MomentumOptions.com Pre-Market Update for 12/24/2019
Nasdaq, S&P 500 Tap Another Round of Record Highs
The market showed continued momentum to start the holiday shortened week with another round of record highs. Weaker-than-expected economic news was brushed aside with the gains coming ahead of Tuesday’s shortened session and Wednesday’s closing for the market.
The Dow closed higher for the 8th-time in 9 sessions after rising 0.3% and trading to a high of 28,582. Current and lower resistance at 28,600-28,800 was challenged but held with a close above the latter signaling a run towards the 29,000 level.
The Nasdaq added 0.2% to extended its winning streak to 8-straight sessions with the midday record high reaching 8,956. Current and lower resistance at 8,950-9,000 was cleared but failed to hold with a close above the latter signaling additional momentum towards the 9,050-9,100 level.
The S&P 500 was up for the 3rd-straight after rising 0.1% while testing an all-time intraday high of 3,227. Fresh and lower resistance at 3,225-3,250 was cleared but held for the 2nd-straight session with a close above the latter leading towards 3,275-3,300.
The Russell 2000 was also up 0.1% to extend its winning streak to 6-straight sessions with the fresh 52-week peak reaching 1,675. Current and lower resistance at 1,675-1,690 was tripped but held with a move above the latter keeping the 1,700 level in play.
Energy and Industrials were the strongest sectors after jumping 1% and 0.8%. Utilities and Real Estate led sector weakness after falling 0.9% and 0.6%, respectively.
In economic news, Durable Goods Orders fell -2% in November, after gaining 0.2% in October, and well below forecasts for a rise of 1.5%. Transportation orders surprised with a -5.9% decline, versus the prior 0.1% gain. Excluding transportation, orders were flat after rebounding 0.3% in the prior month. Nondefense capital goods orders excluding aircraft inched up 0.1% following October’s 1.1% surge. Shipments edged up 0.1% versus the prior -0.1% slip. Nondefense capital goods shipments excluding aircraft were down -0.3% versus 0.7%. Inventories rose 0.4%, the same as in October while the inventory-shipment ratio was steady at 1.72.
Chicago Fed National Activity Index rose 1.32 points to 0.56 in November following the -0.22 point decline to -0.76 in October. The September index was revised lower to -0.54 from -0.45. The index was at 0.25 in August and at 0.26 a year ago. The 3-month moving average improved slightly to -0.25 from -0.35.
New Home Sales bounced 1.3% to 719,000 in November, after tumbling -2.7% to 710,000 in October, and missing forecasts of 735,000. The months’ supply of homes dipped to 5.4 from 5.5, with the number of homes for sale at 323,000 and unchanged from October. The median sales price climbed 4.4% to $330,800 versus $316,900, with prices up 7.2% year-over-year.
December Survey of Business Uncertainty Index checked in at 116.3.
The iShares 20+ Year Treasury Bond ETF (TLT) had its 2-session winning streak halted despite the intraday run to $136.97. Prior and lower resistance from mid-November at $137-$137.50 was challenged but held. A close above the latter would signal ongoing strength with additional hurdles at $138-$138.50 and the 50-day moving average.
Ke support is at $136. A close below this level would signal additional weakness towards $134.50-$134 and early November lows.
The S&P 500 Volatility Index ($VIX) is showing signs of breaking out of a 5-session trading range with Monday’s high reaching 12.90. Lower resistance at 12.75-13.25 was breached but held. A close above the 13.50 level and the 50-day moving average would signal additional risk towards 14.50-15 and the 200-day moving average.
Current and rising support is at 12.50-12.
The Russell 2000 ETF (IWM) extended its winning streak to 6-straight sessions following Monday’s trip to $166.36. Fresh and lower resistance at $166.50-$167 was challenged but held along with last Friday’s 52-week high of $166.41. Continued closes above the $167 would be an ongoing bullish signal with upside potential towards $168-$170. The all-time from late August 2018 is at $173.39.
Near-term is support at $166-$165.50. A close below the $165 level would signal a possible near-term top with backtest potential towards $162.50-$162.
