MomentumOptions.com Pre-Market Update for 12/6/2018
Bears Return, VIX Clears 20/ Profit Alert (EBAY)
The market opened lower on Tuesday with the losses accelerating into the second half of action as fears of an inverted yield curve spooked Wall Street. It also appears that the U.S.-Sino deal was an agreement to agree, following more trade rhetoric, with much of the heavy lifting on detail yet to be done in the first three months of the year.
The Bush memorial ahead of the market closure on Wednesday, caused a 25% spike in volatility with the VIX closing above a key level of resistance.
The Russell 2000 plummeted 4.4% after trading to an intraday low of 1,479. Prior and upper support at 1,480-1,460 was breached but held with a close below the latter leading to fresh and prior October lows.
The Nasdaq stumbled 3.8% following the backtest to 7,150. Upper support at 7,150-7,100 held with a move below the latter signaling additional risk towards 7,000-6,900.
The S&P 500 sank 3.2% following the pullback to 2,697. Major and upper support at 2,700-2,675 held with risk to 2,625-2,600 and fresh October lows on a move below 2,675.
The Dow tumbled 3.1% after testing a session low of 25,008. Shaky support at 25,000-24,800 held on the close back below the 200-day moving average held with risk to 24,600-24,400 on continued selling pressure.
Utilities were the only sector to show strength after climbing 0.1%
Industrials were the the worst performing sector after sinking 4.4%. Technology and Consumer Discretionary dropped 3.8% and 3.6%, respectively.
The S&P 500 Volatility Index ($VIX) zoomed to a high of 21.94 while closing back above the 20 level for the first time in 7 sessions. Prior resistance at 21.50-22 held with a move above 22.50 signaling additional risk towards 25-27.50
New support is 20-19.50 followed by 19-18.50 and a 50-day moving average that remains in an uptrend.
The Spiders Dow Jones Industrial Average ETF (DIA) tumbled to an intraday low of $250.38 with fresh support at $250.50-$250 holding. A move back below $249.50-$249 and 200-day moving average would be a slightly bearish signal with risk towards $247.50-$245.
Lowered resistance is at $252-$252.50 held with more important hurdles at $254.50-$255 and the 500-day moving average.
RSI is back in a downtrend with support is at 45-40. A move below the latter would signal additional pressure with risk towards 35-30 and November/ October lows. Resistance is at 55-60.
The Consumer Discretionary Select Spiders (XLY) fell for just the 2nd-time in 7 sessions following the backtest to $105.77. Fresh support at $105.50-$105 held with a move below the latter signaling additional weakness.
Lowered resistance is at $106.50-$107 followed by $108-$108.50 and the 50/200-day moving averages. The major moving averages are also close to forming a death-cross with the 50-day on track to fall below the 200-day. This is typically a bearish setup for lower lows.
RSI is in a downtrend with fresh support at 45-40 on the close back below the 50 level. resistance at 60. Resistance is at 55.
I have a Profit Alert for EBAY and I have updated our current positions. I could have New Trades today so stay locked-and-loaded in case I take action. Futures were showing a 1% pullback late last night.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 46-18 (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 “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, $29.26, down $0.94)
EBAY January 30 calls (EBAY190118C00030000, $0.85, down $0.40)
Entry Price: $1.00 (11/30/2018)
Exit Target: $2.00
Stop Target: $1.05 (Stop Limit)
Action: The Stop Limit at $1.05 tripped on Tuesday’s pullback to $29.14. Although slightly disappointed we were stopped out, I wanted to protect profits given the market volatility.
Symantec (SYMC, $21.96, down $0.40)
SYMC January 23 calls (SYMC190118C00023000, $0.60, down $0.15)
Entry Price: $0.75 (11/30/2018)
Exit Target: $
Stop Target: None
Action: Shares traded down to $21.89 with Upper support at $22-$21.75 failing to hold. Lowered resistance is at $22.25-$22.50.
Yeti Holdings (YETI, $16.87, down $0.14)
YETI December 20 calls (YETI181221C00020000, $0.15, down $0.05)
Entry Price: $0.85 (11/28/2018)
Exit Target: $1.60-$2.40
Stop Target: None
Action: Lower resistance at $17-$17.50 was cleared on the run to $17.40. Support at $16.50-$16 held on the backtest to $16.78.
Starbucks (SBUX, $66.65, down $0.85)
SBUX January 60 puts (SBUX190118P00060000, $0.35, up $0.15)
Entry Price: $0.60 (11/15/2018)
Exit Target: $1.20
Stop Target: None
Action: Fresh support is at $66.50-$66. Lowered resistance is at $67-$67.50.