MomentumOptions.com Pre-Market Update for 10/13/2020
Market Maintains Momentum
The stock market maintained its current momentum following Monday’s gains and ahead of the start of the 3Q earnings season. The major indexes continue to work their way towards fresh all-time highs with the Nasdaq and S&P 500 pushing September peaks and the Dow and the Russell 2000 pushing prior record highs from February.
The Nasdaq reached an afternoon peak of 11,965 before ending at 11,876 (+2.6%). Fresh and lower resistance at 11,900-12,000 was cleared but held. A close above the latter would indicate ongoing strength towards 12,100-12,200 with the early September all-time high at 12,074.
The S&P 500 settled at 3,534 (+1.6%) following the intraday run to 3,549. Prior and lower resistance at 3,525-3,550 was recovered. A move above the latter would suggest a retest towards 3,575-3,600 with the all-time high from September at 3,588.
The Dow tested a midday peak of 28,957 while closing at 28,837 (+0.9%). Current and lower resistance at 28,750-29,000 was reclaimed. A close above the latter would indicate additional strength towards 29,250-29,500 and levels from February.
The Russell 2000 finished at 1,649 (+0.7%) with the session high at 1,652. Prior and lower resistance from early February at 1,650-1,665 was breached but held by a smidge. A close above the latter would be an ongoing bullish signal for a run towards 1,675-1,690.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a 3-session slide despite tapping an opening low of 24.14. Current and upper support at 24.50-24 was breached but held.
Lower resistance at 25.50-26 and the 50-day moving average was also cleared but levels that held on the bounce to 25.65 afterwards. A move above the 27.50 level would signal a retest towards 29.50-30 and the 200-day moving average.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) extended its winning streak to four-straight sessions after trading to an intraday peak of $289.61. Prior and lower resistance from early September at $289.50-$290 was breached but held. A move above the latter would indicate ongoing strength towards $292-$292.50 with the September peak at $292.36.
Current and rising support is at $287-$286.50 with backup help at $285-$284.50.
RSI remains in an uptrend with lower resistance at 65-70 getting challenged but holding. A move above the latter would signal a retest towards 75 and the late August/ early September high. Support is at 60 with a close below this level signaling near-term weakness.
The Spider S&P Retail ETF (NYSE: XRT) was also higher for the fourth straight-session with the intraday high tapping $54.56. Fresh and lower resistance at $54.25-$54.75 was cleared but held. A close above the latter and Friday’s all-time peak at $54.61 level would be an ongoing bullish signal for additional momentum towards $55.50-$56.
Rising support is at $54-$53.50 followed by $52.50-$52.
I have updated our current trades so let’s go check the tape.
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.
Freeport McMoRan (FCX, $16.81, down $0.42)
FCX November 18 calls (FCX201120C00018000, $0.80, down $0.20)
Entry Price: $0.95 (10/9/2020)
Exit Target: $1.90
Stop Target: None
Action: Monday’s low tapped $16.77 with upper support at $16.75-$16.50 getting challenged but holding. Resistance is at $17-$17.25.
Bank of America (BAC, $25.68, up $0.32)
BAC November 26 calls (BAC201120C00026000, $1.15, up $0.10)
Entry Price: $0.85 (10/5/2020)
Exit Target: $1.70
Stop Target: 90 cents, raise to $1 (Stop Limit)
Action: Raise the Stop Limit from 90 cents to $1.
Shares tested a high of $25.83 with lower resistance at $25.75-$26 getting cleared but holding. Support is at $25.25-$25 and the 50-day moving average.
General Motors (GM, $32.21, up $0.05)
GM January 35 calls (GM210115C00035000, $2.00, flat)
Entry Price: $1.20 (9/28/2020)
Exit Target: $2.40
Stop Target: $1.80 (Stop Limit)
Action: Lower resistance at $32.50-$32.75 was breached but held for the 3rd-straight session following the intraday trip to $32.67. A move above the $33 level could lead a breakout towards $34-$34.50 and levels from mid-February. Support remains at $32-$31.75.
Rambus (RMBS, $14.42, down $0.03)
RMBS November 13 puts (RMBS201120P00013000, $0.30, flat)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Shares traded to a high of $14.57 with lower resistance at $14.50-$14.75 getting cleared but holding. Support remains at $14.25-$14 and the 200/50-day moving averages.