MomentumOptions.com Pre-Market Update for 10/2/2017
The market closed higher on Friday and for the month of September with the S&P 500, Nasdaq, and the Russell trading to fresh all-time highs. The Dow closed within 14 points of its lifetime peak, thanks in part to the Transports ($TRAN), which also reached a lifetime high after closing above the 9,900 level. All of the major averages finished the month higher by 4%-5% with the Russell 2000 up 6%. Technology, Health Care, and Financials were the month’s leaders while Utilities, Consumer Staples, and Energy were the only laggards.
The Dow gained 24 points, or 0.1%, to finish at 22,405. The blue-chips were slightly weak during the first half of action with the low reaching 22,332. Rising support at 22,300-22,200 held with backup help at 22,000-21,975 and the 50-day moving average. Lower resistance at 22,400-22,500 was cleared on the session high into the close with the all-time high at 22,419.
The S&P 500 advanced 9 points, or 0.4%, to end at 2,519. The index slipped 3 points to 2,507 shortly after the open with fresh support at 2,500-2,490 holding. There is additional help at 2,475-2,470 and the 50-day moving average on a close below the latter. Upper resistance at 2,510-2,525 held on the lifetime high into the weekend with a move above the latter getting 2,550-2,560 in the mix.
The Nasdaq jumped 42 points, or 0.7%, to close at 6,495. Tech held positive territory throughout the session after testing a fresh all-time just south of 6,498 while pushing upper resistance at 6,475-6,500. Continued closes above the latter could lead to 6,550-6,575. Rising support is at 6,425-6,400 with a move below 6,375 and the 50-day moving average signaling a short-term top.
The Russell 2000 climbed 2 points, or 0.1%, to settle at 1,490. The small-caps also held green throughout Friday while testing a record high of 1,493 intraday. I mentioned continued strength should easily get 1,500-1,515 on the radar with continued closes above 1,500 being a bullish development. Rising support is 1,475-1,470 with a move below 1,460 signaling a short-term top.
The S&P 500 Volatility Index ($VIX, 9.51, down 0.04) traded up to 9.83 intraday with lowered resistance at 10-10.50 easily holding. Near-term support at 9.50-9.25 was split afterwards on the fade to 9.36.
The Dow Jones Transportation Average ($TRAN) closed at an all-time high following Friday’s run to 9,934. Continued closes above the 9,900 level keeps fresh resistance at 10,000 firmly in play. Rising support is at 9,850-9,800 with a move below 9,750 signaling a short-term top. RSI is in slightly overbought territory and is currently in the high 70’s. However, RSI stayed above the 70 level throughout last November and into December while peaking in the high 80’s.
The start of Q3 earnings season doesn’t “officially” begin until the next week of October and when the big banks start coming out with quarterly results. However, there have been 16 S&P 500 members that have reported quarterly results over the past two weeks. This week, another 20 companies are on deck to report results, including 7 S&P 500 members.
Total Q3 earnings are expected to be up 3.2% versus the year ago period on 5% higher revenues. However, it is important to note estimates for Q3 came down as the quarter unfolded, with the current 3.2% growth down from 6.3% at the end of June.
As far as sector growth in Q3, the Energy sector should benefit the most from easy comparisons. Excluding Energy, the aggregate growth pace drops to 1.4% from 3.2%. Construction and Conglomerates are the only other sectors with double-digit growth rates. Earnings growth is also strong for the Technology sector, with total earnings expected to be up 9.7% on 6.7% higher revenues.
From desk to press, futures look like this: Dow (+20); S&P 500 (+2); Nasdaq 100 (+7).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 49-19 (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.
Limelight Networks (LLNW, $3.97, up $0.03)
LLNW December 4 calls (LLNW171215C00004000, $0.40, flat)
Entry Price: $0.37 (9/21/2017)
Exit Target: $0.80-$1.20
Stop Target: None
Action: Resistance is at $4.20-$4.25 on continued closes above $4. Friday’s high reached $3.99. Support is at $3.90-$3.75.
TherapeuticsMD (TXMD, $5.29, up $0.17)
TXMD December 7.50 calls (TXMD171215C00007500, $0.30, flat)
Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $5.50 with Friday’s high reaching $5.42. Support is at $5.
TiVo (TIVO, $19.85, up $0.40)
TIVO October 20 calls (TIVO171020C00020000, $0.75, up $0.25)
Entry Price: $0.70 (8/8/2017)
Exit Target: $1.40
Stop Target: None
Action: Shares traded to a high of $20.05 on Friday. Resistance is at $19.75-$20. Support is at $19.50-$19.25.