MomentumOptions.com Pre-Market Update for 11/19/2020
Choppy Action Continues
The overall market was choppy on Wednesday after trading on both sides of the ledger while closing in the red for the second-straight session. Better-than-expected housing numbers and ongoing vaccine hopes provided strength on the open that fizzled midday.
The bears pushed lower lows but haven’t made much of a dent following the recent push to all-time highs by the bulls. The action is signaling a possible consolidation pattern developing but one that will provide key support and resistance levels to watch for the next breakout, or breakdown.
The Russell 2000 settled on its session low of 1,769 (-1.3%) despite tapping another record peak of 1,805. Fresh and upper support at 1,775-1,760 was breached and failed to hold. A close below the latter would suggest a further pullback towards 1,750-1,735.
The S&P 500 also closed on its session low at 3,567 (-1.2%). Near-term and upper support at 3,575-3,550 failed to hold. A drop below the latter would indicate further weakness towards 3,525-3,500.
The Dow tested a late day low of 29,432 before ending at 29,438 (-1.2%). Current and upper support at 29,500-29,250 was tripped and failed to hold. A move below the latter would suggest a continued backtest towards 29,000-28,750.
The Nasdaq kissed 11,799 ahead of the closing while finishing at 11,801 (-0.8%). Near-term and upper support at 11,900-11,800 was breached and but held. A close below the latter would indicate ongoing weakness towards 11,700-11,600.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was also,up for the second-straight session despite tapping a fresh monthly low of 21.66. Key support at 22 was breached but held. A close below this level would signal additional weakness towards 21.50-21 and levels from late August.
Lower resistance at 23.50-24 was cleared and held on the late day bounce to 23.92.
The Spider Small-Cap 600 ETF (NYSE: SLY) was down for the the first time in four sessions despite tapping an intraday high of $73.83. Longer-term and lower resistance from mid-January at $73.50-$74 was breached but held. A close above the latter and the all-time peak at $74.23 would be a bullish signal for additional momentum towards $75.50-$76.
Upper support at $72.50-$72 failed to hold on the session low and close at $72.35.
RSI (relative strength indicator) is rolling over after failing to hold key resistance at 70. Continued closes above this level would signal additional strength towards 75 and the early June peak. Support is at 65-60.
The Real Estate Select Sector SPDR Fund (NYSE: XLRE) had its three-session winning streak snapped following the late day pullback to $37.12. Current and upper support at $37.50-$37 was tripped and failed to hold. A close below the latter would indicate a further backtest towards $36.50-$36 and the 50-day moving average.
Resistance is at $38-$38.50.
RSI is back in a downtrend with upper support at 55-50 holding. A move below the latter would signal additional weakness towards 45-40. Resistance is at 60.
I have updated our current trades so let’s go check the tape.
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, $27.33, down $0.26)
XLF January 28 calls (XLF210115C00028000, $0.85, down $0.10)
Entry Price: $0.75 (11/16/2020)
Exit Target: $1.50
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, $20.71, down $0.32)
FCX December 20 calls (FCX201218C00020000, $1.50, down $0.25)
Entry Price: $1.10 (11/13/2020)
Exit Target: $2.20
Stop Target: $1.45 (Stop Limit)
Action: Upper support at $20.75-$20.50 failed to hold with shares closing a penny off the low of $20.71. Resistance is at $21-$21.25.