MomentumOptions.com Pre-Market Update for 10/14/2020
Financial Earnings Shine, Airline Earnings Disappoint / Profit Alerts (BAC, GM)
The stock market struggled on Tuesday as the start of the 3Q earnings season officially got underway with the Financial sector pleasing Wall Street analysts while the Airline sector widely disappointed. However, despite solid beats by the banking companies, shares of Citigroup (C) and JPMorgan Chase & Co. (NYSE: JPM) closed lower for the session with the former falling nearly 5%.
The coronavirus treatment optimism also weighed on sentiment following news from Johnson & Johnson (JNJ) and Eli Lilly (LLY) regarding pauses of their studies of vaccines and antibody therapeutics. Apple (AAPL) shares weighed on Tech despite the announcement of its new iPhone 12 models.
The Nasdaq tested an intraday low of 11,821 before ending at 11,863 (-0.1%). Fresh and upper support at 11,800-11,700 was challenged but held. A close below the latter would indicate additional backtest potential towards 11,600-11,500.
The S&P 500 settled at 3,511 (-0.6%) following the afternoon drop to 3,500. Near-term and upper support at 3,500-3,475 was tapped but held. A close below the latter would signal a further fade towards 3,450-3,425.
The Dow tapped a late day low of 28,604 while closing at 28,679 (-0.6%). Current and upper support at 28,750-28,500 failed to hold. A move below the latter would suggest a retest towards 28,250-28,000.
The Russell 2000 closed at 1,636 (-0.7%) after testing a morning low of 1,631. New and upper support at 1,635-1,620 was breached but held. A drop below the latter would indicate further weakness towards 1,615-1,600.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the 2nd-straight session with the intraday high reaching 26.93. Resistance at 25.50-26 and the 50-day moving average was breached and levels that failed to hold. A move above 27.50 would signal a retest towards 29.50-30 and the 200-day moving average.
Support remains at 24.50-24.
The SPDR S&P 500 ETF (NYSEArca: SPY) fell for the first time in five sessions after bottoming out at $349.09. Fresh and upper support at $349.50-$349 was tripped but held. A close below the latter would indicate additional weakness towards the $347.50-$347 area.
Lowered resistance is at $352.50-$353 followed by $354.50-$355.
RSI is rolling over with key support at 60 holding. A close below this level would signal weakness towards 55-50. Resistance is at 65-70.
The Energy Select Sector SPDR Fund (NYSEArca: XLE) fell for the second time in three sessions with the afternoon low tapping $30.30. Near-term and upper support at $30.50-$30 was breached and failed to hold. A close below the latter would be a renewed bearish development for additional selling pressure towards $29-$28.50 with the monthly low at $28.20.
Resistance at $31-$31.50. A close above the $32 level would be a more bullish signal of a near-term bottom.
Tuesday’s losses snapped 4-session winning streak’s for the major indexes with near-term support levels easily holding. However, volatility is back on the rise after failing to close below 25 last Friday and Monday. While this level was stretched on both days, it was a good indication the retest towards all-time highs for the stock market wasn’t going to be smooth sailing.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 36-10 (78%). 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, $16.82, up $0.01)
FCX November 18 calls (FCX201120C00018000, $0.80, flat)
Entry Price: $0.95 (10/9/2020)
Exit Target: $1.90
Stop Target: None
Action: Lower resistance at $17-$17.25 was kissed but held on yesterday’s peak. Support is at $16.75-$16.50.
Bank of America (BAC, $24.95, down $0.73)
BAC November 26 calls (BAC201120C00026000, $0.85, down $0.30)
Entry Price: $0.85 (10/5/2020)
Exit Target: $1.70
Stop Target: $1 (Stop Limit)
Action: The Stop Limit at $1 was triggered on the stock’s tumble to $24.84 yesterday.
General Motors (GM, $31.87, down $0.34)
GM January 35 calls (GM210115C00035000, $1.65, down $0.35)
Entry Price: $1.20 (9/28/2020)
Exit Target: $2.40
Stop Target: $1.80 (Stop Limit)
Action: The Stop Limit at $1.80 was taken out on the stock’s fade to $31.47 yesterday.
Rambus (RMBS, $14.40, down $0.02)
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 low of $14.31 with upper support at $14.25-$14 and the 200/50-day moving averages easily holding. Resistance is at $14.50-$14.75.