MomentumOptions.com Pre-Market Update for 8/11/2020

S&P Nears Record High, Tech Lags

8:00am (EST) 

The market settled mostly higher on Monday as Congress remains in a stalemate over the next fiscal package, while President Trump issued executive orders to extend unemployment benefits over the weekend. 

The blue-chips led the way higher following a better-than-expected jobs opening report while Tech was weak for the 2nd-straight session after trading in the red for much of the day.

The Dow extended its winning streak to 7-straight sessions after soaring 1.3% and hitting a late day peak of 27,803. Lower resistance from early June at 27,750-28,000 was reclaimed. A close above the latter would indicate a possible retest towards 28,250-28,500.

The Russell 2000 was up for the 5th time in 6 sessions and 2nd-straight after rallying 1% while tapping a morning high of 1,593. Longer-term and lower resistance from late January at 1,585-1,600 was cleared but held by a quarter-point. A pop above the latter would indicate additional momentum towards 1,610-1,625.

The S&P 500 was also up for the 7th-straight session after rising 0.3% with the 2nd-half high reaching 3,363. Early February and lower resistance at 3,375-3,400 was challenged but held. A close above the latter and the current all-time high at 3,393 would suggest a breakout towards 3,425-3,450.

The Nasdaq lost 0.4% following the intraday pullback to 10,849. Fresh and upper support at 10,850-10,750 was breached but held. A move below the latter would signal additional weakness towards 10,600-10,500.

Energy and Industrials were the strongest sectors after surging 3.1% and 2.5%. Healthcare, Communication Services and Technology were the weakest sectors after sliding 0.3%.

In economic news, JOLTS reported job openings rose 518,000 to 5,889,000 in June following the 375,000 bounce to 5,371,000 in May. The JOLT rate improved to 4.1% from 3.9% and is the best since February. June hirings declined -503,000 to 6,696,000 after jumping a record 3,152,000 to an historic peak of 7,199,000 in May which broke four months of declines. The hire rate slid to 4.9% from May’s record 5.4%. Quitters increased 531,000 to 2598,000 versus the 190,000 increase to 2,067,000 in May. The quit rate climbed to 1.9% versus 1.6%, and is the best since February.

The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 2nd-straight session following the fade to $169.07 ahead of the closing bell. Current and upper support at $169-$168.50 was challenged but held. A close below the latter would signal additional additional weakness towards $167.50-$167.

Lowered resistance is at $170-$170.50 followed by $171.50-$172.

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The S&P 500 Volatility Index ($VIX) extended its losing streak to 7-straight sessions after trading to an intraday low of 21.46. Near-term and upper support at 21.50-21 was breached but held. A close below the latter and last Thursday’s low of 20.97 would be an ongoing bullish signal for the market with additional weakness towards 20.50-20.

Lowered resistance is at 23.50-24. A close above the 25 level would suggest additional upside risk towards 27-27.50 and the 200-day moving average.

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The iShares Russell 1000 (IWF) extended its losing streak to 2-straight sessions following the pullback to $208.02. Current and upper support at $208.50-$208 was tripped but held. A close below the latter would indicate a further backtest towards the $206-$205.50 area.

Lowered resistance is at $211-$211.50. A move above the latter would suggest a retest towards $213.50-$214 with last Thursday and the all-time peak at $213.61.

RSI is in a downtrend with upper support at 65-60 getting breached and failing to hold. A close below the latter would signal additional weakness towards 55-50 with the latter holding since early April. Resistance is at 70 and a level that has held since early July. 

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The Industrials Select Sector Spider (XLI) extended its winning streak to 6-straight sessions after testing a high of $77.05. Early June and lower resistance at $77-$77.50 was cleared but held by a couple pennies. A close above the latter would be an ongoing bullish signal with retest potential towards $78.50-$79 and levels from late February.

Rising support is at $76-$75.50. A close below the $75 level would signal a false breakout with additional backtest potential towards $74-$73.50.

RSI remains in an uptrend after clearing and holding key resistance at 70. Continued closes above this level would suggest ongoing momentum towards 75-80 and early June peaks. Support is at 65-60.

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I have updated our current trades so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2020: 26-8 (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.

AT&T (T, $30.20, up $0.18)

T September 31 calls (T200918C00031000, $0.50, up $0.03)

Entry Price: $0.50 (8/10/2020)

Exit Target: $1.00

Return: 0%

Stop Target: None

Action: Shares closed on the session high with lower resistance at $30.25-$30.50 getting challenged but holding. Support is at $29.75-$29.50.

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Western Union (WU, $23.38, up $0.11)

WU September 26 calls (WU200918C00026000, $0.35, flat)

Entry Price: $0.50 (8/3/2020)

Exit Target: $1.00

Return: -30%

Stop Target: None

Action: Shares tested a high of $23.70 with lower resistance at $23.50-$23.75 getting cleared but holding. Fresh support is at $22.75-$22.50 and the 200-day moving average.

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Cisco Systems (CSCO, $47.73, up $0.30)

CSCO August 50 calls (CSCO200821C00050000, $0.65, up $0.05)

Entry Price: $0.65 (7/21/2020)

Exit Target: $1.30

Return: 0%

Stop Target: None

Action: Monday’s peak reached $48 with lower resistance at $48-$48.50 getting tagged but holding. Support is at $47.50-$47.

Earnings due on Wednesday.

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Viavi Solutions (VIAV, $14.22, down $0.04)

VIAV August 14 calls (VIAV200821C00014000, $0.75, flat)

Entry Price: $0.60 (7/13/2020)

Exit Target: $1.20

Return: 25%

Stop Target: 60 cents (Stop Limit)

Action: Upper support at $14.25-$14 failed to hold on the late day fade to $14.10. Resistance remains at $14.50-$14.75. 

Earnings are due out on Tuesday after the closing bell.

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