The bulls were cruising during the first half of trading on Monday, with the small-caps testing fresh all-time highs. The bears started making noise during the second half of trading and used a final-hour growl to get nearly a clean sweep. The broader market and tech failed to hold their gains, but the Russell 2,000 avoided a loss, and first-quarter earnings season is now officially underway.
The Dow fell 80 points, or 0.5%, to finish at 17,977. The blue-chips traded to a high of 18,107 shortly after the open but failed at holding resistance at 18,100–18,200. The second-half fade to 17,974 held near-term support at 17,900 and the 50-day moving average. Additional support is at 17,800 and the 100-day moving average.
The S&P 500 slipped 9 points, or 0.5%, to end at 2,092. The index made a run to 2,107 but fell shy at clearing overhead resistance at 2,110–2,120. The intraday pullback to 2,092 easily held support at 2,090. There is additional help at 2,080–2,075 and the 50-day moving average on a close below this level.
The Nasdaq gave back 7 points, or 0.2%, to settle at 4,988. Tech made a run past 5,000 and peaked at 5,024 but had trouble threatening resistance at 5,025–5,050. The bears pushed a low of 4,985 but also had trouble cracking support at 4,975-4,950.
The Russell added a point, or 0.1%, to close at 1,265. The small-caps held positive territory throughout the session and traded to a fresh all-time high of 1,271. Wall Street failed to notice, as they were more worried about the start of earnings season. A near-term run to 1,275 could come on continued strength, with a possible push to 1,290–1,300 on a short-covering rally. Fresh support is at 1,260, with 1,250 serving as backup.
The S&P 500 Volatility Index (VIX) stayed elevated and traded higher throughout Monday’s session. The bears pushed a high of 14.31, but the bulls easily held 15. The close above 13.50 was slightly bearish, while a close below 12.50 keeps higher market highs in play.
Today I’m recommending a bullish play on Jabil Circuit, Inc. (JBL), a diversified manufacturer based in Florida that, among other things, supplies Apple Inc (AAPL) with phone casings. Shares touched a 52-week high of $24 on April 9, while Monday’s low reached $23.62.
Near-term support is at $23.50, followed by $23. Continued closes above $24 would be bullish for a run to $26–$28 – and JBL’s 10-year chart shows a possible run to $30.
Buy the JBL May 24 calls (JBL150515C00024000) at current levels, around $0.60, for target $1.20. These are the regular monthly options that expire on May 15.
We will double our money on a move past $25–$25.25, as the options will be worth $1.00–$1.25 if these levels are reached by mid-May.
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