MomentumOptions.com Pre-Market Update for 12/23/2020
Tech, Small-Caps Shine
The market settled mixed on Tuesday as concerns over a new variant of the coronavirus and disappointing economic data offset the passage of a long-awaited pandemic relief bill. Tech and the small-caps advanced after setting another round of record highs while the broader market pulled back.
The Russell 2000 tagged a morning all-time peak of 1,992 while closing at 1,989 (+1%). Fresh and lower resistance at 1,990-2,010 was tripped but held. A close above the latter would indicate momentum towards 2,020-2,040.
The Nasdaq finished at 12,807 (+0.5%) with the opening high reaching 12,840. Unchartered territory and lower resistance at 12,800-12,900 was cleared and held. A move below the latter would signal a continued rally towards 13,000-13,100.
The Dow closed lower at 30,015 (-0.7%) after bottoming at 29,992 ahead of the closing bell. Near-term and upper support 30,000-29,750 was breached but held. A move below the latter would suggest further weakness towards 29,500-29,250.
The S&P 500 settled at 3,687 (-0.2%) with the midday low kissing 3,676. Current and upper support at 3,675-3,650 was challenged but held. A close below the latter would indicate a retest towards 3,625-3,600.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the fifth time in six sessions with the intraday low tapping 23.53. Current and upper support at 24-23.50 was triggered but held. A close below the latter would indicate a retest towards 22.50-22.
Lowered resistance is 25.50-26 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) extended its losing streak to three-straight sessions with the midday low reaching $366.03. Near-term and upper support at $366.50-$366 was breached but held. A close below the latter would suggest further weakness towards $365-$364.50.
Resistance is at $368-$368.50 followed by $369.50-$370.
RSI has remains in a downtrend after failing to hold key support at 60. Continued closes below 60 would signal a retest towards 55-50 and levels from early November. Resistance is at 65-70.
The Consumer Discretionary Select Spiders (XLY) was also down for the third-straight session with the intraday low tagging $155.83. Current and upper support at $156-$155.50 was breached but held. A close below the latter would likely indicate a further backtest towards $154.50-$154 and the 50-day moving average.
Resistance is at $158-$158.50 followed by $159.50-$160.
RSI remains in a downtrend with key support at 50 holding. A move below this level would suggest additional weakness towards 45-40. Resistance is at 55-60.
I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2020: 45-11 (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, $28.40, down $0.61)
T February 30 calls (T210219C00030000, $0.48, down $0.14)
Entry Price: $0.48 (12/22/2020)
Exit Target: $1.00
Stop Target: None
Action: Shares tested a low of $28.32 with upper support at $28.50-$28.25 and the 50-day moving average failing to hold. Resistance is at $28.75-$29.
Boston Scientific (BSX, $34.36, down $0.46)
BSX February 31 puts (BSX210219P00031000, $0.60, flat)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Shares tested a low of $34.19 with mid-month and upper support at $34.25-$34 getting breached but holding. Resistance remains at $35-$35.25.