MomentumOptions.com Pre-Market Update for 7/7/2017
Bulls Hold Lower Support Levels
The market was a sea of red on Thursday as the bears controlled the action throughout the session. Tech continued its backpedal to lower lows but held key support while the Financial stocks showed some strength before fading. The choppy action could continue into next week and the start of 2Q earnings season until a clearer trend emerges.
The Dow dropped 158 points, or 0.7%, to finish at 21,320. The blue-chips opened 55 points lower at 21,423 while testing a low of 21,305 intraday. Support at 21,300-21,250 held with additional help at 21,100-21,000 and the 50-day moving average. Resistance remains at 21,500-21,600. RSI has fallen to the high 40’s and a crucial level of support.
The S&P 500 sank 22 points, or 0.9%, to settle at 2,409. The index started the session at 2,423 and between prior resistance at 2,420-2,425 while reaching a low of 2,407. Backup support at 2,410-2,400 held but the close below the 50-day moving average was a slightly bearish signal. RSI has slipped just below 40 and is also at near-term support.
The Nasdaq tumbled 61 points, or 1%, to end at 6,089. Tech held lower support at 6,100-6,075 following the morning backtest to 6,081. I mentioned a move below 6,075 could cause additional selling pressure to 6,100 and the 100-day moving average and a level that could attract buyers. Lowered resistance is now at 6,150-6,175 and the 50-day moving average. RSI is holding just below 40 and early May levels.
The Russell 2000 stumbled 19 points, or 1.4%, to close at 1,400. The small-caps were the weakest link for the second-straight session after trading down to 1,398 into the closing bell. Lower support at 1,410-1,400 and the 50-day moving average was breached but held with wiggle room to 1,395. A move below 1,390 and the 100-day moving average would be a bearish development. Lowered resistance is at 1,415-1,420. RSI is in the mid 40’s and remains in a downtrend.
The S&P 500 Volatility Index ($VIX, 12.57, up 1.50) stayed elevated throughout Thursday after spiking over 13% and peaking at 13.05. The close above upper resistance at 11.50-12.50 and the 200-day moving average was a slightly bearish sign and opened risk up to 13.50-15. Support has moved up to 11.50-10.75 and the 100/50-day moving averages.
From desk to press, futures look like this: Dow (+1); S&P 500 (+1); Nasdaq 100 (+10).
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Closed Momentum Options Trades for 2017: 38-15 (72%). 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.
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Bank of America (BAC, $24.71, down $0.21)
BAC August 25 calls (BAC170818C00025000, $0.72, down $0.08)
Entry Price: $0.75 (7/3/2017)
Exit Target: $1.50
Stop Target: None
Action: Shares traded to a high of $25.11 to clear lower resistance at $25-$25.25. Support at $24.75-$24.50 held on the fade to $24.69 into the closing bell.
AT&T (T, $37.18, down $0.45)
T August 37 puts (T170818P00037000, $0.75, up $0.18)
Entry Price: $0.78 (6/29/2017)
Exit Target: $1.60
Stop Target: None
Action: Lower support at $37.50-$37.25 held on Thursday’s closing low. The 52-week low is at $36.10. Lowered resistance is at $37-$36.75.
Amicus Therapeutics (FOLD, $10.54, up $0.25)
FOLD July 10 calls (FOLD170721C00010000, $0.90, up $0.25)
Entry Price: $0.70 (6/22/2017)
Exit Target: $1.40
Stop Target: 73 cents (Stop Limit)
Action: Set an initial Stop Limit at 73 cents. These are July options and why I have placed a Stop Limit to protect profits. I’m looking at adding August call options on continued strength.
Shares traded to a fresh 52-week peak of $10.77 with longer-term resistance at $10.75-$11 now in play. Rising support is at $10.50-$10.25.
TherapeuticsMD (TXMD, $4.60, down $0.77)
TXMD August 7.50 calls (TXMD170818C00007500, $0.30, down $0.05)
Entry Price: $0.50 (6/22/2017)
Exit Target: $1.00
Stop Target: None
Action: Longer-term support at $4.50-$4.25 following yesterday’s drop to $4.54. Fresh resistance is at $4.75-$5. There was no specific move for the 14% pounding and the options were heavily traded. Shares continue to be volatile on pending, major news that I expect to come in August.
iPath S&P 500 VIX Futures (VXX, 13.56, up 0.65)
VXX August 14 calls (VXX170818C00014000, $1.20, up $0.30)
Entry Price: $1.20 (6/15/2017)
Exit Target: $2.40
Stop Target: None
Action: VXX tested a high of 13.68 to clear upper resistance at 13-13.50. Continued closes above the latter would be bearish for the market but a good sign for our position. Additional hurdles are now at 13.75-14. Rising support is at 13.25-13.