MomentumOptions.com Pre-Market Update for 8/25/2020
S&P 500 Clears 3,400 Level
The market closed higher across the board on Monday after President Trump said that the FDA approved blood-plasma treatment for emergency use in the treatment for coronavirus. There was also a potential sign of easing U.S./ China tensions on news President Trump is privately seeking to reassure U.S. companies that they can still do business with a Chinese messaging app.
Aside from the small-caps, the major indexes extended their winning streaks to 3-straight sessions with fresh record highs and prior resistance levels getting back into play.
The Dow was higher by 1.4% after testing a late day high of 28,314. Mid-December and lower resistance at 28,250-28,500 was reclaimed. A pop above the latter would be a bullish signal for additional upside towards 28,750-29,000 and levels from mid-January.
The Russell 2000 rallied 1% while closing on the session high of 1,568. Current and lower resistance at 1,570-1,585 was challenged but held. A close above the latter would be a bullish signal for another run towards 1,600-1,615.
The S&P 500 was also up 1% following the afternoon push to 3,432 and 2nd-straight all-time high. Unchartered territory and lower resistance at 3,425-3,450 was cleared and held. A close above the latter would indicate additional momentum towards 3,475-3,500.
The Nasdaq climbed 0.6% with the morning and lifetime peak reaching 11,462. New and lower resistance at 11,400-11,500 was breached but held. A move above the latter would suggest additional strength towards the 11,600-11,700 area.
Energy and Financials led sector strength after zooming 2.8% and 2.4%, respectively. Healthcare was the only sector laggard after giving back 0.5%.
In economic news, Chicago Fed National Activity Index fell -4.2 points to 1.2 in July after June’s 1.1 point gain to a record peak of 5.3. The 3-month moving average improved to a record high of 3.6 last month from June’s -2.8 dismal reading. According to the report, 56 of the 85 indicators made positive contributions, with 29 making negative contributions. Production and employment related indicators made smaller contributions to the index.
The iShares 20+ Year Treasury Bond ETF (TLT) had its 2-session winning streak snapped following the intraday pullback to $165.86. Current and support at $166-$165.50 failed to hold. A move below the latter and the 50-day moving average would signal additional weakness towards $165-$164.50.
Resistance remains at $166.50-$167. A close above the $16750 would be a more bullish signal for additional strength towards $168.50-$169 and prior levels from the start of the month.
The S&P 500 Volatility Index ($VIX) was down for the 2nd-straight session with the opening low tapping 21.25. Near-term and upper support at 22.50-22 was reclaimed with more important recovery levels at 20.50-20.
Current and lower resistance is at 23-23.50 followed by 24.50-25.
The Invesco QQQ Trust (QQQ) extended its winning streak to 3-straight sessions after trading to a record high of $286. Uncharted territory and lower resistance at $286-$286.50 was tagged but held. A close above the latter would indicate additional momentum towards $289.50-$290.
Current and rising support is at $282.50-$282 with backup help at $281.50-$281.
RSI i\remains in a slight uptrend with key resistance at 70 getting cleared and holding. Continued closes above this level would indicate additional strength towards 75 and the July and June peak. Support is at 65-60.
The iShares PHLX Semiconductor ETF (SOXX) was up for the 2nd-straight session following the intraday trip to $302.98. Prior and lower resistance $302.50-$303 was cleared but held. A close above the latter would signal a retest towards $304.50-$305 with the current all-time high at $304.69.
Near-term support is at $300-$299.50 with backup help at $298-$297.50. A close below the $295 level would signal a possible near-term top.
RSI is rebounding with lower resistance at 60-65 getting recovered. A move above the latter would signal additional strength towards 70 and the high from earlier this month and back in June. Support is at 55-50 with the latter holding since early April.
I have updated our current trades so let’s go check the tape. We also sent a Text Alert last night shortly after 9pm (EST). Please email me if you did NOT get the update.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 28-9 (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.
Rambus (RMBS, $13.28, down $0.10)
RMBS November 13 puts (RMBS201120P00013000, $0.95, up $0.05)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Monday’s low tapped $13.17 with prior and upper support from late April at $13-$12.7r getting challenged but holding. Lowered resistance is at $13.50-$13.75 followed by $14 and the 200-day moving average.
RSI is holding 30 and I’m looking for a drop in the 20’s and levels from March to come into play to confirm additional weakness. Resistance is at 35.
Advanced Micro Devices (AMD, $83.08, down $0.73)
AMD September 90 calls (AMD200918C00090000, $1.65, down $0.55)
Entry Price: $2.20 (8/21/2020)
Exit Target: $3.30-$4.40
Stop Target: $1.10
Action: Monday’s low reached $82.55 with upper support at $83-$82.50 getting breached but holding. Resistance remains at $84-$84.50 with shares testing an opening high of $85.33.
Consumer Staples Select Spiders (XLP, $64.85, up $0.55)
XLP September 65 calls (XLP200918C00065000, $0.80, up $0.15)
Entry Price: $0.85 (8/17/2020)
Exit Target: $1.70
Stop Target: None
Action: Lower resistance at $64.50-$65 was recovered with shares closing on the session high of $64.85. Support remains at $64-$63.50.
AT&T (T, $30.03, up $0.34)
T September 31 calls (T200918C00031000, $0.25, up $0.05)
Entry Price: $0.50 (8/10/2020)
Exit Target: $1.00
Stop Target: None
Action: Shares tested a high of $30.05 with prior and lower resistance at $30-$30.25 and the 50-day moving average getting cleared and holding. Support is at $29.75-$29.50.