9:00am (EST)

The market gave us mixed signals on Monday as the bears pushed support for much of the session before the bulls made a late-day run to try and get back to even.  Although they fell short, the final hour rally by the bulls showed once again they are trying to push resistance as well.  Despite the choppy action, there were some positive developments worth noting.

The Dow dropped 15 points, or 0.1%, to finish at 12,962.  The blue-chips traded to a low of 12,883 which was just below short-term support at 12,900 with further help at 12,800.  The bulls are still trying to push the action past 13,000 and a couple of consecutive days above this level could propel the Dow towards 13,250. 

The S&P slipped 5 points, or 0.4%, to end at 1,364.  The index reached a low of 1,359 before buyers stepped-in.  We have been mentioning the 1,350 level needs to hold on any pullback while a close above 1,375 would be bullish.  The S&P was able to break through this level, twice, intraday last week but has yet to close above it. 

The Nasdaq declined 26 points, or 0.9%, to settle at 2,950.  We wanted to see a close at or above this level as Tech traded down to 2,940 before Wall Street’s lunch break.  A break below 2,925 will get 2,900-2,850 back in play but we would like to see one last pop past 3,000 and up to 3,250.

The Russell 2000 added a point, or 0.15%, to close at 803.65.  The index traded to a bottom of 795.99 but was able to hold support at 800.  We mentioned how crucial it would be for the small-caps to close above this level or the Russell faced a test down to 780.  After testing 830 in recent weeks, the index has given back 4% and a 10% pullback would test the second wave of support at 750.

The Wall Street pros and hedge fund managers who have missed the rally since December are hoping the market pulls back 5%-10% so everybody can start at even again.  This will depend on whether support holds or not.       

As we head to press, Dow futures are down 101 points to 12,860 while the S&P 500 futures are lower by 12 points to 1,353.  Nasdaq 100 futures are off 20 points and are at 2,596. 

There are still a few trades we would like to close before adding new positions but we have listed some new ideas on our Watch List.  These options look like low-hanging fruit ripe for picking but let’s see how the market opens before jumping in.  Subscribers, check the Members Area for the updates.