MomentumOptions.com Pre-Market Update for 2/26/2019
Market Settles Mixed Following Morning Breakout
8:00am (EST)
The market showed strength throughout Monday’s action following confirmation President Trump will extend the March 1st tariff deadline. The President also cited substantial progress on key issues was made following U.S./ China trade talks that also helped market enthusiasm.
The gains propelled the major indexes towards prior resistance levels from mid-October with support levels from early November in play on a pullback. The breakout to higher levels looks bullish on the charts, however, volatility stayed elevated throughout the session while holding the 15 level.
The Nasdaq advanced 0.4% following the opening push to 7,602. Lower and upper resistance from early November at 7,550-7,600 was tested on the close above the former with the 200-day moving average also holding for the 2nd-straight session.
The Dow added 0.2% after testing a high of 26,241. Fresh and lower resistance at 26,250-26,500 held on the 2nd-straight close above the 26,000 level.
The S&P 500 was up 0.1% following the morning run to 2,814 shortly after the opening bell. Lower resistance from early November at 2,800-2,825 was cleared but failed to hold.
The Russell 2000 slipped 0.1% after trading to a first half high of 1,602. Fresh and lower resistance at 1,600-1,615 was cleared but held on the 2nd-straight close above the 200-day moving average.
Materials led sector strength after rising 0.7%. Technology gained 0.5% while Financials and Industrials rose 0.4%.
Utilities were the worst performing sector after falling 0.8%. Real Estate and Consumer Staples were down 0.7% and 0.6%, respectively.
The S&P 500 Volatility Index ($VIX) tapped a low 13.44 shortly after the opening bell with upper support at 13.50-12.50 holding. The index turned higher within 20 minutes of trading and stayed elevated the rest of the session.
Fresh and lowered resistance at 14.50-15 held on the steady rise to 14.90 into the closing bell. A move above the latter would be a slightly bearish signal with risk towards 16-16.50 and the 200-day moving average.
The Spider Small-Cap 600 ETF (SLY) was lower for the 2nd time in the past 3 sessions following a 7-session winning streak. The late day fade to $69.95 breached fresh and upper support at $70-$69.50 on the close just below the former and the 200-day moving average.
October resistance at $70.50-$71 held on the morning rally to $70.65. A close above $72 would be a continuing bullish development for higher highs.
RSI is signaling slightly overbought levels with near-term resistance at 75. Continued closes above this level gets 80-85 and August 2017 peaks in play. Support is at 70 with a close below this level signaling additional weakness towards 65-60.
The Energy Select Sector Spider (XLE) was up for the 2nd-straight session with the intraday high reaching $66.09. Prior and lower resistance from mid-month at $66-$66.50 was challenged but held. Continued closes above the $67 level and late November resistance would be a slightly bullish signal for a possible run towards $69.50-$70 and the 200-day moving average.
Current support is at $65.50-$65 with a close below $64 signaling a near-term top.
RSI is back in a slight uptrend with mid-month hurdles at 65-68 and longer-term resistance at 70 from September/ October. Continued closes above the latter would signal additional momentum towards 75-80 and May 2018 highs. Support is at 60 with risk to 55-50 on a move below this level.
While I wasn’ too thrilled with the action in the VIX, the 15 level held, and offers a contrarian look. The lower close on the small-caps was also slightly disappointing but I still believe higher highs into March are in play…as long as the 200-day moving average holds on the VIX this week.
I have updated our current trades, including a Stop Limit for AMD, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 8-2 (80%). 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.
AT&T (T, $31.13, down $0.02)
T April 32 calls (T190418C00032000, $0.34, down $0.03)
Entry Price: $0.34 (2/22/2019)
Exit Target: $0.70
Return: 0%
Stop Target: 20 cents
T March 30 calls (T190315C00030000, $1.30, down $0.05)
Entry Price: $0.55 (2/12/2019)
Exit Target: $2.10
Return: 136%
Stop Target: $1.15 (Stop Limit)
Action: Lower resistance at $31.25-$31.50 held with Monday morning’s peak reaching $31.29. Near-term support remains at $31-$30.75.
Boston Scientific (BSX, $39.99, down $0.53)
BSX April 45 calls (BSX190418C00045000, $0.45, down $0.11)
Entry Price: $0.53 (2/22/2019)
Exit Target: $1.10
Return: -15%
Stop Target: None
BSX March 41 calls (BSX190315C00041000, $0.55, down $0.20)
Entry Price: $0.50 (2/14/2019)
Exit Target: $1.00
Return: 10%
Stop Target: None
Action: Shares closed on the session low with upper support at $40-$39.50 getting breached and failing to hold. Resistance is at $40.50-$41.
Advanced Micro Devices (AMD, $24.71, up $0.35)
AMD April 27 calls (AMD190418C00027000, $0.95, up $0.10)
Entry Price: $0.75 (2/22/2019)
Exit Target: $1.50
Return: 27%
Stop Target: 80 cents (Stop Limit)
Action: Set a Stop Limit at 80 cents to start protecting initial profits and to avoid a loss.
Monday’s surge to $25.52 pushed fresh and mid-October resistance at $25.50-$25.75 but levels that held into the close. Rising support is at $24.25-$24.
Freeport-McMoRan (FCX, $13.26, up $0.04)
FCX April 14 calls (FCX190418C00014000, $0.55, flat)
Entry Price: $0.55 (2/22/2019)
Exit Target: $1.10
Return: 0%
Stop Target: None
Action: Lower resistance at $13.25-$13.50 was cleared and held with Monday’s peak reaching $13.31. Support is at $13-$12.75.
Bank of America (BAC, $29.27, up $0.19)
BAC April 30 calls (BAC190418C00030000, $0.60, up $0.05)
Entry Price: $0.70 (2/20/2019)
Exit Target: $1.40
Return: -14%
Stop Target: 35 cents
Action: Shares tested a high of $29.59 with prior and lower resistance at $29.50-$29.75 holding. Current support is at $29-$28.75.
Viavi Solutions (VIAV, $13.16, down $0.18)
VIAV June 13 calls (VIAV190621C00013000, $1.10, down $0.10)
Entry Price: $0.60 (2/14/2019)
Exit Target: $1.80 (closed half at $1.20 on 2/19)
Return: 92%
Stop Target: $1.00 (Stop Limit)
Action: Support at $13.25-$13 was split on the fade to $13.15 yesterday. A close below the latter will likely take us out of the trade. Resistance is at $13.25-$13.50.
Cypress Semiconductor (CY, $15.74, up $0.06)
CY March 16 calls (CY190315C00016000, $0.40, flat)
Entry Price: $0.40 (2/12/2019)
Exit Target: $0.80
Return: 0%
Stop Target: None
Action: Shares tested a high of $15.93 with both upper and lower resistance at $15.75-$16 holding into the close. Support remains at $15.50-$15.25.
Communication Services (XLC, $46.12, up $0.05)
XLC March 48 calls (XLC190315C00048000, $0.10, flat)
Entry Price: $0.45 (2/1/2019)
Exit Target: $0.90
Return: -78%
Stop Target: None
Action: Fresh and lower resistance at $46.50-$47 held on Monday’s push to $46.40. Rising support is at $46-$45.50.
