Pre-Market Update for 12/9/2020

Bulls Trip Another Round of Record Peaks

8:00am (EST)

The stock market set another round of fresh all-time highs following news of the first coronavirus vaccine being delivered overseas and ongoing stimulus talks. GOP congressional leaders spoke with Treasury Secretary Mnuchin and White House Chief of Staff Meadows in hopes of getting a deal done before Congress leaves for the holidays.

The Russell 2000 finished at its session high of 1,917 (+1.4%). Fresh and lower resistance at 1,900-1,920 was cleared and held. A move above the latter would indicate continued upside towards 1,940-1,960.

The Nasdaq closed at 12,582 (+0.5%) with the afternoon peak hitting 12,594. Uncharted territory and lower resistance at 12,500-12,600 was challenged but held. A move above the latter would signal continued record highs towards 12,700-12,800.

The Dow traded to a second half high of 30,246 before settling at 30,173 (+0.4%). Near-term and lower resistance 30,250-30,500 was approached but held. A pop above the latter would suggest additional momentum towards 30,750-31,000.

The S&P 500 tested an intraday high of 3,708 while ending at 3,702 (+0.3%). New and lower resistance at 3,700-3,725 was cleared and held. A close above the latter would suggest additional strength towards 3,750-3,775.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second time in three sessions following the late day pullback to 20.52. Current and upper support at 21-20.50 was recovered. A close below the latter would indicate a retest towards20-19.50 with the November low at 19.51.

Resistance is at 22-22.50 followed by 23.50-24.

The S&P 400 Mid Cap Index (NYSE: MID) rebounded after tapping an intraday and all-time high of 2,251. Current and lower resistance at 2,250-2,275 was breached/ challenged but held. A close above the latter and would likely indicate a fresh breakout towards 2,300-2,325.

Support is at 2,225-2,200 with a close below 2,175 signaling a possible near-term top.

RSI (relative strength index) has flatlined with key resistance at 70 holding. A close above this level would indicate strength towards 75 and the early June peak. Support is at 65.

The Materials Select Sector Spider Fund (NYSE: XLB) has been in a 10-session trading range with the high hitting $71.88. Current and lower resistance at $71.50-$72 was recovered. A close above the latter would signal a retest towards $72.50-$73 with the current all-time top at $72.41.

Support is at $70.50-$70. A close below the latter and the bottom of the trading range would signal weakness towards $69-$68.50.

RSI is trying to curl higher after clearing and holding lower resistance at 60. Continued closes above this level would signal additional strength towards 65-70 with the latter representing the November top. Support is at 55-50.

I have updated our current trades so let’s go check the tape.

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.

AT&T (T, $30.81, up $1.17)

T January 30 calls (T210115C00030000, $1.25, up $0.65)

Entry Price: $0.40 (12/3/2020)
Exit Target: $0.80, raise to $1.60
Return: 213%
Stop Target: 45 cents, raise to 75 cents (Stop Limit)

Action: Raise the Exit Target from 80 cents to $1.60. Raise the Stop Limit at 45 cents to 75 cents.

Monday’s high kissed $29.78 with lower resistance at $29.75-$30 getting breached but holding. Support is at $29.50-$29.25 and the 200-day moving average.

Grocery Outlet Holding (GO, $38.27, up $0.49)

GO January 40 calls (GO210115C00040000, $1.10, up $0.15)

Entry Price: $1.00 (11/30/2020)
Exit Target: $2.00
Return: 10%
Stop Target: None

Action: Lower resistance at $37.75-$38.25 and the 200-day moving average was reclaimed with Monday’s high tapping $38. Support at $37.25-$36.75.