8:45am (EST)
“I’m gonna take a freight train down at the station, Lord…I don’t care where it goes”…
Well, back in October, we told you the bull train was leaving and last week’s market action was incredible to say the least.
We are going to use some of last night comments from the Weekly Wrap which is another reason to sign-up for the publication because you would already know what we are thinking:
“The Dow added 44 points, or 0.4%, on Friday and closed at 12,273 after hitting a high of 12,285 intraday. For the week, the index was up 181 points, or 1.5%, as the bulls got back on a 2-game winning streak. We mentioned the breakout over 12,000 could lead to a run to 12,300-12,350 and the bulls showed strength in holding this level after the breakout despite the geopolitical turmoil. Over the past 2 weeks the blue-chips are up 450 points, or 3.8%. Support is at 12,200 and further down at 12,000 and then 11,800.
The S&P 500 gained 7 points, or 0.6%, and settled at 1,329. For the week, the index was up 18 points, or 1.4%. The S&P traded to a high of 1,324.87 on Tuesday and 1324.54 on Wednesday and we said a break above 1,325 would be the next green light. We got that Friday as the index hit a high of 1,330 intraday. We said there could be fluff up to 1,350 and support is at 1,300 with the 1,275-1,270 level serving as backup. Beyond that there is additional support at 1,260-1,250. In other words, the bears have multiple layers to crack which will give us plenty of time to prepare for a bear market when it comes.
The Nasdaq popped 19 points, or 0.7%, to finish at 2,809. For the week, the index jumped 40 points, or 1.5%, and the break above 2,800 was another solid sign Tech remains strong. Over the past few weeks, the Nasdaq is up 123 points, or 4.6%. Our near-term target has been 2,850 with a possible push up to 3,000 while support is solid at 2,700 and then 2,650-2,600. After that would be 2,500 and signal a trend reversal.
As the bulls edge closer to our near-term targets (again) we are sure your next question is “what are our next targets?” Well, here were our thoughts on January 19, 2011 in our Daily newsletter:
“The Dow gained 50 points to close at 11,837 on Tuesday and made its first close above the 11,800 level since June, 2008. The index hit a high of 11,858 and our 12,000 target we have had in place since October is just over 1% away. We have mentioned we are expecting a slight pullback afterwards but we are going on record by saying the index could reach 13,000 by yearend. Of course, a lot has to go right but the chart is pointing towards 12,500 and then 13,000 for the Dow, longer-term.
The S&P 500 added 2 free throws and ended at 1,295. The index is within spitting distance of our 1,300 target and we mentioned a run to 1,325 could be possible on some fluff. Our weekend work revealed some nice targets for the S&P as well. If things go right in 2011, the index could see 1,450-1,500 by Christmas.
Tech struggled for much of the morning but battled back and stayed positive shortly after lunch. The index managed a 10 point pop when the dust settled and was last seen standing at 2,765. We mentioned our 3,000 target could be a stretch over the near-term but further signs are pointing towards a possible run to 3,400 over the next 12 months” (END)
As you can see, we have been in one of the easiest technical pictures we have seen in a long time and as we have outlined resistance all the way up since October. If and when the bears want to rumble we will use these numbers as support.
From our November 2, 2010 Morning Update:
“The Dow finished with a 6 point gain and closed at 11,124 but traded to a high of 11,244. We were hoping for a close above the 11,200 level which we have been talking about for a few weeks and then 11,258. If we get an intra-day high of the latter number or a close above either, then we should see Dow 11,500-11,600 by year-end, at least. These upper targets represent resistance from July 2008. We also think if the bulls can get through this week holding support (11,000-10,800) then the index has a shot at 12,000.
The S&P 500 added a free throw (1 point) and settled at 1,184 after touching 1,195. We are looking for a close above 1,200 and then 1,220 which should clear the way for a test of 1,300. The index will run into resistance at 1,250 but we expect it to be somewhere in this upper neighborhood by year-end. The S&P held the 1,175 level once again and any dips to 1,150 should be considered buying opportunities if these levels hold on weakness.
The Nasdaq failed to finish in the green and slipped nearly 3 points to end the day at 2,504. The index traded to a high of 2,532 which was just short its 52-week high of 2,535. We said in our Weekly Wrap the index was the first to confirm a new bull TREND and we will talk about this in a minute. We already have 2,600-2,700 in our sites for Tech but a run to 3,000 could be in the cards for 2011 if support holds.” (END)
We try to make the technical picture easy to read and once you have that down you are good to go on following the market and controlling your emotions.
On that note, we have already been mentioning the “blow-off” type rally we could get once the Egypt turmoil was resolved (although the situation is far from over) and Friday’s news was a step in the right direction.
The earlier aforementioned higher price targets we mentioned for the market are ready to be met but we will have to stay sharp to nail down the time frame. That is what makes this game so fun. Thanks to all of you who ordered our option trading manual, How to Trade Options on Momentum Stocks, over the weekend and we hope you enjoy it as well as all of the upcoming monthly videos. We don’t offer this special deal that often and we don’t advertise it on the website so Happy Valentine’s Day and thanks for love!
As we head to press, here’s a look at the futures: Dow (-7); S&P 500 (-2); Nasdaq 100 (-2). We will be back at 1pm with our next update but be on the lookout for Trade Alerts in case we need to take any action today.
]]>