MomentumOptions.com Pre-Market Update for 8/23/2017
Technical Picture Improves, More Work to be Done
The market broke out of a slump to trade higher following news President Trump’s economic team and legislators have revived hopes for targeted tax cuts, if not full tax reform. Oversold conditions also played a role in the push to resistance as all of the major sectors finished higher. It is too early to say a broad-based rally is underway but the action looked bullish. Excluding the Dow, the major indexes are still lower for the month of August.
The Dow surged 196 points, or 0.9%, to settle a shade below 21,900. The blue-chips traded higher throughout the session while reaching an intraday peak of 21,912. Fresh resistance is at 22,000-22,100 with a move above the latter being a bullish development. Support is at 21,800-21,750 and prior resistance with backup help at 21,600-21,550.
The S&P 500 soared 24 points, or 1%, to end at 2,452. The index opened 5 points higher at 2,433 while testing 2,454 into the closing bell. The close back above the 50-day moving average was slightly bullish with resistance now at 2,465-2,470. Support is at 2,425-2,415 with a move below the latter a bearish signal.
The Nasdaq zoomed 84 points, or 1.4%, to finish at 6,297. Tech also cleared and held its 50-day moving average after making a run to 6,302. Renewed resistance is at 6,350-6,375. Shaky support is at 6,200-6,175 with a move below the latter signaling a fresh August low and a warning sign.
The Russell 2000 jumped 14 points, or 1.1%, to close at 1,371. The small-caps also held positive territory throughout the session while finishing a point of the intraday high. The 200-day moving average held with a move above 1,380-1,385 being a slightly bullish development. Support has moved up to 1,360-1,355. Another drop below 1,350 might provide a great shorting opportunity.
The S&P 500 Volatility Index ($VIX, 11.35, down 1.84) sank another 14% and stayed underwater from the opening bell while closing on the session low. The move below 11.50 gets prior support at 11-10.50 and the 50-day moving average back in play. Resistance is at 12.50-13.50.
I wanted to point out the action in SPY as I have been watching the action intensely for a possible long or short trade. Spider S&P 500 ETF (SPY) is trying to rebound from slightly oversold levels with the current 10-day RSI jumping to nearly 50 from just above 35 on Monday. The 30 level represented the early August, mid-April lows, and mid-May levels. Each time, the lower 30’s came into play, there has been nice short-term, and longer-term rebounds.
Current resistance for SPY is at $246-$246.50 following today’s close above the 50-day moving average and the $245 level. Support has moved up to $244.50-$244. A move above the $246 level would break the downtrend action in effect since early August. Continued closes above this level could provide an opportunity to go long SPY call options.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 44-19 (70%). 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.
TherapeuticsMD (TXMD, $6.04, up $0.09)
TXMD December 7.50 calls (TXMD171215C00007500, $0.70, flat)
Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $6.25-$6.50 with Tuesday’s high reaching $6.14. Support is at $6-$5.75.
Intel (INTC, $34.65, down $0.27)
INTC October 37 calls (INTC171020C00037000, $0.18, down $0.06)
Entry Price: $0.53 (8/15/2017)
Exit Target: $1.10
Stop Target: None
Action: Upper support at $34.75-$34.50 failed to hold on yesterday’s low of $34.62. Resistance is at $34.75-$35.
TiVo (TIVO, $18.60, up $0.10)
TIVO October 20 calls (TIVO171020C00020000, $0.60, flat)
Entry Price: $0.70 (8/8/2017)
Exit Target: $1.40
Stop Target: None
Action: Lowered resistance at $18.50-$18.75 held on yesterday’s run to $18.60. Rising support is at $18.25-$18.