MomentumOptions.com Pre-Market Update for 10/23/2020

Bulls Rebound as Stimulus Talk Continues

8:00am (EST)

Wall Street settled higher Thursday as talks in DC on a new fresh coronavirus fiscal relief package continue to take center stage. House Speaker Pelosi said an agreement is near while Economic director Kudlow downplayed the likelihood of a deal before the Presidential election.

The Russell 2000 finished at 1,630 (+1.7%) with the session high at 1,631. Prior and lower resistance at 1,620-1,635 was reclaimed. A close above the latter would be an ongoing bullish signal for another run towards 1,650-1,665.

The S&P 500 settled at 3,453 (0.5%) following the intraday push to 3,460. Prior and lower resistance at 3,475-3,500 was recovered. A move above the latter would suggest a retest towards 3,525-3,550.

The Dow tested an afternoon peak of 28,421 while closing at 28,363 (+0.5%). Current and lower resistance at 28,250-28,500 was cleared and held. A close above the latter would indicate additional strength towards 28,750-29,000.

The Nasdaq reached an afternoon peak of 11,548 before ending at 11,506 (+0.2%). Near-term and lower resistance at 11,500-11,600 was tripped and held. A close above the latter would indicate ongoing strength towards 11,700-11,800.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session after testing an afternoon low of 27.68. Current and upper support at 28-27.50 was breached but held. A close below the latter would signal another retest towards 26.50-26 and the 50-day moving average.

Resistance remains at 30.50-31 and the 200-day moving average.

The SPDR S&P 500 ETF (NYSEArca: SPY) was up for the second time in three sessions after trading to a high of $345.24. Lower resistance at $345-$345.50 was cleared but held. A close above the latter would indicate additional strength towards $346.50-$347.

Current support is at $342.50-$342 followed by $339.50-$339 and the 50-day moving average.

RSI is in a slight uptrend with lower resistance 55-60 holding. A move above the latter would signal additional momentum towards 65-70 and prior levels throughout the first half of August. Support is at 50 and a level that has been holding since late September.

The Real Estate Select Sector SPDR Fund (NYSE: XLRE) was down for the fourth time in five sessions after trading to a midday low of $35.33. Current and upper support at $35.50-$35.25 was breached and failed to hold. A close below the latter reopens downside risk towards $35-$34.75 and the 200-day moving average.

Lowered resistance is at $35.75-$36 and the 50-day moving average.

We got some nice pin action yesterday so let’s go check the tape.

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.

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MGM Resorts International (MGM, $22.62, up $1.21)

MGM November 23 calls (MGM201120C00023000, $1.55, up $0.45)

Entry Price: $0.95 (10/16/2020)
Exit Target: $1.90
Return: 62%
Stop Target: $1.25 (Stop Limit)

Action: Set a Stop Limit at $1.25 to start protecting profits.

Thursday’s high hit $22.68 with prior and lower resistance from late September at $22.50-$22.75 getting cleared and holding. Fresh support is at $22.25-$22 and the 50-day moving average.

Freeport McMoRan (FCX, $18.35, up $0.63)

FCX November 18 calls (FCX201120C00018000, $1.25, up $0.20)

Entry Price: $0.95 (10/9/2020)
Exit Target: $1.90
Return: 30%
Stop Target: 95 cents, raise to $1.05 (Stop Limit)

Action: Raise the Stop Limit from 95 cents to $1.05.

Shares zoomed to another new 52-week high of $18.40 with fresh and lower resistance at $18.25-$18.50 getting cleared and holding. Support is at $18-$17.75.

Rambus (RMBS, $14.25, up $0.01)

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: Lower resistance at $14.25-$14.50 was recovered on the bounce to $14.30 yesterday. Support is at $14-$13.75.