September is over, and so is the rare September rally. It sure was fun but now we enter what has traditionally been one of the strongest quarters of the year. The S&P 500 Index found itself largely confined between 1,140 and 1,150 last week, and now we must discover the catalyst that will drive it higher.
In a month that is historically dead weight — averaging a loss — the Dow roared ahead 7.7%, its best September since 1939 and its best monthly performance in more than a year. For the quarter, the Dow picked up 10.4%. Meanwhile, the S&P 500 Index (SPX) advanced 8.8% for the month and 10.7% for the quarter, while the Nasdaq Composite (COMP) surged 12% in September, accounting for most of its quarterly gain of 12.3%. And equities weren’t the whole story this week: Gold futures finally cracked the $1,300 ceiling.
By the close, the Dow launched the new month with a gain of 0.39%, although it recorded a 0.3% loss for the week. The SPX, meanwhile, dropped 0.2% for the week, while the COMP fell 0.4%.
The S&P 500 Index (SPX) found itself locked in a narrow range between 1,140 and 1,150 for most of the week. Should the trading range from last week expand, 1,130 would be viewed as support, with resistance around 1,170.
We’re looking for a bit of a pullback to kick off the new week but we think any pull backs will be moderate and we should find buyers as we float towards support around 1130. We will look to be buyers on pullbacks. Cautious buyers.
Weekly Economic Calendar:
- The Commerce Department will report on August factory orders. The National Association of Realtors will release pending home sales numbers for August. The Mosaic Company (MOS) will report earnings.
- The Institute for Supply Management will report on nonmanufacturing activity when it releases its services index for September on Tuesday. Wolverine World Wide Inc. (WWW) and Yum! Brands, Inc. (YUM) are scheduled to issue their quarterly reports.
- We’ll get the usual weekly report on U.S. petroleum supplies. Meanwhile, ADP will kick off three days of jobless data when it reports on September private sector employment. Scheduled to report earnings are Constellation Brands, Inc. (STZ), Costco Wholesale Corp. (COST), Monsanto Company (MON), and Marriott International, Inc. (MAR).
- The Labor Department will release the weekly new jobless claims figures, while the Federal Reserve will report on consumer credit use in August. Joining Alcoa Inc. (AA) in the earnings spotlight will be International Speedway Corp. (ISCA), PepsiCo, Inc. (PEP) and Micron Technology, Inc. (MU).
- The nonfarm payrolls report and unemployment rate for September will arrive on Friday. As always, these numbers will be closely watched. The Commerce Department will also report on August wholesale inventories. There are no earnings reports scheduled.
New Trade Idea:
Buy Juniper Networks (JNPR) Nov 30 Calls @ $1.80 or Better:
Nice orderly pullback allows us a great entry point with support just beneath us should we need it. Use $4.00 as a target and $.90 as a mental stop loss.
Buy Salesforce (CRM) Oct 110 Calls @ $2.00 or Better:
Salesforce has been beaten up but its finally found its support at the 50-day where it historically bounced from. Use. $3.30 as a target and $1.00 as a mental stop loss.
Lululemon Athletica (LULU) October 45 calls @ $1.80:
This play has been closed.
Visa (V) October 72.5 Calls @ $1.75:
Target was hit last week for a nice +79% profit.
Research in Motion (RIMM) October 47.5 Put @ $1.95:
This play has been closed.
TEN Exclusive: Options Update – 10/3/2010 is an article from: