MomentumOptions.com Pre-Market Update for 10/27/2020
Bears Return on Market Selloff/ Profits Alerts (MGM, FCX)
Wall Street closed substantially lower on Monday as disappointment over the lack of another stimulus deal and escalating worries over the surge in coronavirus cases weighed on sentiment. House Speaker Pelosi’s Deputy Chief of Staff said she remains optimistic on a deal while Economic Advisor Kudlow said stimulus talks have certainly slowed down.
The back-and-forth claptrap nearly confirms a deal won’t get passed ahead of the Presidential Election which is now just a week away. Wow. Mixed earnings ahead of the busiest week for the third-quarter and slightly disappointing economic news from the housing market were also factors in the bears biggest win since early September.
The Dow plunged to a low of 27,370 while closing at 27,685 (-2.3%). Upper support from late September at 27,500-27,250 was breached but held on the close back below the 50-day moving average. A drop below the latter and would suggest a retest towards 27,000-26,750.
The Russell 2000 tapped an afternoon low of 1,586 before settling at 1,605 (-2.2%). Current and upper support at 1,600-1,585 was shaken but held. A move below the latter would indicate a further backtest towards 1,580-1,565.
The Nasdaq traded an intraday low of 11,221 before finishing at 11,358 (-1.6%). Prior and upper support from the beginning of the month at 11,300-11,200 and the 50-day moving average were clipped but levels that held. A close below the latter would indicate additional weakness towards 11,100-11,000.
The S&P 500 closed at 3,400 (-1.9%) following the midday tumble to 3,364. Prior and upper support at 3,375-3,350 was tripped but held on the close back below the 50-day moving average. A move below the latter would signal further downside risk towards 3,325-3,300.
The Wilshire 5000 Composite Index (NYSE: WLSH) fell for the first time in three sessions with the intraday low tapping 34,742. Prior support from the beginning of the month at 35,000-34,750 and the 50-day moving average was breached but levels that held. A close below the latter would indicate additional weakness towards 34,500-34,250.
Lowered resistance is at 35,250-35,500.
RSI is in a downtrend after failing to hold key support at 50. Continued closes below this level would indicate additional weakness towards 45-40 and levels from late September. Resistance is at 55-60.
The SPDR Gold Shares (NYSE: GLD) was up for the first time in three sessions after testing an intraday high of $179.14. Current and lower resistance at $179-$179.50 was breached but held. A close above the latter would be a more bullish signal for a retest towards $180.50-$181 and the 50-day moving average.
Support is at $178.50-$178. A close below $177.50 would be a slightly bearish development with additional downside risk towards $175.50-$175.
RSI is approaching lower resistance at 50-55 with a close above the latter suggesting additional strength towards 60-65 and mid-August peaks. Support is at 45-40.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a 3-session slide after zooming to a midday peak of 33.68. Prior and lower resistance at 33.50-34 was cleared but held. A move above the latter would signal additional strength towards 35.50-36.
Fresh support is at 32-31.50 followed by 31-30.50 and the 200-day moving average.
We made a nice double-digit 60% win in MGM in just 10 days and 15% profit in FCX in just over 2 weeks after the Stop Limits were triggered on Monday’s selloff. We will keep them on our Watch List for possible reentry points. Let’s see how the VIX acts today before possibly entering New Positions.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 38-10 (79%). 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 and Text Alerts.
MGM Resorts International (MGM, $22.13, down $1.23)
MGM November 23 calls (MGM201120C00023000, $1.35, down $0.35)
Entry Price: $0.95 (10/16/2020)
Exit Target: $1.90 (Limit Order on half)
Stop Target: $1.50 (Stop Limit)
Action: The calls traded to a high of $1.66 but the Stop Limit failed to hold on the stock’s fade to $21.70 afterwards.
Freeport McMoRan (FCX, $17.36, down $1.00)
FCX November 18 calls (FCX201120C00018000, $0.75, down $0.45)
Entry Price: $0.95 (10/9/2020)
Exit Target: $1.90
Stop Target: $1.10 (Stop Limit)
Action: The Stop Limit at $1.10 was tripped on the stock’s tumble to $17.21.
Rambus (RMBS, $14.14, down $0.12)
RMBS November 13 puts (RMBS201120P00013000, $0.30, flat)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Upper support at $14-$13.75 was challenged but held on the backtest to $14.10. Resistance is at $14.25-$14.50.