Pre-Market Update for 12/16/2020

Small-Caps Tap Another All-time High

8:00am (EST)

The stock market rallied on Tuesday following vaccine optimism and stimulus hopes. The FDA told advisors ahead of an upcoming meeting that it views Moderna’s vaccine as highly effective, paving the way for the potential approval of a second shot as early as this week.

Meanwhile, expectations for another coronavirus stimulus helped sentiment after a new relief package was presented that totaled $748 billion but excluded the controversial aid to states and liability protections that have stalled prior attempts at passing a bill.

The Russell 2000 tapped a late day high of 1,960 before settling at 1,959 (+2.4%). Uncharted territory and lower resistance at 1,950-1,970 was cleared and held. A close above the latter would indicate continued strength towards 1,980-2,000.

The Nasdaq tested an afternoon peak of 12,596 while finishing at 12,595 (+1.3%). Current and lower resistance at 12,500-12,600 was recovered. A move above the latter and the all-time high at 12,607 would signal continued momentum towards 12,700-12,800.

The S&P 500 ended at 3,694 (+1.3%) after trading to a high 3,695 ahead of the closing bell. Near-term and lower resistance at 3,675-3,700 was breached and held. A close above the latter and last week’s record high of 3,712 would suggest additional upside towards 3,725-3,750.

The Dow traded to a second half peak of 30,243 before closing at 30,199 (+1.1%). Current and lower resistance 30,000-30,250 was reclaimed. A move above the latter and the record high at 30,325 would suggest a possible run towards 30,500-30,750.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) had its four-session winning streak snapped following the late day pullback to 22.73. Current and upper support at 23-22.50 was recovered. A close below the latter would indicate a retest towards 21.50-21.

Resistance is at 24-24.50.

The Wilshire 5000 Composite Index (NYSE: WLSH) snapped a two-session slide after testing an intraday high of 38,868. Current and lower resistance at 38,750-39,000 was cleared and held. A move above the latter and last week’s all-time peak at 38,979 would indicate momentum towards 39,250-39,500.

Support is at 38,500-38,250 with a close below the 38,000 level signaling a possible near-term top.

RSI (relative strength index) is back in an uptrend with key resistance at 70 holding. A close above this level would indicate additional strength towards 75-80 and levels from late August/ early September. Support is at 65-60.

The Technology Select Sector Spider Fund (NYSE: XLK) was up for the second-straight session and for the third time in four after settling on its session peak of $126.83. Lower resistance at $126.50-$127 was cleared and held. A close above the latter would signal additional upside towards $127.50-$128 with the current all-time high at $127.72.

Current support is at $125-$124.50 followed by $123-$122.50.

RSI is in an uptrend with lower resistance at 65-70 getting challenged but holding. A close above the latter would signal upside towards 75-80 and levels from early September. Support is at 60-55.

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

Momentum Options Play List

Closed Momentum Options Trades for 2020: 44-11 (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.

Boston Scientific (BSX, $34.67, up $1.22)

BSX February 31 puts (BSX210219P00031000, $0.65, down $0.25)

Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Return: -17%
Stop Target: None

Action: Shares rebounded to test a high of $34.97 with lower resistance from mid-December at $34.50-$35 holding. Support is at $34-$33.50.

Grocery Outlet Holding (GO, $39.28, up $1.17)

GO January 40 calls (GO210115C00040000, $1.30, up $0.35)

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

Action: Prior and lower resistance from mid-November at $39-$39.50 was cleared and held with yesterday’s high reaching $39.34. Fresh support is at $38.50-$38 and the 200-day moving average.