RSI remains in a slight uptrend with resistance at 75 and the February high. There is a chance for a run towards 80-85 on continued strength and a close above 75 but overbought levels from late September/ early October 2017. Support is at 70. A close below this level would be a slightly bearish development and would signal additional weakness towards 65-60.
The Energy Select Sector Spider (XLE) was up for the 2nd-straight session and for the 5th time in the past 6 after trading to an late day high $62.03.
Near-term and upper resistance at $61.50-$62 was cleared but held by a penny. A close above $62 would b bullish signal for a retest towards $62.50-$63 with the former representing the mid-September peak.
Current support is at $61.50-$61. A close below the latter would be a slightly bearish signal with retest potential towards $60.50-$60 and the 200-day moving average.
RSI is pushing key resistance at the 70 level and the mid-September top. A close above this level would signal additional strength towards 75-80 with the latter representing overbought levels the March 2018. Support is at 65-60.
I wanted to take timeout to truly wish you and your family a Merry Christmas. I cannot thank my subscribers enough for the joy it gives me to write a Daily newsletter and the opportunity to make you some serious money. Your support allows me to focus on something I truly love to do which is very rare in life. I look forward to having you on board for 2020 and longer as we continue to keep on winning. This will be our 11th-straight profitable year and thank you again for the support.
I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 46-12 (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.
Bausch Health Companies (BHC, $29.91, down $0.09)
BHC January 30 calls (BHC200117C00030000, $1.00, flat)
Entry Price: $0.95 (12/20/2019)
Exit Target: $1.90
Stop Target: None
Action: Monday’s low tapped $29.72 with upper support at $29.75-$29.50 getting breached but holding. Resistance is at $30.25-$30.50.
Intel (INTC, $59.23, up $0.28)
INTC January 60 calls (INTC200117C00060000, $0.82, up $0.09)
Entry Price: $0.65 (12/20/2019)
Exit Target: $1.30
Stop Target: 68 cents (Stop Limit)
Action: Set an initial Stop Limit at 68 cents to protect profits and to avoid a loss.
Shares tested a 52-week high of $59.78 with lower resistance at $59.75-$60 getting cleared but holding. Continued closes above the latter would signal a push towards $60.50-$61. New support is at $59-$58.75.
Exxon Mobil (XOM, $70.29, up $0.35)
XOM January 70 calls (XOM200117C00070000, $1.35, up $0.10)
Entry Price: $1.20 (12/18/2019)
Exit Target: $2.40
Stop Target: 60 cents
Action: Lower resistance at $70-$70.50 was cleared and held on Monday’s trip to $70.30. Support is at $69.50-$69.
AT&T (T, $39.07, down $0.08)
T January 39 calls (T200117C00039000, $0.60, flat)
Entry Price: $0.52 (12/5/2019)
Exit Target: $1.05
Stop Target: None
Action: Monday’s high reached $39.43 before the slightly lower close with lower resistance at $39.25-$39.50 getting cleared but holding. Support is at $38.75-$38.50 and the 50-day moving average on a close below $39.
Pfizer (PFE, $39.32, up $0.09)
PFE January 40 calls (PFE200117C00040000, $0.35, flat)
Entry Price: $0.40 (11/25/2019)
Exit Target: $0.80
Stop Target: None
Action: Lower resistance at $39.50-$39.75 was cleared but held with Monday’s high at $39.51. Support remains at $39-$38.75 and the 200-day moving average.
Viava Solutions (VIAV, $15.24, down $0.01)
VIAV January 16 calls (VIAV200117C00016000, $0.25, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Upper support at $15.25-$15 and the 50-day moving average was breached bit failed to hold with Monday’s bottom at $15.10. Resistance is at $15.50-$15.75.
Limelight Networks (LLNW, $4.07, up $0.14)
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: 75 cents (Stop Limit)
Action: Shares traded to an intraday high of $4.07 with lower resistance at $4-$4.10 getting cleared and holding. A close above the latter and the 50-day moving average would be a more bullish signal a near-term bottom is in and a break out of the current trading range. Support is trying to move up to $3.95-$3.85.