MomentumOptions.com Pre-Market Update for 9/25/2020
Choppy Action Continues
The market traded on both sides of the ledger on Thursday following mixed economic news on the open and positive developments shortly afterwards. Negotiations to restart on another fiscal relief bill sent the market to midday peaks after the major indexes set fresh monthly lows, excluding the Nasdaq, shortly after the opening bell.
The Nasdaq traded to a midday peak of 10,799 before closing at 10,672 (+0.4%). Near-term and lower resistance at 10,700-10,800 was breached but held. A move above the latter would indicate further strength towards 10,900-11,000 and the 50-day moving average.
The S&P 500 ended at 3,246 (+0.3%) after topping out at 3,278. Resistance at 3,250-3,275 was breached but levels that held. A close above the latter would suggest another push towards 3,300-3,325.
The Dow traded to an afternoon peak of 27,094 before settling at 26,815 (+0.2%). Prior and lower resistance at 27,000-27,250 was tripped but held. A close above the latter would indicate additional upside towards 27,500-27,750.
The Russell 2000 tapped an intraday high of 1,474 while settling at 1,451 (+0.02%). Current and lower resistance at 1,460-1,475 was breached but held. Continued closes above the latter would be a bullish signal for a retest towards 1,485-1,500.
In economic news, Initial Jobless Claims rose 4,000 to 870,000 after sliding -27,000 to 866,000 previously. This left the four-week average at 878,250 versus 913,500 in the prior week. Continuing claims fell -167,000 to 12,580,000 following the -797,000 plunge to 12,747,000.
New Home Sales for August climbed another 4.8% to 1,011,000 after surging 14.7% to 965,000 in July. Expectations were for a print of 875,000. The August read is now the highest since September 2006, and the first time back over 1 million since November 2006. The months’ supply of homes dropped to a record low of 3.3 from 3.6. The number of homes on the market fell to 282,000 from 291,000 and is the lowest since September 2017. Regionally, sales increased in the South and Northeast, but fell in the Midwest and West. The median sales price dropped -4.6% to $312,800 versus the -2.9% slide to $327,800 previously.
Kansas City Fed Manufacturing Index checked in at 11 versus forecasts for a reading of 13.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was up for the second-straight session after settling on the session high of $165.12. Near-term and lower resistance at $165-$165.50 was recovered. A close above $166 and the 50-day moving average would be a more bullish signal for a retest towards $167-$167.50.
Current and rising support at $164.50-$164 followed by $163-$162.50.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) flipped-flopped for the fifth-straight session with the afternoon low tapping 27.94. Current and upper support at 28-27.50 was tripped but held. A close below the latter would suggest another retest towards 25.50-25 and the 50-day moving average.
Resistance remains at 29-29.50 and the 200-day moving average followed by 31-31.50.
The iShares Russell Growth 1000 ETF (NYSEArca: IWF) rebounded to close higher for the third time in four sessions with the second half top reaching $209.96. Near-term and lower resistance at $209.50-$210 was cleared but held. A move above the latter would be a more bullish signal for a retest towards $212-$212.50 and the 50-day moving average.
Support is at $205.50-$205. A close below $204.50 and Monday’s low at $204.55 would be a bearish signal for additional weakness towards $202.50-$202 and levels from late July.
The Financial Select Sector Spiders (XLF) snapped a five-session slide after trading to an intraday high of $23.58. Fresh and lower resistance at $23.50-$23.75 was cleared but held. A close above the $24 level would be a more bullish development for additional strength towards $24.25-$24.50 and the 50-day moving average.
Current support is at $23-$22.75. A close below the latter would be a renewed bearish development and likely indicate a further pullback towards $22.50-$22.25 and levels from early July/ late June.
RSI is showing signs of leveling out with lower resistance at 35-40 holding. Support is at 30 and a level that has been holding since mid-March.
The major indexes are headed for their fourth-straight week of losses, overall, heading into Friday’s session. The past three Friday’s have favored the bears and continues to signal money is moving to the sidelines on the lower lows.
While the recent Monday’s have been mixed but mostly lower, the negative Friday/ Monday closes continues to confirm the bearish history for the month of September.
Additionally, companies could start to pre-announce earnings, or provide negative or positive guidance, between now and the first week of October as this is usually the time frame.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 32-10 (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, $28.04, up $0.17)
T October 28 puts (T201016P00028000, $0.90, down $0.10)
Entry Price: $0.55 (9/10/2020)
Exit Target: $1.10
Stop Target: 80 cents (Stop Limit)
Action: Shares traded to a low of $27.75 with upper support at $27.75-$27.750 getting tagged but holding. Resistance remains at $28.25-$28.50.
Rambus (RMBS, $13.32, up $0.17)
RMBS November 13 puts (RMBS201120P00013000, $0.80, down $0.10)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Lower resistance at $13.50-$13.75 was tripped but held on yesterday’s rebound to $13.55. Shaky support is at $13.25-$13.