Pre-Market Update for 9/5/2017

All-Time Highs Less Than 1% Away

8:00am (EST)

U.S. markets finished higher on Friday despite a disappointing jobs report with the major indexes once again near all-time record highs. The Dow, S&P 500, and Nasdaq are less than 1% away from triggering fresh lifetime peaks with the latter closing at a record all-time high for the 46th time year. The Russell 2000 is roughly 3% away from joining the crowd after being the most volatile index following a whipsaw August.

The Dow climbed 39 points, or 0.2%, to close at 21,987 on Friday. The blue-chips held positive territory throughout the session while trading up to 22,038. Upper resistance at 21,900-22,000 was cleared with a close above the latter leading to 22,150-22,200 and fresh all-times highs. Support is at 21,800-21,750 and the 50-day moving average.

The S&P 500 added nearly 5 points, or 0.2%, to end at 2,476. The index opened higher at 2,473 while reaching an intraday peak of 2,480. Lower resistance at 2,480-2,485 was challenged with the lifetime a nickel above at 2,490. Continued closed above this level gets 2,520-2,525 in play. Near-term support is 2,460-2,455 and the 50-day moving average.

The Nasdaq gained 6 points, or 0.1%, to settle at 6,434. Tech traded to a high of 6,449 shortly after the open with lower resistance at 6,450-6,475 holding. The all-time high is at 6,460. Support at 6,400-6,375 held following the backtest to 6,417 afterwards with a move below 6,350 signaling a near-term top.

The Russell 2000 jumped 8 points, or 0.6%, to finish at 1,413. The small-caps held green throughout the session while going out a third-point off the closing high. Fresh resistance at 1,415-1,420 held with a move above the latter getting 1,430-1,435 in the mix. Rising support is at 1,410-1,405 and the 50-day moving average.

The S&P 500 Volatility Index ($VIX, 10.13, down 0.46) traded in in the red throughout Friday’s session with the low reaching 10.02. Fresh support at 10-9.50 held with a close below the latter being a continued bullish development. Resistance is at 10.50-11.50.

The first trading day for September showed continued momentum with the Material and Energy sectors leading the charge higher. The Utility sector finished in the red along with Healthcare and Technology also showing slight losses.

The Dow and S&P 500 are on five-month winning streaks while the Nasdaq has closed higher for 2-straight months following a lower June. The small-caps fell nearly 2% in August and have some catching up to do on some paper. Technically, last week’s strong recovery off the Tuesday’s lows and close above all the major moving averages was a very bullish development. In other words, the bearish pattern improved in four trading sessions.

The battle between the bulls and bears was intense last month with the VIX soaring to 17.28 in mid-August. Just like the technical damage turned bullish in less than a week for the major indexes, the VIX also went through a bullish pattern turnaround over the same time period.

The whipsaw action is historically typical for August and why it was important to keep your emotions in check. However, active traders love this type of volatility but it can be very tricky to trade, especially if you are on the wrong side.

September could bring the same type of heat with the end of summer and Congress coming back to work. Geopolitical tensions will likely intensify along with rhetoric over tax cuts, the debt ceiling, and the economic affects Hurricane Harvey could have on the economy.

Despite mentioning the massive amount of money that has been moving out of the market over the past 10 months, it doesn’t mean it’s a bad omen for the market. It just means there could be investors that miss another breakout to record highs into yearend.

Wall Street, along with many notorious analysts and wealth moguls, have predicted a 10% pullback and 20% corrections throughout this year and last. The 100-point pullback on the Russell 2000 from the 1,450 level in July to 1,350 last month was close to the former and good for 7% but panic hasn’t set in, yet.

While there has been some nervousness, and continued doubt higher all-time highs are possible, sometimes it can be hard to see the forest through the trees. This can happen when there is sector rotation with money moving out of weak ones and into stronger sectors.

The number of S&P 500 stock trading above their 50-day moving average has improved to 55.4%, up from 37% on August 28th. We mentioned last week there was a good chance this number could reach 50%-55% over the near-term with the latter representing major resistance. This is suggesting more stocks are returning to an uptrend following the pullback in mid-August. A wider array of stocks performing well is seen as one of the clearest indicators of market strength.

From desk to press, futures look like this: Dow (-58); S&P 500 (-7); Nasdaq 100 (-16).


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.


Cypress Semiconductor (CY, $13.93, up $0.24)

CY October 14 calls (CY171020C00014000, $0.60, up $0.10)

Entry Price: $0.45 (9/1/2017)
Exit Target: $0.90
Return: 0%
Stop Target: None

Action: Shares traded to a high of $13.96 on Friday while clearing and holding the 50-day moving average. Resistance is at $14.20-$14.25 on a move above $14. Support is at $13.60-13.50.


Materials Select Sector Spider (XLB, $55.43, up $0.36)

XLB October 56 calls (XLB171020C00056000, $0.60, up $0.10)

Entry Price: $0.45 (8/31/2017)
Exit Target: $0.90
Return: 33%
Stop Target: 47 cents (Stop Limit)

Action: Set an initial Stop Limit at 47 cents.

Resistance is at $55.50-$55.75 with Friday’s peak reaching $55.49. Rising support is at $55.25-$55.


Amicus Therapeutics (FOLD, $14.32, up $0.38)

FOLD October 15 calls (FOLD171020C00015000, $1.60, up $0.10)

Entry Price: $1.05 (8/25/2017)
Exit Target: $2.10
Return: 47%
Stop Target: $1.25 (Stop Limit)

Action: Fresh resistance is at $14.50-$14.75. Rising support is at $14-$13.75.


TherapeuticsMD (TXMD, $5.95, down $0.05)

TXMD December 7.50 calls (TXMD171215C00007500, $0.65, flat)

Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Return: -32%
Stop Target: None

Action: Support is at $5.75. Resistance is at $6.25.


Intel (INTC, $35.09, up $0.02)

INTC October 37 calls (INTC171020C00037000, $0.15, flat)

Entry Price: $0.53 (8/15/2017)
Exit Target: $1.10
Return: -72%
Stop Target: 10 cents (Stop Limit)

Action: Resistance is at $35.25-$35.50 and the 200-day moving average. Support is at $34.50-$34.25.


TiVo (TIVO, $18.50, up $0.20)

TIVO October 20 calls (TIVO171020C00020000, $0.40, up $0.05)

Entry Price: $0.70 (8/8/2017)
Exit Target: $1.40
Return: -xx
Stop Target: None

Action: Resistance is at $18.65-$18.75 and the 50/200-day moving averages. Support is at $18.25-$18.