MomentumOptions.com Pre-Market Update for 1/11/2019
Bulls Get 5th-Straight Win
The market closed closed higher for the 5th-straight session despite opening weakness and a backtest to near-term and mid-December support levels. Fed Speak and more rhetoric over the DC gridlock and partial government shutdown led to the choppiness before the midday rebound into positive territory.
The major indexes also cleared previous session highs and remain in track for a possible push past the 50-day moving averages. The VIX also tested a higher high but settled below the 20 level for the 2nd-straight session.
The Dow rose 0.5% after testing a high of 24,014 ahead of the closing bell. Fresh support is at 24,250-24,500 and the 50-day moving average following the close above the 24,000 level.
The S&P 500 was up 0.5% following the late day run to 2,597. Near-term and major support at 2,600 held with a close above this level getting 2,625-2,650 and the 50-day moving average in play.
The Russell 2000 was also higher by 0.5% after at its session high of 1,445. Fresh resistance at 1,450-1,455 and the 50-day moving average held with a close above the latter signaling additional momentum 1,475-1,500.
The Nasdaq gained 0.4% after trading to a late session high of 6,991. Major resistance at 7,000 and the 50-day moving average held for the 2nd-straight session with fluff up fo 7,150-7,200 on continued closes above these levels.
Real Estate was the strongest sector after rising 1.6%, respectively. Industrials and Utilities were up 1.4%.
Consumer Discretionary was the only sector laggard after falling 0.3%.
The S&P 500 Volatility Index ($VIX) closed in the red for the 10th time in the past 11 sessions despite the first half pop to 21.32. The lower low than the previous session easily held resistance at 22-22.50 with a close above the latter being a slightly bearish development.
The low reached to 19.29 with the close below early December support at 20-19.50 being a continued bullish signal. The next wave of support is at 18-17.50.
The Spider Small-Cap 600 ETF (SLY) was up for the 5th-straight session despite trading down to an opening low of $62.92. Fresh and upper support at $63-$62.50 was breached but held. A close below $62 would likely signaling additional selling pressure with risk towards $61-$60.
The rebound to $63.88 and close above lower resistance at $63.50-$64 was a continuing bullish signal. A move above the latter gets more important hurdles at $64.50-$64.75 and the 50-day moving average in play.
RSI is remains in an uptrend with resistance at 60. A move above this level would signal additional strength towards 65-70 with the latter representing the August peaks. Support is at 55-50.
The Utilities Select Spider (XLU) has been in a mini trading range between $51.75-$53.25 for 10 sessions but has been making higher highs and higher lows for 3-straight sessions. Thursday’s peak reached $53.53 with continued closes above the $53.50 level getting $54 and the 50-day moving average in play.
Rising support is at $52.75-$52.50. A move above the latter would signal additional weakness towards $52-$51.75 and the 200-day moving average.
RSI is in an uptrend with resistance is at 50. Continued closes above this level would be a near-term bullish signal for a run towards 55-60. Support is at 45-40.
Shares of Bed Bath & Beyond (BBBY) surged nearly 17% yesterday after topping earnings estimates. I mentioned I had the stock on my Watch List and I should have looked at the chart more closely this week as shares made higher highs and higher lows into the announcement.
Earnings are always tricky to trade but the bounce off the recent 52-week low north of $10 was a bullish indicator, along with the massive short interest in the stock.
The BBBY January 12 calls (BBBY190118C00012000, $2.32, up $1.07) went into Wednesday close at $1.25 and zoomed over 85% with shares trading to a high of $14.34 into the close. Of course, if shares would have sank double-digits, these call options would likely have expire worthless by next Friday’s close and when they expire.
There is always risk involved with earnings but every now and then I like to swing the bat on these types of trades. Although our current trades didn’t get this nice of a pop, I’m loving the current price action in the market.
I mentioned a Follow Thru Friday and a Marvelous Monday would keep the current bullish January uptrend intact. I would also like to see the VIX continue to hold into next week and ahead of the flood of 4Q earnings that will start to flow.
Also, we sent out a test Text Alert after the market closed yesterday as we have made a few upgrades to our system. We have also been adding current and new subscribers to the list throughout the week so please let is know if you did not receive the message.
Additionally, the system automatically enters the phone number associated with billing when you first signup so please let us know if you need the number changed, as well.
Feel free to email me at Rick@MomentumOptionsTrading.com with any questions, comments, or concerns you may have on this topic or any other. Although I would still like to get long a few more trades, if you don’t hear from me by 3:30pm (EST), it means I didn’t add any new positions.
In the meantime, let’s go check the current positions and have a safe and great weekend if I don’t take any new action.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 0-0 (0%). 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.
Energy Select Spiders (XLE, $62.38, up $0.18)
XLE February 64 calls (XLE190215C00064000, $1.20, flat)
Entry Price: $1.15 (1/8/2019)
Exit Target: $2.30
Stop Target: None
Action: Shares tested a high of $62.46 into the close with lower resistance at $62.50-$63 and the 50-day moving average holding for the 2nd-straight session. A close above the latter should give the position a nice pop and some momentum. Support remains at $62-$61.50.
CVS Health (CVS, $65.55, down $0.49)
CVS February 72.50 calls (CVS190215C00072500, $0.30, down $0.10)
Entry Price: $1.20 (1/8/2019)
Exit Target: $2.40
Stop Target: None
Action: Yesterday’s lower low tapped $64.56 with support at $65.50-$65 holding for the 2nd-straight session. A close below $64 would be a slightly bearish development. Resistance is at $67-$67.50.
Earnings are due out the first week of February and I’m looking for a surge past $70 – as long as shares can hold $64 the rest of this month.
New Age Beverages (NBEV, $6.04, down $0.06)
NBEV February 6 calls (NBEV190215C00006000, $0.70, down $0.05)
Entry Price: $0.50 (1/7/2019)
Exit Target: $1.00
Stop Target: 55 cents (Stop Limit)
Action: Shares tested a midday peak of $6.45 with fresh and upper resistance at $6.25-$6.50 holding. The options reached a peak of 88 cents. Support remains at $5.75-$5.50.
Consumer Staples Select Spiders (XLP, $51.48, up $0.30)
XLP February 53 calls (XLP190215C00053000, $0.40, flat)
Entry Price: $0.52 (1/7/2019)
Exit Target: $1.05
Stop Target: None
Action: Lower resistance at $51.50-$52 held on Thursday’s trip to $51.57. Support remains at $51-$50.50.
Imax (IMAX, $19.50, flat)
IMAX February 18 puts (IMAX190215P00018000, $0.40, flat)
Entry Price: $0.60 (1/3/2019)
Exit Target: $1.20
Stop Target: None
Action: Support is at $19.50-$19.25 with yesterday’s low tapping $19.31 on the open. Resistance is at $19.75-$20.
Earnings aren’t due out until late February so the news shouldn’t play into this trade unless they possibly warn of a miss and lower guidance. That would be beautiful but the company doesn’t usually warn the Street.