Pre-Market for 11/30/2017

Sector Rotation Hits Tech

8:00am (EST)

The market pushed new record highs on Wednesday’s open with selling pressure and sector rotation hitting shortly afterwards. The mixed finish was slightly bearish with the Nasdaq tumbling 1.3% while holding shaky support at the 6,800 level. The S&P 500 traded to an all-time peak just south of 2,635 before slipping a point, or 0.04%, while easily holding the 2,600 level on the pullback.

The Dow was up 0.4% after kissing a lifetime peak of 23,959 while holding positive territory throughout the session. The Russell 2000 followed suit after tapping a record high of 1,547 and also gaining 0.4%.

Financials continue to show strength with the sector rising 1.7%. Industrials and Energy also posted solid gains of 0.9% and 0.6%, respectively. Technology took a beating with the sector sinking 2.2%. Real Estate was the only other sector in the red after giving back 0.02%.

Fed Chair Janet Yellen expects gradual rate increases to be appropriate and sees the expansion deepening and widening, with further job market gains likely to increase wage growth. She said vulnerabilities in the financial sector appear moderate while reiterating core inflation has remained surprisingly subdued though it likely reflects transitory elements. However, she cautioned it could also reflect something more persistent.

Yellen went on to say the corporate tax rate is an important issue for Congress, but didn’t weigh in much further. On regulations, she did say the Fed is trying to tailor the rules, and it’s appropriate to look into easing some regulations on small banks. She said stress testing is an important tool of the Fed and didn’t think the Volcker Rule shouldn’t apply to smaller banks.

On the unemployment rate, Yellen said it’s desirable that it has declined recently, but there are disparities across groups, which the Fed doesn’t have tools to address. She was mum on the upcoming FOMC meeting, but did reiterate that policy remains accommodative and it’s important to remain on a gradual path toward a neutral rate.

The VelocityShares Daily Inverse VIX (ZIV) was weak throughout the session after bottoming at 79.65. Support at 80-79.50 was split with risk to 78-77.75 and the 50-day moving average on a move below the latter. Resistance remains at 81.50-82 on continued closes back above 80.

The PowerShares QQQ (QQQ) traded to a high of $156.45 before declining 1.7%. We mentioned last week a blowoff rally towards $157.50-$158 could come on continued closes above $155.75-$156. Current support is at $153.25-$153 with a move below $152 being a continued bearish development. Fresh resistance is at $154-$154.50. RSI was significantly weakened with late October support at 50 back in play.

The Technology Select Sector Spiders (XLK) traded down to $62.84 after failing resistance at $64.50-$64.75 on the open. Early and mid-November support at $62.75-$62.50 held on the backtest with a drop below the latter signaling additional weakness to $62-$61.50 and the 50-day moving average. RSI has rolled over with multi-month support in the 50-45 area.

I have updated the parameters of our BAC trade so please do so in your trading accounts.

Momentum Options Play List

Closed Momentum Options Trades for 2017: 52-21 (71%). 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.

Viavi Systems (VIAV, $9.29, flat)

VIAV January 9 calls (VIAV180119C00009000, $0.60, up $0.05)

Entry Price: $0.65 (11/29/2017)
Exit Target: $1.30
Return: -9%
Stop Target: None

Action: Support is at $9 with yesterday’s low tapping $9.14. Resistance is at $9.50.

Twitter (TWTR, $20.79, down $1.04)

TWTR January 24 calls (TWTR180119C00024000, $0.35, down $0.20)

Entry Price: $0.70 (11/22/2017)
Exit Target: $1.40
Return: -21%
Stop Target: None

Action: Wednesday’s low reached $20.52 with fresh support at $20.75-$20.50 holding. Lowered resistance is at $21-$21.25.

Bank of America (BAC, $28.28, up $0.64)

BAC January 28 calls (BAC180119C00028000, $1.20, up $0.38)

Entry Price: $0.63 (11/16/2017)
Exit Target: $1.25, raise to $1.75 (closed half at $1.30 on 11/29/2017)
Return: 99%
Stop Target: $1.05 (Stop Limit)

Action: Raise the Exit Target from $1.25 to $1.75. Set a Stop Limit at $1.05 on the other half of the trade

Fresh resistance is at $28.50-$28.75 following the run to $28.49 and a fresh 52-week peak. Rising support is at $28-$27.75.

TiVo (TIVO, $17.90, down $0.20)

January 20 calls (TIVO180119C00020000, $0.40, down $0.05)

Entry Price: $0.60 (10/31/2017)
Exit Target: $1.20
Return: -33%
Stop Target: None

Action: Support is at $17.75-$17.50. Resistance at $18-$18.25.

TherapeuticsMD (TXMD, $6.07, up $0.05)

TXMD December 7.50 calls (TXMD171215C00007500, $0.15, flat)

Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Return: -84%
Stop Target: None

Action: Resistance is at $6.15-$6.25. Rising support is at $6-$5.90.