MomentumOptions.com Pre-Market Update for 10/24/2019
Bulls Stay Active Despite Choppy Action
The market showed continued choppiness on Wednesday following disappointing earnings from a couple of Dow components and ongoing geopolitical news. President Trump announced that he is lifting sanctions on Turkey after the country said they will be ending combat and imposing a permanent ceasefire in Syria.
The tight trading ranges led to slightly higher closes for the major indexes with the overall market still showing signs of breaking out to higher highs. However, if the double-tops from July and September aren’t cleared over the near-term, another pullback to previous support levels seems certain.
The S&P 500 rose 0.3% while closing on its session peak of 3,004. Lower resistance at the 3,000 level was cleared and held to keep upper resistance at 3,025 and the July record peak at 3,027 in focus.
The Dow advanced 0.2% after testing an intraday high of 26,896. Near-term and lower resistance at 26,800-27,000 was recovered with a close above the latter getting 27,200-27,400 and fresh all-time highs back in play.
The Nasdaq also added 0.2% following the first half push to 8,122. Near-term and lower resistance at 8,100-8,150 was cleared and held with more additional hurdles at 8,200-8,250 and the mid-September high at 8,243.
The Russell 2000 edged up 0.1% after tapping an intraday high of 1,554. Lower resistance at 1,560-1,575 was challenged but held with a close above the latter getting 1,585-1,600 back in play.
Energy and Communication Services were the strongest sectors with gains of 0.8% while Healthcare and Materials were higher by 0.6%. Consumer Discretionary showed the most sector weakness after falling 0.5% while Industrials were marginally lower after slipping 0.01%.
The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 2nd-straight session with Wednesday’s high reaching $140.31. Prior and lower resistance at $140-$140.50 was cleared but held. Continued closes above the $141 level would be a slightly bullish signal for a possible retest towards $142-$142.50 and the 50-day moving average.
Support remains at $139-$138.50.
The S&P 500 Volatility Index ($VIX) bubbled to a high of 15.12 on the open with upper resistance at 14.50-15 getting breached but holding. A close above the later would be a slightly bearish development with upside risk towards 15.50-16 and the 200-day moving average.
Near-term and upper support at 14-13.50 held on the fade to 14.04 afterwards. A close below the latter could lead to short covering in the market and would be a bullish signal for continued weakness towards 13-12.50.
The S&P 400 Mid Cap Index ($MID) showed strength after trading to an intraday high of 1,950. Near-term and lower resistance from early September at 1,950-1,970 was cleared but held. Continued closes above the 1,975 level and the mid-September peak at 1,976 would be a bullish signal for a retest towards 1,980-2,000 and fresh all-time highs.
Current and key support is at 1,940. A close below this level would be a slightly bearish signal for a backtest towards 1,930-1,910 and the 50-day moving average.
RSI is flatlining with support at 55-50. A close below the latter would signal additional weakness towards 45-40 and the latter representing the early monthly low. Resistance is at 60 and the September peak with a move above this level signaling strength towards 65-70.
The Consumer Staples Select Spiders (XLP) extended its winning streak to 6-straight sessions following the intraday push to $61.28. Near-term and lower resistance at $61.50-$62 was challenged but held. A close above the latter and the September all-time high at $61.92 would be an ongoing bullish signal with blue-sky potential towards $63-$63.50.
Current support is at $60.75-$60.25 and the 50-day moving average. A close below the latter would be a slightly bearish signal with downside risk towards $60.25-$59.75 and prior lows from the start of the month.
RSI is in an uptrend with resistance at 60. Continued closes above this level would signal additional strength towards 65-70 and the latter representing the July high. Support is at 55-50.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 36-11 (77%). 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.
Viavi Solutions (VIAV, $15.04, down $0.15)
VIAV December 16 calls (VIAV191220C00016000, $0.50, down $0.05)
Entry Price: $0.50 (10/21/2019)
Exit Target: $1.00
Stop Target: None
VIAV January 16 calls (VIAV200117C00016000, $0.65, down $0.05)
Entry Price: $0.65 (10/21/2019)
Exit Target: $1.30
Stop Target: None
Action: Upper support at $15-$14.75 was breached but held on the pullback to $14.98 yesterday. Resistance is at $15.25-$15.50.
iShares MSCI Emerging Markets Fund (EEM, $42.40, up $0.01)
EEM November 43 calls (EEM191115C00043000, $0.35, flat)
Entry Price: $0.35 (10/17/2019)
Exit Target: 0.70
Stop Target: None
Action: Lower resistance at $42.50-$42.75 was challenged but held on Wednesday’s run to $42.44. Support remains at $42.25-$42.
Mylan (MYL, $18.52, up $0.22)
MYL November 20 calls (MYL191115C00020000, $0.55, up $0.05)
Entry Price: $0.80 (10/15/2019)
Exit Target: $1.60
Stop Target: None
Action: Lower resistance at $18.50-$18.75 was cleared and held with yesterday’s peak reaching $18.69. Support is at $18.25-$18.
Limelight Networks (LLNW, $4.22, down $0.17)
LLNW January 3 calls (LLNW200117C00003000, $1.30, down $0.10)
Entry Price: $0.60 (9/11/2019)
Exit Target: $1.50-$2 (closed 1/3 @ $1.40 on 10/22)
Stop Target: $1.10 (Stop Limit)
Action: Fresh and upper support at $4.20-$4.10 held on the session low. Lowered resistance at $4.30-$4.40.