MomentumOptions.com Pre-Market Update for 9/29/2020
Bulls Get Back-to-Back Friday/ Monday Wins
The market showed continued momentum throughout Monday’s session while closing just off the session highs as bargain-hunting from last week’s monthly lows continued. The follow thru close from Friday’s action was a bullish signal as the overall market had its first higher Friday and Monday closes in more than a month.
This can be a mildly bullish development as it means cash is moving off the sidelines and back into the stock market. The closes above the 50-day moving averages for some of the major indexes was also a solid signal for continued near-term upside.
The Russell 2000 reached an afternoon peak of 1,514 before closing at 1,510 (+2.4%). Current and lower resistance at 1,510-1,525 was breached and held. A close above the latter would signal another push towards 1,535-1,550.
The Nasdaq traded a late day high of 11,120 while settling at 11,117 (+1.9%) and back above its 50-day moving average. Near-term and lower resistance at 11,100-11,200 was cleared and held. A close above the latter would indicate further upside towards 11,300-11,400.
The S&P 500 finished at 3,351 (+1.6%) with the late day high tapping 3,360. Prior and lower resistance at 3,350-3,375 was recovered with the 50-day moving average holding by a smidge. A move above the latter would suggest a retest towards 3,400-3,425.
The Dow tagged an intraday high of 27,722 while ending at 27,584 (+1.5%). Prior and lower resistance at 27,500-27,750 and the 50-day moving average were cleared and held. A move above the latter would be an ongoing bullish development with additional strength towards 28,000-28,250.
Dallas Fed Manufacturing Business Index rose 5.6 points to 13.6 in September, versus forecasts for a print of 8.5, after bouncing 11 points to 8 in August. The production component climbed to 22.3 from 13.1. The September employment index improved further to 14.5 versus 10.6 while the workweek dipped to 6.9 from 10.5 last month. New orders increased to 14.7 from 9.8. Prices paid climbed to 26.2 from 19.4, with prices received at 5.2 from 0.9. The 6-month activity index rose to 28 versus August’s 20.4. The future employment gauge fell to 23.3 from 27.6, while new orders increased to 49.3 from 42.5. The 6-month view of prices paid climbed to 33.4 versus 22.1, with prices received jumping to 21.6 versus 7.8, while capex rallied to 23.9 from 13.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) had its three-session winning streak snapped following the intraday pullback to $164.37. Current and upper support at $164.50-$164 was tripped but held. A close below the latter reopens downside risk towards $163-$162.50.
Lowered resistance is at $165-$165.50 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) settled in the red for the second-straight session after trading to a late day low of 24.90. Near-term support at 25.50-25 and the 50-day moving average were breached but levels that held.
Lowered resistance is at 27-27.50 followed by 29-29.50 and the 200-day moving average.
The Invesco QQQ Trust (Nasdaq: QQQ) extended its winning streak to three-straight sessions while settling on the session peak of $277.20. Lower resistance at $277-$277.50 was cleared and held. Continued closes above the latter would indicate further upside towards the $279.50-280 area.
Fresh support is at $274-$273.50 and the 50-day moving average.
RSI (relative strength indicator) remains in an uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level signal additional strength towards 55-60. Support is at 45-40 with the latter representing the monthly low.
The iShares MSCI Emerging Markets ETF (NYSE: EEM) was up for the second-straight session after testing an opening high of $43.60. New and lower resistance at $43.50-$44 was breached but held. A close above the latter and the 50-day moving average would be an ongoing bullish signal for a retest towards $45-$45.50.
Current support is at $43-$42.50. A close back below the $42 level would be a renewed bearish development with backtest potential towards $41-$40.50 and the 200-day moving average.
I have updated our current positions so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 33-10 (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.
General Motors (GM, $29.44, up $0.44)
GM January 35 calls (GM210115C00035000, $1.15, up $0.10)
Entry Price: $1.20 (9/28/2020)
Exit Target: $2.40
Stop Target: None
Action: Shares tagged a high of $30.04 with fresh and lower resistance at $30-$30.25 getting cleared but holding. New support is at $29.25-$29.
Advanced Micro Devices (AMD, $79.48, up $1.43)
AMD November 90 calls (AMD201120C00090000, $3.80, up $0.35)
Entry Price: $3.60 (9/28/2020)
Exit Target: $5.40-$7.20
Stop Target: $1.80
Action: Monday’s peak reached $79.57 with lower resistance at $79.50-$80 getting cleared but holding. Rising support is at $78-$77.50.
Rambus (RMBS, $13.75, up $0.46)
RMBS November 13 puts (RMBS201120P00013000, $0.60, down $0.20)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Prior and lower resistance at $13.75-$14 was cleared but held on the rebound to $13.80. Support is at $13.25-$13.
A death cross remains in play and I still like this trade as long as $14-$14.25 holds going forward.