MomentumOptions.com Pre-Market Update for 12/2/2020
Bulls Push Another Round of Record Highs/ Profit Alert (UTZ)
The stock market rebounded on Tuesday with the gains pushing the Nasdaq to its fourth-straight record high and the S&P 500 to a new all-time peak. Renewed talks of a stimulus package and mostly positive economic news helped sentiment as lawmakers offered a new $908 billion stimulus plan.
The Nasdaq tested an afternoon and lifetime high of 12,405 while finishing at 12,355 (+1.3%). Uncharted territory and lower resistance at 12,400-12,500 was cleared but held. A move above the latter would signal continued momentum towards 12,600-12,700.
The S&P 500 ended at 3,662 (+1.1%) after trading to a record peak of 3,678. Fresh and lower resistance at 3,675-3,700 was breached but held. A close above the latter would suggest additional upside towards 3,725-3,750.
The Russell 2000 tapped a morning high of 1,848 before settling at 1,836 (+0.9%). Near-term and lower resistance at 1,850-1,870 was challenged but held. A close above the latter and the recent all-time high at 1,862 would indicate continued strength towards 1,880-1,900.
The Dow traded to a peak of 30,083 shortly after the opening bell before finishing at 29,823 (+0.6%). Current and lower resistance 29,750-30,000 was recovered. A move above the latter and the record high at 30,116 would suggest a possible run towards 30,250-30,500.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) closed higher for the first time in six sessions despite testing a first half low of 20. Current and upper support at 20-19.50 was tagged but held. A close below the latter would be a very bullish signal for the stock market with additional weakness towards 18.50-18.
Resistance is at 21-21.50 followed by 22.50-23.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) rebounded after trading to an intraday peak of $301.01. Current and lower resistance at $301-$301.50 was breached but held. A close above the latter and the recent all-time high at $301.11 would signal a possible breakout towards $302-$302.50.
Current support is at $298-$297.50 followed by $295.50-$295.
RSI is back in a slight uptrend after clearing and holding lower resistance at 60-65. A close above the latter would suggest additional strength towards 70-75 and levels from late August/ early September. Support is at 55-50.
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) was up for the third-straight session and for the fifth time in six after trading to a fresh all-time high of $370.11. Uncharted territory and lower resistance $370-$370.50 was cleared but held. A close above the latter would indicate an ongoing breakout with upside potential towards the $372-$372.50.
Near-term and rising support at $367.50-$367 followed by $364-$363.50.
RSI remains in an uptrend after clearing and holding lower resistance at 70-75. A move above the latter and the early September top would signal additional strength towards the 80 level. Support is at the 65-60.
Volatility remains slightly elevated despite Tuesday’s push to record highs and the top of the current trading ranges for the major indexes. More specifically, traders and investors are waiting to see if volatility can clear and hold longer-term support below 20, and the high-teen levels, that were last seen in late February.
Although the 20 level has been tested and breached in four of the past five sessions, it remains one of the most important technical indicators to confirm a continued rally into yearend.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 43-11 (80%). 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.
Grocery Outlet Holding (GO, $37.80, down $0.82)
GO January 40 calls (GO210115C00040000, $1.10, down $0.35)
Entry Price: $1.00 (11/30/2020)
Exit Target: $2.00
Stop Target: None
Action: Upper support at $37.25-$37 was breached but held. Resistance is at $38-$38.25 and the 200-day moving average.
Utz Brands (UTZ, $19.13, down $1.05)
UTZ January 20 calls (UTZ210115C00020000, $0.70, down $0.45)
Entry Price: $0.75 (11/19/2020)
Exit Target: $1.50
Stop Target: 85 cents (Stop Limit)
Action: The Stop Limit at 85 cents tripped on yesterday’s pullback to $19.02.
We will keep UTZ on our Watch List for a possible reentry point.