MomentumOptions.com Pre-Market Update for 11/22/2019
Bears Growl for 3rd-Straight Session
The market showed weakness throughout Thursday’s session despite a pick-up in trade optimism. Specifically, China has invited U.S. negotiators to Beijing for additional talks, and the U.S. may delay the December 15th tariffs.
The upbeat reports soothed worries of a breakdown in talks and President Trump’s threat to increase levies. However, the major indexes settled lower across the board after trading in rather tight ranges with volatility continuing to hold a key level of resistance.
The Russell 2000 fell 0.4% following the intraday backtest to 1,581. Current and upper support at 1,585-1,570 was breached and failed to hold with risk towards 1,560-1,545 and the 50-day moving average on a move below the latter.
The Nasdaq was down 0.2% after trading to a midday low of 8,487. Current and upper support at 8,450-8,400 easily held with a move below the latter signaling risk towards 8,350-8,300.
The S&P 500 extended its losing streak to 3-straight sessions after giving back 0.2% while tapping a first half low of 3,094. Near-term and upper support at 3,100-3,075 was breached but held with a move below the latter opening up risk towards 3,050-3,025 and the 50-day moving average.
The Dow also dipped 0.2% following the intraday pullback to 27,708. Near-term and upper support at 27,750-27,500 was breached but held with a close below the latter getting 27,250-27,000 and the 50-day moving average in play.
Energy surged 1.6% to lead sector strength while Healthcare and Communications Services added 0.3% to round out the winners.
Real Estate paced laggards after tanking 1.4% while Technology and Consumer Staples dropped 0.5%.
Initial Jobless Claims were steady at 227,000, topping forecasts for a print of 215,000. The 4-week moving average rose to 221,000 versus the prior 217,500 reading. Continuing claims rose 3,000 to 1,695,000, after dropping -1,000 to 1,692,000 previously.
Philadelphia Fed Business Outlook Survey rose 4.8 points to 10.4 in November after dropping -6.4 points to 5.6 in October. The components were mixed and mostly counter the better than expected headline. The November employment index fell to 21.5, after doubling to 32.9 in October. New orders plunged to 8.4 after after edging up to 26.2 previously. Prices paid dropped to 7.8 from 16.8 and are down from 33 in September, with prices received at 12.2 from 16.4 in the prior month, and 20.8 in September. The 6-month index rose to 35.8 versus October’s 33.8, with most of the real components improving, including prices, though capex declined.
Existing Home Sales tracked estimates with a 1.9% October bounce to a 5,460,000 pace. The median price continued to post a seasonal unwind of the all-time high in June, leaving a firm 6.2% year-over-year rate. Inventories fell for a fourth consecutive month to 1,770,000 that translated to a 3.9 month supply.
The iShares 20+ Year Treasury Bond ETF (TLT) had its 3-session winning streak snapped following the intraday pullback to $139.12. Current support at $139.50-$139 was breached but held on the close back below the 50-day moving average. A close below $139 would signal additional weakness towards $138-$137.50.
Resistance remains at $140.50-$141.
The S&P 500 Volatility Index ($VIX) tested an intraday high of 13.86 with major resistance at 13.50 getting breached but holding. A close above this level keeps upside risk to 14.50-15 and the 50/200-day moving averages in focus.
Current support remains at 12.50-12.
The S&P 400 Mid Cap Index ($MID) extended its losing streak to 2-straight sessions after trading to a low of 1,978. Near-term and upper support at 1,980-1,970 was breached but held by a half-point. A close below the latter would signal a near-term top with pullback potential towards 1,960-1,950 and the 50-day moving average.
Current resistance is at 1,990-2,000. Continued closes above the latter and the early November 52-week high of 2,009 would be a bullish signal for a breakout towards 2,040-2,060. The all-time high is at 2,053 from August 2018.
RSI is in a downtrend with support at 50 and a level that has been holding since early October. A move below this level would signal additional weakness towards 45-40. Resistance is at 55-60.
The Health Care Select Sector Spider (XLV) was up for the 2nd time in 3 sessions after trading to an all-time high of $97.98. Blue-sky and lower resistance at $97.50-$98 was cleared and held. Continued closes above the latter would be an ongoing bullish signal for a run towards $99.50-$100.
Current support is at $97.50-$97. A close below the latter would likely signal a possible near-term top with additional selling pressure towards $96-$95.50.
RSI has been flatlining with resistance at 75 and the June high. Continued closes above this level would be a bullish development for additional strength towards 80-85 but overbought levels from August 2018. Support is at 70 with a move back below this level signal additional weakness towards 65-60.
I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 43-12 (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.
Boston Scientific (BSX, $42.36, down $0.25)
BSX January 43 calls (BSX200117C00043000, $1.35, down $0.15)
Entry Price: $1.20 (11/14/2019)
Exit Target: $2.40
Stop Target: $1.25 (Stop Limit)
Action: Shares tested a low of$41.87 with prior and upper support is at $42-$41.50 getting breached but holding. Resistance is at $42.50-$43.
Viava Solutions (VIAV, $15.16, down $0.31)
VIAV January 16 calls (VIAV200117C00016000, $0.40, down $0.10)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Shares traded to a low of $15.13 with prior and upper support at $15.25-$15 getting breached and failing to hold. Lowered resistance is at $15.50-$15.75.
Limelight Networks (LLNW, $4.30, down $0.28)
LLNW January 3 calls (LLNW200117C00003000, $1.30, down $0.25)
Entry Price: $0.60 (9/11/2019)
Exit Target: $1.50-$2 (closed 1/3 @ $1.40 on 10/22)
Stop Target: $1.20 (Stop Limit)
Action: Upper support at $4.30-$4.20 held on Wednesday’s backtest to $4.22. Resistance is at $4.40-$4.50.