MomentumOptions.com Pre-Market Update for 12/31/2020
Bulls Rebound to Keep Record Highs in Focus
The market rebounded on Wednesday with the blue-chips setting a record close despite the dashing hopes for $2,000 stimulus checks as focus. More positive news on the vaccine front helped bullish sentiment after AstraZeneca’s (AZN) coronavirus vaccine became the second inoculation to be authorized overseas.
Meanwhile, volatility traded in a tighter range as overall stock market volume remained quite thin heading into the New Year’s holiday on Friday.
The Russell 2000 tapped a morning high of 1,987 before closing at 1,989 (+1.1%). Current and lower resistance at 1,980-2,000 was recovered. A close above the latter would indicate a retest towards 2,020-2,040 with Monday’s all-time peak at 2,026. Below is a chart of the IWM.
The Dow closed at 30,409 (+0.2%) while trading to a high of 30,525. Near-term and lower resistance at 30,500-30,750 was breached but held. A close above the latter would signal further upside towards 31,000-31,250.
The Nasdaq tagged an opening high of 12,924 before finishing at 12,870 (+0.2%). Lower resistance at 12,900-13,000 was cleared but held. A move above the latter would suggest additional strength towards 13,100-13,200.
The S&P 500 traded to an intraday peak of 3,744 before ending at 3,732 (+0.1%). Near-term and lower resistance at 3,750-3,775 was challenged but held. A close above the latter would indicate additional momentum towards 3,800-3,825.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) traded in a tight range with the morning low tapping 22.41. Current and upper support at 22.50-22 was breached but held. A close below the latter would suggest another retest towards 21-20.50.
Resistance remains at 23.50-24.
The Spider Small-Cap 600 ETF (NYSE: SLY) rebounded following the first half run to $79.83. Near-term and lower resistance at $79.50-$80 was breached but held. A close above the $80.50 level and Monday’s all-time high at $80.58 would signal additional momentum towards the $81.50-$82 area.
Support is at $79-$78.50 followed by $77.50-$77.
RSI (relative strength indicator) is back in an uptrend after clearing and holding lower resistance at 65-70. A close above the latter would indicate additional strength towards 75 and the late November peak. Key support is at 60 and a level that has been holding since mid-November.
The Energy Select Sector SPDR Fund (NYSE: XLE) remains in a seven-session trading range with the intraday high reaching $38.58. Near-term and lower resistance at $38.50-$39 was cleared but held. A close above the latter would suggest additional strength towards $40-$40.50.
Support is at $37.50-$37. A move below the latter and the bottom of the trading range would signal a further pullback towards $36.50-$36.
RSI is in a slight uptrend with lower resistance at 50-55 getting cleared and holding. A close above the latter would signal strength towards 60-65. Support is at 45-40 and levels from early November on a close back below the 50 level.
The percentage of Nasdaq 100 stocks trading above the 50-day moving closed at 89.32%, up 2.92%. Near-term and lower resistance at 87.5%-90% was recovered. A move above the latter would indicate a retest towards 92.5%-95% and overbought levels from mid-July. Support is at 85%-82.5%.
The percentage of S&P 500 stocks trading above the 200-day moving average settled at 89.70%, up 0.40%. Key resistance at 90% was cleared but held. A close above this level keeps upside towards 92.5%-95% and overbought levels May 2013. Support is at 87.5%-85%.
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, $44.48, down $0.16)
CSCO February 48 calls (CSCO210219C00048000, $0.55, down $0.05)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares tested a low of $44.44 with upper support at $44.50-$44.25 failing to hold. Resistance is at $44.75-$45.
AT&T (T, $28.49, down $0.05)
T February 30 calls (T210219C00030000, $0.45, down $0.05)
Entry Price: $0.48 (12/22/2020)
Exit Target: $1.00
Stop Target: None
Action: Wednesday’s low tapped $28.43 with current and upper support at $28.50-$28.25 failing to hold. Resistance is at $28.75-$29 and the 50-day moving average.
Boston Scientific (BSX, $35.55, up $0.05)
BSX February 31 puts (BSX210219P00031000, $0.35, flat)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Fresh and lower resistance at $35.75-$36 was s]challenged but held with the intraday peak at $35.73. Support remains at $35.25-$35 and the 50-day moving average.