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MomentumOptionsTrading.com Morning Update for 7/18/2013

Lots of Talk, Little Action 

9:00am (EST)

 

The bulls held their ground for much of Wednesday’s session after Bernanke reassured Wall Street (and the zombies) that he has no specific timeframe for cutting back on the Fed’s bond purchases, or Quantitative Easing (QE). 

Big Ben said the Fed would consider reducing its stimulus program if the economy improved, but emphasized that the reductions were “by no means on a preset course”.  The suit-and-ties that have been predicting a taper cut by September seem to have it wrong and as long as the Fed keeps pumping cash into the economy, the market should trend higher.

The Dow added 18 points, or 0.1%, to close at 15,470.  The blue-chips traded to a high of 15,502 but once again failed to hold 15,500.  There is still risk down to 15,200-15,000 should the trend change but we are expecting a run to 15,800 on a close above 15,500.

The S&P 500 gained 5 points, or 0.3%, to settle at 1,681.  The index held green all session long and more importantly 1,675 after testing a high of 1,684.75.  We mentioned yesterday a close above 1,685 should trigger 1,700 but a close below 1,675 would suggest a pullback is near.

The Nasdaq advanced 11 points, or 0.3%, to end at 3,610.  Tech held 3,600 throughout the day following Tuesday’s close at 3,598.50.  The peak checked-in at 3,615.79 and along with the close was nearly a 13-year high for the index.  The bulls have a shot at pushing 3,650 over the near-term as long as current support holds.

The Russell 2000 jumped 4 points, or 0.4%, to finish at 1,042.53 and another all-time high.  The bulls continue to march towards our 1,050 fluff target for the small-caps and also held positive territory all session long.  Yesterday’s high was 1,046.

The S&P 500 Volatility Index ($VIX, 13.78, down $0.64) fell 4% after trading down to 13.76.  A close below 13.50 points towards a continued rally while a close above 15 would suggest a pullback is in the cards.

As we head to press, futures look like this:  Dow (+17); S&P 500 (+3); Nasdaq 100 (+1).

We opened 3 new trades yesterday and we closed another quarter position on an earnings trade that is approaching a triple-digit return.  We could also have Profit Alerts again today so prepare for another busy session.