MomentumOptions.com Pre-Market Update for 11/5/2019
Blue-Chips Follow Suite to Tag Fresh All-Time High/ Profit Alert (VIAV)/ New Trade (TIVO)
The market opened at fresh record highs to start Monday’s action amid increasing optimism on trade. Commerce Secretary Wilbur Ross reiterated over the weekend that good progress was being made on a phase one deal with China and also suggested the U.S may not need to impose EU auto tariffs.
The Nasdaq was up for the 3rd time in 4 sessions after rising 0.6% while trading to an intraday high of 8,451. Fresh and lower resistance at 8,450-8,500 was cleared but held with additional hurdles at 8,600-8,650 on a close above the latter.
The Russell 2000 also gained 0.6% with the session peak reaching 1,602. Fresh and lower resistance at 1,600-1,615 was cleared but held with a close above the latter and the May 52-week high at 1,618 getting 1,625-1,640 in play.
The Dow rose 0.4% after testing an all-time intraday high of 27,517. New and lower resistance at 27,500-27,750 was cleared but held with a close above the latter signaling a possible run towards the 28,000 level.
The S&P 500 was also higher by 0.4% following the record run to 3,085 shortly after the opening bell. Fresh and lower resistance at 3,075-3,100 was cleared and held with melt-up potential towards 3,125-3,150 on a move above the latter.
Energy was the strongest sector after zooming 3.3% while Industrials and Financials added 1.2% and 0.9%, respectively. Utilities and Real Estate were the weakest sectors for the 2nd-straight session after giving back 1.3% and 1.1%, respectively.
In economic news, Factory Orders dropped -0.6% in September, missing forecasts for a rise of 0.3%, and follows the -0.1% dip in August. Transportation orders dropped -2.8% following the 0.2% August gain. Excluding transportation, factory orders slipped -0.1% versus -0.2% previously. Nondefense capital goods orders excluding aircraft declined -0.6% versus -0.8% previously. Shipments fell -0.2% versus -0.3% previously, with nondefense capital goods shipments excluding aircraft -0.7% lower versus August’s -0.7%. Inventories rose 0.3% versus -0.1%. The inventory-shipment ratio was steady at 1.39.
The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 2nd-straight session after testing an intraday low of $138.53. Prior and upper support at $138.50-$138 was challenged but held. A close below the latter would be a ongoing bearish development with additional weakness towards $137-$136.50.
Lowered resistance is $139.50-$140 followed by $141.50-$142 and the 50-day moving average.
The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session
while testing a morning high of 13.13. Lower resistance at 13-13.50 was breached but held with the latter holding for the 7th-straight session. A close above the 13.50 level would be a cautious signal with risk towards 14.50-15.
Support is 12.50-12 with weakness towards 11.50-11 on a move below the latter.
The Spider Small-Cap 600 ETF (SLY) extended its winning streak to 2-straight sessions after surging to an intraday high of $70.41. Early May and late February resistance at $70.50-$71 was challenged but held. A close above the latter would signal a quadruple-top breakout with upside potentials towards $72-$72.50 and fresh 52-week peaks.
Near-term support has moved up to $70-$69.50. A close below the latter would signal a false breakout with backtest potential towards $68.50-$68.
RSI is back in an uptrend after clearing lower resistance at 65-70. A move above the latter gets 75-80 and February highs in play. Support is at 60 with a move below this level signaling additional weakness towards 55-50.
The Communication Services Select Sector Spider (XLC) was up for the 4th-straight session following the intraday push to $51.31. Near-term and lower resistance at $51.25-$51.50 was cleared but held. A move above the latter would be a bullish signal for a push towards $52-$52.50 with the current July all-time high at $51.87.
Current support is at $51-$50.75. A close below the $50.50 level would be a slightly bearish signal for a retest towards $50.25-$50 and the 50-day moving average.
RSI is in an uptrend with resistance at 60. A close above this level would be a bullish signal for additional strength towards 65-70 and July highs. Support is at 55-50 with the latter holding since mid-October.
I have a Profit Alert for our VIAV positions and a New Trade on TIVO this morning.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 40-11 (78%). 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.
Tivo (TIVO, $8.31, up $0.15)
Buy to Open TIVO January 9 calls (TIVO200117C00009000, $0.45, up $0.05)
Action: I like these call options at current levels and you can use a Limit Order up to 55 cents to get the best fills. These are the regular TIVO January 9 calls that expire on January 17th, 2020.
Viavi Solutions (VIAV, $15.77, down $0.34)
VIAV December 16 calls (VIAV191220C00016000, $0.55, down $0.20)
Entry Price: $0.50 (10/21/2019)
Exit Target: $1.00
Stop Target: 60 cents (Stop Limit)
VIAV January 16 calls (VIAV200117C00016000, $0.70, down $0.20)
Entry Price: $0.65 (10/21/2019)
Exit Target: $1.30
Stop Target: 75 cents (Stop Limit)
Action: Both Stop Limits were tagged on the backtest to $15.75 yesterday.
I would like to see a further backtest towards $15.25 so we can possibly reestablish fresh positions.
Limelight Networks (LLNW, $4.39, up $0.22)
LLNW January 3 calls (LLNW200117C00003000, $1.40, up $0.20)
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: Prior and lower resistance at $4.40-$4.50 was cleared and held on the push to $4.52 yesterday. Support is trying to move up to $4.30-$4.20.