The bulls rebounded from last Friday’s drubbing to get a Monday win, but the bears have made a little noise as they pressure tech and keep volatility elevated.
On Monday, the Dow gained 139 points, or 0.8%, to finish at 17,995. The blue-chips traded to a high of 18,031 late in the session before closing just below the 18,000 level. A return above 18,000–18,100 to start the week was a bullish sign, but there is still risk to 17,800–17,600.
The S&P 500 added 8 points, or 0.4%, to end at 2,079. The index reached a peak of 2,083 and held 2,075 into the close. This was a slightly bullish sign, but the bears are still gunning for a test to 2,050.
The Nasdaq advanced 15 points, or 0.3%, to settle at 4,942. Tech was choppy, as the index traded down to 4,920 on the open and backup support at 4,925 during the first half of trading. A close below 4,900 would be bearish. The bulls made a run past 4,950 by half of a point in the second half of trading but failed to hold this level. A more convincing run past 4,950–4,975 is needed to get 5,000 back into play.
The Russell 2000 popped a 6-pack, or 0.5%, to close at 1,223. The small-caps held positive territory throughout the session and traded past 1,225 by nearly a point before failing to hold this level into the closing bell. Support is at 1,210–1,200 on another drop below 1,220. A move above 1,225–1,230 would be a bullish sign.
The S&P 500 Volatility Index (VIX) opened higher at 15.72 before falling to a low of 14.71. The bulls came close to holding 15-14.75 but need to tap 13.50 again to regain their momentum. There is still risk to 17.50, and possibly 20, on continued closes above 15.
But, keeping this in mind, today I’m recommending a bullish trade. I like these call options on The Western Union Company (WU) at current levels to play continued strength in shares of WU and a possible run to the low $20s.
Buy the WU April 20 calls (WU150417C00020000) at current levels, around $0.30. My exit target is $0.75.
Monday’s peak in Western Union shares reached $19.63. Resistance is at $19.50–$19.75, while support is at $19.25–$19.
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