9:00am (EST)
The bulls gave up an early lead to the bears at the open but they were able to rebound to make it a tight race by the closing bell. It wasn’t a photo finish by any means but Tech showed some strength and the small-caps were up over 1% which gave the bulls a tie in our book.
The Dow dropped 55 points, or 0.4%, to finish at 13,035. The blue-chips traded to a low of 12,977 after failing to hold 13,000 shortly after the open. They were able to reclaim support but the bulls will need to get back above 13,100 to break the current downtrend while the bears are still eyeing 12,800 near-term.
The S&P 500 fell 2 points, or 0.1%, to settle at 1,405. The index opened slightly lower and bottomed at 1,396 but was able to reclaim 1,400 and pushed 1,410 late in the day. A move above this level should be bullish for a retest of 1,425 while a close below 1,400 keeps 1,375 in play.
The Nasdaq gained 8 points, or 0.3%, to end at 3,075. Tech opened in negative territory and traded down to 3,040 before bouncing off its lows to reach a peak of 3,082 which was above Friday’s high of 3,078. Resistance will still be a mother at 3,100 which is less than 1% away but with all of the Tech news due out over the 8 days, there could be a run to 3,150. Dips or a close below 3,050, which has been solid support, will continue to keep 3,025-3,000 in the mix. This level held throughout the back half of August and Friday’s test to 3,040 could be a short-term double bottom until next week. Naturally, another test below this level will need to be watched.
The big story for the day that the talking heads failed to mention was the Russell 2000 which was up 10 points, or 1.2%, and closed at 822. The move above 820 was super bullish and gets 830 back in play which last seen on May 1. The small-caps traded to a high of 823.77 after testing 807 in the morning.
The one negative sign we didn’t like was the S&P Volatility Index ($VIX, 17.98, up 0.51) which jumped 3% after trading up to 18.96 intraday. This was slightly bearish as the close above 17.50 signals 20 is on the bears radar and we have said once this number prints, sheets are going to hit the bed.
Much of yesterday’s rebound can be attributed to Apple’s (AAPL, $674.97, up $9.73) strength as shares jumped $10 and are on the verge of another breakout to 52-week highs. We put Apple on our Watch List over the weekend and like a deer in headlights, we certainly watched it.
We say that with tongue-in-cheek because we hesitated on a nice Apple call option trade that doubled in 4 hours. We talk more about this in our Members Area but there was another trade we liked just a little better and we felt safer with. We also have added a couple of charts to the Watch List we want you to check out.
As we head to press, futures look like this: Dow (-20); S&P 500 (-2); Nasdaq (-8). Subscribers, stay on the lookout this morning for possible New Trades for the Daily and follow-up trades for our current Weekly Wrap.
