MomentumOptions.com Pre-Market Update for 12/3/2018
VIX Holds 20 Ahead of G20 Summit
The market traded in a tight range on Friday before showing late day strength while closing out the best week of the year with strong gains. Much of the early choppiness came on chatter from the G-20 summit on how things might be progressing in trade talks between the U.S. and China.
The major indexes cleared the previous session highs and the action is showing the market is anticipating some sort of deal, or at least a truce on further tariffs. Volatility also continues to show signs the market could be on the verge of a continued breakout with major resistance levels holding throughout the past week.
The S&P 500 soared 0.8% following the late day push to 2,760. Fresh and lower resistance at 2,760-2,775 and the 50-day moving average was challenged with a close above the latter and the 200-day moving average being a continued bullish development.
The Dow was also up 0.8% after testing a session high of 25,549. Lower resistance at 25,550-25,750 and the 50-day moving average held with a move above the latter signaling additional strength.
For the week, the Dow was up 5.2% while the S&P 500 rallied 4.9%, with monthly gains of 1.7% and 1.8%, respectively.
The Nasdaq closed for the 4th-time in 5 sessions after rising 0.8% and kissing a high of 7,332. Fresh and lower resistance at 7,350-7,400 held with a close above 7,475-7,525 being a continuing bullish development.
The Russell 2000 was up for the 5th-time in 7 sessions after adding 0.5% and reaching a peak of 1,535. Lower resistance at 1,535-1,550 held for the 2nd-straight session with a close above the latter signaling additional momentum.
The Nasdaq was higher by 5.6% for the week and 0.3% for the month while the Russell 2000 rose 3.1% on the week and 1.4% in November.
Utilities and Healthcare led sector strength after jumping 1.5% and 1%. Industrial, Real Estate and Technology rose 1%.
Communication Services and Consumer Staples were the only sector laggards after losing 0.2%.
For the week, Healthcare and Technology zoomed 7% and 6%, respectively. Consumer Discretionary surged 5.9% and Communication Services rallied 4.9%. There were no sectors that closes lower for the week.
The S&P 500 Volatility Index ($VIX) tested a high of 19.98 shortly after the open with resistance at 19.50-20 holding for the 5th-straight session. A move above 20.50 would be a bearish signal with risk towards 22-22.50.
The fade to 18.03 afterwards and close below upper support at 18.25-17.75 and the 50-day moving average was a slightly bullish signal. A move below 17.50 would signal additional market strength and set up a possible drop towards 16-15.50 and the 200-day moving average.
RSI is in a downtrend with support at 45-40. A close below the latter would also be a bullish development for higher market highs. Resistance is at 50.
The Russell 3000 Index ($RUA) was up for the 4th time in 5 sessions following the intraday run to 1,626. Lower resistance at 1,625-1,640 was cleared and held. Continued closes above the latter and the 50/200-day moving averages would be a more bullish development as a death cross has officially formed. The last time this technical pattern occurred was in August 2015 with significant lows afterwards into 2016.
Support is at 1,605-1,590. A close back below 1,580 would be a bearish development and signal a near-term top.
RSI is in a slight uptrend with resistance at 55. Continued closes above this level would be a bullish development for a run towards 60-70. Support is at 50-45 with a move below the latter signaling additional weakness.
The Dow Jones Transportation Average ($TRAN) closed higher for the 6th-time in 7 sessions following the push to 10,834. Mid-October and lower resistance at 10,800-10,900 was cleared and held on the close back above the 200-day moving average. Continued closes back above the 11,000 level would be a more bullish development and would help level out the recent death cross that has formed.
Support is at 10,700-10,600 and the 50-day moving average. A move below 10,500 would signal a possible near-term top.
RSI is back in an uptrend with resistance at 60. Continued closes above this level would signal additional momentum towards 65-70. Support is at 55-50.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed Friday at 47.57% with the high reaching 48.54% for the 2nd-straight session. Early November resistance at 49%-51% held with a move above the latter signaling additional strength towards 52.50%-55%. The latter represents early October support. Current support is at 45%-42.50% with a move below the latter being a slightly bearish signal.
The percentage of S&P 500 stocks trading above the 50-day moving average closed at 55.86% and the session high. Fresh resistance is at 57.50%-60% with the latter representing late September and early October peaks. Support is at 50%-47.50% with a move below the latter signaling a possible near-term top for the index.
Futures are showing a strong open for this morning after the U.S. and China agreed to a truce in their trade war over the weekend.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 45-18 (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.
eBay (EBAY, $29.85, up $0.33)
EBAY January 30 calls (EBAY190118C00030000, $1.15, up $0.20)
Entry Price: $1.00 (11/30/2018)
Exit Target: $2.00
Stop Target: None
Action: Shares tested a high of $29.88 on Friday with lower resistance at $30-$30.25 and the 50-day moving average holding. A close above the latter would be a bullish development for continued strength. Support is at $29.50-$29.25.
Symantec (SYMC, $22.11, down $0.47)
SYMC January 23 calls (SYMC190118C00023000, $0.75, down $0.25)
Entry Price: $0.75 (11/30/2018)
Exit Target: $
Stop Target: None
Action: Shares tested a low of $21.89 with support at $22-$21.75 holding. Resistance is at $22.50-$22.75.
Yeti Holdings (YETI, $16.84, up $0.74)
YETI December 20 calls (YETI181221C00020000, $0.20, flat)
Entry Price: $0.85 (11/28/2018)
Exit Target: $1.60-$2.40
Stop Target: None
Action: Friday’s peak reached $17.35 with fresh resistance at $17-$17.50 holding. Support is at $16.50-$16.
Starbucks (SBUX, $66.72, down $0.16)
SBUX January 60 puts (SBUX190118P00060000, $0.30, flat)
Entry Price: $0.60 (11/15/2018)
Exit Target: $1.20
Stop Target: None
Action: Support is at $66.50-$66. Resistance is at $67-$67.50.