Pre-Market Update for 12/18/2020

Bulls Still Showing Strong Momentum

8:00am (EST)

The stock market shrugged off weak economic news before the open to close at record levels on Thursday, despite Congress remaining locked in discussions over another coronavirus relief package and legislation to fund the government for the fiscal year.

Initial jobless claims unexpectedly rose to the highest level since early September, giving Wall Street more reason to believe the disappointing data will compel lawmakers to advance a stimulus bill more expediently.

The Russell 2000 finished on its session high of 1,978 (+1.3%). Fresh and lower resistance at 1,970-1,990 was cleared and held. A move above the latter would indicate continued upside towards 2,000-2,020.

The Nasdaq closed at 12,764 (+0.8%) with the afternoon peak hitting 12,765. Uncharted territory and lower resistance at 12,700-12,800 was breached and held. A pop above the latter would signal continued record highs towards 12,900-13,000.

The S&P 500 tested an intraday high of 3,708 while ending at 3,702 (+0.6%). New and lower resistance at 3,725-3,750 was tapped but held. A close above the latter would suggest additional strength towards 3,775-3,800.

The Dow traded to a late day high of 30,323 before settling at 30,303 (+0.5%) and missing its lifetime peak at 30,325 by two points. Near-term and lower resistance 30,250-30,500 was recovered. A move above the latter would suggest additional momentum towards 30,750-31,000.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the third-straight session with the intraday low hitting 21.52. Current and upper support at 22-21.50 was recovered. A close below the latter would indicate a retest towards 20.50-20.

Lowered resistance is at 23-23.50 followed by 24-24.50.

The S&P 400 Mid Cap Index (NYSE: MID) traded in a tight range with the afternoon and all-time peak reaching 2,297. Key resistance at 2,300 was challenged but held. A close above this level would likely indicate a fresh breakout towards 2,325-2,350.

Support is at 2,275-2,250 with a close below the signaling a further backtest towards 2,225-2,200.

RSI (relative strength index) is trying to curl higher with key resistance at 70 getting cleared and holding. Continued closes above this level keeps strength towards 75 and the early June peak in play. Support is at 65.

The SPDR Gold Shares (NYSE: GLD) was up for the third-straight session with the intraday high reaching $177.87. Prior and lower resistance from early November at $177.50-$178 was breached but held. A close above the latter would be an ongoing bullish signal for additional upside towards $179-$179.50.

Fresh support is at $176-$175.50 and the 50-day moving average.

RSI is in an uptrend after clearing and holding lower resistance at 55-60. A close above the latter would suggest additional strength towards 65-70 and levels from early July. Support is at 50-45.

I have updated our current positions 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, $35.39, up $0.26)

BSX February 31 puts (BSX210219P00031000, $0.50, down $0.05)

Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Return: -40%
Stop Target: None

Action: Shares traded to a high of $35.65 with early November and lower resistance at $35.50-$36 getting cleared but holding. Support is at $34.50-$34.

Grocery Outlet Holding (GO, $39.41, up $0.73)

GO January 40 calls (GO210115C00040000, $1.25, up $0.20)

Entry Price: $1.00 (11/30/2020)
Exit Target: $2.00
Return: 25%
Stop Target: None

Action: Thursday’s peak reached $39.54 with lower resistance at $39.50-$40 getting breached but holding. Support is at $38.50-$38 and the 200-day moving average