MomentumOptions.com Pre-Market Update for 9/17/2019
Small-Caps Show Strength Despite Spike in Oil
The market were choppy throughout Monday’s action following drone strikes on an oil facility in Saudi Arabia over the weekend. The attacks, which the U.S. has blamed on Iran, hit key Saudi facilities, disrupting 5% of the global daily oil production.
Despite the heightened geopolitical risks and the spike in oil, the major indexes held near-term support levels with the small-caps showing strength throughout the session. Volatility was elevated but held prior resistance levels and is back at a neutral reading.
The Russell 2000 rose 0.4% despite the morning backtest 1,570. Fresh but shaky support at 1,575-1,565 was split with risk to 1,550-1,540 on a move below the latter. The intraday rebound to 1,590 and close a half-point below lower resistance at 1,585-1,600 was a slightly bullish signal for the overall market.
The Dow declined 0.5% after testing a midday low of 27,032 while snapping an 8-session winning streak. Upper support at 27,000-26,800 held with a move below the latter getting 26,600 and the 50-day moving average back in play.
The S&P 500 was down 0.3% after testing an intraday low of 2,990 while closing below the 3,000 level for the 1st time in 4 sessions. Prior support at 2,975-2,950 is back in focus with a move below the latter and the 50-day moving average being a bearish development.
The Nasdaq gave back 0.3%, as well, following the opening low at 8,121. Near-term and upper support at 8,150-8,100 was breached but held with a close below 8,050 and the 50-day moving average signaling additional weakness towards 8,000-7,950.
Energy led sector strength after zooming 3.4% while Real Estate added 1%. Materials were the weakest sector after falling 1.6% while Consumer Staples and Consumer Discretionary dropped 1.3% and 1%, respectively.
In economic news, Empire State Manufacturing Survey fell 2.8 points to 2 in September, well below expectations for a print of 7, after inching up a half-point to 4.8 in August. The employment index jumped to 9.7 from -1.6, with the workweek rebounding to 1.7 from -1.3, although new orders slipped to 3.5 from 6.7. Prices paid increased to 29.4 from 23.2, and prices received moved up to 9.2 from 4.5. The 6-month index dropped to 13.7, from 25.7, and is the lowest since April, with employment at 12.1 from 21.1, and new orders at 21.9 from 31.7. The future prices paid index climbed to 42.5 from 38.1, with prices received at 17 from 12.9.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 5-session losing streak after trading to a high of $138.57. Fresh and lower resistance at $138.50-$139 and the 50-day moving average was challenged but levels that held with continued closes above the $140 level being a more bullish development of a near-term bottom.
Support is at $137-$136.50. A close below the $136 level would be a renewed bearish signal with risk towards the $134-$133.50 area.
The S&P 500 Volatility Index ($VIX) was up for the 1st time in 5 sessions following the morning pop to 15.29. Prior and lower resistance at 15-15.50 was breached but held. A move above the latter would be a slightly bearish signal for the market with upside risk towards 16-16.50 and the 50/200-day moving averages.
Fresh support is at 14-13.50.
The Spider S&P 500 ETF (SPY) fell for the 2nd-straight session after trading to an intraday low of $299.45. Current and upper support at $299.50-$299 was tripped but held on the 4th-straight close above the $300 level. A close below $299 would be a slightly bearish signal with downside risk towards $298-$297.50.
Lowered resistance is at $301-$301.50 with additional hurdles at $302-$302.50.
RSI is in a downtrend with support at 60. A move below this level would signal additional weakness towards 55-50 with the latter representing prior and late August resistance. Current resistance is at 65 with a move above this level being a bullish signal for a run towards 70-75 and early July highs.
The Energy Select Sector Spider (XLE) was up for 2nd-straight session after surging to a high of $63.65. Late July and lower resistance at $63.50-$64 was cleared but held. A close above the $64.50 level and the mid-July high of $64.66 would be an ongoing bullish signal for continued strength towards $65-$65.50 and prior support levels from late April.
Current and rising support is at $62.50-$62 and the 200-day moving average. A close below the latter would be signal a false breakout with backtest potential towards $61.50-$61.
RSI is in an uptrend with resistance at 70. A close above this level would be a bullish signal for additional strength towards 75-80 and May 2018 highs. Support is at 65-60.
Today’s earnings announcements:
Before the open: Apogee Enterprises (APOG), Cracker Barrel Old Country Stores (CBRL), Mereo BioPharma Group (MREO)
After the close: Adobe (ADBE), Chewy (CHWY), FedEx (FDX), ZK International Group (ZKIN)
We got some super sweet action with our MGM position yesterday and I’m still keeping my fingers crossed for VIAV. Additionally, I could have a 1-2 New Trades this morning so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 31-11 (74%). 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.
Fox (FOXA, $33.60, down $0.23)
FOXA October 35 calls (FOXA191018C00035000, $0.60, down $0.05)
Entry Price: $0.70 (9/11/2019)
Exit Target: $1.40
Stop Target: None
Action: Monday’s low tapped $33.47 with upper support at $33.50-$33.25 getting breached but holding for the 2nd-straight session. Lowered resistance is at $33.75-$34.
Limelight Networks (LLNW, $3.21, up $0.02)
LLNW January 3 calls (LLNW200117C00003000, $0.55, flat)
Entry Price: $0.60 (9/11/2019)
Exit Target: $1.50-$2
Stop Target: None
Action: Shares tested a high of $3.28 with lower resistance at $3.30-$3.40 holding. Support at $3.10-$3.
MGM Resorts International (MGM, $29.62, up $0.62)
MGM October 30 calls (MGM191018C00030000, $0.95 up $0.35)
Entry Price: $0.95 (8/13/2019)
Exit Target: $1.90
Stop Target: 40 cents (Stop Limit)
Action: Prior and upper resistance at $30-$30.50 was challenged but held on the session high. Support is at $29-$28.50 and the 50-day moving average.
Viavi Solutions (VIAV, $14.84, up $0.02)
VIAV September 15 calls (VIAV190920C00015000, $0.20, down $0.05)
Entry Price: $0.65 (7/15/2019)
Exit Target: $1.30 (Limit Order)
Stop Target: None
Action: Lower resistance at $15-$15.25 was tapped but held on the session peak. Rising support is at $14.75-$14.50.
This is one of our last remaining trade from the summer. A close above $15.25 will help this trade out a ton but these options expire this Friday. We are still hoping to make a profit, or at least break even, but could come down to the wire as we expect to hold open and up until expiration. If shares close below the $14.50 level would could save the remaining premium while rolling out into December or January call options. I LOVE this stock for the longer-term as we have been playing calls on VIAV for a few years now.
Cypress Semiconductor (CY, $23.36, up $0.02)
CY September 17 calls (CY190920C00017000, $6.15, flat)
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 until this Friday and when the options expire.
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.