MomentumOptions.com Pre-Market Update for 10/29/2019

S&P 500 Taps Fresh All-time High

8:00am (EST)

The market  showed continued momentum on Monday after President Trump offered another upbeat assessment on the progress in the U.S./ China trade talks. Trump said phase one talks with China are ahead of schedule with the agreement expected to be signed in November. 

The rally helped push the major indexes towards and past all-times highs on the open with much of the gains holding into the closing bell. One sour note was the action in the VIX Index as volatility stayed slightly elevated throughout the session.

The Nasdaq rallied 1% after testing an intraday high of 8,335. Prior and lower resistance from July at 8,300-8,350 was cleared and held with a close above the latter and the all-time high at 8,339 getting 8,450-8,500 in play.

The Russell 2000 surged 0.9% following the 2nd half push to 1,576. Early September and upper resistance at 1,560-1,575 was cleared but held with continued closes above this level keeping 1,585-1,600 in play.

The S&P 500 was higher by 0.6% after opening at an all-time high of 3,032 while topping out at 3,044. Fresh and lower resistance at 3,050-3,075 was challenged but held with a possible melt-up rally towards 3,100-3,125 on a move above 3,075.

The Dow rose 0.5% after trading to a high of 27,167 while holding the 27,000 level throughout the session. Lower resistance from mid-September and early July at 27,200-27,400 was challenged but held with the all-time high at 27,398.

Technology and Healthcare were the strongest sectors after soaring 1.3% and 1%, respectively, while Communications Services popped 0.9%. Utilities and Real Estate were the leading sector laggards for the 2nd-straight session after sinking 1.4% and 1.1%, respectively. Energy and Consumers Staples were down 0.6% and 0.2% to round out the losers.

In economic news, International Trade in Goods for September narrowed to -$70.4 billion versus forecasts of -$73.5 billion. Exports declined -1.6% to $135.9 billion after rising 0.3% to $138.1 billion in August. Imports dropped -2.3% to $206.3 billion following August’s 0.5% gain to $211.1 billion. Advance wholesale inventories fell -0.3% to $677.4 billion in September, while retail inventories increased 0.3% to $677.1 billion.

Chicago Fed National Activity Index for September checked in at -0.45. The 3-month average fell to -0.24 from -0.06. According to the report, 54 of the 85 components made negative contributions, while 31 made positive contributions.

Retail Inventories for September were up 0.3% while Wholesale Inventories for September were down -0.3% for the month.

Dallas Fed Manufacturing Survey for October came in at -5.1 versus estimates for a print of 1.2.

The iShares 20+ Year Treasury Bond ETF (TLT) fell out of a 5-session trading range following the intraday dive to $136.99. Prior and upper support at $137-$136.50 was breached but held. A close below the latter and the September low at $136.54 would signal additional weakness towards $134.50-$134 and levels from early August.

Current and lowered resistance is at $137.50-$138.

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The S&P 500 Volatility Index ($VIX) opened at 13.01 and stayed slightly elevated throughout the session, despite the market rally, with the late day high tapping 13.13. Lower resistance at 13-13.50 was cleared and held with a close above the latter reopening upside risk towards 14.50-15. 

Major support from mid-July remains at 12.50.

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The Spider S&P 500 ETF (SPY) extended its winning streak to 4-straight sessions and 5 of the past 6 after trading to a fresh all-time high of $303.85. New and lower resistance at $303.50-$304 was cleared but held. A close above the latter would be an ongoing bullish signal with blue-sky territory towards $305-$307.50, depending on momentum.

Current and rising support is at $302-$301.50. A move below the latter would signal a possible backtest towards $300.50-$300.

RSI remains in an uptrend with resistance at 65-70 and the latter representing the June/ July peak. A close above 70 would signal additional strength towards 75 and the late April high. Support is at 60-55.

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The Health Care Select Sector Spider (XLV) was up for the 2nd-straight session after trading to an intraday high of $93.20. Prior and lower resistance from early July at $93-$93.50 was cleared and held by a penny. Continued closes above the latter would be a bullish signal for a retest towards $94-$94.50 with the early July peak at $94.42. The 52-week and all-time high is at $95.92 from last December.

