”….
The Dow surged 267 points, or 2.3%, to settle at 11,808. The blue-chips tested 11,600 all week and our target was 11,800 (blue line, black circles). With Friday’s close, it would be hard to imagine the bulls not at least kissing 12,000 which is home of the 200-day moving average. If this level is penetrated then the bulls could make a quick run to 12,200 (orange line, purple circles). Short-term support is now 11,600 with 11,350 (green line, brown circles) providing backup. The Dow was at 11,644 to start the week and added 164 points, or 1.4%. For the year, the index is up 231 points, or 2%…
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