11:30am
We said in our Weekly Wrap we could have a Romney Rally or a Barrack Breakdown and as the 4-week trading range came to a head, we saw both. Tuesday’s rally was based on Mitt Romney possibly winning the presidential race and all of those traders were getting in early but we had a feeling if Barrack Obama was reelected then we would see a pullback, at first.
There is still a chance the market clears resistance before yearend but we have been planning for a 5% pullback since mid-October. It remains to be seen if support levels hold this week but we are very happy with today’s action as we have a number of put options in play that have gotten nice pops.
The Dow is down 314 points to 12,931 while the S&P 500 is lower by 34 points to 1,394. The Nasdaq is showing a decline of 74 points to 2,937.
The levels we have been preaching the bulls need to hold are Dow 13,000; S&P 1,400; and Nasdaq 2,950 and you can see where the indexes are trading. If these levels hold into the close, the market should hit our 5% pullback targets from mid-October.
We said we were positioned perfectly for the possible breakout or breakdown and despite our disappointment with the election, winning trades and making money certainly eases the pain. Our job is to stay ahead of the market, not congress, so we wish them well with solving the Fiscal Cliff by yearend. We have talked about the limited timeframe this needs to get done in and the market seems to agree with our thoughts that America could get pushed off the cliff if the zombies don’t get together and put something in place. When they do, we will see a huge rally but until then, the path of least resistance is lower.
One stock we are watching today is Intel (INTC, $21.03, down $0.70) which is taking a beating. Rumors of Apple (AAPL, $562.01, down $18.19) possibly dropping Intel chips for the Mac and laptops could come to fruition. We have been saying Intel trades below $20 and we would like to see the stock come down to $18 where it might get interesting. However, we are watching the developments with the shares at 52-week lows and we will have to check the chart work to see if $18 will be a bottom.
We have a lot more to cover with our current trades and we came to press early because we were excited. However, we may send out a NEW TRADE today as we are scouring our Watch List to find the best ones. We are getting close to ringing the register on a few more trades so we may also send out Profit Alerts as well.
In any event, stay locked-and-loaded in case we jump into the fray.
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