We were expecting one last charge by the bulls as we closed out the month of April and the market got it. The Dow and S&P finished the month of April at 3-year highs while the Nasdaq hit its highest level in a decade. Not that we are trying to jinx anything, but geopolitical concerns took a backseat to earnings and economic news for once which helped the bulls stage a furious comeback over the past few weeks. Although the bears will be looking for an opportunity to slow the momentum train, they have been unable to derail the bulls for 6 months now as we head into May.
The Dow started the week at 12,505 and was right in the 12,500-12,600 resistance area we outlined in mid-February. The index gave back a little on Monday and had traded down to 12,400 intraday but broke out above this range by Wednesday. On Friday, the blue-chips gained 47 points and finished at 12,810, up 2.4% for the week, or 305 points. We said a run to 13,000 was possible if we got the breakout and Friday’s high was 12,832.
The S&P 500 was the main index we were watching as 1,350 seemed to be the key battle ground going into the week. The index was at 1,337 to start Monday’s session and held the 1,325 level on a down day but made a comeback on Tuesday by trading up to 1,349.55. There was a little nervousness going into after-hours trading because there were a number of earnings due out that were surely going to sway direction on Wednesday. But it was all good. The S&P powered its way past 1,350 after better-than-expected results and never looked back after adding 26 points, or 2%, for the week. We mentioned if this level was taken out we could see some fluff up to 1,375 and the index closed at 1,363 on Friday, up 3 points. There is still a good possibility for a run up to 1,400 if this level is broken.
The Nasdaq was the real reason April was the best month for the market since December as the bulls got some extra juice from some old and new Tech names. The index started the week at 2,820 and dipped to 2,808 on Monday but finished the session in positive territory. In fact, the Nasdaq went 5-for5 with Friday’s 1 point pop and settled at 2,873, up 53 points, or 1.9%, for the week. The break above 2,750-2,800 was huge from the week before and we had a target of 2,850 for April. If cleared, we said there could be room for a run up to 3,000 as short-sellers got crushed betting against Tech.
For the month, the Dow was up nearly 4%; the S&P 500 added 2.9%; the Nasdaq gained 3.3%. Our thoughts as we head into May is that we will see a continued rally but it’s hard to say how long the bulls keep running before they are tripped up.
The CBOE Market Volatility Index (^VIX, 14.75, up 0.13) touched a new 52-week low last week of 14.27 after touching 31.28 in mid-March. We mentioned a few weeks ago the index could fall to 14-13 on another leg up which is when we penciled in a breather so let’s see how this plays out.
Of course, news out of the White House is that the U.S. military has killed Usama Bin Laden (and his oldest son) which hit about 10:30pm EST last night. We were finishing up our Weekly Wrap and watching the futures market which soared on the news.
This morning Dow futures are up 74 points, S&P futures are higher by 8 points, while the Nasdaq futures are showing a 12 point pop.
Our targets from late-January could be hit today Dow 13,000; S&P 1,400; and Nadaq 3,000 which should mean good news for our call option trades. Subscribers, check for the updates inside our Members Area, pronto! We have a few cool charts to show you and there are a couple of trades we might try to get into this morning.
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