MomentumOptions.com Pre-Market Update for 12/26/2019
Small-Caps, Tech Show Continued Strength
The market closed on both sides of the ledger for Tuesday’s shortened session while keeping fresh 52-week and all-time highs in play. Wall Street is hoping the “official” start of any Santa Claus rally can continue into the New Year as the time period includes the last 5 trading days of the year and the first 2 sessions into the following year.
The Russell 2000 was up for the 7th-straight sessions after adding 0.2% while closing at a fresh 52-week and session high of 1,678. Current and lower resistance at 1,675-1,690 was cleared and held with a move above the latter getting 1,700 in focus.
The Nasdaq extended its winning streak to 9-straight sessions after rising 0.1% with the record high reaching 8,957. Near-term and lower resistance at 8,950-9,000 was cleared and held with a close above the latter leading to a possible run towards 9,050-9,100.
The S&P 500 slipped 0.1% to snap a 3-session winning streak with the intraday low kissing 3,220. Current and upper at 3,220-3,200 held by a half-point with a close below the latter signaling a possible near-term peak with backtest potential towards the 3,175 area.
The Dow also dipped 0.1% after trading in a 73-point range while testing a low of 28,503. Current and upper support at 28,500-28,250 was challenged but held with a close below the latter signaling additional weakness towards the 28,000 level.
Consumer Discretionary and Financials showed the most sector strength after rising 0.2%. Industrials and Healthcare paced sector laggards with losses of 0.4% and 0.1%, respectively.
In economic news, Richmond Fed’s manufacturing index dropped 4 points to -5 in December, weaker than forecast for a print of 1, after falling -9 points to -1 in November. The employment component edged up 2 points to 7 after falling 8 points to 5 in November. The wage index improved further to 29 after jumping 9 points to 24 previously. The new order volume component dropped to -13 from -3. The prices paid index was edged up to 1.73% after slipping in November to 1.55%, while the prices received index dipped to 1.60% following the rise to 1.80%. The 6-month shipment index rose another 7 ticks to 38 following the 7 point increase to 31 last month. The 6-month employment index slipped to 12 from 13, with new orders at 29 from 30. The future price indexes showed prices paid at 1.59% from 1.73%, with prices received at 1.43% from 1.48%.
Chain store sales increased 0.6% last week, following hefty gains of 2.2% and 3.2%, the previous 2 weeks to start December. The 12-month pace accelerated to 2.2% year-over-year from 1.4%.
The iShares 20+ Year Treasury Bond ETF (TLT) was up for the 3rd time in 4 sessions with the intraday high tapping $137.06. Current and lower resistance at $137-$137.50 was cleared but held. A close above the latter would be a bullish signal for a retest towards $138-$138.50 and the 50-day moving average.
Key support remains 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) edged up for the 3rd-straight session after trading to a high of 12.84. Lower resistance at 12.75-13.25 was breached but held for the 2nd-straight session. A close above 13.50 and the 50-day moving average would signal additional risk towards 14.50-15 and the 200-day moving average.
Current support remains at 12.50-12.
The S&P 400 Mid Cap Index ($MID) was down for the 2nd-straight session following the pullback to 2,061. Current and upper support at 2,060-2,040 was challenged but held. A close below the latter would signal a near-term peak with further backtest potential towards 2,020-2,000 and the 50-day moving average.
Near-term resistance is at 2,075-2,100 with the current all-time high at 2,069. Continued closes above the latter would be a renewed bullish signal for a breakout towards 2,125-2,150.
RSI is struggling to clear resistance at 70. A close above this level and the montly high would be a bullish signal for additional strength towards 75-80 and overbought levels from February. Support is at 65-60.
The Communication Services Select Sector Spider (XLC) was also lower for the 2nd-straight session after testing a session low of $53.74. Current and upper support at $53.75-$53.50 was breached but held. A close below $53.25 would signal a near-term top with additional risk towards the $53-$52.75 area.
Near-term resistance is at $54-$54.25. A move above the latter and Monday’s all-time high of $54.15 would be a bullish signal with upside potential towards $55-$55.50, depending on momentum.
RSI is in a slight downtrend and is trying to hold support at 70. A close below this level would be a bearish signal for additional weakness towards 60-55 with the latter representing the December low. Resistance is at 75. A close above this level would signal a possible pop towards 80-85 with the latter representing the April high.
I have raised the Stop Limit on INTC and have updated the rest of our current trades, so let’s go check the tape. I could also have a New Trade this afternoon so stay locked-and-loaded.
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, $29.87, down $0.04)
BHC January 30 calls (BHC200117C00030000, $0.90, down $0.05)
Entry Price: $0.95 (12/20/2019)
Exit Target: $1.90
Stop Target: None
Action: Shares tested a low of $29.63 with upper support at $29.75-$29.50 getting breached but holding. Lowered resistance is at $30-$30.25.
Intel (INTC, $59.41, up $0.18)
INTC January 60 calls (INTC200117C00060000, $0.87, up $0.05)
Entry Price: $0.65 (12/20/2019)
Exit Target: $1.30
Stop Target: 68 cents, raise to 72 cents (Stop Limit)
Action: Raise the Stop Limit at 68 cents to 72 cents to further protect profits.
Tuesday’s high tapped $59.48 with lower resistance at $59.50-$59.75 getting challenged but holding. Current support is at $59.25-$59.
Exxon Mobil (XOM, $70.02, down $0.27)
XOM January 70 calls (XOM200117C00070000, $1.25, down $0.10)
Entry Price: $1.20 (12/18/2019)
Exit Target: $2.40
Stop Target: 60 cents
Action: Upper support at $70-$69.50 was breached but held on the fade to $69.91. Key resistance remains at $70.50 with continued closes above this level being a bullish signal for a retest towards $71.50-$72 and the 200-day moving average.
AT&T (T, $38.96, down $0.11)
T January 39 calls (T200117C00039000, $0.50, down $0.10)
Entry Price: $0.52 (12/5/2019)
Exit Target: $1.05
Stop Target: None
Action: Tuesday’s trip to $38.90 breached and failed to hold upper support at $39-$38.75. A close below the latter would signal a further backtest towards $38.50-$38.25 and the 50-day moving average. Resistance is at $39.25-$39.50.
Pfizer (PFE, $39.29, down $0.03)
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 challenged but held with on Tuesday’s run to $39.44. Support remains at $39-$38.75 and the 200-day moving average.
I could piggy back this trade with March calls as shares could be on the verge of filling a gap up to $41. This level represents the prior intraday plunge to $38 from late July and should come into play quickly if shares can clear and hold $39.75-$40.
Viava Solutions (VIAV, $15.30, up $0.06)
VIAV January 16 calls (VIAV200117C00016000, $0.25, flat)
Entry Price: $0.70 (11/7/2019)
Exit Target: $1.40
Stop Target: None
Action: Lower resistance at $15.25-$15.50 was breached but held with Tuesday’s high reaching $15.30. Support remains at $15.25-$15 and the 50-day moving average.
Limelight Networks (LLNW, $4.05, down $0.02)
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: Current and upper support at $3.95-$3.85 held on Tuesday’s fade to $3.98. Resistance is at $4.05-$4.15 and the 50-day moving average.