MomentumOptions.com Pre-Market Update for 1/5/2021
Volatility Spikes Ahead of Georgia Fireworks/ Trade Alert (T)
The market opened on a high note with the Dow and S&P 500 testing fresh all-time highs but quickly fizzled ahead of Tuesday’s runoff senate elections in Georgia. A win for the two democratic candidates would allow President Elect Biden more freedom to pursue his own legislation over the next two years while a loss (or tie) would help the Republicans object to many of his political appointments.
The S&P 500 finished at 3,700 (-1.5%) with the intraday low tapping 3,662. Near-term and upper support at 3,675-3,650 was breached but held. A close below the latter would suggest ongoing weakness towards 3,625-3,600.
The Nasdaq settled at 12,698 (-1.5%) following the afternoon fade to 12,543. Fresh and upper at 12,600-12,500 was tripped but held. A move below the latter would signal a further retest towards 12,400-12,300.
The Russell 2000 tested a midday low of 1,927 before ending at 1,945 (-1.5%). Near-term and upper support at 1,945-1,925 was breached but held. A close below the latter would signal a further pullback towards 1,920-1,900.
The Dow closed lower at 30,233 (-1.3%) after tagging a low of 29,881. Near-term and upper support 30,000-29,750 was tripped but held. A move below the latter would indicate further weakness towards 29,500-29,250.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a two-session losing streak after zooming to a midday high of 29.19. Prior and lower resistance at 29-29.50 was cleared but held. A close above 30 and the 200-day moving average would indicate further upside towards 31.50-32 and prior levels from a few weeks ago.
Fresh support is at 26.50-26 followed by 25.50-25 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) fell for the first time in three sessions despite tapping an opening all-time high of $375.45. Fresh and lower resistance at $375-$375.50 was cleared but held.
The intraday fade to $364.82 tripped but held prior and upper support at $365-$364.50. A close below the latter would suggest further weakness towards $363-$362.50.
RSI is back in a downtrend with upper support at 55-50 holding. A close below the latter would signal a retest towards 45-40 and levels from late October. Resistance is at 60.
The Utilities Select Spider Fund (NYSE: XLU) had its two-session winning streak snapped following the second half pullback to $60.77. Near-term and upper support at $61-$60.50 was breached but held. A drop below the latter and the December low at $60.32 would indicate further weakness towards $60-$59.50
Resistance is at $62.50-$63 and the 50-day moving average.
RSI is back in a downtrend with key support at 40 holding. A close below this level would suggest additional weakness towards 35-30 and levels from March. Resistance is at 45-50.
We got some sweet pin action on AT&T and we still have some put protection in case the current selling pressure remains.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 0-0 (0%). 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.
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Cisco Systems (CSCO, $43.96, down $0.43)
CSCO February 48 calls (CSCO210219C00048000, $0.50, down $0.10)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares traded to a low of $43.35 with mid-December and upper support at $43.50-$43.25 getting breached but holding. Resistance is at $44.25-$44.50.
AT&T (T, $29.44, up $0.68)
T February 30 calls (T210219C00030000, $0.68, up $0.18)
Entry Price: $0.48 (12/22/2020)
Exit Target: $1.00
Stop Target: 55 cents (Stop Limit)
Action: Set an initial Stop Limit at 55 cents to start protecting profits and to avoid a loss.
Monday’s peak reached $29.49 with prior and lower resistance from early December at $29.25-$29.50 getting recovered. Fresh support is at $29.25-$29.
Boston Scientific (BSX, $35.27, down $0.68)
BSX February 31 puts (BSX210219P00031000, $0.35, up $0.05)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: New and upper support at $35-$34.75 was challenged but held on the pullback to $35.03. Lowered resistance is at $35.50-$35.75.