MomentumOptions.com Pre-Market Update for 3/4/2019
Nasdaq Up 10-Straight Weeks
8:00am (EST)
The market rebounded on Friday on news White House officials are planning a final trade deal with China ahead of the summit between President Donald Trump and Chinese leader Xi Jinping in the coming weeks. Economic news was weak but was offset by lower volatility on the higher market highs.
The gains helped the major indexes recover losses from earlier in the week but it wasn’t enough to extend the Dow’s weekly winning streak which ended at 9, as did the Russell 2000. The Nasdaq, however, was up for the 10th-straight week with the S&P recovering the 2,800 level for the first time since early November.
The Russell 2000 was higher by 0.8% after reaching a late session peak of 1,590. Fresh and lower resistance at 1,590-1,600 was tested but held on the close back above the 200-day moving average.
The Nasdaq was up 0.8% following the late session push to 7,603. Major resistance from earlier in the week and early November at 7,600 was breached but held with upside potential towards 7,650-7,700 on continued closes above this level.
Tech rallied 0.9% for the week while the small-caps were lower by a half-point.
The S&P 500 rose 0.7% following the late day run to 2,808. Lower resistance from early November at 2,800-2,825 was cleared and held with a move above the latter being a continuing bullish signal.
The Dow climbed 0.4% after trading to a high of 26,143. The close back above the 26,000 keeps current resistance at 26,250-26,500 in play.
For the week, the S&P 500 gained 0.4% while the Dow shed 5 points.
Energy led sector strength after zooming 1.8%. Healthcare surged 1.4% while Consumer Discretionary and Communication Services were up 0.8%. Consumer Staples dipped 0.2% to pace sector weakness while Materials and Real Estate slipped 0.1%.
Energy was higher by 1.1% for the week with Technology and Financials rising 0.9% and 0.8%, respectively. Materials and Real Estate were hit with losses of 1.4% and 1.2%, respectively.
The S&P 500 Volatility Index ($VIX) was weak throughout much of the session aside from the midday test to 14.84. Near-term resistance at 15-15.50 held for the 8th-straight session with the index closing below the 15 level for the 9th time in 10 sessions. A close above 16-16.50 and the 200-day moving average would be a slightly bearish signal.
Prior and upper support at 13.50-13 was breached but held on the late day fade to 13.41. Continued closes below 12.50 would be a bullish signal for a continued rally with downside risk to 11.50-11 and September lows.
The Russell 2000 ETF (IWM) rebounded to test a high of $158.34. Prior resistance is at $158.50-$159 held with last’s Monday’s peak at $159.50. Continued closes above the $160 level and early October support would be a more bullish signal for higher highs.
Near-term support is at $157.25-$156.75. A close below the latter opens up risk towards $155-$152.50 and previous support levels from early February.
RSI is back in a slight uptrend with resistance at 75. A move above this level would be a bullish signal for a possible run towards 80-85 and September 2017 peaks. Support is at 65-60.
The Materials Select Sector (XLB) fell for the 4th-straight session following the pullback to $54.79. Mid-February support at $54.50-$54 held with a close below the latter getting $53-$52.50 and the 50-day moving average in play.
Lowered and near-term resistance is at $55.50-$56 and the 200-day moving average. Continued closes back above the latter would signal a possible return of momentum for a run towards $57-$57.50.
RSI is in a downtrend with support at 55-50 with the latter holding since early January. A close below this level would be a bearish signal for a continued backtest towards 45-40. Resistance is at 60.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed Friday at 63.10% with the session high reaching 64.07%. Lower resistance from early February at 62.50%-65% held. A move above the latter would be a bullish development and signal additional strength towards 67.50%-70%. August resistance levels are in the 70%-72.5% range. Current support is at 62.50%-60% with a move below the latter being a slightly bearish signal for additional weakness.
The percentage of S&P 500 stocks trading above the 50-day moving average settled at 89.88% with the session high at 91.46%. Lower March and April 2016 resistance remains at 92.50%-95% with overbought levels still in play. Current support is at 87.50%-85% and consolidation levels that have been in the mix for 12-straight sessions. A move below the latter would be a bearish signal for additional weakness towards the 82.50%-80% area.
