MomentumOptions.com Pre-Market Update for 10/15/2020

Bears Get 2nd-Straight Win 

8:00am (EST) 

The stock market fell for the second-straight session following comments from Treasury Secretary Steven Mnuchin that dampened expectations of a coronavirus stimulus deal being reached before the November 3rd presidential election.

Mnuchin said getting a deal done before the election would be difficult, adding that both sides were still far apart on certain issues. He also noted, however, that Democrats and Republicans are making progress in some areas. Mixed earnings from the Financial sector also weighed on sentiment.

The Russell 2000 settled on its session low at 1,621 (-0.9%). Current and upper support at 1,625-1,610 was breached and failed to hold. A move below the latter would indicate a further backtest towards 1,600-1,585. Below is a chart of the IWM.

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The Nasdaq traded an intraday low of 11,714 before finishing at 11,768 (-0.8%). Near-term and upper support at 11,800-11,700 failed to hold. A close below the latter would indicate additional weakness towards 11,600-11,500.

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The S&P 500 closed at 3,488 (-0.7%) following the midday tumble to 3,480. Fresh and upper support at 3,500-3,475 was tripped and failed to hold. A close below the latter would signal further downside risk towards 3,450-3,425.

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The Dow tested a low of 28,461 while closing at 28,514 (-0.6%). New and upper support at 28,500-28,250 was tripped but held. A drop below the latter would suggest a retest towards 28,000-27,750 and the 50-day moving average.

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The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was also up for the third-straight session after trading to an afternoon peak of 27.23. Key resistance 27.50 was challenged but held. A move above this level 27.50 would signal a retest towards 29.50-30 and the 200-day moving average.

Current support 25.75-25.25 and the 50-day moving average.

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The iShares Russell Growth 1000 ETF (NYSEArca: IWF) fell for the second-straight session after tagging a midday low of $226.01. Current and upper support at $226-$225.50 was challenged but held. A move below the latter would be a bearish signal for additional weakness towards $224-$223.50.

Resistance is at $230-$230.50 followed by $232-$232.50.

RSI is showing signs of rolling over with key support at 60 holding. A close below this level would suggest additional weakness towards 55-50. Resistance is at 65-70.

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The Communication Services Select Sector SPDR (NYSE: XLC) had its five-session winning streak snapped following the intraday pullback $61.06. Near-term and upper support at $61.50-$61 was tripped and failed to hold. A close below the latter keeps downside risk towards $60.50-$60 and the 50-day moving average in focus. 

Resistance is at $62-$62.50 followed by $63-$63.50.

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I could have new trades today so stay locked-and-loaded.

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, $16.94, up $0.12)

FCX November 18 calls (FCX201120C00018000, $0.80, flat)

Entry Price: $0.95 (10/9/2020)

Exit Target: $1.90

Return: -17%

Stop Target: None 

Action: Lower resistance at $17-$17.25 was cleared but held on Wednesday’s trip to $17.02. Support is at $16.75-$16.50.

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Rambus (RMBS, $14.35, down $0.05)

RMBS November 13 puts (RMBS201120P00013000, $0.30, flat)

Entry Price: $0.90 (8/21/2020)

Exit Target: $1.80

Return: -67%

Stop Target: None 

Action: Shares traded to a low of $14.33 with upper support at $14.25-$14 and the 200/50-day moving averages easily holding. Resistance is at $14.50-$14.75.

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