9:00am (EST)

Monday’s have been weak of late and we mentioned in our Weekly Wrap the bulls needed to win yesterday’s session to keep the current rebound alive.  Following a pop and drop, the bulls recovered after holding support while making some noise on the move higher.  Tech was strong and the blue-chips recovered but not everything was all roses.

The Dow added 19 points, or 0.1%, to finish at 14,567.  The blue-chips traded to a high of 14,588 but were unable to crack resistance at the 14,600 level.  Support at 14,400 held following the dip to 14,457.  Friday’s low was 14,444 so the Dow made a higher high and higher low and got a positive close on Monday.  This was slightly bullish.

The S&P 500 gained 7 points, or 0.5%, to settle at 1,562.  The index tested 1,548 shortly after the open but held the 1,550 level after making a push to 1,565 late in the session.  The close back above 1,560 sets up a run to 1,575 again.

The Nasdaq jumped 27 points, or 0.9%, to end at 3,233.  Tech was strong for much of the day following the slight drop to 3,198 at the open but held 3,200 while closing above the 3,225 level.  This was bullish for a possible test back to 3,250 and a break above this level could get 3,275-3,300 in play again.

The Russell 2000 popped 2 points higher, or 0.3%, to close at 914.  The small-caps fell below the 900 level after kissing 899.92 to start the session but pushed 916 in the second half.  The index still needs to clear 920, first, and then 940, before we can say strength is back.  A close below 900 should lead to 875 if there is further weakness this week.

The S&P 500 Volatility Index ($VIX, 14.39, down 0.58) traded to a high of 16 when the S&P dropped below 1,550 but the index held 15 and worked its way lower into the close.  The bulls are trying to get the VIX back below 13.50 while the bears need a close above 15 and then 17.50 to regain the momentum.

We mentioned Google’s (GOOG, $800.11, up $0.24) earnings over the weekend and how their numbers were a little funny after they reported them on Thursday night.  Friday’s rebound to $800 was suspect due to the tax advantages from the previous quarter but shares closed above this level after testing a low of $775 shortly after Monday’s open.  To us, it looked like a mini-flash crash but it wasn’t noticed by the suit-and-ties that were celebrating the close above 8 bills.

Yesterday’s slight rebound in the market was bullish but we still believe the odds of a trading range or downside action are greater than a run to new highs.  Of course, Apple (AAPL, $398.67, up $8.14) could be a game changer if shares rally on Wednesday as any good news in their earnings report after the bell today could provide a lift to $440.  If not, shares could fall to $360.

In other words, we believe a $40 move, or 10%, could be in the mix and we have profiled some “mini” options on our Watch List as a way to play the possible move.  We have also added some other option candidates as possible long or short ideas and there is a good chance 1 or 2 of them could become live trades this within the next day or 2.

As we head to press here is how futures look:  Dow (+55); S&P 500 (+4); Nasdaq 1000 (+14).

Subscribers, check the Members Area for the updates and if we take action this morning we will send out a Trade Alert.