Bull market, bear market : Momentum Trades

Bulls Looking Weak

9:00am(EST)

It appears the 4-week trading range the market has been in is ready to crack but it hasn’t been wise to count the bulls out as the dips have held all year long. However, this time feels a little different.

The Dow plummeted 128 points, or 0.95%, to end at 13,344. We have been mentioning the 13,350 level for a few weeks now as a possible breaking point but 13,200 needs to trigger to confirm a test to 13,000. The bulls will need to recapture 13,500 this week or things will get ugly. Wednesday’s low was 13,327 and the second-straight day of triple-digit losses.

The S&P 500 sank 9 points, or 0.6%, to settle at 1,432. We said on Monday to watch 1,435 as a sign for a trip to 1,425 and yesterday’s low was 1,430. If the bulls do not hold or buy the dip at 1,425 then we can almost count on seeing 1,400-1,375.

The Nasdaq tanked 13 points, or 0.4%, to finish at 3,051. We have talked repeatedly how 3,050 would come into play if 3,100 cracked and yesterday’s low of 3,046 clears the way for a drop down to 3,025-3,000 this week. A move back above 3,100 would be bullish but is looking like a tall order at this point.

Surprisingly, the Russell 2000 only fell a point and went out at 826. The small-caps showed some strength and held 820 but need to clear 830 to calm Wall Street’s worries. The S&P 500 Volatility Index ($VIX, 16.29, down 0.08) was also acting kind of funny amid the chaos and was basically flat, trading in a range of 16.13-16.79. These were bullish indicators and why the market could stay choppy.

Futures are showing a higher open so the bulls still have some fight left in them. Dow futures are up 51 points to 13,319 while S&P futures are higher by 8 points to 1,434. The Nasdaq 100 futures are advancing 17 points to 2,740.

We have a lot o cover this morning and we could be issuing New Trades and/ or Profits Alerts this morning so stay on the lookout if we decide to take action before our midday update. Subscribers, check the Members Area for our latest thoughts.

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Bulls Looking Weak

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