MomentumOptions.com Pre-Market Update for 11/12/2019
Dow Tags 3rd-Straight Record Close
The market was sluggish throughout Monday’s session as trade tensions between the U.S. and China remained in focus. Over the weekend, President Trump said the U.S. would only make a deal with China if it was right for America while saying the reporting about U.S. willingness to lift tariffs had been exaggerated.
Additionally, the U.S. bond market was closed in observance of Veterans Day, so trading volume was thinned on the mostly lower close. Volatility was slightly elevated but has been holding a key level of resistance since late October.
The Russell 2000 was down 0.3% after trading to an intraday low of 1,588. Current and upper support at 1,585-1,570 was challenged but held. A close below the latter would be a slightly bearish signal with risk towards the 1,550 level.
The S&P 500 slipped 0.2% after tapping a low of 3,075 shortly after the open. Current and upper support at 3,075-3,050 held with a close below the latter signaling a short-term top with downside risk towards 3,025-3,000 and the 50-day moving average.
The Nasdaq gave back 0.1% following the intraday pullback to 8,425. Upper support at 8,400-8,350 easily held with a close below the latter opening up risk towards 8,300-8,250.
The Dow was up 10 points, or 0.04%, after showing some 2nd half strength on the run to 27,714 and 3rd-straight record close. Key resistance at 27,750 held with a close above this level and the all-time high at 27,774 signaling additional strength towards 28,000.
Real Estate added 0.2% while Technology and Industrials nudged up 0.1% to round out sectors strength. Utilities and Energy were the weakest sectors after declining 0.6% while Communication Services and Healthcare fell 0.5% and 0.4%, respectively.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 2-session slide after trading to a high of $135.39. Near-term and lower resistance at $135.50-$136 was challenged but held with additional hurdles at $137.50-$138.
Current support is at $134.50-$134. A close below the latter would signal additional risk towards $132.50-$132 and late July lows.
The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session after tapping an opening high of 13.49. Upper resistance at 13-13.50 held for 12th-straight session with a close above this level being a slightly bearish development.
Support remains at 12.50-12 on the close back above the former. Continued closes below 12 would signal additional weakness towards the 11.50 level with the late July low at 11.69.
The Russell 2000 ETF (IWM) was down for the first time in 3 sessions following the intraday pulback to $157.88. Current and upper support at $158-$157.50 was breached but held. A close below the latter would be a slightly bearish signal with backtest potential towards $156.50-$156.
Current resistance is at $159.50-$160. Continued closes above the latter would be a renewed bullish development for a retest towards $161-$161.50 and fresh 52-week peaks.
RSI has flatlined with support at 60. A close below this level would signal additional weakness towards 55-50 with the latter representing the early October support. Resistance is at 70 and the monthly peak. There is upside potential towards 75 and the February 2018 high on a close above the 70 level.
The Industrials Select Sector Spider (XLI) was up for he 7th-straight session and 12 of the past 13 after trading to an intraday high of $81.93. Near-term and lower resistance at $82-$82.50 was challenged but held. Continued closes above the latter and last week’s all-time peak of $82.66 would be an ongoing bullish signal for uncharted territory towards the $83.50-$85 area.
Current support is at $81.25-$80.75. A close below the $80.50 level would be a bearish development with risk towards $80-$79.50.
RSI remains in a slight uptrend but overbought territory with resistance at 75 and the February high. A move above this level would signal additional strength towards 80-85 and January 2018 highs. Support is at 70-65.
Today’s earnings announcements:
Before the open: Advance Auto Parts (AAP), CBS (CBS), D.R. Horton (DHI), Horizon Global (HZN), Inspired Entertainment (INSE), Kemet (KEM), NetSol Technologies (NTWK), Overstock.com (OSTK), RadNet (RDNT), Sotherly Hotels (SOHO), Tyson Foods (TSN), Verso (VRS)
After the close: Amdocs (DOX), BioLife Solutions (BLFS), Canadian Solar (CSIQ), Carbonite (CARB), Datadog (DDOG), Electromed (ELMD), Giga-tronics (GIGA), Health Insurance Innovations (HIIQ), IsoRay (ISR), Kindred Biosciences (KIN), Milacron Holdings (MCRN), Ocular Therapeutix (OCUL), Polar Power (POLA), Radiant Logistics (RLGT), Remark Holdings (MARK), ScanSource (SCSC), Skyworks Solutions (SWKS), Target Hospitality (TH), Varex Imaging (VREX)
Our CSCO trade was stopped out on Monday’s weakness. Overbought levels remain in okay so we have to be a tad careful will bullish positions. The portfolio is light and I don’t want to chase higher highs.
Additionally, the regular November options expire this Friday and the Thanksgiving time period will zap a little premium from the near-term December options so new positions will likely be short-term in nature.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 41-12 (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.
Cisco Systems (CSCO, 48.10, down $0.73)
CSCO January 50 calls (CSCO200117C00050000, $1.15, down $0.20)
Entry Price: $1.20 (11/7/2019)
Exit Target: $2.40
Stop Target: $1.20 (Stop Limit)
Action: The Stop Limit at $1.20 was tripped on CSCO’s dip to $47.56 yesterday. We can reevaluate where shares are at following earnings on Wednesday.
Viava Solutions (VIAV, $15.89, up $0.01)
VIAV January 16 calls (VIAV200117C00016000, $0.70, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Lower resistance at $16-$16.25 held with Monday’s peak reaching $15.91. Support is at $15.75-$15.50.
Limelight Networks (LLNW, $4.23, down $0.02)
LLNW January 3 calls (LLNW200117C00003000, $1.25, flat)
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: Upper support at $4.25-$4.15 failed to hold on the fade to $4.16 yesterday. Resistance remains at $4.30-$4.40.