MomentumOptions.com Pre-Market Update for 9/11/2019
Small-Caps Clear 50-Day Moving Average
The market were sluggish throughout the 1st half of Tuesday’s action before showing some midday strength on news China may offer to buy more U.S. goods in trade talks. According to reports, China is expected to agree to purchase more U.S. agricultural goods in hopes of reaching a better trade agreement as the two sides prepare for a meeting between their top negotiators in October.
The choppy resumed shortly afterwards and once the news faded with the major indexes closing mostly higher for session and Tech lagging. The small-caps showed continued strength as its largest sector, Financials, remained strong and have been one of the factors holding them back over the past few months.
The Russell 2000 was up for the 2nd-straight session after jumping 1.2% while tapping a late day high of 1,543. Lower resistance at 1,545-1,560 held on the close above the 50-day moving average with a move above the latter getting 1,575-1,590 in play.
The Dow extended its winning streak to 5-straight after adding 0.3% and closing on its session high of 26,909. Near-term and lower resistance at 27,00-27,250 held with the July all-time high at 27,398.
The S&P 500 added a point, or 0.03%, following the late day run to 2,979 and closing high. Lower resistance at 3,000-3,025 held with the all-time peak at 3,027, also set in July.
The Nasdaq fell 3 points, or 0.04%, after trading in the red throughout the day while bottoming at 8,001. Upper support at 8,050-8,000 and the 50-day moving average held for the 2nd-straight session with a close below the latter getting 7,900-7,850 in focus.
Energy led sector strength after soaring 1.2% while Materials and Industrials advanced 1% and 0.9%, respectively. Real Estate sank 1.5% to lead sector laggards while Consumer Staples and Technology fell 0.6% and 0.5%.
In economic news, NFIB Small Business Optimism Index was down 1.5% to 103.1 in August, after rebounding 1.4% to 104.7 in July, and missing expectations for a reading of 103.5. Declines were broad-based as plans to hire dipped to 20% from 21% previously, while those expectorating a better economy dropped to 12% from 20%. Those expecting higher sales slid to 17% from 22%.
Redbook Store Sales were up 6.4% for the year in the week ending September 7th.
U.S. weekly chain store sales dropped 2.7% in the week ending September 7th after rising 1.2% in the prior week. Hurricane Dorian has a major impact, while a heat wave across the Southeast diminished demand for seasonal fall items. There wasn’t much action from the Labor Day holiday weekend, as well. On a 12-month basis, sales slowed to a 1.1% year-over-year clip versus the 2.1% pace previously.
The JOLTS report showed job openings declined 31,000 to 7,217,000 in July, after slumping 136,000 to 7,248,000 in June, and missing forecasts for a print of 7,311,000. The job openings rate fell to 4.5% from 4.6% while hirings surged 237,000 to 5,953,000 after the prior 44,000 decline to 5,716,000 with the rate rising to 3.9% from 3.8%. Quitters increased 130,000 to 3,592,000 after slipping 16,000 to 3,462,000 previously with the rate edging up to 2.4% from 2.3%.
The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 3rd time in 4 sessions after testing a low of $140.66 ahead of the closing bell. Mid-August and upper support at $140.50-$140 held. A close below the $139.50 level reopens risk towards $138.50-$138 and the 50-day moving average.
Lowered resistance at $141.50-$142.
The S&P 500 Volatility Index ($VIX) closed slighter lower despite tapping a morning peak of 16.52. Upper resistance at 16-16.50 was breached but held. A close above the latter and the 50-day moving average would be a cautious signal with risk towards 17-17.50 and the 200-day moving average.
The fade to 15.11 into the close held major support at 15 for the 3rd-straight session. A close below this level would be an ongoing bullish signal for the market with fresh downside targets at 14-13.50 for the VIX.
The S&P 400 Mid Cap Index ($MID) showed strength for the 4th time in 5 sessions after closing on its session high of 1,937. Late June and lower resistance at 1,925-1,950 was cleared and held on the 2nd-straight close above the 50-day moving average. This was a continuing bullish signal with continued closes above 1,950 suggesting a retest towards 1,975-2,000.
