MomentumOptions.com Pre-Market Update for 1/12/2021
Profit Taking Sends Market Lower
The stock market backed off from record levels to settle lower on Monday as investors locked in profits following last week’s strong rally and continued run towards all-time highs. News that House Speaker Pelosi is looking to impeach President Trump again if Vice President Pence doesn’t attempt to remove him weighed on sentiment.
The Nasdaq settled at 13,036 (-1.3%) following the opening fade to 12,999. Fresh and upper support at 13,000-12,900 was tripped but held. A move below the latter would signal a further retest towards 12,800-12,700.
The S&P 500 finished at 3,799 (-0.7%) with the morning low tapping 3,789. Near-term and upper support at 3,800-3,775 failed to hold. A close below the latter would suggest additional weakness towards 3,750-3,725.
The Dow closed at 31,008 (-1.3%) after tagging a low of 30,832. Current and upper support 31,000-30,750 was breached but held. A move below the latter would indicate further weakness towards 30,500-30,250.
The Russell 2000 tested a opening low of 2,061 before ending at 2,091 (-0.03%). Near-term and upper support at 2,090-2,070 was tripped but held. A close below the latter would signal a deeper backtest towards 2,050-2,030.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a four session slide after trading to a late day peak of 24.81. Current and lower resistance at 24.50-25 and the 50-day moving average were breached but levels that held. A move above the latter would indicate a retest towards 25.50-26.
Fresh support is at 23.50-23 followed by 22-21.50.
The Spider Small-Cap 600 ETF (NYSE: SLY) rebounded following the first half push to $84.94. Near-term and lower resistance at $85-$85.50 was challenged but held. A close above the latter and last Friday’s all-time high at $85.89 would signal additional momentum towards the $86.50-$87 area.
Near-term and upper support is at $83.50-$83 followed by $82-$81.50.
RSI (relative strength indicator) has flatlined with key resistance at 75 holding. A close above 75 would indicate additional strength towards 80-85 and overbought levels from September 2017. Support is at 70-65.
The Real Estate Select Sector SPDR Fund (NYSE: XLRE) fell for the first time in three sessions after tagging an afternoon low of $34.96. Key support at $35 was breached but held. A close below this level would suggest additional weakness towards $34.75-$34.50 and the 200-day moving average.
Resistance at $35.50-$35.75.
RSI is back in a downtrend after failing to hold upper support at 45-40. A move below the latter would suggest weakness towards 35 and the late October low. Resistance is at 50.
The AAII Sentiment Survey revealed bullish sentiment, expectations that stock prices will rise over the next six months, closed at 71.6% last week. Optimism has remained above its historical average of 38% for the ninth-straight week.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, was at 10.6% and below its historical average of 31.5%.
Bearish sentiment, expectations that stock prices will fall over the next six months, was seen at 17.8%. Pessimism remained below its historical average of 30.5% for the ninth-consecutive week, as well.
I have updated our current positions so let’s go check the tape. We got some nice pin action with CSCO yesterday and I could have a new trade today.
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, $28.87, down $0.15)
T February 31 calls (T210219C00031000, $0.27, down $0.05)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Monday’s low reached $28.68 with upper support at $28.75-$28.50 getting breached but holding for the 2nd-straight session. Resistance is at $29-$29.25.
Cisco Systems (CSCO, $45.36, up $0.30)
CSCO February 48 calls (CSCO210219C00048000, $0.75, up $0.10)
Entry Price: $0.60 (12/28/2020)
Exit Target: $1.20
Stop Target: 62 cents (Stop Limit)
Action: Set an initial Stop Limit at 62 cents to start protecting profits and to avoid a loss.
Shares are showing signs of breakout out after testing a high of $45.95 with fresh and lower resistance at $45.75-$46 getting cleared but holding. Rising support is at $45-$44.75.
Boston Scientific (BSX, $36.44, down $0.31)
BSX February 31 puts (BSX210219P00031000, $0.20, unchanged)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Upper support at $36.25-$36 was tripped but held on the fade to $36.17 yesterday. Resistance at $36.75-$37 and the 200-day moving average.