MomentumOptions.com Pre-Market Update for 11/4/2020
Bulls Keep Momentum on Election Day
Wall Street had it best Presidential election gains since 2008 as the stock market rose for the 2nd-straight session. While the suit-and-ties are mostly split on who might win, President Trump or former VP Joe Biden, the fact more stimulus around the corner might come fueled bullish sentiment.
The Russell 2000 tapped an intraday high of 1,620 while settling at 1,614 (+2.9%). Current and lower resistance at 1,610-1,625 was reclaimed. Continued closes above the latter would be a bullish signal for a retest towards 1,635-1,650.
The Dow traded to an afternoon peak of 27,640 before settling at 27,480 (+2.1%). Prior and lower resistance at 27,250-27,500 was recovered. A close above the latter would indicate additional upside towards 27,750-28,000 and the 50-day moving average.
The S&P 500 ended at 3,369 (+1.8%) after topping out at 3,389. Lower resistance at 3,375-3,400 was cleared but held. A close above the latter and the 50-day moving average would suggest momentum towards 3,425-3,450.
The Nasdaq traded to an intraday peak of 11,213 before closing at 11,160 (+1.9%). Near-term and lower resistance at 11,200-11,300 was breached but held. A move above the latter and the 50-day moving average would indicate further strength towards 11,400-11,500.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) settled lower for the third time in four sessions after testing a late day low of 34.19. Near-term and upper support at 34.50-34 was breached but held. A close below the 34 level would be an ongoing bullish signal for the stock market.
Lowered resistance is at 36-36.50.
The iShares Russell Growth 1000 ETF (NYSEArca: IWF) was up for the second-straight session with the morning high tapping $215.90. Current and lower resistance at $215.50-$216 was cleared but held. A move above the latter would indicate further strength towards $218-$218.50 and the 50-day moving average.
Support is at $212-$211.50 followed by $210-$209.50.
RS remains in a slight uptrend with lower resistance at 45-50 getting cleared and holding. A move above the latter would indicate additional strength towards 55-60. Key support is at 40 and a level that has been holding since late September.
The Health Care Select Sector SPDR Fund (NYSEArca: XLV) was up for the second-straight session with the first high hitting $106.14. Prior and lower resistance at $106-$106.50 was cleared but held. A close above the latter and the 50-day moving average would signal a possible retest towards $107-$107.50.
Support is at $104.50-$104 with backup help at $103-$102.50.
The night of the 2016 Presidential election was extremely volatile and will likely be just as breathtaking heading into Wednesday’s opening bell. When the news that more states were reporting a Trump victory, stock market futures sank rapidly throughout the night four years ago.
The futures market is often looked at by astute investors to try to get a feel on how the next day’s action on Wall Street might unfold. They can fluctuate throughout the night and even into the opening bell as economic, political, and company specific news from around the world and here at home can impact investor sentiment.
The S&P 500 fell more than 5% in premarket trading in the previous Presidential election, triggering a circuit breaker to halt trading. However, by the time the market closed the day after the election, the index was up over 1%.
While history can, and often does, repeat itself, there is no guarantee this same scenario will play out this year. Wall Street feels the market will go higher no matter which candidate wins as they expect another round of stimulus once the dust settles.
The major indexes could, at some point, reach fresh all-time highs but the current technical outlook shows major hurdles must be cleared and held in the coming weeks. If not, and recent support levels start to crack, the bullish outlook could be delayed into 2021.
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.
AT&T (T, $27.46, up $0.12)
T December 28 calls (T201218C00028000, $0.70, up $0.05)
Entry Price: $0.55 (10/29/2020)
Exit Target: $1.10
Stop Target: None
Action: Prior and lower resistance at $27.75-$28 was breached but held with Tuesday’s peak reaching $27.80. Rising support is at $27.25-$27.
Rambus (RMBS, $14.30, up $0.68)
RMBS November 13 puts (RMBS201120P00013000, $0.15, down $0.20)
Entry Price: $0.90 (8/21/2020)
Exit Target: $1.80
Stop Target: None
Action: Close the trade today to save the remaining premium.
I predicted the company would miss earnings by a landslide but they are always tricky. The company also announced a stock buyback and maybe the one thing Wall Street rewarded.