MomentumOptions.com Pre-Market Update for 12/27/2019
Nasdaq Clears the 9,000 Level
The market set another round of record highs on Thursday as the Phase One trade deal has continued to support a renewed optimism in stocks. China’s Commerce Ministry indicated it remains in close touch with the U.S. regarding the deal, which is expected to be signed in early 2020.
The Nasdaq extended its winning streak to 11-straight, it longest in over a decade, after soaring 0.8% while closing at a fresh all-time and session high of 9,022. Uncharted territory and lower resistance at 9,000-9,050 was cleared and held with a close above the latter signaling momentum towards 9,100-9,150.
The S&P 500 was up for the 4th time in 5 sessions after gaining 0.5% while trading to an late day and record high of 3,240. Near-term and lower resistance at 3,225-3,250 was cleared and held with a close above the latter getting 3,275-3,300 in focus.
The Dow added 0.4% following the afternoon run to 28,624 and new lifetime peak. Current and lower resistance at 28,600-28,800 was cleared and held with a close above the latter signaling a run towards the 29,000 level.
The Russell 2000 had its 7-session winning streak snapped after slipping a third-point, or 0.02%, with the intraday low kissing 1,675. Current and upper support at 1,675-1,660 was challenged but held with a move above the latter signaling additional weakness towards the 1,650 level.
Consumer Discretionary led sector strength after jumping 1.2% while Technology and Communication Services rose 0.8%. Healthcare and Energy were the only sector laggards after falling 0.1% and 0.03%, respectively.
In economic news, MBA Mortgage Applications tumbled another -5.3%, after dropping -5% in the prior week. However, it is still 58.7% year-over-year higher compared to last year. The refi index declined -5.1%, and the purchase index fell -4.8%. Compared to last year, the former is 127.8% year-over-year higher while the latter is up 5.3%. The 30-year fixed rate was at 3.99%, and has been below 4% since November 8th. The drop in mortgage rates has been supportive for the pick up in the housing sector in recent months and should remain a tailwind through the early part of 2020.
Initial Jobless Claims fell -13,000 to 222,000, after sliding -17,000 to 235,000 in the prior week. Expectations were for a print of 214,000. The 4-week moving average rose to 228,000 after edging up to 225,750 previously. Continuing claims dipped -6,000 to 1,719,000, following the 54,000 bounce to 1,725,000 in the prior week.
The iShares 20+ Year Treasury Bond ETF (TLT) showed strength for the 2nd-straight session with the intraday peak reaching $137.22. Near-term and lower resistance at $137-$137.50 was cleared and held. A close above the latter would be a more bullish signal for a retest towards $138-$138.50 and the 50-day moving average.
Support is trying to move up to $136.50-$136. A close below the latter would signal additional weakness towards $134.50-$134 and early November lows.
The S&P 500 Volatility Index ($VIX) fell for the 1st time in 4 sessions after tapping a low of 11.72 shortly after the opening bell. Current and lower support at 12.50-12 was breached but held.
Lower resistance at 12.75-13.25 also held for the 3rd-straight session on the session high. A close above 13.50 and the 50-day moving average would be a bearish development with upside risk towards 14.50-15 and the 200-day moving average.
The Spider Small-Cap 600 ETF (SLY) had its 7-session winning streak snapped despite trading to a fresh 52-week peak of $72.91 shortly after the open. Near-term resistance is at $73-$73.50 was challenged but held. A close above the latter would signal additional momentum towards $73.50-$74 and resistance levels from early June 2018.
Current and upper support at $72.50-$72 was breached but held on the intraday fade to $72.49. A close below the latter be a slightly bearish signal with backtest potential towards $71-$70.50.
RSI has been flatlining but is holding key support at 70. A close below this level keeps weakness towards 65-60 in play. Resistance at 75 and the mid-February high.
The Utilities Select Spider (XLU) was up for the 2nd-straight session with Thursday peak reaching $64.25. Lower resistance at $64.50-$65 easily held. Continued closes above the latter and last Friday’s all-time high of $64.94 would be a bullish signal for additional strength towards $66-$66.50.
Current support is at $64-$63.50. A close below the latter and the 50-day moving average would be a bearish signal for a retest towards $62.50-$62 and the prior trading range from mid-November thru mid-December.
RSI is trying to curl higher with resistance at 65-70 with the latter representing the monthly peak. A close above 70 could lead to a push towards 75 and the overbought top from late September. Support is at 60 with a move below this level signaling additional weakness towards 55-50.
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, $29.69, down $0.18)
BHC January 30 calls (BHC200117C00030000, $0.85, down $0.05)
Entry Price: $0.95 (12/20/2019)
Exit Target: $1.90
Stop Target: None
Action: Tuesday’s low tapped $29.56 with prior and upper support at $29.50-$29.25 getting challenged but holding. Lowered resistance is at $29.75-$30.
Intel (INTC, $59.82, up $0.41)
INTC January 60 calls (INTC200117C00060000, $1.05, up $0.18)
Entry Price: $0.65 (12/20/2019)
Exit Target: $1.30
Stop Target: 72 cents, raise to 90 cents (Stop Limit)
Action: Raise the Stop Limit at 72 cents to 90 cents to further protect profits.
Shares traded to an all-time high of $59.85 with fresh and lower resistance at $59.75-$60 getting cleared and holding. A close above the latter could lead to additional strength towards $61.50-$62. Rising support is at $59.50-$59.25.
Exxon Mobil (XOM, $70.13, up $0.11)
XOM January 70 calls (XOM200117C00070000, $1.25, flat)
Entry Price: $1.20 (12/18/2019)
Exit Target: $2.40
Stop Target: 60 cents
Action: Key resistance at $70.50 was triggered but held. A close above this level would be a bullish development for a run towards $71.50-$72 and the 200-day moving average. Near-term support remains at $70-$69.50.
AT&T (T, $39.16, up $0.20)
T January 39 calls (T200117C00039000, $0.55, up $0.05)
Entry Price: $0.52 (12/5/2019)
Exit Target: $1.05
Stop Target: None
Action: Thursday’s peak reached $39.20 with lower resistance at $39.25-$39.50 holding. Support is at $39-$38.75.
Pfizer (PFE, $39.38, 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 yesterday’s top at 39.57. Support is trying to move up to $39.25-$39.
Viava Solutions (VIAV, $15.29, 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 but held on the fade to $15.18. Resistance is at $15.50-$15.75.
Limelight Networks (LLNW, $4.15, up $0.10)
LLNW January 3 calls (LLNW200117C00003000, $1.10, up $0.05)
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: Fresh resistance at $4.15-$4.25 was cleared but held on the close back above the 50-day moving average. Rising support is at $4-$3.90.