1:25pm (EST)
The market has gotten off to a slow start as futures were weak throughout the night. We spent a lot of time looking at the charts over the weekend and the 5-week trading range we have been in has been frustrating to a degree. While we continue to take profits when we can, it’s been harder to establish a clear trend as the indexes continue to churn sideways. We mentioned this morning and in last night’s Weekly Wrap that the Russell 2000 (800.10, down 2.32 points) was breaking down like a rented mule and needed to hold 800 but there are some other sectors showing weakness which has lead to today’s decline.
Economic news has come in better-than-expected but China lowered its GDP (Gross Domestic Product) figures which offset the good news here at home. The February ISM non-manufacturing index came in at 57.3, versus expectations for a print of 56, while Factory Orders showed a decrease of 1.0% in January, versus expectations for a 1.5% decline.
Meanwhile, China lowered its GDP target to 7.5% from 8% which has been a goal for them since 2005. This was one of the key reasons the overseas markets were weak when they opened. China said that it needs to shift to a more sustainable and efficient economic model which could cut its reliance on exports and capital spending in favor of increased consumption. The news wasn’t all that bad as many analysts expected them to lower their GDP to 7% or less.
The two big events this week is the expected announcement of Apple’s (AAPL, $535.76, down $9.42) iPad 3 and Friday’s unemployment numbers. The headlines that come from the news will surely sway the markets and it may or may not be enough to break us out of this trading range but we are betting it will.
Given the lack of positive catalysts today, the bulls have struggled to gain momentum as the bears have held any advance in check. The Dow is down 46 points to 12,931 while the S&P is lower by 8 points to 1,361. The Nasdaq is off 28 points to 2,948.
Some good news for our portfolio – Our magicJack VocalTec (CALL, $23.26, up $1.28) call options continue to shine. The trade is now up 179% and we are looking for shares to make a move north of $25 this week. If not, our hard Stop will protect profits. Subscribers, check the Members Area for the updates and we will see the rest of yawl in the morning.