9:00am (EST)
The market finished mixed on Monday with the bulls and bears each splitting the indexes if we include the small-caps. Yesterday’s action was timid to say the least as the major indexes traded in a tight range ahead of today’s FOMC Rate decision.
Although volatility has picked up in recent weeks, we mentioned in our Weekly Wrap that the Monday’s before triple-witching in March are typically bullish with the Blue-Chips posting gains nearly 70% of the time over the past 25 years.
True to form, the Dow added 38 points, or 0.3%, to finish at 12,959. The blue-chips traded within a 76-point range with the high coming in at 12,976.
The S&P added less than a point (0.22), or 0.02%, to end at 1,371. The index traded in the red for much of the morning following an initial pop at the open but recovered in the afternoon and traded to a high of 1,373. The low checked-in at 1,366.69.
The Nasdaq dropped 5 points, or 0.2%, to settle at 2,983. Tech peaked at 2,994 shortly after the open but spent the rest of the day below the breakeven line. The index kissed a low of 2,973 but stayed above 2,950 which had been prior resistance. We would still like to see a close above 3,000 this week.
The Russell 2000 slipped 3 points, or 0.3%, to close 814. The index pretty much traded in-step with the Nasdaq, seeing early gains up to 819, before fading 30 minutes after the open. The small-caps reached a low of 811 but easily held the 800 level.
Speaking of volatility, the S&P Volatility Index (VIX, 15.64, down 1.47) dropped nearly 9% to the mid-teens despite the flat action yesterday. For those of you that have been with us since November, you know we have been calling for the VIX to reach these levels when the index was above 30. At the time, the S&P 500 was testing the 1,150 area and we said the index would push 1,250-1,300 by the end of January and that the VIX would be cut in half. Roll out the red carpet.
We have used the VIX, along with many other technical (and emotional) indicators, as a guide to when a pullback could begin. We often hear the Wall Street pros say the VIX is an unreliable tool but it has worked magic for us. We have covered the March blueprints and what to look for over the few weeks, starting with the Fed’s decision on rates today.
We have outlined clear support and resistance levels so make sure you look at yesterday’s charts which are crystal clear. Once our clues fall into place, we will either get a continued rally or one whale of a pullback and we plan to be positioned perfectly as our portfolio will be light and tight going into next week. If the circumstances are right, we could have room for up to 10 NEW trades over the next few weeks. Of course, we also don’t want to push the action so we will need to be patient if there aren’t any good setups.
We said we might get lucky and time a possible market pullback just right so let’s see how the rest of the week plays out along with our current trades.
Futures are showing a strong open. Dow futures are up 56 points 12,953. S&P futures are higher 7 points to by 1,374 while Nasdaq futures are up a dozen points to 2,659. Subscribers, check the Members Area for the updates.
