MomentumOptions.com Pre-Market Update for 1/10/2020
Nasdaq, S&P 500 Tap Fresh All-Time Highs/ New Trade (SPCE)
The market stayed in rally mode on Thursday as the major indexes continued their assault on all-time highs amid the relative calm in the Middle East. However, the the latest developments, multiple reports are now indicating that U.S. officials firmly believe that a American made jet crash that occurred near the time of the military aggression was caused by the Iran missile strike.
The ongoing US/ Iran flareups deflated oversold market conditions, but not to the point where levels still aren’t stretched. Volatility continues to give a bullish reading and Friday’s close could provide a sneak-peak into how the start of the 4Q earnings season might unfold.
The Nasdaq jumped 0.8% after tapping an intraday high of 9,215 and fresh lifetime high. New and lower resistance at 9,200-9,250 was cleared and held with a close above the latter signaling upside potential towards 9,350-9,400.
The Dow was up 0.7% with the late day all-time high reaching 28,988. Current and lower resistance at 28,800-29,000 was cleared and held with a move above the latter signaling additional momentum towards 29,200-29,400.
The S&P 500 also soared 0.7% after testing a record peak of 3,275. Fresh and lower resistance at 3,275-3,300 was kissed but held by a less than a point with a pop past the latter signaling a possible trip towards 3,325-3,350.
The Russell 2000 nudged up 0.1% with the session high reaching 1,671. Near-term and lower resistance at 1,665-1,680 was cleared or challenged for the 5th-straight session, but held by a smidge, with the late December 52-week high remaining at 1,681.
Technology led sector strength for the 2nd-straight session after rising 1.1% while Energy and Consumer Staples gained 0.7%. Real Estate was the only sector laggard after slipping 0.03%.
In economic news, Initial jobless claims fell 9,000 to 214,000 following a 1,000 slide to 223,000 in the previous week. The 4-week moving average declined to 224,000 versus 233,500. Continuing claims climbed 75,000 to to 1,803,000 in the after rising 5,000 to 1,723,000 previously.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 3-session slide despite the intraday pullback to $135.90. Prior and upper support at $136-$135.50 was breached but held. A close below the latter would be an ongoing bearish signal with additional weakness towards $134.50-$134 and levels from early November.
Lower resistance at $137.50-$138 and the 50-day moving average was challenged but held on the late rebound to $137.43.
The S&P 500 Volatility Index ($VIX) extended its losing streak to 4-straight sessions after tapping a low of 12.53 just ahead of the closing bell. Near-term and upper support at 13-12.50 and the 50-day moving average were cleared and held. A close below the 12.50 level would signal additional market momentum with downside potential towards 12-11.50.
Key resistance is now at the 13.50 followed by 14.50-15 and the 200-day moving average.
The Spiders Dow Jones Industrial Average ETF (DIA) was up for the 2nd-straight session and for the 3rd time in 4 after trading to an all-time intraday high of $289.84. Uncharted territory and lower resistance at $290-$290.50 was challenged but held. A close above the latter would be an ongoing bullish signal with upside potential towards $292-$292.50, depending on momentum.
Near-term and rising support is at $289-$288.50. A close below the latter would signal a false breakout with backtest potential towards $287.50-$287.
RSI is in an uptrend with key resistance at 70 holding. Continued closes above this level would signal additional strength towards 75-80 and overbought levels from mid-November. Support is at 65-60 with the latter representing the monthly low.
The Dow Jones Transportation Average ($TRAN) extended its winning streak to 3-straight sessions following the intraday run to 11,055. Near-term and key resistance at 11,000 was cleared and held. Continued closes above this level would be an ongoing bullish development for a retest towards 11,100-11,200 with the current 52-week peak at 11,226 from early November.
Current support is at 10,900-10,800. A close below the latter and the 50-day moving average would be a slightly bearish signal with additional weakness towards 10,700-10,600.
RSI is in an uptrend with resistance at 60 getting cleared and holding. Continued closes above this level would signal additional strength towards 65-70 and late October highs. Support is at 55-50 with the latter holding since mid-December.
I have one more New Trade this morning on a stock that is on the verge of breakout out to the mid-teens.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 0-0 (0%). 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.
Virgin Galactic (SPCE, $12.04, up $0.64)
Buy to Open SPCE March 14 calls (SPCE200320C00014000, $0.65, up $0.25)
Action: I like these call options at current levels and you can use a Limit Order up to 85 cents to get the best fills. These are the regular SPCE March 14 calls that expire on March 20th, 2020.
Shares surged to a high of $12.17 with late October and key resistance at $12 getting cleared and holding. Continued closes above this level could lead to a surge towards $14-$15. Rising support is at $11.75-$11.50.
Viavi Solutions (VIAV, $15.34, down $0.21)
VIAV March 16 calls (VIAV200320C00016000, $0.65, down $0.10)
Entry Price: $0.70 (1/8/2020)
Exit Target: $1.40
Stop Target: None
Action: Yesterday’s low reached $15.32 with upper support at $15.25-$15 holding. Resistance is at $15.50-$16.
Spider Gold Shares (GLD, $146.03, down $0.83)
GLD February 145 puts (GLD0221P00145000, $1.60, up $0.20)
Entry Price: $1.00 (1/7/2020)
Exit Target: $2.00 (Limit Order)
Stop Target: $1.15, raise to $1.35 (Stop Limit)
Action: Raise the Stop Limit at $1.15 to $1.35 to further protect profits. The options peaked at $1.76 yesterday.
Shares tested a low of $145.44 with new and upper support at $145.50-$145 getting breached but holding. A close below the latter would signal additional weakness towards $144.50-$144. Lowered resistance is at $146.50-$147.
Dropbox (DBX, $18.37, down $0.09)
DBX April 20 calls (DBX200417C00020000, $0.95, flat)
Entry Price: $0.90 (1/6/2020)
Exit Target: $1.80
Stop Target: None
Action: Shares tested a low of $18.22 for the 2nd-straight session with upper support at $18.25-$18 getting breached but holding. Lowered resistance is at $18.50-$18.75.
Pfizer (PFE, $38.89, down $0.17)
PFE March 40 calls (PFE200320C00040000, $0.65, down $0.05)
Entry Price: $0.75 (1/2/2020)
Exit Target: $1.50
Stop Target: None
Action: Thursday’s low touched $38.79 with upper support at $38.75-$38.50 holding. Resistance is at $39-$39.25.
AT&T (T, $38.80, down $0.05)
T March 40 calls (T200320C00040000, $0.80, down $0.05)
Entry Price: $0.70 (1/2/2020)
Exit Target: $1.40
Stop Target: 72 cents
Action: Shares tested a low of $38.55 with upper support at $38.50-$38.25 holding. Resistance is at $39-$39.25.
Limelight Networks (LLNW, $4.52, up $0.10)
LLNW January 3 calls (LLNW200117C00003000, $1.50, up $0.10)
Entry Price: $0.60 (9/11/2019)
Exit Target: $1.50-$2 (closed 1/3 @ $1.40 on 10/22)
Stop Target: $1.15 (Stop Limit)
Action: Shares traded to a high of $4.43 with prior and lower resistance at $4.40-$4.50 getting cleared and holding. Current support remains at $4.30-$4.20 and the 50-day moving average.