MomentumOptions.com Pre-Market Update for 2/11/2020
Nasdaq, S&P 500 Tap Fresh Record Highs
The market rebounded on Monday despite news the coronavirus continues to spread with reports indicating that the official death toll now exceeds that of the SARS outbreak. Although some factory workers in China have tentatively returned to work, many factories there will remain closed for another week or two with corporate conferences in March being cancelled.
For now, however, the major indexes are shrugging off concerns about the virus’ spread and resuming the rally that had been briefly interrupted the past two Friday’s. Tech showed the most strength to led the major indexes higher but elevated volatility remains a slight concern ahead of a busy week filled with Fed speak and ongoing 4Q earnings.
The Nasdaq recorded its 11th all-time high of the year after jumping 1.1% while closing at 9,628 and the session peak. Fresh and lower resistance at 9,600-9,650 was cleared and held with a move above the latter signaling strength towards 9,700-9,750.
The S&P 500 added 0.7% after closing at a session and new record high of 3,352. Prior and key resistance at 3,350 was cleared and held with upside potential towards 3,375-3,400 on continued closes above this level.
The Russell 2000 also rallied 0.7% after clearing and holding 1,667 into the closing bell. Near-term and lower resistance at 1,665-1,680 was cleared and held with continued closes above the latter getting the 1,700 level back in focus.
The Dow was up 0.6% after trading to a late day high of 29,278. Current and lower resistance at 29,200-29,400 was recovered with a close above the latter and the all-time high at 29,408 signaling additional strength towards 29,600-29,800.
Real Estate and Technology led sector strength after rising 1.4% and 1.2%, respectively, while Consumer Discretionary advanced 1.1%. Energy paced sector laggards after giving back 0.5% while Materials nudged down 0.1% to round out the losers.
The iShares 20+ Year Treasury Bond ETF (TLT) extended its winning streak to 3-sessions after reaching an intraday peak of $145.25. Prior and lower resistance from late January at $145-$145.50 was cleared but held. A close above the latter would signal additional strength towards $146-$146.50 and early September highs.
Current and rising support is at $144.50-$144. A move below the latter would signal a possible near-term top with additional backtest potential towards $143-$142.50.
The S&P 500 Volatility Index ($VIX) was down for the 2nd-straight session after testing a low of 15.01 ahead of the close. Current and upper support at 15-14.50 was challenged but held with the close below the 200-day moving average being a slightly bullish signal. However, more important recovery levels remain at 14-13.50 and the 50-day moving average that remains in a slight uptrend.
Near-term resistance at 16-16.50 has been holding the past 5 sessions. A close above the latter would be a bearish development with upside risk towards 17.50-18.
The Russell 2000 ETF (IWM) snapped a 2-session slide after tapping an intraday high of $165.89. Current and lower resistance at $165.50-$166 was cleared and held. Continued closes above the latter would be a more bullish signal for a retest towards $167.50-$168 with last Thursday’s peak at $168.15.
Near-term support is at $165-$164.50. A close below the latter and the 50-day moving average would signal additional weakness towards the $162.50-$162 area.
RSI has leveled out with key resistance at 55. A close above this level would signal additional strength towards 60-65. Support is at 50-45. A close below the latter would be a renewed bearish development with additional weakness towards 40-35.
The iShares PHLX Semiconductor ETF (SOXX) was up for the 5th time in 6 sessions after rebounding and surging to an afternoon high of $257.02. Near-term and lower resistance at $257-$257.50 was breached but held. A close above the latter would signal additional strength towards $259.50-$260.
Near-term but shaky support is at $254-$253.50. A close below the latter keeps downside risk towards $252.50-$250 in play.
RSI has flatlined with key support at 50. A close below this level reopens downside pressure towards 45-40 and the latter representing the late January low. Resistance is at 55-60. A move above the latter and the monthly peak would signal additional strength towards 65-70.
Today’s earnings announcements:
Before the open: AutoNation (AN), Cerence (CRNC), Dominion Energy (D), Exelon (EXC), Goodyear Tire & Rubber (GT), Hasbro (HAS), Ingredion (INGR), Jones Lang LaSalle (JLL), LouisianaPacific (LPX), Masco (MAS), Omnicom Group (OMC), Palatin Technologies (PTN), Sealed Air (SEE), Tegna (TGNA), Under Armour (UAA), Virtu Financial (VIRT)
After the close: Akamai Technologies (AKAM), Blackstone Mortgage Trust (BXMT), CNO Financial Group (CNO), Denny’s (DENN), Electromed (ELMD), Franklin Street Properties (FSP), Good Times Restaurants (GTIM), Insperity (NSP), IsoRay (ISR), Kornit Digital (KRNT), Lattice Semiconductor (LSCC), Lyft (LYFT), NCR Corporation (NCR), Primerica (PRI), Rexford Industrial Realty (REXR), UDR, (UDR), Varex Imaging (VREX), Western Union (WU)
We got another blessing from the market gods after cashing out on another triple-digit winner in AT&T. Shares of BBBY also tanked 6.7% to put us back in the green for that trade. Meanwhile, CSCO and DBX continue to rebound.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 8-1 (89%). 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.
AT&T (T, 38.34, down $0.11)
T March 38 calls (T200320C00038000, $1.05, down $0.15)
Entry Price: $0.55 (2/4/2020)
Exit Target: $1.10, raise to $2
Stop Target: $1.10 (Stop Limit)
Action: The Stop Limit at $1.10 tripped on the stock’s pullback to $38.10 and the 50-day MA yesterday.
I will keep shares on my Watch List for another reentry point as we are now 15-0 since the start of last year trading call options in AT&T.
Bed Bath & Beyond (BBBY, $14.29, down $1.02)
BBBY April 12 puts (BBBY0417P00012000, $0.65, up $0.15)
Entry Price: $0.55 (1/30/2020)
Exit Target: $1.10
Stop Target: None
Action: Shares sank to a low of $14.17 with prior and upper support at $14.25-$14 getting breached but holding. Lowered resistance is at $14.50-$14.75.
Cisco Systems (CSCO, $48.87, up $0.90)
CSCO March 52.50 calls (CSCO200320C00052500, $0.45, up $0.15)
Entry Price: $0.55 (1/22/2020)
Exit Target: $1.10
Stop Target: None
Action: Shares surged to a high pf $48.89 into the close with lower resistance at $49-$49.25 getting cleared and holding. New support at $48.50-$48.25
Dropbox (DBX, $18.53, up $0.43)
DBX April 20 calls (DBX200417C00020000, $0.90, up $0.20)
Entry Price: $0.90 (1/6/2020)
Exit Target: $1.80
Stop Target: None
Action: Prior and lower resistance at $18.50-$18.75 was cleared and held following Monday’s trip to $18.59. Current support is at $18.25-$18.