MomentumOptions.com Pre-Market Update for 1/6/2021
Bulls Rebound as Georgia Election Outcome Looms/ Profit Alert (T)
The market ended higher on Tuesday in choppy trading, as traders took advantage of the previous session’s selloff and ahead of the outcome of the Senate runoff elections in the battleground state of Georgia.
The Russell 2000 tapped an afternoon high of 1,990 before closing at 1,979 (+1.7%). Current and lower resistance at 1,980-2,000 was cleared but held. A close above the latter would indicate a retest towards 2,010-2,030 with the late December all-time peak at 2,026.
The Nasdaq tested a late day peak of 12,828 while finishing at 12,818 (+0.2%). Near-term and lower resistance at 12,800-12,900 was recovered. A move above the latter and last week’s lifetime high at 12,973 would suggest additional strength towards 13,000-13,100.
The S&P 500 traded to an intraday peak of 3,737 before ending at 3,726 (+0.7%). Near-term and lower resistance at 3,725-3,750 was breached and held. A close above the latter would indicate additional momentum towards 3,775-3,800.
The Dow closed at 30,391 (+0.6%) while trading to a high of 30,504. Near-term and lower resistance at 30,500-30,750 was cleared but held. A close above the latter would signal further upside towards 31,000-31,250.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the third time in four sessions with the afternoon low tapping 24.80. Current and upper support at 25-24.50 and the 50-day moving average was breached but levels that held. A close below the latter would suggest another retest towards 23.50-23.
Resistance is at 27.50-28 followed by 29.50-30 and the 200-day moving average.
The iShares Russell Growth 1000 ETF (NYSE: IWF) rebounded after testing a second half high of $239.25. Current and lower resistance at $239-$239.50 was cleared but held. A close above the $240 level would signal a retest towards the $242-$242.50 area with last week’s all-time peak at $242.82.
Near-term support is at $237-$236.50 followed by $235.50-$235.
RSI is back in an uptrend with key resistance at 60 holding. A move above this level would suggest additional strength towards 65-70 with the latter holding since early December. Support is at 55-50.
The Materials Select Sector Spider Fund (NYSE: XLB) was up for the third time in four sessions after tapping a fresh all-time peak of $73.51. Uncharted territory and lower resistance at $73.50-$74 was tripped but held. A close above the latter would signal momentum towards $75-$75.50.
Support is at $71.50-$71 followed by $70.50-$70.
RSI is back in an uptrend with key resistance at 60 getting cleared and holding. Continued closes above this level would signal additional strength towards 65-70 with the latter representing the early November top. Support is at 55-50.
I have updated our current trades, including a Profit Alert for AT&T, and our 16th-straight winning trade since mid-August.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 1-0 (100%). 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, $43.98, up $0.02)
CSCO February 48 calls (CSCO210219C00048000, $0.50, flat)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares traded to a high of $44.07 with lower resistance at $44-$44.25 getting breached but holding. Support remains at $43.50-$43.25.
AT&T (T, $29.26, down $0.18)
T February 30 calls (T210219C00030000, $0.55, down $0.13)
Entry Price: $0.48 (12/22/2020)
Exit Target: $1.00
Stop Target: 55 cents (Stop Limit)
Action: The Stop Limit at 55 cents tripped on yesterday’s pullback. While disappointed the uptrend didn’t continue yesterday, we will likely be back into this trade as early as today. If I take action, I will send out a Trade Alert.
Boston Scientific (BSX, $36.24, up $0.97)
BSX February 31 puts (BSX210219P00031000, $0.25, down $0.10)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: New and lower resistance at $36.25-$36.50 was cleared but held on the rebound to $36.47 yesterday. Support is at $36-$35.75.