9:00am (EST)
The market extended its winning streak to three straight on Tuesday as the news from across the pond was all good for much of the day. Wall Street is getting giddy on renewed hopes that Europe is doing all it can to ease their debt crisis and it showed with yesterday’s 1% pop. The indexes were up nearly 2% but the momentum faded in the last couple of hours of trading following news that a split had developed in the eurozone over the terms of Greece’s second bailout. Monday’s big surge and a test to major resistance also played a role in the pullback and this will need to be watched as we explain.
Greece helped out a little after their Parliament passed a new property tax which helped optimism about the country’s ability to implement austerity measures and will be important going forward. Meanwhile, Germany also said they supported the European Financial Stability Fund (EFSF) and will vote on it today even though they will probably have to pay out more. Then, the curveball came. Still, it was a bullish day so let’s go over the numbers along with a review of support and resistance.
The Dow gained 147 points, or 1.3% to finish at 11,190. The blue-chips traded to a high of 11,369 which was just above our second resistance target of 11,350. We said to look for a test of 11,200 then 11,350 going forward so let’s stick with them again today. Support is at 11,000 then 10,800.
The S&P 500 added a 12-pack, or 1.1%, to close at 1,175. The index tested the 1,200 level as it kissed a high of 1,195 before falling back and settling right on our 1,175 target. If the index can clear our next target of 1,200 then look for a run back to 1,225 – but – if the bulls struggle, there could be a test down to 1,150 again.
The Nasdaq advanced 30 points, or 1.2%, to settle at 2,546. We mentioned yesterday morning a run to 2,550 was all but a given and that there would be a serious test at 2,600. Tech traded to a high of 2,590 before closing just below our first target so these two areas are still short-term resistance. Support comes in at 2,525-2,500 followed by 2,450.
We have a busy morning planned as we have two possible trades that will be released for our Weekly Wrap and one NEW TRADE for our Daily publication. Look for Trade Alerts shortly after the opening bell if we see an opportunity.
Futures are showing another solid start: Dow +39; S&P 500 +4; Nasdaq +6. Subscribers, check the Members Area for the updates.
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