MomentumOptions.com Pre-Market Update for 11/25/2020
Bulls Tap Fresh All-Time Highs/ Profit Alert (FCX)
The market showed continued momentum on Tuesday with the small-caps and blue-chips setting fresh all-time highs. The gains were fueled by news the Trump administration has approved the start of a formal transition to President elect Biden.
Additionally, the pick of Janet Yellen for Treasury Secretary calmed fears of a more radical pick and added to the bullish sentiment. Meanwhile, volatility hit a fresh monthly low but continues to struggle clearing longer-term support at the 20 level.
The Russell 2000 tested a midday and all-time high of 1,862 while closing at 1,853 (+1.9%). Fresh and lower resistance at 1,860-1,880 was cleared but held. A close above the latter would indicate continued momentum towards 1,900-1,920.
The Dow traded to a lunchtime peak of 30,116 before ending at 30,046 (+1.5%). Unchartered territory and lower resistance 30,000-30,250 was breached and held. A move above the latter would suggest continued upside towards 30,500-30,750.
The S&P 500 settled at 3,635 (+1.6%) after trading to a high of 3,642. Current and lower resistance at 3,625-3,650 was recovered. A close above the latter and the recent all-time high at 3,645 would suggest additional strength towards 3,675-3,725.
The Nasdaq tested an intraday high of 12,049 while finishing at 12,036 (+1.3%). Near-term and lower resistance at 12,000-12,100 was recovered. A move above the latter and this months all-time peak at 12,108 would signal a possible breakout towards 12,300-12,450.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session with the intraday and fresh monthly low tapping 20.80. Prior and upper support at 21-20.50 was breached but held. A close below the 20 level and the August low of 20.28 would be an ongoing bullish signal for the stock market.
Lowered resistance is at 22.50-23 followed by 24.50-25.
The Wilshire 5000 Composite Index (NYSE: WLSH) extended its winning streak to two-straight session with the intraday and new record high tapping 37,957. Unchartered territory and lower resistance at 37,750-38,000 was cleared and held. Continued closes above the latter would indicate continued momentum towards 38,250-38,500.
New support is at 37,500-37,250 with a close below 37,000 signaling a possible near-term top.
RSI (relative strength index) is in an uptrend after clearing and holding lower resistance at 65-70. A close above the latter would indicate additional momentum towards 75-80 and levels from late August/ early September. Key support is at 60.
The Dow Jones Transportation Average (NYSE: TRAN) was up for the second-straight session after testing a new record peak of 12,772. New and lower resistance at 12,750-12,900 was cleared but held. A close above the latter would be an ongoing bullish signal for additional momentum towards 13,000-13,125.
Near-term support is at 12,600-12,475 followed by 12,400-12,275.
RSI is in an uptrend with key resistance at 70 holding. A close above this level would signal additional strength towards 75-80 and levels from August. Support is at 65-60.
With Tuesday’s results, the major indexes are showing signs of breaking out of 12-session trading ranges with the higher closes pushing the action towards the top and past key resistance levels. For continued upside, below are the key resistance levels needing to clear and hold to ignite another swoosh higher. The latter numbers are today’s and the recent all-time intraday highs.
For the Dow: 30,100-30,116; S&P 500: 3,650-3,645; Nasdaq: 12,100-12,108; and the Russell 2000: 1,875-1,862.
Tech and the small-caps have been more volatile but have strong upward sloping 50-day moving averages along with the blue-chips and the S&P 500 although they aren’t as pronounced.
To identify when there could be weakness moving forward, below are the bottom of the trading ranges with key support levels. The latter numbers are the monthly intraday lows inside of these trading ranges.
For the Dow: 29,000-28,902; S&P 500: 3,500-3,511; Nasdaq: 11,500-11,424; and the Russell 2000: 1,700-1,652.
We got some super sweet pin action yesterday with all of our current trades posting strong gains. Half of the FCX position was closed with further adjustments this morning so please follow the instructions carefully. Also, please note the Stop Limits now in place for XLF and UTZ.
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.
Utz Brands (UTZ, $20.14, up $0.59)
UTZ January 20 calls (UTZ210115C00020000, $1.25, up $0.25)
Entry Price: $0.75 (11/19/2020)
Exit Target: $1.50
Stop Target: 50 cents, raise to 85 cents (Stop Limit)
Action: Raise the Stop Target from 50 cents to 85 cents and make it a Stop Limit to start protecting profits. This will also avoid a loss.
Shares tested a high of $20.50 with lower resistance at $20.25-$20.50 getting cleared but holding. A close above the latter would signal additional momentum towards $20.75-$21. Rising support is at $19.75-$19.50.
Relative strength is above 75 and is starting to indicate oversold levels. However, the peak reached 90 and above in September and June so I’m still looking for a possible run towards $22 on the stock over the near-term.
Financial Select Sector Spider Fund (XLF, $28.66, up $0.97)
XLF January 28 calls (XLF210115C00028000, $1.45, up $0.60)
Entry Price: $0.75 (11/16/2020)
Exit Target: $1.50, raise to $2.50
Stop Target: 35 cents, raise to $1.25 (Stop Limit)
Action: Raise the Exit Target from $1.50 to $2.50.
Raise the Stop Target from 35 cents to $1.25 and make it a Stop Limit to start protecting profits. We can continue to move it up on higher highs. This will lock-in at least a 67% profit on any pullback.
Shares zoomed a high of $28.69 with fresh and lower resistance at $28.50-$28.75 getting cleared and holding. New support is at $28.25-$28 with a move below the latter likely triggering the Stop Limit.
Freeport McMoRan (FCX, $23.11, up $1.20)
FCX December 20 calls (FCX201218C00020000, $3.30, up $1.05)
Entry Price: $1.10 (11/13/2020)
Exit Target: $2.75, raise to $3.75 (closed half at $2.75 on 11/24)
Stop Target: $1.80, raise to $2.90 (Stop Limit)
Action: Raise the Exit Target from $2.75 to $3.75 on the other half of the trade. We closed half of the position at $2.75 with a Limit Order yesterday.
Raise the Stop Limit from $1.65 to $2.90 to further protect profits.
Fresh and lower resistance at $23-$23.25 was breached and held with Tuesday’s 52-week peak reaching $23.25. Fresh support is at $22.75-$23.