MomentumOptions.com Pre-Market Update for 11/19/2019
Bulls Brush Off Trade Jitters
The market was choppy throughout Monday’s session following news China has become less optimistic about the prospects of reaching a trade deal with the U.S. Additionally, there is chatter China is also thinking about holding out until the 2020 elections, after President Trump declined to roll back tariffs.
The news tempered semtiment as futures were showing continued strength before the open following productive phone calls between the U.S. and China over the weekend. However, late day strength helped the major indexes tag another round of record highs with the small-caps slacking.
The Nasdaq nudged up 0.1% following the late day run to 8,559. Fresh and lower resistance at 8,550-8,600 was cleared but held by a smidge with blue-sky territory towards 8,650-8,700 on a move above the latter.
The Dow also advanced 0.1% after tapping a new all-time intraday high of 28,040. Uncharted and lower resistance at 28,250-28,500 held on the 2nd-straight close above the 28,000 level.
The S&P 500 was up over a point, or 0.05%, following the late day push to 3,124 and 4th-straight record close. Fresh and lower resistance at 3,125-3,150 held with strength towards 3,175-3,200 on a close above the latter.
The Russell 2000 was down 0.3% after trading in negative territory throughout the session with the low kissing 1,588. Current and upper support at 1,585-1,570 held with risk towards 1,550 and the 50-day moving average on a close below the latter.
Consumer Staples and Real Estate were sector standouts after rising 0.5%. Energy led sector laggards after sinking 1.2% while Industrials were down 0.4%.
The NAHB Housing Market Index slipped 1 point to 70 in November after jumping 3 points in October to 71. The weakness was in the single family sales index which decline to 76 after the 3 point increase to 78 in October. The future sales index rose 1 point to 77 after surging 6 points to 76 in October. The index of prospective buyer traffic dipped to 53 from 54, but has been at, or above the 50 expansion/contraction mark since August. Builder reported ongoing positive conditions, with lower mortgage rates and a strong job market.
The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 5th time in 6 sessions after trading to an intraday high of $138.61. Current and lower resistance at $138.50-$139 was cleared but held. A close above the latter would be an ongoing bullish signal for a retest towards $139.50-$140 and the 50-day moving average.
Near-term support is trying to move up to $138-$137.50. A move below the $137 level would be a slightly bearish development with backtest potential towards $136-$135.50.
The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session while tapping an intraday peak of 13.10. Prior and lower resistance at 13-13.50 was breached but held. A close above the latter would be a slightly bearish signal for the market with risk towards 14.50-15 and the 50/200-day moving averages.
Support is at 12.50-12 following the close back above the former.
The Wilshire 5000 Composite Index ($WLSH) extended its winning streak to 5-straight sessions after trading to an all-time intraday high of 31,781. Fresh and lower resistance at 31,800-32,000 was challenged but held.
Current support is at 31,600-31,500 with the latter representing prior resistance before last week’s breakout. A close below the 31,500 level would signal additional weakness towards the 31,250 area and prior support to start the month.
RSI remains in a slight uptrend after clearing July resistance at 70 last Friday. There is additional strength towards 75-80 but also signaling severely overbought levels from January 2018. Support is at 65-60 with the latter representing the late October low.
The Consumer Staples Select Spiders (XLP) was up for the 4th time in 5 sessions following the intraday push to a new record high of $61.99. Near-term and lower resistance at $61.50-$62 was cleared and held. A close above the latter and the prior September all-time high at $61.92 would be ongoing bullish signals with blue-sky potential towards $63-$63.50.
Current support is at $61.25-$60.75 and the 50-day moving average. A close below the $60.25 level would be a fresh sell signal with downside risk towards the $59.75 area and prior lows from early October.
RSI remains in an uptrend after clearing resistance at 60 and the October peak. Continued closes above this level would signal additional strength towards 65-70 with the latter representing the July high. Support is at 55-50.
I have updated our current trades including setting Stop Limits on the AT&T (T) positions along with Boston Scientific (BSX).
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.
AT&T (T, $39.63, up $0.13)
T December 40 calls (T191220C00040000, $0.50, up $0.05)
Entry Price: $0.36 (11/15/2019)
Exit Target: $0.75
Stop Target: 40 cents (Stop Limit)
T January 40 calls (T200117C00040000, $0.75, up $0.05)
Entry Price: $0.63 (11/15/2019)
Exit Target: $1.30
Stop Target: 65 cents (Stop Limit)
Action: Set Stop Limits at 40 cents and 65 cents to protect initial profits and to avoid a loss.
Monday’s fresh 52-week peak reached $39.70 with new and lower resistance at $39.75-$40 holding. Rising support is at $39.50-$39.25.
Boston Scientific (BSX, $42.29, down $0.02)
BSX January 43 calls (BSX200117C00043000, $1.40, flat)
Entry Price: $1.20 (11/14/2019)
Exit Target: $2.40
Stop Target: 60 cents, raise to $1.20 (Stop Limit)
Action: Shares surged to a high of $43.49 before settling slightly lower. The options peaked at $1.93. I wasn’t happy with the action and why we now have a Stop Limit in place.
Prior and lower resistance from September at $43-$43.50 was cleared but held. A close above the latter would be a very bullish signal for a breakout towards the $45 level. Support remains at $42-$41.75.
Viava Solutions (VIAV, $15.74, down $0.04)
VIAV January 16 calls (VIAV200117C00016000, $0.65, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Upper support at $15.50-$15.25 held on the fade to $15.60. Resistance remains at $15.75-$16.
Limelight Networks (LLNW, $4.22, up $0.01)
LLNW January 3 calls (LLNW200117C00003000, $1.30, 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: Monday’s high reached $4.26 with lower resistance at $4.30-$4.40 holding. Support is at $4.20-$4.10.