9:00am (EST)

The market ended mixed on Monday as the Dow held its gains while the S&P and Nasdaq finished in the red but off their lows for the day.  This doesn’t sound too bad on the surface but the major averages are forming some awful bearish charts so let’s go over the numbers and what we are seeing. 

The Dow gained 72 points, or 0.56%, to finish at 12,921.  The blue-chip traded to a high of 12,986 but the peak was a point below last Thursday’s high and 13,000 has been a brick wall.  The low for the day was 12,850 which is just above short-term support but the continued failure at 13K is a sign of weakness until cleared.

The S&P 500 fell three-quarters of a point, or 0.05%, to end at 1,369.  The index traded to a high of 1,379 at the open which was just above resistance at 1,375.  The low for the day was 1,365 which keeps 1,350 in play.  We talked about the importance of the bears getting a win on Monday, albeit small, it was still a negative close for the index.  This was the first time the S&P closed down on back-to-back Friday/ Monday’s.  Although the market was closed for Good Friday, we counted the negative close on the Thursday before.  This was good evidence going forward.

The Nasdaq fell double-deuces, or 0.76%, to settle at 2,988.  The pop back above 3,000 was short-lived as the index traded down to 2,975 about an hour into the session.  Although the talking heads were saying Google and Apple can be blamed for much of the weakness, we also have to remember these 2 Tech giants led the bulls’ charge higher for 6 months.  Tech is now at its mid-March lows and if 2,973 is taken out a test to 2,950-2,900 could come quickly.

The S&P Volatility Index (VIX, 19.55, flat) traded above 20 again, to 20.42, while the low was 18.60.  The major indexes have made lower highs and lower lows for much of April while the VIX is making higher highs and higher lows.  Both are bearish signals.

Earnings kick into second gear this week and although companies are beating Wall Street’s estimates for the most part, many firms are missing on their revenue results.  There were few earnings warnings coming into the season and we should get a clearer picture this week which sectors are thriving and which ones could suffer on an economic slowdown.

The scales have been tipping in the bears favor but we still have to guard against snap-back rallies, dead cat bounces, and a possible trading range.  The bears still have another layer or two of support they must crack but so far our put options trades have been doing extremely well.

We could have a busy morning as we are looking to take profits in a few trades that could hit triple-digit returns.  We continue to feel this next few months are going to offer some exciting opportunities so stay locked-and-loaded on possible NEW TRADES as well.

Futures are showing a decent pop at the open as Dow futures are up 63 points to 12,913 while the S&P 500 futures are higher by 7 points to 1,370.  The Nasdaq 100 futures are advancing 12 points to 2,675.  Subscribers, check the Members Area for the updates.