Fresh support is at $92.50-$92. A close below the latter would likely signal a possible near-term top with additional selling pressure towards $91.50-$91.

RSI is back in an uptrend with resistance at 65. Continued closes above this level would be a bullish development for additional strength towards 70-75 and the latter representing the June high. Support is at 60 with a move back below this level signal additional weakness towards 55-50.

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Today’s earnings announcements:

Before the open: AutoNation (AN), Bio-Techne (TECH), Commvault Systems (CVLT), ConocoPhillips (COP), Corning (GLW), Diebold Nixdorf (DBD), Eaton (ETN), Franklin Electric (FELE), General Motors (GM), GrubHub (GRUB), HCA Healthcare (HCA), Ingersoll-Rand (IR), Kellogg (K), Mastercard (MA), Pfizer (PFE), Ryder System (R), Unifi (UFI), Waters (WAT), Xerox (XRX), Zebra Technologies (ZBRA)

After the close: Advanced Micro Devices (AMD), Allstate (ALL), Amgen (AMGN), Boston Beer Company (SAM), Cheesecake Factory (CAKE), Chubb (CB), Electronic Arts (EA), FireEye (FEYE), Genworth Financial (GNW), 

Lattice Semiconductor (LSCC), Mattel (MAT), MicroStrategy (MSTR), National Instruments (NATI), OneSpan (OSPN), Public Storage (PSA), Ryerson (RYI), Stryker (SYK), UMB Financial (UMBF), Verisk Analytics (VRSK), Yum China Holdings (YUMC), Zendesk (ZEN)

I have made adjustments on our current EEM position to protect profits and hopefully cash out on our next triple-digit winner. I could have 1-2 New Trades today but I want to be cautious ahead of the Fed news on Wednesday. If the market continues towards fresh all-times highs we won’t miss anything as the major indexes could rally 3%-5%. However, if Fed Head Jay Powell makes a slight slip of the tongue, the bears could be ready to pounce.

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, $14.85, up $0.03)

VIAV December 16 calls (VIAV191220C00016000, $0.40, down $0.05)

Entry Price: $0.50 (10/21/2019)

Exit Target: $1.00

Return: -20%

Stop Target: None

VIAV January 16 calls (VIAV200117C00016000, $0.55, down $0.05)

Entry Price: $0.65 (10/21/2019)

Exit Target: $1.30

Return: -17%

Stop Target: None

Action: Current and upper support at $14.75-$14..50 held with Monday’s intraday low reaching $14.77. Resistance remains at $15-$15.25. Earnings are due out after Wednesday’s close.

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iShares MSCI Emerging Markets Fund (EEM, $42.95, up $0.25)

EEM November 43 calls (EEM191115C00043000, $0.55, up $0.15)

Entry Price: $0.35 (10/17/2019)

Exit Target: 0.70 (Limit Order on half)

Return: 63%

Stop Target: 40 cents

Action: Set a Limit Order to close half the trade at 70 cents. Set an initial Stop Limit at 40 cents to start protecting profits.

Monday’s high reached $43.06 with fresh and lower resistance at $43-$43.25 holding getting cleared but holding by a nickel. A close above the latter gets $43.50-$43.75 and the July peak at $43.74 in play. Rising support is at $42.75-$42.50.

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Mylan (MYL, $18.97, up $0.27)

MYL November 20 calls (MYL191115C00020000, $0.70, up $0.10)

Entry Price: $0.80 (10/15/2019)

Exit Target: $1.60

Return: -13%

Stop Target: None

Action: Shares soared to a high of $19.26 with fresh and lower resistance at $19.25-$19.50 getting breached but holding. Support is trying to move up to $18.75-$18.50.

Earnings are due November 5th.

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Limelight Networks (LLNW, $4.22, down $0.15)

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)

Return: 122%

Stop Target: $1.10 (Stop Limit)

Action: Upper support at $4.20-$4.10 was tripped but held on the fade to $4.19 yesterday. Resistance remains at $4.30-$4.40.

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