MomentumOptions.com Pre-Market Update for 12/19/2019
Market Mixed on Light News
The major indexes traded in tight ranges while settling mixed on Wednesday following light economic news and the winding down of the 3Q earnings season. Wall Street continues to digest the recent trade deal and UK election news while keeping an eye on the ongoing impeachment process playing out in Congress.
The Russell 2000 climbed 0.3% after testing a fresh 52-week high of 1,663. New and lower resistance at 1,660-1,675 was cleared and held with a close above the latter signaling additional momentum towards 1,685-1,700 and July 2018 levels.
The Nasdaq edged up 0.1% after trading to an all-time afternoon high of 8,848. Uncharted and lower resistance at 8,850-8,900 was challenged but held with a close above the latter leading to a possible run at 8,950-9,000.
The S&P 500 slipped a point, or 0.04%, following the run to 3,198 and 5th-straight intraday record high. Lower resistance at 3,200-3,225 was challenged but held for the 3rd-straight session with fluff towards 3,250-3,275 on a close above the latter and continued strength.
The Dow dipped 0.1% after trading in a 84-point range while closing on the session low of 28,239. Current and support at 28,200-28,000 was challenged but held with a close below the latter signaling additional weakness and possible backtest towards 27,800-27,600 and the 50-day moving average.
Real Estate was the strongest sector after jumping 1.4% while Communication Services and Energy rose 0.7% and 0.4%, respectively. Financials and Industrials were the weakest sectors after giving back 0.4%.
In Fed news, New York Fed John Williams said his economic outlook is very positive and expects growth around 2% in 2020, with the unemployment rate holding around 3.5%, along with steady job gains. He sees inflation moving back up to the 2% target.
Williams reiterated policy is data dependent and that a material change in the outlook is necessary for a policy shift. He added there are still some significant risks to the downside, as the trade and geopolitical issues are still uncertain. He does not have a prediction about reversing the recent interest rate cuts.
As far as the repo market, Williams believes the measures taken have calmed the money markets. He said the markets are functioning well and there are ample reserves in the system, although there are some long term issues that will need to be addressed.
Chicago Fed Charles Evans continues to worry that inflation is too low and said it’s important that it rises to the 2% goal. He thinks the current stance is at a good setting where the rate setting can serve us really quite well. He added the labor market is vibrant, but employment growth should moderate to about a 100,000 a month.
The iShares 20+ Year Treasury Bond ETF (TLT) extended its losing streak to 3-straight sessions after plunging to an intraday low of $136.28. Prior and upper support from early November at $136-$135.50 was breached and failed to hold. A close below the latter would signal additional weakness towards $135-$134.50.
Lowered resistance is at $137-$137.50 with more important hurdles at $138.50-$139 and the 50-day moving average.
The S&P 500 Volatility Index ($VIX) closed higher for the 2nd-straight despite tapping a morning low of 11.93. Upper support at 12-11.50 was breached but held for the 3rd-straight session.
Lower resistance at 12.50-13 was cleared and held on the late day bounce to 12.70. A close above the latter would signal additional risk towards 13.50-14 and the 50-day moving average.
The iShares Russell 1000 (IWF) was up for the 5th-time in 6 sessions after trading to an all-time high of $173.87. Uncharted and lower resistance at $174-$174.50 was challenged but held. A close above the $175 level could lead to a near-term run towards $176.50-$177, depending on momentum.
Rising support is at $173-$172.50. A close below the $172 level would signal a near-term top with additional risk towards $170.50-$170.
RSI is pushing November resistance at 75 and slightly overbought conditions. The is a chance for a run towards 80-85 and January 2018 highs on a close above 75. Support is at 65-60 on a move back below the 70 level.
The Spiders S&P Homebuilders ETF (XHB) has been in a 9-session trading range with Wednesday’s low kissing $45.41. Current and upper support at $45.50-$45.25 was breached but held. A close below the latter and the 50-day moving average would signal additional weakness towards $45-$44.75 and a breakdown out of the trading range.
Near-term is resistance at $46-$46.25. Continued closes above $46.50 would be a bullish development and signal a move out of the current range with additional hurdles at $46.75-$47. The late November all-time tapped $46.68.
RSI is in a slight downtrend after failing to hold key support at 50. The close below this level keeps weakness open towards 45-40 in play with the former representing the monthly low. Resistance is at 55-60.
Today’s earnings announcements:
Before the open: Accenture (ACN), Apogee Enterprises (APOG), Conagra Brands (CAG), Darden Restaurants (DRI), Enerpac Tool Group (EPAC), FactSet Research Systems (FDS), Rite Aid (RAD), Sanderson Farms (SAFM)
After the close: AAR Corp. (AIR), CalAmp (CAMP), Nike (NKE), Scholastic (SCHL), SMART Global Holdings (SGH)
I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 45-12 (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.
Exxon Mobil (XOM, $69.87, up $0.19)
XOM January 70 calls (XOM200117C00070000, $1.25, up $0.05)
Entry Price: $1.20 (12/18/2019)
Exit Target: $2.40
Stop Target: 60 cents
Action: Shares traded to a high of $70.29 with near-term and lower resistance at $70-$70.50 getting cleared but holding. Support is at $69.50-$69 and the 50-day moving average.
AT&T (T, $38.74, up $0.24)
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 $38.75-$39 was cleared but held by a penny on the run to $38.93 on Wednesday. Support remains at $38.50-$38.25 and the 50-day moving average.
Pfizer (PFE, $38.89, down $0.01)
PFE January 40 calls (PFE200117C00040000, $0.30, flat)
Entry Price: $0.40 (11/25/2019)
Exit Target: $0.80
Stop Target: None
Action: Upper support at $38.75-$38.50 and the 200-day moving average was tripped but held on the backtest to $38.54. Resistance is at $39.25-$39.50.
Viava Solutions (VIAV, $14.77, down $0.13)
VIAV January 16 calls (VIAV200117C00016000, $0.15, down $0.05)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Shares tapped a low of $14.51 with upper support at $14.75-$14.50 getting breached but holding. Resistance remains at $15-$15.25 and the 50-day moving average.
Limelight Networks (LLNW, $3.97, up $0.03)
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 tested a high of $4.09 with lower resistance at $4-$4.10 and the 50-day moving average holding. Support remains at $3.90-$3.80.