The month of March is typically bullish but can be prone to volatility, especially during options expiration week. The market is in one of the strongest starts to a new year in history, with the major indexes flirting with November resistance levels while in an over-extended technical condition. However, the market has been looking over-extended for much of the past month and I still think we can get one more leg higher before a pullback towards the 200-day moving averages.
The regular March options expire in 11 days while regular April options expire in 45 days. We have 3 open March trades with 2 showing losses. I still think they can make a comeback but where they close by this Friday will give us a better clue.
As far as our 4 open April trades, I’m bullish on all of them. The June calls have 109 days before expiration and we only have 1 current trade that is still showing a sweet profit.
As we close current bullish trades, we will need to be careful with our next batch of trades that will likely carry into April, May and June. The 1Q earnings season will be coming up in April and will be a major catalyst for how next major trend might unfold.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 10-2 (83%). 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, $30.82, down $0.30)
T April 32 calls (T190418C00032000, $0.25, down $0.08)
Entry Price: $0.34 (2/22/2019)
Exit Target: $0.70
Return: -26%
Stop Target: None
Action: Lower support at $31-$30.75 and the 200-day moving average was breached but held on Friday’s fade to $30.64. A close below $30.50 would be a slightly bearish signal. Lowered resistance is at $31-$31.25.
Boston Scientific (BSX, $40.75, up $0.63)
BSX April 45 calls (BSX190418C00045000, $0.45, up $0.05)
Entry Price: $0.53 (2/22/2019)
Exit Target: $1.10
Return: -15%
Stop Target: None
BSX March 41 calls (BSX190315C00041000, $0.70, up $0.30)
Entry Price: $0.50 (2/14/2019)
Exit Target: $1.00, raise to $1.25 (Limit Order on half)
Return: 40%
Stop Target: None
Action: Set a Limit Order at $1.25 on the BSX March 41 calls to close half the position. Friday’s high reached 96 cents.
Shares tested a fresh 52-week high of $40.90 with new and lower resistance at $41-$41.50 holding. Rising support is at $40-$39.50.
Freeport-McMoRan (FCX, $12.87, down $0.03)
FCX April 14 calls (FCX190418C00014000, $0.30, down $0.05)
Entry Price: $0.55 (2/22/2019)
Exit Target: $1.10
Return: -45%
Stop Target: None
Action: Upper support at $12.75-$12.50 held for the 2nd-straight session on the the backtest to $12.79. A close below the latter would be a slightly bearish signal. Resistance remains at $13-$13.25.
Bank of America (BAC, $29.31, up $0.23)
BAC April 30 calls (BAC190418C00030000, $0.70, up $0.05)
Entry Price: $0.70 (2/20/2019)
Exit Target: $1.40
Return: 0%
Stop Target: 35 cents
Action: Friday’s peak reached $29.65 with lower resistance at $29.25-$29.50 holding into the closing bell. A close above the latter should lead to a quick pop past $30. Rising support is at $29.25-$29.
Viavi Solutions (VIAV, $13.20, up $0.07)
VIAV June 13 calls (VIAV190621C00013000, $1.10, flat)
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: Lower resistance at $13.25-$13.50 held on the run to $13.26. Support remains at $13-$12.75.
Cypress Semiconductor (CY, $15.43, down $0.03)
CY March 16 calls (CY190315C00016000, $0.20, flat)
Entry Price: $0.40 (2/12/2019)
Exit Target: $0.80
Return: -50%
Stop Target: None
Action: Shares tested a high of $15.63 with lower resistance at $15.75-$16 easily holding. Support is at $15.50-$15.25.
Communication Services (XLC, $46.28, up $0.36)
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: Resistance at $46-$46.50 was split following Friday’s trip to $46.30. Shaky support is at $46-$45.50.
I would like to see shares clear $47 by Friday’s close.