Current support is at 1,910-1,890. A move below the latter would signal a near-term top and reopen risk towards 1,875 and the 200-day moving average and the prior breakout level from earlier this month.
RSI is an uptrend with resistance at 60-65 and the latter representing the July peak. A close above 65 would be an ongoing bullish signal for additional strength towards 70-75 and February highs. Support is at 55-50.
The Health Care Select Sector Spider (XLV) was up for the 4th time in 5 sessions despite the intraday plunge to $89.02. Near-term and upper support at $89.50-$89 was breached but held. A close below the latter and the 200-day moving average would likely signal additional selling pressure towards $88.50-$88 with the early August lows at $88.19 and $88.20, respectively.
Current resistance at $91-$91.50. Continued closes above the latter and the 50-day moving average would be a bullish signal for a possible retest towards $92.50-$93.
RSI has been flatlining but managed to clear resistance at 50. Continued closes above this level would be a slightly bullish development for additional strength towards 55-60 with the latter representing the mid-July peak. Support is at 45-40.
The bulls continue to show a run towards all-time highs and I’m still hoping to het into new trades. In the meantime, I’ve made adjustments to T (+177%) and PFE (+118%) with both trades up triple-digits!
Momentum Options Play List
Closed Momentum Options Trades for 2019: 29-11 (73%). 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, $37.58, up $0.79)
T October 36 calls (T191018C00036000, $1.80, up $0.55)
Entry Price: $0.65 (8/22/2019)
Exit Target: $2.50
Stop Target: $1.05, raise to $1.45 (Stop Limit)
Action: Raise the Stop Limit from $1.05 to $1.45 to lock-in another triple-digit winner. Yesterday’s high tapped $2.02.
Tuesday’s high reached $37.72 with lower resistance at $37.75-$38 holding. Support is at $37-$36.75.
A number of analysts upgraded the stock and Price Targets following news of a major 3.8% stake in the company by Elliot Management
Pfizer (PFE, $37.38, up $0.55)
PFE December 37 calls (PFE191220C00037000, $1.85, up $0.30)
Entry Price: $0.85 (8/16/2019)
Exit Target: $1.70, raise to $2.50
Stop Target: $1.30, raise to $1.60 (Stop Limit)
Action: Raise the Exit Target from $1.70 to $2.50. Raise the Stop Limit from $1.30 to $1.60 to further protect profits.
Lower resistance at $36.75-$37 was recovered with shares tapping a high of $36.84. Rising support is at $36.50-$36.25.
MGM Resorts International (MGM, $28.80, up $0.40)
MGM October 30 calls (MGM191018C00030000, $0.55, up $0.10)
Entry Price: $0.95 (8/13/2019)
Exit Target: $1.90
Stop Target: 10 cents (Stop Limit)
Action: Tuesday’s trip to $28.82 cleared and held lower resistance at $28.75-$29. The close above the 50-day moving average was a bullish signal for additional strength towards the $29.50 area. Support is at $28.50-$28.25 with a move below $28 possibly forcing an early exit for the trade.
Viavi Solutions (VIAV, $14.11, up $0.18)
VIAV September 15 calls (VIAV190920C00015000, $0.10, flat)
Entry Price: $0.65 (7/15/2019)
Exit Target: $1.30
Stop Target: None
Action: Lowe resistance at $14.25-$14.50 and the 50-day moving average held on the push to $14.14. Support remains at $14-$13.75.
Cypress Semiconductor (CY, $23.22, up $0.03)
CY September 17 calls (CY190920C00017000, $6.10, up $0.05)
Entry Price: $0.75 (5/16/2019)
Exit Target: $6.75 (Limit Order) (closed half at $1.70 on 5/29)
Stop Target: $5 (Stop Limit)
Action: Continue to hold.
Infineon (IFNNY) will acquire Cypress for $23.85 per share in cash. Cypress expects to continue its quarterly cash dividend payments until the transaction closes and these options have an intrinsic value of $6.85. We will continue to keep the trade open but have set a Stop Limit in place for protection.