9:00am (EST)
The market ended mixed on Monday as Wall Street debated over Europe’s election results which many had seen as disastrous. Despite the uncertainty on who’s in or who could be out of the eurozone, the market was able to brush off those worries as the bulls held support.
The Dow fell 30 points, or 0.2%, to finish at 13,008. The blue-chips traded to a low of 12,970 and were able to hold the 13,000 level into the close. There is risk down to 12,800 this week while the bulls will try to reclaim 13,200.
The S&P added a half-point, or 0.04%, to settle at 1,369 after trading to a low of 1,363 shortly after the open. The index recovered to trade to a high of 1,373 but faded at the 1,375 level which is now serving as near-term resistance. We are looking for a test down to 1,350 this week.
The Nasdaq advanced a point-and-a-half, or 0.5%, to end at 2,957. Tech kissed a low of 2,939 but was able to hold 2,950 for much of the afternoon session. The bulls will try to push 3,000 while the bears are targeting a drop to 2,900-2,850.
The market is now going on 6-week trading range, except we are now at the bottom of it. We gave a brief outlook on what to expect over the next few weeks and we are starting to see lower highs and lower lows which is bearish.
The bulls aren’t ready to throw in the towel and this week is light on economic news until Thursday which is when we will get the weekly Jobless Claims numbers. It is possible the major indexes stay within a tight range until then as Wall Street tries to distance itself away from Europe’s woes.
We were able to close 2 more winning trades yesterday although we did leave a half position open on one of them. Our KLA-Tencor (KLAC, $49.73, down $0.13) put option trade is up a whopping 172% but we have moved the Hard Stop up to lock-in triple-digit profits no matter what happens from here on out. Of course, we would like to squeeze a little more out of the trade and hit a 200% or more return but if we don’t we will still bank a 156% profit.
For those of you who took a flyer on Fossil’s (FOSL, $129.19, down $5.81) earnings announcement, you could be getting paid today.
We profiled the May 105 puts (FOSL120519P00105000, $0.90, up $0.60) yesterday morning on our Watch List as a way to play a miss and the company did just that. They missed Wall Street’s estimates and shares are down $30 to $95 in pre-market action.
The May 105 puts should open up near $10 for a 1,000% return if you got in before the closing bell yesterday. Although it wasn’t an “official” trade, we have gotten a few excited emails this morning.
As we head to press, futures look like this: Dow (-51), S&P 500 (-5), Nasdaq (-14).
Subscribers, please notice the Hard Stops we have raised on some other trades as well and be on the lookout for possible new trades if we see something we like.