MomentumOptions.com Pre-Market Update for 12/17/2019
Fresh All-tIme Highs Remain in Play
The market showed overall strength for the 4th-straight session following ongoing trade developments between with China. Over the weekend, U.S. Treasury Secretary Steven Mnuchin said the Phase One trade deal would be signed in early January and that Phase Two may then be negotiated in stages.
The Nasdaq surged 0.9% with the midday all-time high reaching 8,833. Fresh and lower resistance at 8,800-8,850 was cleared and held with a close above the latter signaling additional momentum towards 8,900-8,950.
The Russell 2000 rallied 0.7% following the intraday run to 1,658 and fresh 52-week peak. Key resistance at 1,650 held by a smidge with continued closes above this level keeping 1,660-1,675 in focus.
The S&P 500 also soared 0.7% after testing an intraday record high of 3,197. Current and lower resistance at 3,200-3,225 was challenged but held with a close above the former signaling additional strength towards 3,225-3,250.
The Dow gained 0.4% with the intraday record high reaching 28,337. Lower resistance at 28,200-28,400 was cleared and held with a close above the latter keeping upside potential towards 28,600-28,800 in play.
Energy and Utilities showed the most sector strength with gains of 1.3%, while Healthcare and Communication Services rose 1.1% and 1%, respectively. Industrials were the only sector laggard after slipping 0.1%.
In economic news, Empire State Manufacturing Survey rose 0.6 points to 3.5 in December, below forecasts of 5, after falling -1.1 ticks to 2.9 in November. The employment component was flat at 10.4 after improving to that level in November. The workweek slipped to 0.8 from 2.3. New orders dropped to 2.6 from 5.5. Prices paid fell to 15.2 from 20.5, while prices received dipped to 4.3 from 6.2. The 6-month general business activity index jumped to 29.8 from 19.4, the best since July. The future employment gauge declined marginally to 12.4 versus 12.5, while new orders rose to 35.6 from 24.2, with prices paid at 39.1 from 42.5, and prices received at 29 from 26. The 6-month capex gauge increased to 26.1 from 19.2.
PMI Composite Flash dipped to 52.5 in December, versus estimates of 52.4, and just below November”s print of 52.6. The output index fell to 52.4 from 53.7. The services index rose to 52.2 versus November’s 51.6. Prices charged rose to 52.7 from 50.3. The composite index improved to 52.2 from 52 previously.
Housing Market Index for December was at 76 versus estimates for a reading of 70.
The iShares 20+ Year Treasury Bond ETF (TLT) was down for the 2nd time in 3 sessions following the intraday pullback to $137.43. Near-term and upper support at $137.50-$137 was breached but held. A close below the $136.50 level would signal additional weakness towards $135-$134.50.
Lowered resistance is at $138.50-$139. A close above the latter and the 50-day moving average would be a more bullish signal for a retest towards $140-$140.50.
The S&P 500 Volatility Index ($VIX) extended its losing streak to 5-straight sessions with the intraday low reaching 11.71. Prior and upper support from late November at 12-11.50 was breached but held. Continued closes below the latter and the late November lows at 11.42 and 11.44 would be ongoing bullish signals for a possible test towards 11-10.50. The 52-week low from mid-April is at 11.03.
Lowered resistance is at 12.50-13 with backup help at 13.50-14 and the 50-day moving average.
The Spiders Dow Jones Industrial Average ETF (DIA) was up for the 4th-straight session after trading to an all-time intraday high of $284.11. Fresh and lower resistance at $284-$284.50 was cleared but held. A close above the latter would be an ongoing bullish signal with blue-sky territory towards $286-$287.50, depending on momentum.
Near-term and rising support is at $283-$282.50. A close below the former would signal additional weakness with backtest potential towards $281.50-$281.
RSI remains in an uptrend after clearing lower resistance at 65-70. Continued closes above the former would signal additional strength towards 75-80 and mid-November highs. Key support is at 60 with a move below this level signaling additional weakness towards 55-50.
The Consumer Discretionary Select Spiders (XLY) extended its winning streak to 4-straight sessions with the 2nd half high reaching $124. Near-term and lower resistance at $123.50-$124 was cleared and held. A close above the former and the early September peak would be a bullish signal for additional strength towards the $125 level with the July all-time high at $124.60.
Current support is at $123-$122.50. A close below the latter would signal a possible backtest towards $121.50-$121 and the 50-day moving average.
RSI is in a slight uptrend with late November resistance at 65. A close above this level would signal additional strength towards 70-75 and mid-July highs. Support is at 60 with a move below this level signaling additional weakness towards 55-50.
We got some nice pin action yesterday so 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.
Boston Scientific (BSX, $45.20, up $0.11)
BSX January 45 calls (BSX200117C00045000, $1.20, flat)
Entry Price: $0.75 (12/11/2019)
Exit Target: $1.50
Stop Target: 90 cents (Stop Limit)
Action: Shares tagged a fresh all-time high of $45.68 yesterday with lower resistance at $45.50-$45.75 getting cleared but holding. A close above the former could lead to a run towards $46.50-$47. Rising support at $45-$44.75.
AT&T (T, $38.59, up $0.33)
T January 39 calls (T200117C00039000, $0.45, up $0.05)
Entry Price: $0.52 (12/5/2019)
Exit Target: $1.05
Stop Target: None
Action: Lower resistance at $38.50-$38.75 was cleared and held on Monday’s run to $38.65. Support remains at $38.25-$38 and the 50-day moving average.
Pfizer (PFE, $39.14, up $0.81)
PFE January 40 calls (PFE200117C00040000, $0.35, up $0.15)
Entry Price: $0.40 (11/25/2019)
Exit Target: $0.80
Stop Target: None
Action: Shares zoomed to a high of $39.40 with fresh and lower resistance at $39.25-$39.50 and the 200-day moving average getting cleared and holding. New support at $38.75-$38.50.
Viava Solutions (VIAV, $15.03, up $0.09)
VIAV January 16 calls (VIAV200117C00016000, $0.20, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Lower resistance at $15-$15.25 was cleared and held on the push to $15.22. A close above the latter and the 50-day moving would be a more bullish development for a retest towards $15.50-$15.75. Support remains at $14.75-$14.50.
Limelight Networks (LLNW, $3.95, flat)
LLNW January 3 calls (LLNW200117C00003000, $1.05, flat)
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 traded up to $4.09 with lower resistance at $4-$4.10 and the 50-day moving average holding. Support is at $3.90-$3.80.