9:00am (EST)
Although it is November, it sure feels like August following the market’s recent slide which stretched to 5-straight sessions following Tuesday’s losses. The bulls did have some momentum going into the second half of trading but lost their edge by the closing bell as worries over the Super Committee’s failure lingered throughout the session. The bears, however, have to be a little disappointed they couldn’t crack support.
The Dow dropped 54 points, or 0.5%, to end at 11,494. The index traded up to 11,571 but couldn’t clear 11,600. Support held at 11,400 with the low coming in at 11,434. The close below 11,500 wasn’t good though and could lead to a further test down to 11,350.
The S&P slipped 5 points, or 0.4%, to finish at 1,188. The bulls couldn’t clear 1,200 while the bears failed to crack 1,175. These two targets will be in play today. If 1,175 fails, we can expect to see 1,150, quickly.
The Nasdaq gave back 2 points, or 0.1%, to settle at 2,521. The dip below 2,500 is either a warning sign or a bottom but we have to respect the fact that 2,499 printed. The bulls will target a finish above 2,550 but there could be further pressure down to 2,450, and possibly 2,350. We currently have a put option in play on the Nasdaq which could do well on further weakness.
In earnings news, Pandora Media (P, $11.85, down $0.67) reported its first quarter as a public company and surprised Wall Street to some degree. The company posted a profit of 2 cents a share on revenue of $75 million. Analysts were looking for a loss of a penny on sales of $71.4 million.
Going forward, Pandora said its sees 4Q revenue of $80-$84 million while analysts have penciled-in $82 million. This made the suit-and-ties a little skittish as shares fell another 4% in after-hours trading last night on top of the 5% they lost during the regular session.
Pandora shares made their debut on the NYSE in mid-June and traded to a high of $26 on the first day of trading before closing at $17. The following day they closed just above $13 and by mid-September they had dipped to a low of $9. It appears to be a promising young company but shares could test single-digits again.
We talked about the market’s recent slide and compared it to what the bulls went through in early August. The recent “correction” could continue for the rest of the week but we are getting so close to a massive rebound or a continued breakdown. With a holiday shortened week, anything can happen, but out bet is the fireworks (volatility) will continue.
The day before and after Thanksgiving are usually bullish but historic patterns haven’t been kind to the bulls for November.
Futures are pointing towards another brutal open. Dow futures are down 115 points while the S&P futures are lower by 11 points. Nasdaq futures are showing a drop of 20 points.
We will be releasing 4 NEW TRADES for our Weekly Wrap this morning shortly after the open so stay alert for an update sometime before noon. Also, we may add another trade to the Daily with one on our Watch List. Call options have been beaten up pretty bad during the market’s recent skid and we see some low-hanging fruit dying to be picked. We also see some put options that could do well if the indexes continue to Tom Petty.
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