MomentumOptions.com Pre-Market Update for 1/7/2021
Bulls Stay Strong Despite Chaos in DC
The market was resilient throughout Wednesday’s session following the outcome of the Georgia senate elections and the late day chaos that played out in our nation’s capital. The capture of the second seat by the Democrats likely opened the door to a presumably sizable increase in fiscal spending as the incoming Biden administration’s agenda will likely face little opposition.
The Russell 2000 surged to an intraday record high of 2,079 while settling at 2,057 (+4%). Unchartered territory and lower resistance at 2,060-2,080 was cleared but held. A close above the latter would indicate additional momentum towards 2,100-2,120.
The Dow finished at 30,829 (+1.4%) after soaring to a lifetime high of 31,022. New and lower resistance at 31,000-31,250 was breached but held. A close above the latter would suggest further strength towards 31,500-31,750.
The S&P 500 closed at 3,748 (+0.6%) while tagging an afternoon all-time peak of 3,783. Fresh and lower resistance at 3,775-3,800 was breached but held. A close above the latter would signal ongoing momentum towards 3,825-3,850.
The Nasdaq topped out at 12,909 before ending lower at 12,740 (-0.6%). Current and lower resistance at 12,900-13,000 was tripped but held. A move above the latter and the current all-time peak at 12,973 would indicate additional strength towards 13,100-13,200.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the fourth time in five sessions following the morning fade to 22.15. Prior and upper support from last week at 22.50-22 was tripped but held. A move below the latter would indicate a further backtest towards 21-20.50.
Lowered resistance is at 27-27.50 followed by 29.50-30 and the 200-day moving.
The Wilshire 5000 Composite Index (NYSE: WLSH) was up for the second-straight session and for the fourth time in five with the intraday and fresh record high reaching 39,889. Unchartered territory and lower resistance at 39,750-40,000 was cleared but held. A move above the latter would indicate a continued breakout towards 40,250-40,500.
New support is at 39,250-39,000 followed by 38,750-38,500.
RSI (relative strength index) is in an uptrend with lower resistance at 65-70 getting cleared but holding. A close above the latter would indicate additional strength towards 75-80 and levels from late August/ early September. Support is at 60-55.
The Financial Select Sector Spider Fund (NYSE: XLF) rebounded after trading to an afternoon peak of $30.74. Prior and lower resistance from mid-February at $30.50-$30.75 was cleared and held. A move below the latter would indicate further upside towards $31.25-$31.50 with the current 52-week high at $31.38.
Fresh support is at $30-$29.75 with a close back below $29.50 signaling a near-term top.
RSI is back in an uptrend with key resistance at 70 getting cleared and holding. Continued closes above this level would indicate a run towards 75 and the early November 2019 peak. Support is at 65-60.
I have updated our current trades so let’s go check the tape.
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.
AT&T (T, $29.83, up $0.57)
T February 31 calls (T210219C00031000, $0.44, up $0.11)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Yesterday’s rebound reached $30 with prior and lower resistance at $30-$30.25 getting kissed but holding. Support is at $29.50-$29.25.
Cisco Systems (CSCO, $44.40, up $0.42)
CSCO February 48 calls (CSCO210219C00048000, $0.55, up $0.05)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: None
Action: Shares traded to a high of $44.87 with lower resistance at $44.75-$45 getting breached but holding. Support is at $44.25-$44.
Boston Scientific (BSX, $36.76, up $0.52)
BSX February 31 puts (BSX210219P00031000, $0.20, down $0.05)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Fresh and lower resistance at $36.75-$37 and the 200-day moving average was recovered on the run to $36.93. Rising support is at $36.25-$36.