MomentumOptions.com Pre-Market Update for 6/3/2020
Bulls Push Fresh Resistance Levels
The market closed higher for the 6th time in 7 sessions as ongoing reopening of economies and rising expectations that government will add even more stimulus to the already sizable amount previously fueled sentiment. Tech was choppy throughout the session before showing late day strength while volatility remained in a 11-session trading range.
The Dow added 1.1% after tagging a late day high of 25,743. Lower resistance at 25,500-25,750 was cleared and held with a move above the latter signaling additional strength towards 26,000-26,250.
The Russell 2000 was up for the 2nd-straight session after rising 0.9% with the intraday high reaching 1,421. Current and lower resistance at 1,410-1,425 was recovered with a close above the latter getting 1,435-1,450 in focus.
The S&P 500 was higher by 0.8% to extend its winning streak to 3-straight sessions while testing a peak of 3,081 just ahead of the closing bell. New and lower resistance at 3,075-3,100 was breached and held with a close above the latter signaling additional momentum towards 3,125-3,150.
The Nasdaq traded in a 139-point range before climbing 0.6% with the 2nd-half high reaching 9,611. Current and lower resistance at 9,600-9,650 was cleared and held with a move above the latter signaling additional momentum towards 9,700-9,750.
Energy and Materials paced sector strength with gains of 2.8% and 1.8%, respectively. There were no sector laggards.
In economic news, weekly chain store sales dropped -3.1% in the week ended May 30th, according to The Retail Economist data, after the prior 0.6% increase. This breaks a string of three straight weeks of gains. The 12-month pace of contraction slowed to -15.1% year-over-year, from -17.1%. The declines come even as more and more stores are beginning to open from the lockdowns, but the sector is far from being out of the woods, according to the report. However, the data for Q1 comp sales, strengthened by on-line, are reflecting an improved trend as stay-at-home consumers continue to purchase essentials via their computers.
The iShares 20+ Year Treasury Bond ETF (TLT) was down for the 2nd-straight session and for the 5th time in 6 after tapping a fresh multi-month and intraday low of $161.25. Late March and upper support at $161.50-$161 was pierced but held. A close below the latter would signal additional weakness towards $160.50-$160.
Lowered resistance at is $162-162.50 followed by $163.50-$164.
The S&P 500 Volatility Index ($VIX) flipped-flopped for the 4th-straight session with the afternoon low kissing 26.66. Near-term and upper support has moved up to 27-26.50 was recovered. A close below the latter would signal additional weakness towards 26-25.50 with the late May low at 25.92.
Lowered resistance is at 28.50-29 followed by 30-30.50.
The Wilshire 5000 Composite Index ($WLSH) extended its winning streak to 3-straight and settled higher for the 6th time in 7 sessions after closing on a fresh and multi-month peak of 31,365. Early March and lower resistance 31,250-31,500 was cleared and held. A close above the latter would be an ongoing bullish signal for a continued run towards 31,750-32,000.
Current support is at 31,000-30,750. A move back below the latter would be a slightly bearish signal with backtest potential 30,500-30,250 and the 200-day moving average
RSI is in an uptrend with lower resistance at 65-70 getting cleared and holding. Continued closes above the latter would signal additional strength towards 75-80 and prior peaks from January and December. Support is at 60 and a level that has been holding since mid-May.
The Real Estate Select Sector Spider (XLRE) was up for the 2nd-straight session and for the 6th time in 7 with the intraday high reaching $35.71. Prior and lower resistance at $35.50-$36 was recovered. A close above the latter would signal additional momentum towards $36.75-$37 and the 200-day moving average.
Current and rising support is at $35.25-$35. A close below the the latter would be a slightly bearish signal with additional downside risk towards $34.25-$34.
RSI has leveled out with key resistance at 65 holding. A close above this level would signal additional momentum towards 70-75 and prior levels from February. Support is at 60 with a move below this level signaling additional weakness towards 55-50.
We got some super sweet pin action yesterday as WU officially become our biggest winner of the year while shares of FCX finally cleared a key resistance level I have been wanting to see.
On that note, I still plan to open 1-2 new positions this week so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 19-6 (76%). 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.
Freeport McMoRan (FCX, $9.75, up $0.41)
FCX June 10 calls (FCX200619C00010000, $0.40, up $0.15)
Entry Price: $0.40 (5/19/2020)
Exit Target: $0.80
Stop Target: None
Action: Shares soared to a high of $9.90 with fresh and lower resistance at $9.75-$10 getting cleared and holding. I would like to see a close above $10 today. New support is at $9.70-$9.60.
Western Union (WU, $23.10, up $2.39)
WU June 21 calls (WU200619C00021000, $2.15, up $1.65)
Entry Price: $0.50 (5/9/2020)
Exit Target: $1.00, raise to $3 (closed half at $2.25 on 6/2/2020)
Stop Target: $1.80, raise to $2 (Stop Limit)
Action: Raise the Exit Target from $1 to $3 on the other half of the position. Yesterday’s high tagged $2.74. Raise the Stop Limit from $1.80 to $2.
Shares zoomed to a high of $23.63 with early March and lower resistance at $23.50-$23.75 getting cleared but holding. We need to see a close above the 200-day moving average today to keep the momentum going. Fresh support is at $23-$22.75. A move below $23.50 will likely force us out of the other half of the trade.
Limelight Networks (LLNW, $5.11, up $0.01)
LLNW June 5 calls (LLNW200619C00005000, $0.40, flat)
Entry Price: $0.60 (5/6/2020)
Exit Target: $1.20
Stop Target: None
Action: Fresh and lower resistance at $5.20-$5.230 was kissed but held on Tuesday’s high. Support remains at $5-$4.90.