MomentumOptions.com Pre-Market Update for 4/18/2017
Bulls Clear Resistance
The bulls ended a three-session slide following Monday’s market win as the bears gave back fresh resistance. The major indexes made a steady run to higher highs throughout the day and into the closing bell as volatility slipped back below a key level of support. However, the major moving averages are still holding for the most part. Some follow through is needed today to keep momentum and to show yesterday’s action wasn’t an oversold bounce.
The Dow jumped 183 points, or 0.9%, to settle at 20,636. The blue-chips held positive territory throughout the session while reaching a high of 20,644. Upper resistance at 20,600-20,650 and the 50-day moving average held with fresh hurdles at 20,750-20,800 if cleared. Support is at 20,400-20,350.
The S&P 500 surged 20 points, or 0.9%, to close at 2,349. The index opened at 2,332 and closed just a tenth-point off its session peak. Lower resistance at 2,350-2,360 held by a point along with the 50-day moving average. Support is at 2,325-2,300 and the 100-day moving average if 2,335 fails to hold.
The Nasdaq soared 51 points, or 0.9%, to finish at 5,856. Tech also held green throughout the session after opening at 5,818. The index went out at its peak while clearing lower resistance at 5,850-5,875. The close back above the 50-day moving average was a slightly bullish sign. Support remains at 5,825-5,800.
The Russell 2000 zoomed 16 points, or 1.2%, to end at 1,361. The small-caps opened just a tenth-point higher at 1,345 but also held positive ground from start to finish. The move above lower resistance at 1,360-1,375 looked somewhat weak as the 100-day moving average easily held into the closing bell. Support is at 1,350-1,340 with a move below the middle another warning sign.
The S&P 500 Volatility Index ($VIX, 14.66, down 1.30) traded up to 16.28 on the open with upper resistance at 17-17.50 holding. The fade to 14.60 and close below upper support at 15-14.50 was encouraging. However, a return to 13.50-12.50 would give a better feel a rebound rally has legs.
I had a very itchy trigger finger yesterday but decided the whipsaw action wasn’t worth trading unless there is some follow through today. In any event, there are a few bearish trades I like on technical weakness along with a possible earnings trade for next week. I could use a bullish trade on the QQQ’s if the Nasdaq clears 5,875.
From desk to press, futures look like this: Dow (+1); S&P 500 (-1); Nasdaq 100 (+4).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 22-9 (71%). All trades are dated and time stamped for verification. New subscribers can look at the past history to see how the trades have played out or to research our Track Records.
Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send a Trade Alert outside of these time frames.
Best Buy (BBY, $48.36, up $0.09)
BBY May 45 puts (BBY170519P00045000, $0.55, down $0.03)
Entry Price: $0.57 (4/13/2017)
Exit Target: $1.15
Stop Target: None
Action: Shares traded to a low of $48.03 yesterday before closing slightly higher. Support is at $48-$47.50. Resistance is at $48.75-$49.
STMicroelectronics (STM, $14.85, up $0.24)
STM May 15 calls (STM170519C00015000, $0.75, up $0.10)
Entry Price: $1.15 (3/31/2017)
Exit Target: $2.30
Stop Target: 55 cents
Action: Resistance is at $14.75-$15 and the 50-day moving average. Yesterday’s high tapped $14.89. Support is at $14.50-$14.25.