MomentumOptions.com Pre-Market Update for 10/22/2020
Bears Win Sloppy Session
Wall Street stayed nervous on Wednesday as investors digested the ongoing back-and-forth rhetoric between the Republicans and Democrats over a coronavirus stimulus package. Much of the session was choppy with the major indexes flip-flopping between gains and losses but in tighter trading ranges.
The Russell 2000 settled on its session low at 1,603 (-0.9%). Current and upper support at 1,615-1,600 was breached and failed to hold. A move below the latter would indicate a further backtest towards 1,590-1,575. Below is a chart of the IWM.
The Dow tested a low of 28,196 while closing at 28,210 (-0.4%). Near-term and upper support at 28,250-28,000 was tripped and failed to hold. A drop below the latter and the 50-day moving average would suggest a retest towards 27,750-27,500.
The Nasdaq traded an intraday low of 11,476 before finishing at 11,484 (-0.3%). Near-term and upper support at 11,500-11,400 was clipped and taken out. A close below the latter would indicate additional weakness towards 11,300-11,200.
The S&P 500 closed at 3,435 (-0.2%) following the morning fade to 3,433. Current and upper support at 3,450-3,425 was breached and failed to hold. A close below the latter would signal further downside risk towards 3,400-3,375 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) had its seven session winning streak snapped after tagging an afternoon low of 28.45. Current and upper support at 28-27.50 was challenged but held with more important recovery hurdles at 26.50-26 and the 50-day moving average.
Resistance is at 30.50-31 and the 200-day moving average.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) fell for the second time in three sessions despite trading to a morning peak of $284.47. Current and lower resistance at $284.50-$285 was challenged but held. A move above the latter would suggest a retest towards $286.50-$287.
Upper support at $282-$281.50 failed to hold on the backtest to $281.83 afterwards. A move below the latter reopens downside risk towards $280.50-$280.
RSI is in a slight downtrend with key support at 50 holding. A close below this level would signal near-term weakness towards 45-40 and prior levels from late September. Resistance is at 55-60.
The iShares MSCI Emerging Markets ETF (NYSE: EEM) was up for the second-straight session after testing a intraday high of $46.31. Current and lower resistance at $46-$46.50 was reclaimed. A close above the latter and this month’s 52-week peak at $46.34 would be a bullish signal for a possible breakout towards $47.50-$48.
Rising support is at $45.50-$45 followed by $44.50-$44 and the 50-day moving average.
Yesterday’s action was too choppy to initiate new positions but we got some good pin action with our current positions.
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.
MGM Resorts International (MGM, $21.41, unchanged)
MGM November 23 calls (MGM201120C00023000, $1.10, flat)
Entry Price: $0.95 (10/16/2020)
Exit Target: $1.90
Stop Target: None
Action: Yesterday’s peak reached $21.57 with lower resistance at $21.50-$21.75 getting cleared but holding. Support is at $21.25-$21.
Freeport McMoRan (FCX, $17.72, up $0.11)
FCX November 18 calls (FCX201120C00018000, $1.05, unchanged)
Entry Price: $0.95 (10/9/2020)
Exit Target: $1.90
Stop Target: 95 cents (Stop Limit)
Action: Shares zoomed to another new 52-week high of $18.33 with fresh and lower resistance at $18.25-$18.50 getting breached but holding. Rising support is at $17.50-$17.25.
Rambus (RMBS, $14.36, up $0.0
RMBS November 13 puts (RMBS201120P00013000, $0.30, flat)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Lower resistance at $14.50-$14.75 was challenged but held on the rebound to $14.42 yesterday. Support is at $14.25-$14.