MomentumOptions.com Pre-Market Update for 12/20/2019
Bulls Continue Surge into Blue-Sky Territory
The market continued its run at record highs after showing overall strength for the 6th time in the past 7 sessions. Better-than-expected economic news, for the most part, helped sentiment as Wall Street mostly ignored news the U.S. House voted to impeach President Trump.
The impeachment process is highly unlikely to get through the Senate and has been a non-issue for the market. However, the Democrats don’t seem in a rush to get it to the House for a vote, likely hoping that a prolonged public discussion will cause more damage.
The Nasdaq gained 0.7% after trading to a late day and all-time high of 8,888. Fresh and lower resistance at 8,850-8,900 was cleared and held with a close above the latter signaling additional strength towards 8,950-9,000.
The S&P 500 was higher by 0.5% after testing and closing at a record high of 3,205 into the closing bell. Lower resistance at 3,200-3,225 was cleared and finally held with upside potential towards 3,250-3,275 on a close above the latter.
The Dow also rose 0.5% with the intraday record high reaching 28,381. Lower resistance at 28,300-28,500 was cleared and held with a close above the latter keeping upside potential towards 28,600-28,800 in play.
The Russell 2000 rallied 0.3% while closing on the session high of 1,667 and new 52-week peak. Current and lower resistance at 1,670-1,685 was challenged with a close above the latter signaling additional momentum towards the 1,700 level.
Real Estate and Communication Services were the strongest sectors after rallying 1% and 0.9%, respectively. Energy and Financials were the only sectors laggards with both falling 0.03%.
In economic news, Initial Jobless Claims fell 18,000 to 234,000, versus expectations for a steeper drop to 218,000, and reversing some of the 49,000 surge to 252,000 in the prior week. The 4-week moving average rose to 225,500 versus the prior 224,000 reading. Continuing claims jumped 51,000 to 1,722,000, after falling 28,000 to 1,671,000.
Current Account deficit narrowed to -$124.1 billion versus estimates of -$127.8 billion. The balance on goods and services was -$157.4 billion versus Q2’s -$159.1 billion. The primary income balance increased to $68.7 billion versus $66.6 billion previously. The balance on secondary income widened to -$35.5 billion compared to -$32.7 billion.
December Philadelphia Fed Business Outlook Survey checked in at 0.3, versus forecasts of 8.5, and follows November’s 4.8 point gain to 10.4. The employment index slipped to 17.8 after falling to 21.5 in November, but the workweek edged up to 7.7 versus 5.2 previously. New orders improved slightly to 9.4 following November’s 17.8 point plunge to 8.4. The prices paid index zoomed to 19 from 7.8, while prices received slipped to 11.9 versus 12.2. The 6-month general business activity index was slightly lower at 35.2 versus 35.8 previously. The future employment gauge rose to 28.6 from 24, with new orders at 35.6 from 40.3, prices paid at 50.9 from 43.2, and prices received at 49.3 from 36.7. The 6-month capex climbed to 27.6 after a print of 19.4 in November.
Existing Home Sales declined -1.7% to 5,350,000 in November after rebounding 1.5% to 5,440,000 in October. Single family sales slipped -1.2% versus the prior 1.7% gain. Condo/coop sales dropped -5.1% versus unchanged previously. The months’ supply of homes slid to 3.7 versus 3.9 in October, and is the lowest since February. The median sales price fell to $271,300 after falling to $271,500 previously. The 5.4% year-over-year pace is a new record peak.
Leading Indicators were flat at 111.6 in November following a -0.2% October decline to that level. Six of the 10 components increased, paced by stock prices (+0.17%). Two components declined, led by ISM new orders (-0.18%). Two indicators were unchanged, the workweek and nondefense capital goods orders ex-aircraft.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 3 session slide after trading to an intraday high of $136.86. Current and lower resistance at $137-$137.50 was challenged but held. A move above the latter would signal a possible retest towards $138-$138.50 and the 50-day moving average.
Support is at $136-$135.50. A close below the latter would signal additional weakness towards $135-$134.50.
The S&P 500 Volatility Index ($VIX) was lower for the 1st time in 3 sessions after trading in a tight range with the intraday high reaching 12.78. Lower resistance at 12.75-13.25 was cleared but held on the intraday day bounce to 12.78. A close above the latter would signal additional risk towards 13.50-14 and the 50-day moving average.
Rising support is at 12.25-11.75 following the close at the 12.50 level.
The Wilshire 5000 Composite Index ($WLSH) extended its winning streak to 4-straight sessions after tapping a late day and fresh all-time high of 32,655. Uncharted and lower resistance is at 32,600-32,800 was cleared and held with a close above the latter signaling further fluff towards the 33,000 level.
Current support is at 32,400-32,200. A close below the latter would signal a near-term peak with additional weakness towards the 32,000 area.
RSI is back in an uptrend with late November resistance at 75. A close above this level would signal additional strength towards 80-85 and overbought levels from January 2018. Support is at 70-65.
The iShares PHLX Semiconductor ETF (SOXX) is showing signs of breaking out of a mini trading range with Thursday’s all-time high reaching $248.95. Fresh and lower resistance at $248.50-$249 was cleared and held. A close above the latter would signal continued strength and a possible run towards $250-$251.50, depending on momentum.
Current support is at $248-$247.50 with backup help at $245.50-$245. A close below the latter would signal a near-term top.
RSI has leveled out but cleared key resistance at 70. Continued closes above this level would signal additional strength towards 75-80 and the July highs. Current support is at 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: 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, $69.39, down $0.48)
XOM January 70 calls (XOM200117C00070000, $0.95, down $0.30)
Entry Price: $1.20 (12/18/2019)
Exit Target: $2.40
Stop Target: 60 cents
Action: Thursday’s low tapped $69.24 with upper support at $69.50-$69 getting breached and failing to hold. A close below the latter and the 50-day moving average would be a slightly bearish development for additional weakness towards $68.50-$68. Lowered resistance is at $69.75-$70.25.
AT&T (T, $38.93, up $0.19)
T January 39 calls (T200117C00039000, $0.50, 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 and held with the high tapping $38.93 for the 2nd-straight session. Support remains at $38.50-$38.25 and the 50-day moving average.
Pfizer (PFE, $38.97, up $0.08)
PFE January 40 calls (PFE200117C00040000, $0.30, flat)
Entry Price: $0.40 (11/25/2019)
Exit Target: $0.80
Stop Target: None
Action: Resistance at $39-$39.25 was cleared but held following yesterday’s pop to $39.15. Support is at $38.75-$38.50 and the 200-day moving average.
Viava Solutions (VIAV, $15.36, up $0.59)
VIAV January 16 calls (VIAV200117C00016000, $0.25, up $0.15)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Shares zoomed to a high of $15.40 yesterday with prior and lower resistance at $15.50-$15.75 getting challenged but holding. New support is at $15.25-$15 and the 50-day moving average.
Limelight Networks (LLNW, $3.98, up $0.01)
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 $4.02 with lower resistance at $4-$4.10 and the 50-day moving average holding for the 5th-straight session. Support remains at $3.90-$3.80.