MomentumOptions.com Pre-Market Update for 6/9/2020
Bulls Stay Strong
s finished higher on Monday, finding further support from the fantastic jobs report from last Friday that provided a huge boost to optimism over the economic recovery. The gains came despite the Business Cycle Dating Committee of the National Bureau of Economic Research determining that a top in monthly economic activity occurred in the U.S. economy in February.
The peak marked the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. Volatility rose a tad despite the strong market gains with the S&P 500 back in positive territory for 2020.
The Russell 2000 showed the most strength for the 2nd-straight session after rising 2% with the afternoon peak reaching 1,537. Lower resistance from early March at 1,535-1,550 was recovered with a close above the latter signaling additional momentum towards 1,560-1,575.
The Dow rose 1.7% to extend its winning streak to 6-straight sessions after tagging a high of 27,580. Fresh and lower resistance from late February resistance 27,500-27,750 was recovered with a close above the latter signaling additional strength towards 28,000-28,250.
The S&P 500 closed higher for the 2nd-straight session after advancing 1.2% while topping out at 3,233. New 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 Nasdaq was higher by 1.1% after tapping a 2nd-straight all-time amd intraday high of 9,927. Uncharted and lower resistance at 9,900-9,950 was breached and held with a move above the latter signaling additional momentum towards the 10,000 level.
Energy showed the most sector strength for the 2nd-straight session after soaring 4.5% while Utilities and Real Estate rose 2.7% and 2.2%, respectively. There was no sector weakness.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped a 5-session slide despite testing an opening low of $155.05. Current and upper support at $155-$154.50 was challenged but held with backup help at $153.50-$153.
Lower resistance at $156.50-$157 was recovered on the intraday bounce to $156.85. A close above the latter would be a slightly bullish signal for continued strength towards $158-$158.50.
The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session with the late day high reaching 25.98. Lower resistance is at 25.50-26 was breached and held. A close above the latter would signal additional strength towards 27-27.50.
Near-term support remains at 24.50-24 and the 200-day moving average. A close below the 23.50 level would signal additional weakness towards 22.50-22 and ongoing market strength.
The Spider Small-Cap 600 ETF (SLY) extended its winning streak to 6-straight sessions following the intraday run to $65.55. Lower resistance from early March at $65.50-$66 was breached but held. A close above the latter would be an ongoing bullish signal for additional strength towards $67-$67.50.
Current support is at $65-$64.50. A close below $63.50 and the 200-day moving average would signal a possible near-term top with backtest potential $62.50-$62.
RSI remains in an uptrend with key resistance from January at 70 getting cleared and holding. Continued closes above this level would signal additional strength 75 and the prior peak from February 2019. Support is at 65-60.
The Consumer Discretionary Select Spiders (XLY) was up for the 2nd-straight session after tagging an intraday high of $133.30. Prior and lower resistance from February at $133-$133.50 was cleared and held. A move above the latter would signal additional breakout potential towards the $134.50-$135 area.
Near-term support at $132.50-$132. A close below the $130 level would signal a possible near-term peak with additional downside risk towards $129-$128.50.
RSI is in slight uptrend with key resistance at 75 getting cleared and holding. A move above this level would signal additional strength towards 80-85 and January 2018 highs. Support is at 70.
I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 20-6 (77%). 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.
Dropbox (DBX, $22.54, up $0.56)
DBX July 25 calls (DBX200717C00025000, $0.45, up $0.15)
Entry Price: $0.55 (6/4/2020)
Exit Target: $1.10
Stop Target: None
Action: Lower resistance is at $22.50-$22.75 was recovered on the bounce to $22.68 yesterday. Support is at $22.25-$22.
Tilray (TLRY, $10.44, up $0.96
TLRY September 11 calls (TLRY200918C00011000, $1.25, up $0.40)
Entry Price: $1.00 (6/3/2020)
Exit Target: $2.00
Stop Target: 50 cents
Action: Monday’s peak reached $10.68 with lower resistance at $10.50-$10.75 getting cleared but holding. Support at $10.25-$10.
Freeport McMoRan (FCX, $11.25, up $0.39)
FCX June 10 calls (FCX200619C00010000, $1.35, up $0.35)
Entry Price: $0.40 (5/19/2020)
Exit Target: $1.60 (closed half at $1.20 on 6/5/2020)
Stop Target: 90 cents, raise to $1.20 (Stop Limit)
Action: Raise the Stop Limit from 90 cents to $1.20 on the other half of the trade.
Monday’s high reached $11.27 with fresh and lower resistance at $11.20-$11.30 getting breached and holding. New support is at $11.10-$11.
Limelight Networks (LLNW, $5.46, up $0.76)
LLNW June 5 calls (LLNW200619C00005000, $0.60, up $0.45)
Entry Price: $0.60 (5/6/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares zoomed to a high of $5.50 with prior and lower resistance at $5.40-$5.50 getting cleared and holding with the latter representing the session top. New support is at $5.30-$5.20.