MomentumOptions.com Pre-Market Update for 10/6/2020
Market Rebounds on Trump Return
The market rebounded on Monday to recover the losses from the previous session following favorable updates on President Trump’s coronavirus symptoms and a return to the White House. An optimistic outlook on more fiscal stimulus returned after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin talked with another meeting expected on Tuesday.
The Russell 2000 reached an afternoon peak of 1,582 before closing at 1,581 (+2.7%). Current and lower resistance at 1,575-1,590 was breached and held. A close above the latter would signal another run towards 1,600-1,615.
The Nasdaq traded a late day high of 11,335 while settling at 11,332 (+2.3%). Near-term and lower resistance at 11,300-11,400 was cleared and held. A close above the latter would indicate further upside towards 11,500-11,600.
The S&P 500 finished at 3,409 (+1.8%) with the late day high tapping 3,408. Prior and lower resistance at 3,400-3,425 was recovered. A move above the latter would suggest a retest towards 3,450-3,475.
The Dow tagged an intraday high of 28,162 while ending at 28,148 (+1.7%). Prior and lower resistance at 28,000-28,250 were cleared and held. A pop above the latter would be an ongoing bullish development with additional strength towards 28,500-28,750.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the fifth-straight sessions with the opening high hitting 29.69. Lower resistance at 29.50-30 was cleared but held. A close above the latter and the 200-day moving average would be a bearish signal for the market with upside risk towards 32-32.50.
Support remains at 27-26.50 followed by 25.50-25 and the 50-day moving average.
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 $219.55. Near-term and lower resistance at $219.50-$220 was cleared but held. A move above the latter would be a bullish signal for a retest towards $222-$222.50.
Support is at $218.50-$218 followed by $216.50-$216.
The Dow Jones Transportation Average ($TRAN) was up for the second-straight session with the intraday high reaching 11,510. Lower resistance at 11,500-11,600 was cleared but held. A close above the latter would indicate a retest towards 11,700-11,800 and fresh all-time highs.
Rising support at 11,400-11,300 followed by 11,100-11,000 and the 50-day moving average.
RSI (relative strength index) is in an uptrend with key resistance at 60 getting cleared and holding. Continued closes above this level would signal additional strength towards 65-70. Support is at 55-50.
If the Transports can break out to fresh all-time highs, it is likely the Dow will follow to the upside, along with the rest of the major indexes. The action in the VIX was slightly bearish as it closed higher and continues to test the 30 level. The higher Monday following a down Friday is continuing to point to an ongoing trading range.
I have updated our current trades and could have another one today. Stay locked-and-loaded in case I take action.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 34-10 (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.
Bank of America (BAC, $24.62, up $0.41)
BAC November 26 calls (BAC201120C00026000, $0.90, up $0.10)
Entry Price: $0.85 (10/5/2020)
Exit Target: $1.70
Stop Target: None
Action: Shares traded to a high of $24.71 with new and lower resistance at $24.75-$25 getting challenged but holding. Rising support is at $24.50-$24.25.
General Motors (GM, $30.96, up $0.50)
GM January 35 calls (GM210115C00035000, $1.65, up $0.10)
Entry Price: $1.20 (9/28/2020)
Exit Target: $2.40
Stop Target: $1.20, raise to $1.35 (Stop Limit)
Action: Raise the Stop Limit from $1.20 to $1.35.
Shares were up for the 4th-straight session with the intraday peak tagging $31.29. Prior and lower resistance from mid-September at $31.25-$31.50 was cleared but held. Rising support is at $30.75-$30.50.
Rambus (RMBS, $13.69, up $0.21)
RMBS November 13 puts (RMBS201120P00013000, $0.60, down $0.05)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Lower resistance at $13.75-$14 was breached but held with Monday’s high reaching $13.78. Support remains at $13.50-$13.25.