MomentumOptions.com Pre-Market Update for 12/6/2019
20-Day MA’s in Play
The market was choppy on Thursday after trading on both sides of the ledger while settling higher for the 2nd-straight session. Better-than-expected economic news helped sentiment with the tight trading ranges and higher closes being good indications a near-term bottom is trying to form.
The major indexes are still down for the week and will need to show continued strength to keep the near-term technical rebound intact. The Russell 2000, S&P 500 and the Nasdaq have recovered and held their 20-day moving averages over the past 2 sessions. Volatility also settled lower and continues to push prior levels of support to keep the near-term bullish outlook intact.
The S&P 500 gained 0.2% after trading to a late day high of 3,119. Resistance at 3,125 held for the 2nd-straight session with a move above this level signaling additional strength towards 3,150-3,175 and the all-time record high at 3,154.
The Dow was up 0.1% following the push to 27,745 ahead of the closing bell. Current and lower resistance at 27,800-28,000 was challenged but held with continued closes above the latter getting 28,200-28,400 and the all-time high of 28,174 in play.
The Russell 2000 added a point, or 0.1%, after topping out at 1,620 shortly after the opening bell. Near-term and lower resistance at 1,615-1,625 was cleared but held for the 2nd-straight session with a close above the latter getting 1,635-1,650 and last week’s 52-week peak at 1,634 back in focus.
The Nasdaq also edged up 0.1% after trading in a 47-point range while testing a morning high of 8,588. Current and lower resistance at 8,600-8,650 was challenged but held with a close above the former getting 8,700 and the all-time high at 8,705 back in focus.
Technology and Materials led sector strength after advancing 0.3%.
Energy and Consumer Discretionary paced sector laggards after sliding 0.3% and 0.1%, respectively.
In economic news, Initial Jobless Claims fell 10,000 to 203,000, versus expectations for a print of 214,000, and follows the prior week’s drop of 15,000 to 213,000. The 4-week moving average declined to 217,750 versus 219,750 previously. Continuing claims increased 51,000 to 1,693,000 following the prior 55,000 decline to 1,642,000.
November Challenger Job-Cut Report Announced Layoffs of 44,569.
Factory Orders increased 0.3% in October, matching estimates, alongside a flat print on shipments and a 0.1% gain in inventories. Transportation orders increased 0.7% in October versus the -3.2% September decline. Excluding transportation, orders were up 0.2% versus -0.3%. The key nondefense capital goods orders excluding aircraft bounced 1.1% after falling -0.5% in September. Nondefense capital goods shipments ex-aircraft increased 0.8%, reversing the prior -0.8% drop. The inventory-shipment ratio was flat at 1.40 for second straight month, from 1.39 in August.
The International Trade deficit narrowed -7.6% to -$47.2 billion in October after shrinking -4.6% to -$51.1 billion in September. Exports declined 0.2% after September’s -0.9% slide while imports dropped -1.7% versus -1.6% previously. The real deficit was at -$79.1 billion versus -$83 billion as exports fell -0.5% and imports were down -2% after prior respective declines of -1.2% and -1.9%. The trade balance with China was at -$31.3 billion versus -$31.6 billion and was -$3.4 billion with Canada versus -$2.6 billion, previously. Mexico’s balance was -$8.8 billion in October versus -$8.9 billion.
The iShares 20+ Year Treasury Bond ETF (TLT) was down for the 2nd-straight session and the 5th time in 6 sessions with the low reaching $138.60. Prior and upper support at $138.50-$138 held.A close below the latter would signal additional weakness towards $137-$136.50.
Lowered resistance is at $139.50-$140 and the 50-day moving average.
The S&P 500 Volatility Index ($VIX) fell for the 2nd-straight session following the midday fade to 14.17. Current and upper support at 14-13.50 and the 50-day moving average held for the 2nd-straight session.
Resistance remains at 15-15.50 and the 200-day moving average.
The Spiders Dow Jones Industrial Average ETF (DIA) was up for the 2nd-straight session with the session high reaching $277.76. Prior and lower resistance from mid-November at $277.50-$278 was cleared but held. A close above the latter and the 20-day moving average would be an ongoing bullish development with additional momentum towards $279.50-$280.
Near-term support is at $277-$276.50 with backup help at $275.50-$275. A close below the latter would reverse Wednesday’s island reversal candlestick and typically a bullish technical signal of a near-term bottom.
RSI is back in a slight uptrend with resistance at 55-60. Continued closes above the former would signal additional strength towards 65-70. Support is at 50-45 with a move below the latter being a renewed bearish signal.
The Industrials Select Sector Spider (XLI) extended its winning streak to 2-straight sessions after tapping an intraday high of $80.33. Near-term and lower resistance at $80.50-$81 was challenged but held. Continued closes above the latter would be an ongoing bullish signal for a retest towards $82-$82.50.
Current but shaky support is at $80-$79.50. A close below $79 and the 50-day moving average would be a renewed bearish development with risk towards $78-$77.50. Tuesday’s low kissed $79.26.
RSI has leveled out with resistance at 50. A move above this level would signal additional strength towards 55-60. Support is at 45-40. A move below the latter would signal additional weakness towards 35-30 and lows from early October and August.
I have updated our latest AT&T (T) trade to let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 44-12 (79%). 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, $38.19, up $0.09)
T January 39 calls (T200117C00039000, $0.50, up $0.01)
Entry Price: $0.52 (12/5/2019)
Exit Target: $1.05
Stop Target: None
Action: Lower resistance at $38.25-$38.50 was cleared but held on Thursday’s push to $38.36. Support is at $38-$37.75 and the 50-day moving average.
Pfizer (PFE, $38.03, down $0.11)
PFE January 40 calls (PFE200117C00040000, $0.25, down $0.05)
Entry Price: $0.40 (11/25/2019)
Exit Target: $0.80
Stop Target: None
Action: Shares tested a low of $37.79 with upper support at $38-$37.75 getting breached but holding. Resistance is at $38.25-$38.50.
Viava Solutions (VIAV, $14.75, up $0.18)
VIAV January 16 calls (VIAV200117C00016000, $0.20, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Thursday’s rebound reached $14.84 with lower resistance at $14.75-$15 and the 50-day moving average getting cleared and holding. Support is at $14.50-$14.25.
Limelight Networks (LLNW, $4.13, down $0.12)
LLNW January 3 calls (LLNW200117C00003000, $1.15, down $0.05)
Entry Price: $0.60 (9/11/2019)
Exit Target: $1.50-$2 (closed 1/3 @ $1.40 on 10/22)
Stop Target: $1 (Stop Limit)
Action: Shares tapped a low of $4.06 with prior and upper support at $4.10-$4 getting tripped but holding. Lowered resistance is at $4.20-$4.30.