Pre-Market Update for 10/1/2018

Bears Get Weekly Win, Bulls Take the Quarter/ Profit Alert (LLNW)

8:00am (EST)

The market was mixed on Friday while closing mostly lower for the week following slightly disappointing economic news. Concerns over Italy also caused some tentativeness as the major indexes were choppy throughout the session.

President Trump signed a spending bill that will avert a government shutdown and will keep the U.S. government open through December 7th. Although it had little effect on the market, the bill removed some uncertainty ahead of the mid-term elections in November. 

The Russell 2000 rallied 0.4% after testing a high of 1,699. Resistance at 1,700 and the 50-day moving average held with a close above the latter being a slightly bullish development.

The Dow climbed 0.1% following the intraday push to 26,515. It was the 4th-straight session the blue-chips made a lower high and lower low with resistance at 26,600 continuing to hold.

For the week, the blue-chips fell 1.1% and the small-caps gave back 1%. 

The Nasdaq edged up 0.1% after reaching a morning peak of 8,065. Lower resistance at 8,075-8,100 held for the 3rd-straight session with a close above the latter getting fresh all-time highs in play.

The S&P 500 slipped less than a point, or 0.0% following a run to 2,920.

Lower resistance at 2,920-2,925 held for the 5th-straight session with a move above the latter being a slightly bullish signal.

The Nasdaq was up 0.6% for the week while the S&P 500 was down 0.5%.

For the month, the Dow gained 1.9% and the S&P 500 advanced 0.4%. The Nasdaq fell 0.8% while the Russell sank 2.2%.

For the 3rd quarter, the S&P 500 rose more than 7% and the Dow advanced 9% with both indexes rising in 11 of the past 12 quarters. The Nasdaq gained just over 7% for the quarter, and has closed higher for 9-straight quarters. The Russell jumped over 5% for the 3rd quarter.

Utilities and Real Estate led sector strength after surging 1.5% and 1.2%, respectively. Technology and Health Care rose 1% and 0.9% for the week.

Financials was the weakest sector after sinking 1% and was down 4% for the week. Materials tumbled 4.3% for the week while Industrials and Consumer Staples stumbled 2%.

The S&P 500 Volatility Index ($VIX) traded to a high of 13.22 shortly after the open with resistance at 12.50-13 and the 50-day moving average getting stretched. We have been warning a close above 13.50 would be a slightly bearish development and a key level to watch going forward.

The fade to 12.09 shortly afterwards held upper support at 12-11.50. The September low tapped 11.10 with continued closes below 11 being a bullish signal for the market.

RSI is in a slight downtrend with support at 45-40. Resistance is at 50 with a move above 55 signaling additional strength and being s bearish development for the market.

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The PowerShares QQQ (QQQ) slipped for the first time in 4 sessions after testing a low of $184.97. Near-term support at $185-$184.50 held. A move below $183.50 could lead to a further backtest towards $182-$181.50 and the 50-day moving average.

Resistance is at $186-$186.50. A move above the latter would be a bullish development for another run towards $187-$187.50 and fresh all-time highs. The late August peak reached $187.52.

RSI has cleared lower resistance at 60 with continued closes above this level signaling additional strength for a run at 65-70 and August highs. Support is at 55-50.

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The Energy Select Sector Spider (XLE) tested a high of $76.54 before closing in the red for the 2nd time in 3 sessions. Lower resistance at $76.50-$77 held with a move above the latter being a bullish development.

The fade to $75.55 held upper support at $75.50-$75.  A close below the latter could lead to a continued backtest towards $74.50-$74 and the 50-day moving average.

RSI is in a downtrend with support at 60. A move below this level would likely lead to a continued backtest towards 55-50. Resistance at 65.

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The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 54.76% with the low tapping 53.37%. Early July support is at 51%-50% with risk to the 45% area and late June lows on a close below the latter. Resistance at 55%-56%. A close above the latter would be a slightly bullish signal for a run towards 60%.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed at 60.19% and the session peak on Friday. Resistance is at 62%-62.5% with a close above the 63% level being a more bullish development. Support is at 57% with a move below this area signaling additional weakness towards 55% and the mid-September low.

I have updated our current trades along with a Profit Alert for LLNW.

Momentum Options Play List

Closed Momentum Options Trades for 2018: 35-14 (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 Daily updates.

STMicroelectronics (STM, $18.34, down $0.18)

STM November 20 calls (STM181116C00020000, $0.55, down $0.10)

Entry Price: $0.75 (9/20/2018)

Exit Target: $1.50

Return: -27%

Stop Target: None

Action: Fresh support is at $18.25-$18 following Friday’s backtest to $18.06. Lowered resistance is at $18.50-$18.75.

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Consumer Staples Select Spiders (XLP, $53.91, up $0.06)

XLP January 58 calls (XLP190118C00058000, $0.20, flat)

Entry Price: $0.35 (9/20/2018)

Exit Target: $0.70

Return: -43%

Stop Target: None

Action: Lower resistance at $54-$54.25 held on Friday’s push to $53.99. Support is at $53.75-$53.50.

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Boston Scientific (BSX, $38.50, up $0.16)

BSX November 39 calls (BSX181116C00039000, $1.25, up $0.10)

Entry Price: $1.05 (9/18/2018)

Exit Target: $2.10

Return: 19%

Stop Target: $1.10 (Stop Limit)

Action: Shares reached a peak of $38.78 with lower resistance at $38.75-$39.25 holding. Support is at $38.25-$37.75.

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Marvell Technology Group (MRVL, $19.30, up $0.59)

MRVL October 20 calls (MRVL181019C00020000, $0.40, up $0.20)

Entry Price: $0.45 (9/14/2018)

Exit Target: $0.90

Return: -11%

Stop Target: None

Action: Fresh resistance is at $19.50-$19.75 following Friday’s surge to $19.31. Rising support is at $19-$18.75. 

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Limelight Networks (LLNW, $5.02, down $0.16)

LLNW December 5 calls (LLNW181221C00005000, $0.55, down $0.10)

Entry Price: $0.50 (9/7/2018)

Exit Target: $1.00

Return: 10%

Stop Target: 55 cents (Stop Limit)

Action: The Stop Limit at 55 cents tripped on Friday following the backtest to $4.99.

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Viavi Systems (VIAV, $11.34 up $0.08)

VIAV December 11 calls (VIAV181221C00011000, $0.90, flat)

Entry Price: $0.85 (9/6/2018)

Exit Target: $1.70

Return: 6%

Stop Target: 40 cents

Action: Lower resistance at $11.30-$11.40 was cleared on Friday’s trip to $11.39. Support is at $11.20-$11.10.

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