9:05am (EST)
The shortened Wall Street week has been full of surprises but the week and the year comes down to today on if the indexes will finish with a loss or gain on both fronts. Following a flat Tuesday, the bears took a 1% bite out of the major indexes on Wednesday with the bulls getting much of the losses back on yesterday’s rally.
The Dow advanced 136 points, or 1.1%, to settle at 12,287. The index ran green from start to finish and reached a peak of 12,293 which was once again just short of resistance. The blue-chips are still down 7 points for the week but should easily finish the year with a solid gain as the index is up a little over 700 points.
The S&P 500 jumped a lucky 13 points, or 1.1%, to finish at 1,263. The index went out near its high but failed to clear resistance after holding support on Wednesday and Thursday’s open. The S&P is down 2 points for the week but is now up 6 points for the year and today’s action will likely decide who gets the win between the bulls and bears.
The Nasdaq added 24 points, or 0.9%, to close at 2,613. The index was able to recapture the 2,600 level and went out a point off its high. We have been talking about the 2,650 level for the last few weeks and Tuesday’s high was 2,633. The bulls will need to clear 2,618 and 2,653 today to get Tech into positive territory for the week and year.
We have made it no secret Tech has us worried going into 4Q earnings (which start in January) and the Nasdaq can look so ugly at times. However, support seems to hold just as the index appears ready to fall off a cliff. To prove our point, look at Amazon.com (AMZN, $173.86, down $0.03) which ended the day in the red after touching a low of $167 on a downgrade, yet, the Nasdaq was up nearly 1%.
The bears may have wasted a bullet on that call because we think Wall Street is underestimating Amazon’s sales. Sure the Kindle Fire is losing money but we doubt analysts have any clue just how much revenue this company could earn for the current quarter. Earnings are late-January for Amazon.
We could have a busy day with the addition of a trade or two so look for alerts by 11am if we do decide to take action. We usually don’t open new positions ahead of a 3-day weekend but if our upside or downside targets trigger, we may take small positions.
Futures are slightly lower as we head to press and look like this: Dow (-4); S&P 500 (–1); Nasdaq (-2).
