MomentumOptions.com Pre-Market Update for 12/10/2020
Market Pulls Back Off Fresh Record Peaks
The stock market retreated from record opening highs following reports that a stimulus agreement looks to be on the back-burner again. Senate Leader McConnell said the Democrats shrugged of the latest proposal for a relief bill that would leave out liability protection and state aid.
Meanwhile, the stock market continued to monitor the rise in virus cases and increase in lockdowns, weighing those developments against the rollout of a vaccine and the potential for more government aid.
The Nasdaq ended at 12,338 (-1.9%) with the afternoon low tagging 12,290. New and upper at 12,300-12,200 was tripped but held. A close below the latter would signal a continued pullback towards 12,100-12,000.
The Russell 2000 tested an intraday low of 1,889 while closing at 1,902 (-0.8%). Current and upper support at 1,900-1,880 was split but held. A move below the latter would suggest continued weakness towards 1,870-1,850. Below is a chart of the IWM.
The S&P 500 ended at 3,672 (-0.8%) following the late day fade to 3,660. Fresh and upper support at 3,675-3,675 was tripped and failed to hold. A close below the latter would indicate a retest towards 3,650-3,625.
The Dow traded to a second half low of 29,951 before settling at 30,068 (-0.4%). Near-term and upper support 30,000-29,750 was breached but held. A drop below the latter would indicate a further slide 29,500-29,250.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) traded in a wider range after testing a morning low of 20.10. Current and upper support at 20.50-20 was breached but held.
The bounce to 22.93 and fresh monthly high afterwards cleared but failed to hold lower resistance at 22.50-23. A close above the latter would signal a retest towards 23.50-24.
The Spider Small-Cap 600 ETF (NYSE: SLY) was unchanged after testing an all-time high of $78.68. Uncharted territory and lower resistance at $78.50-$79 was breached but held.
Current support is at $77-$76.50 followed by $75.50-$75.
RSI (relative strength indicator) has flatlined with key support at 70 holding. A move below the latter would indicate additional weakness towards 65-60. Resistance is at 75 and the November high.
The Financial Select Sector Spider Fund (NYSE: XLF) showed weakness for the third-straight session after trading to an intraday low of $28.59. Current and upper support at $28.50-$28.25 was challenged but held. A move below the latter would indicate further weakness towards $28-$27.75.
Key resistance is at $29. A close above this level would be a slightly bullish development with additional upside towards $29.25-$29.50 and prior levels from late January.
RSI is in a slight downtrend with upper support at 65-60 failing to hold. A close below the latter would indicate additional weakness towards 55-50 and levels from early November. Key resistance is at 70.
I have updated our current trades so let’s go check the action as we have one of our biggest returns for 2020 going. Please read the trade instructions for AT&T carefully as we continue to ride a 14-trade winning streak since mid-August.
Also, I could have a New Trade today so stay locked-and-loaded.
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, $31.46, up $0.65)
T January 30 calls (T210115C00030000, $1.80, up $0.55)
Entry Price: $0.40 (12/3/2020)
Exit Target: $1.60, raise to $3.00
Stop Target: 75 cents, raise to $1.60 on half and $1.20 on the other half (Stop Limits)
Action: Raise the Exit Target from $1.60 to $3.00. Raise the Stop Limit at 75 cents to $1.60 on half and $1.20 on the other half. If both Stop Limits are tripped, the total return would be 250%, but I’m still looking for higher highs.
Shares surged to a peak of $31.89 with the options zooming to a high of $2.18. Longer-term and lower resistance from early June at $31.75-$32 was breached but held. Fresh support is at $31.25-$31.
Grocery Outlet Holding (GO, $37.73, down $0.54)
GO January 40 calls (GO210115C00040000, $0.90, down $0.20)
Entry Price: $1.00 (11/30/2020)
Exit Target: $2.00
Stop Target: None
Action: Current and upper support at $37.75-$37.25 was breached and failed to hold with yesterday’s low tapping $37.58. Resistance remains at $37.75-$38.25 and the 200-day moving average.