MomentumOptionsTrading.com Midday Update for 8/1/2014
Bears Breaking Bad
12:20 p.m. (EST)
Futures were volatile throughout the night and were higher ahead of the overseas market opening, but got progressively worse ahead of Wall Street’s open. Dow futures were down over triple-digits at one point, but made a dramatic turnaround following a weaker-than-expected Non-farm Payrolls number.
The drop to 209,000 jobs added came in worse-than-expected, but held the 200,000 level. The goldilocks number has the Fed debate on interest rates back in full gear, but I’ll save that rhetoric for another day.
The more important picture is in the charts, as the bears did do some serious technical damage on Thursday. The Dow and the S&P 500 are wrangling with their 100-day moving averages, while the Russell 2000 fell below its 200-day moving average. The Nasdaq has fallen below its 50-day moving average with today’s pullback.
I was up late doing chart work and research to figure out possible actions for next week. Needless to say, if there is no rebound today, there could be a new short-term trend developing.
August has historically been the worst month for the Dow and S&P 500 since the late 1990′s. Additionally, a second consecutive negative Friday close would add to the bearish outlook.
Heading into the second half of trading, the Dow is down 101 points to 16,461, while the S&P 500 is declining 12 points to 1,918. The Nasdaq is lower by 39 points to 4,330, and the Russell 2000 is dropping 12 points to 1,108. The VIX is up 0.47 to 17.42. I will be watching to see if the bulls can hold the 17.50 level into the close.
The stop limits on the current profitable trades are still holding and, while it is tempting to open a new position today, I usually shy away from doing so on Friday’s due to the weekend time decay. However, I do see a few trades I like and, if the selling pressure continues, I may send out a New Trade alert.
If the stop limits trigger on the current trades, I will also have additional room to open more new trades next week.
Stay locked-and-loaded into the close, but if you don’t hear from me, I will be back Sunday night with the Weekly Wrap and on Monday morning with the Daily. Until then, have a great weekend, everybody!
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