Pre-Market Update for 11/18/2020

Small-Caps Show Continued Strength

8:00am (EST)

The market was choppy throughout Tuesday’s action following a weaker-than-expected retail sales report ahead of the opening bell. The major indexes were down well over 1% within the first half hour of action before rebounding throughout to session while closing mostly lower.

The small-caps outperformed after setting another all-time peak with Tech also showing some intraday strength. Meanwhile, volatility continues to hold a key level of support and the main indicator that could signal the next market breakout if cleared and held over the near-term.

The Russell 2000 closed at 1,791 after testing a record peak of 1,795 (+0.4%). Unchartered territory and lower resistance at 1,800-1,820 was challenged but held. A close above the latter would indicate continued momentum towards 1,830-1,850.

The Dow finished at 29,783 (-0.6%) after trading down to 29,520 shortly after the opening bell. Near-term and upper support at 29,750-29,250 was breached but a level that held. A drop below the latter would suggest a retest towards 29,000-28,750.

The S&P 500 tested an opening low of 3,588 before settling at 3,609 (-0.5%). Current and upper support at 3,600-3,575 was breached but held. A move below the latter would signal further downside risk towards 3,550-3,525.

The Nasdaq bottomed at 11,852 shortly after the opening bell before ending at 11,899 (-0.2%). Near-term and upper support at 11,900-11,800 was tripped and failed to hold. A close below the latter would indicate additional weakness towards 11,700-11,600.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) closed higher for the first time in three sessions following the opening bounce to 24.09. Current and lower resistance at 24-24.50 was breached but held. A close above the latter would signal a retest towards 26-26.50.

Key support remains at 22 with a close below this level being a bullish signal for the market.

The S&P 400 Mid Cap Index (NYSE: MID) extended its winning streak to three-straight session following the intraday push to 2,166 and fresh all-time high. Uncharted territory and lower resistance at 2,175-2,200 was challenged but easily held.

Current support is at 2,125-2,100. A close below the latter would likely indicate a near-term top with backtest potential towards 2,075-2,050.

RSI (relative strength index) remains in a slight uptrend after clearing and holding key resistance at 70. Continued closes above this level keeps 75 and the early June high in play. Support is at 65-60.

The iShares MSCI Emerging Markets ETF (NYSE: EEM) was down for the first the first time in three sessions despite testing an afternoon high of $49.01. Current and lower resistance at $49-$49.50 was cleared but held. A close above the latter and this month’s 52-week peak at $49.53 would be a bullish signal for additional momentum towards $50.50-$51.

Support is at $48.50-$48 followed by $47.50-$47.

RSI has leveled out with key resistance at 70 holding. A close above this level would indicate additional strength towards 75-80 and prior peaks from last December. Support is at 65-60.

I have updated our current trades so let’s go check the tape. I’m also looking at getting into a possible New Trade this afternoon so stay locked-and-loaded.

Momentum Options Play List

Closed Momentum Options Trades for 2020: 40-11 (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 and Text Alerts.

Financial Select Sector Spider Fund (XLF, $27.59, down $0.04)

XLF January 28 calls (XLF210115C00028000, $0.85, down $0.05)

Entry Price: $0.75 (11/16/2020)
Exit Target: $1.50
Return: 13%
Stop Target: 35 cents

Action: Shares held up well despite the opening fade to $27.13 yesterday. Fresh support at $27.25-$27 was cracked but held. Resistance is at $27.75-$28 with a close above the latter signaling additional momentum.

Freeport McMoRan (FCX, $21.03, up $0.03)

FCX December 20 calls (FCX201218C00020000, $1.75, up $0.05)

Entry Price: $1.10 (11/13/2020)
Exit Target: $2.20
Return: 54%
Stop Target: $1.45 (Stop Limit)

Action: Tuesday’s afternoon peak reached $21.06 with current and lower resistance at $21.25-$21.50 getting cleared and holding. A close above the latter and the recent 52-week peak at $21.29 would signal additional upside towards $21.75-$22. Support is at $20.75-$20.50.