Pre-Market Update for 11/8/2018

Bulls Make a Strong Statement

8:00am (EST)

The market opened higher and stayed strong following the results from the midterm elections, which played out just as Wall Street had expected. Republicans held the majority in the Senate, while Democrats gained control of the U.S. House of Representatives, raising the prospect of gridlock in D.C. between the two sides.

Lost in the hoopla, the Federal Reserve began its two-day policy meeting today, with a decision due Thursday afternoon. The market isn’t expecting a change in policy, but traders will be looking for fresh signals from the U.S. central bank on its plans for the rest of the year and beyond.

The Nasdaq zoomed 2.6% while reaching a peak of 7,572. Lower resistance at 7,500-7,525 and the 200-day moving average was cleared and gets fresh hurdles at 7,600-7,650 in play.

The Dow jumped 2.1% after testing a midday high of 26,200. Fresh and lower resistance at 26,000-26,200 was cleared and held with the move above the 50-day moving average being a bullish signal.

The S&P 500 also soared 2.1% following the push to 2,815 intraday. Fresh and lower resistance at 2,800-2,825 was cleared and held on the move above the 200-day moving average.

The Russell 2000 was higher by 1.7% after trading an intraday high of 1,582. Upper resistance at 1,575-1,580 was cleared and held into the close to set up a possible run towards 1,600.

Healthcare and Technology led sector strength after surging 3% and 2.9%, respectively. Consumer Discretionary advanced 2.7%.

There were no sector laggards for a 2nd-straight session.

The S&P 500 Volatility Index ($VIX) sank 17.7% after plunging to a low of 16.36. Fresh support at 16.50-16 was breached on the close below the 50-day. A move below latter and continued closes below 15.50-15 would signal a continued market rally.

Lowered resistance is at 17.50-18. 

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The Spiders Dow Jones Industrial Average ETF (DIA) was up for the 3rd straight session after reaching a peak of $261.86 ahead of the closing bell. Fresh resistance at $262-$262.50 is back in play following the close back above the 50-day moving average.

Rising support is at $260-$259.50. A move back below $257.50 would signal a false breakout.

RSI is in a strong uptrend after clearing resistance at 60. Continued closes above this level would signal additional strength towards 65-70 with the latter representing early October resistance. Support is at 55-50.

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Bitcoin Investment Trust (GBTC) extended its winning streak to 4-straight sessions after making a push to $7.79. Near-term resistance at $7.75 and the 50-day moving average was cleared but failed to gold. Continued closes back above $8 would be a more bullish signal.

Rising support is at $7.50 with a close back below this level being a bearish development.

RSI is closing in on July resistance at 60. A move above this level could lead to a possible push towards 70 and the April high. Support is at 55-50.

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I have updated our latest BSX trade so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2018: 42-17 (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 “Stops” entered to close any trades or “Limit 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.

Boston Scientific (BSX, $37.95, up $1.10)

BSX January 40 calls (BSX190118C00040000, $0.90, up $0.23)

Entry Price: $0.85 (9/20/2018)

Exit Target: $1.70

Return: 7%

Stop Target: None

Action: Shares traded to a high of $37.99 with fresh resistance at $38-$38.25 holding.  Rising support is at $37.25-$37.

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Consumer Staples Select Spiders (XLP, $56.46, up $0.32)

XLP January 58 calls (XLP190118C00058000, $0.60, up $0.05)

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

Exit Target: $0.70

Return: 61%

Stop Target: 45 cents (Stop Limit)

Action: Shares traded to a high of $56.48 with fresh resistance at $56.50-$56.75 holding. Rising support is at $56-$55.50.

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