The bulls broke out of their two-day slump but left Junior behind as the market rallied and held most of its gains (and losses). We have talked relentlessly since mid-November about a trading range developing and its is now in its third week. Trading ranges can be frustrating but once there is a breakout or breakdown, trend trading becomes easier.
The good news is we are cash heavy and our current open option positions roll out into January and March 2012. We are also using “cheap” options because you never want to be out of the market while we wait for the zombies to decide what they want to do. Oh, that’s right, nearly all of them were seen vacating the White House and were headed home for a sweet 4-day weekend. Fiscal Cliff, $16 trillion. Politicians seen leaving their JOB with the debt clock ticking – priceless.
We mentioned at the beginning of the week it would be important for the bulls to hold support and how we felt the dips would be bought. Much of that has played out but the beating Tech took yesterday is letting us know the market is still fragile.
The Dow gained 83 points, or 0.6%, to finish at 13,034. The close back above 13K and the run to 13,089 was bullish but the bulls need to keep the momentum going. Resistance remains at 13,150-13,200 while support is at 12,800.
The S&P 500 added 2 points, or 0.2%, to settle at 1,409.28. The index kissed 1,415 intraday but ended just south of 1,410. The 1,425 level remains a brick wall while 1,400 has been holding up rather well but showed another crack after 1,398 triggered.
The Nasdaq tanked 23 points, or 0.8%, to close at 2,973. Tech traded down to 2,958 and we said to watch for 2,975-2,950. The low was set at 2,958 while the close was a little more than a point off from the aforementioned targets. Resistance is at 3,000.
Of course, Apple (AAPL, $538.79, down $37.05) had a lot to do with that as shares closed a shade under our $540 target we gave you yesterday. We talk more about a possible option trade on Apple inside our Members Area as shares could push $500 or rebound to $600 by Christmas, if not sooner.
We have a special update this morning so please make sure you read it carefully. We will have a lot of new members coming on as a result of our yearend special that will start tomorrow.
Futures are showing a slightly lower open and look like this: Dow (xx); S&P 500 (xx); Nasdaq (xx). Subscribers, check the Members Area for the special update and for our thoughts concering our current trades.