Janet Yellen gave all the right comments on Tuesday to keep the bullish momentum going with round two coming today. The indices are blazing their way toward continued record highs.
The Dow made a slight dip into negative territory on the open following to a dip to 18,098. Support is moving up and held at 18,100-18,000. The bulls remain on track to test 18,300-18,500 over the near-term.
The S&P 500 opened lower and tested 2,105 with support holding at 2,100 for the third-straight session. The bulls pushed a high north of 2,117 and momentum could carry the S&P to 2,125-2,150 over the near-term.
Tech was weak at the start of trading and the Nasdaq tested 4,945 but held support at 4,950. The higher low than Monday’s 4,939 was also bullish as the index reached a peak of 4,971 and another 15-year peak. Resistance is at 5,000-5,100.
The Russell 2000 climbed 2 points, or 0.2%, to settle just below 1,234. The small-caps were a little choppier than the other indices as the bears pushed 1,230 late in the session. The bulls easily held support at 1,225 while pushing a high of 1,236 intraday. The run into the 1,235-1,240 zone was bullish.
The S&P 500 Volatility Index ($VIX, 13.69, down 0.87) fell 6% and traded down to 13.53. The VIX traded up to 14.63 during the early morning weakness with the bulls holding 15. A close below 13.50 would confirm higher highs into March, and the bulls have three days left this month to make that happen. It is too early to say if the VIX will test single-digits this year but I’m throwing the possibility out there.
I’ve been actively trading in this environment, and there’s a name I want to put in front of you today: GrubHub (GRUB). The company resides in the technology space and offers an online and mobile platform for U.S. restaurant take-out and delivery orders.
GrubHub hares formed a “double-top” last August near $46, and overhead resistance is at $42. A close above this level should lead to a retest of $45-$46. The 52-week high is at $45.80. Short-term support is at $40. All three major moving averages are “curling” higher, with the 50-day crossing over the 100- and 200-day moving averages. The “golden crossover” looks bullish for a possible run to $50.
On Monday, GrubHub announced that its president would resign, but traders took the news in stride and the shares stayed relatively flat. The goodwill may stem from GRUB’s recent earnings of $0.13 a share on sales of $73.3 million. Wall Street had been expecting $0.11 a share on revenue of $70.3 million. Revenue was up 50% versus last year’s fourth-quarter numbers. The recent acquisitions of DiningIn and Restaurants on the Run should provide even better revenue numbers in 2015.
You could buy GRUB stock here at current levels around $41 and hold shares for a move to $50. I recommended playing this move with call options for a cheaper trade.
Buy the GRUB March 45 calls at current levels (which are around 60 cents).
My exit target for the GrubHub calls is $1.10, and I don’t have a stop loss in place at this time, as I tend not to use stops on lower-priced options.
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