Pre-Market Update for 7/28/2017

Dow Closes Higher but Major Technical Damage Done Elsewhere

8:00am (EST)

U.S. markets were volatile and closed the session mixed after trading to fresh all-times highs on the open. The blue-chips closed higher but the midday day reversal did some technical damage as Tech and the small-caps led the way lower. Commodities showed strength with gold testing major resistance before pulling back.

The Dow jumped 85 points, or 0.4%, to close at 21,796. The blue-chips held positive territory for the third-straight session while kissing an all-time high of 21,798. I have talked about a run towards 21,800-22,000 with lower resistance holding by 2 points. Support remains at 21,600-21,550.

The S&P 500 slipped 2 points, or 0.1%, to settle at 2,475. The index reached a record high of 2,484 midday with resistance at 2,500 holding. The stumble to 2,459 held upper support at 2,460-2,450. A move below the latter would be a bearish development.

The Nasdaq tanked 40 points, or 0.6%, to end at 6,382. Tech tested a lifetime high of 6,460 shortly after the opening bell to clear lower resistance at 6,450-6,500. Support at 6,375-6,350 was challenged on the stumble to 6,318 during the second half of action. I mentioned a move below 6,300 would be a cause for concern and a level that needs to hold ahead of the weekend.

The Russell 2000 fell 8 points, or 0.6%, to finish at 1,433. The small-caps made a 4-point push to 1,446 but lower resistance at 1,445-1,450 holding. Lower support at 1,435-1,430 was breached on the late day test to 1,427. The close below 1,435 was a yellow light.

The S&P 500 Volatility Index ($VIX, 10.11, up 0.51) was flat up into Wall Street’s lunch break with the low checking in at 9.16. Support at 9.25-9 held before the surge to 11.50 afterwards. Resistance at 10-10.50 held into the closing bell and I mentioned earlier this week a close above 11.50 could signal a short-term market peak.

There was some major technical damage done during yesterday’s sudden reversal and something that I will cover in more detail over the weekend. However, one day doesn’t make a trend but it is an important development heading into the weekend.

From desk to press, futures look like this: Dow (-43); S&P 500 (-8); Nasdaq 100 (-35).


Momentum Options Play List

Closed Momentum Options Trades for 2017: 41-16 (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.

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.


Alcoa (AA, $36.36, down $0.27)

AA August 39 calls (AA170818C00039000, $0.30, down $0.10)

Entry Price: $0.55 (7/25/2017)
Exit Target: $1.10
Return: -36%
Stop Target: None

Action: Crucial support is at $36-$35.75 with yesterday’s low reaching $36.08. A move below the latter would be a bearish development. Resistance is at $36.50-$36.75.


Imax (IMAX, $21.10, down $0.75)

IMAX August 21 puts (IMAX170818P00021000, $0.90, up $0.25)

Entry Price: $0.78 (7/21/2017)
Exit Target: $1.60
Return: 17%
Stop Target: None

Action: Yesterday’s low on the stock reached $20.40 while holding crucial support at $20.50-$20. I was hoping for a close below these levels and was slightly disappointed $21 held. Resistance is at $21.25-$21.50.


Wendy’s (WEN, $15.85, up $0.02)

WEN August 16 calls (WEN170818C00016000, $0.45, flat)

Entry Price: $0.45 (7/12/2017)
Exit Target: $0.90
Return: 0%
Stop Target: None

Action: Thursday’s low tapped $15.72 with support at $15.75 holding. Resistance remains at $16-$16.25.


TherapeuticsMD (TXMD, $5.47, down $0.43)

TXMD August 7.50 calls (TXMD170818C00007500, $0.25, flat)

Entry Price: $0.50 (6/22/2017)
Exit Target: $1.00
Return: -50%
Stop Target: None

Action: Support is at $5.50-$5.25 following the backtest to $5.36. Resistance is at $5.75-$6. Shares were up 5% in after-hours trading and the volatility is suggesting a possible major price move forthcoming.


iPath S&P 500 VIX Futures (VXX, 11.17, up 0.07)

VXX August 14 calls (VXX170818C00014000, $0.25, up $0.10)

Entry Price: $1.20 (6/15/2017)
Exit Target: $2.40
Return: -77%
Stop Target: 10 cents (Stop Limit)

Action: Resistance is at 11.25-11.50. Support is at 11.