MomentumOptions.com Pre-Market Update for 12/30/2020
Market Retreats Despite Another Round of Record Highs
The market was choppy throughout Tuesday’s session after setting lower before kissing another round of fresh all-time highs shortly after the open. The lower close came after Senate Leader McConnell blocked immediate approval of increasing the one time payments though the legislation could be voted on at a later time or date if McConnell so chooses.
The Russell 2000 tested a midday low of 1,950 before ending at 1,959 (-1.9%). Current and upper support at 1,950-1,930 was tagged but held. A close below the latter would signal a further pullback towards 1,920-1,900.
The S&P 500 finished at 3,727 (-0.2%) with the intraday low tapping 3,723. Near-term and upper support at 3,725-3,700 was breached but held. A close below the latter would suggest ongoing weakness towards 3,675-3,650.
The Dow closed lower at 30,335 (-0.2%) after tagging a low of 30,274. Near-term and upper support 30,250-30,000 was challenged but held. A move below the latter would indicate further weakness towards 29,750-29,500.
The Nasdaq settled at 12,742 (-0.4%) following the opening fade to 12,525. Fresh and upper at 12,600-12,500 was tripped but held. A move below the latter would signal a deeper retest towards 12,400-12,300.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second-straight session with the second half high hitting 23.72. Prior and lower resistance at 23.50-24 was cleared but held. A move above the latter would signal a retest towards 25-25.50 and the 50-day moving average.
New support is at 22-21.50 followed by 20.50-20.
The S&P 400 Mid Cap Index (NYSE: MID) extended its losing streak to two-straight sessions with the first half low tagging 2,273. Current and upper support at 2,275-2,250 was breached but held. A close below the latter would indicate a further backtest towards 2,225-2,200.
Resistance is at 2,300-2,325 with Monday’s all-time peak at 2,334.
RSI (relative strength index) is in a downtrend with key support at 60 holding. A move below this level would reopen downside risk towards 55-50 and levels from early November. Resistance is at 65-70.
The Spider S&P Retail ETF (NYSE: XRT) was down for the second time in three sessions following the intraday pullback to $63.58. Near-term and upper support at $64-$63.50 was tripped but held. A close below the latter would suggest additional weakness towards $62.50-$62.
Resistance at $65-$65.50 with the recent all-time peak at $65.59.
RSI is in a downtrend after failing to hold key support at 70. Continued closes below this level keeps downside risk towards 65-60 in play. Overbought resistance is at 75 and the monthly top.
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.
Cisco Systems (CSCO, $44.64, down $0.28)
CSCO February 48 calls (CSCO210219C00048000, $0.60, down $0.05)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares faded to a low of $44.53 with upper support at $$44.75-$44.50 failing to hold. Resistance is at $45-45.25.
AT&T (T, $28.55, down $0.01)
T February 30 calls (T210219C00030000, $0.50, flat)
Entry Price: $0.48 (12/22/2020)
Exit Target: $1.00
Stop Target: None
Action: Yesterday’s low reached $28.51 with current and upper support at $28.50-$28.25 getting challenged but holding. Resistance is at $28.75-$29.
Boston Scientific (BSX, $35.50, up $0.58)
BSX February 31 puts (BSX210219P00031000, $0.35, down $0.10)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Fresh and lower resistance at $35.50-$35.75 was cleared and held with yesterday’s pop hitting $35.73. New support is at $35.25-$35 and the 50-day moving average.