MomentumOptions.com Pre-Market Update for 1/19/2021
Bears Get Weekly Win
The stock market was weak throughout Friday’s session as Wall Street “sold the new” following details of President-elect Biden’s $1.9 trillion “American Rescue Plan.” Despite control of the executive and legislative branches of government, there is to be some uncertainty over the prospect that the full package will make it through Congress.
The losses capped an overall down week for the major indexes, with the small-caps escaping the damage as traders took profits and of the three-day weekend as the market was closed on Monday.
The Russell 2000 tested a opening low of 2,102 before ending at 2,123 (-1.5%). Near-term and upper support at 2,100-2,080 was challenged but held. A close below the latter would signal a deeper backtest towards 2,070-2,050.
The Nasdaq settled at 12,998 (-0.9%) following the morning fade to 12,949. Current and upper support at 13,000-12,900 was breached and failed to held. A move below the latter would signal a further retest towards 12,800-12,700.
The S&P 500 finished at 3,768 (-0.7%) with the first half low tapping 3,749. Near-term and upper support at 3,750-3,725 was tripped but held. A close below the latter would suggest additional weakness towards 3,725-3,700.
The Dow closed at 30,814 (-0.6%) after tagging a low of 30,612. New and upper support 30,750-30,500 was breached but held. A move below the latter would indicate further weakness towards 30,250-30,000.
For the week, the Nasdaq and the S&P 500 sank -1.5%. The Dow was down -0.9% while the Russell 2000 gained 1.5%.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the second-straight session with the morning peak hitting 25.80. Prior and lower resistance from the start of the month at 25.50-26 was tripped but held. A close above the latter would likely suggest a retest towards 28-28.50 and the 200-day moving average.
New support is at 23.50-23 and the 50-day moving average.
The Wilshire 5000 Composite Index (NYSE: WLSH) was down for the second-straight session following the intraday pullback to 39,766. Current and upper support is at 40,000-39,750 failed to hold. A move below the latter would indicate a continued weakness towards 39,500-39,250.
Resistance is at 40,250-40,500 with Thursday’s all-time peak at 40,570.
RSI (relative strength index) is in a downtrend with upper support at 60-55 holding. A close below the latter would indicate additional weakness towards 50-45 and levels from early November. Resistance is at 65-70.
The Dow Jones Transportation Average (NYSE: TRAN) was down for the second time in three sessions following the intraday pullback to 12,836. Fresh and upper support at 13,000-12,800 was breached and failed to hold. A move below the latter would indicate additional weakness towards 12,700-12,500 and the 50-day moving average.
Current resistance is at 13,100-13,300 with Thursday’s record top at 13,208.
RSI is in a downtrend after failing to hold key support at 60. Continued closes below this level would signal additional weakness towards 55-50. Resistance is at 65-70.
The “official” start of the fourth-quarter earnings season was highlighted with earnings beats from Citigroup Inc. (Nasdaq: C), JPMorgan Chase & Co. (Nasdaq: JPM), PNC Financial Services Group, Inc. (NYSE: PNC) and Wells Fargo & Co. (NYSE: WFC) on Friday. However, Citigroup and Wells Fargo missed revenue estimates with all of the aforementioned stocks closing lower for the session.
With the market closed on Monday, traders will be looking ahead to earnings from additional companies in the Financial sector with Bank of America Corp. (NYSE; BAC), Charles Schwab Corp. (NYSE: SCHW) and Goldman Sachs Group, Inc. (NYSE: GS) announcing ahead of the opening bell on Tuesday.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 2-0 (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.
MGM Resorts International (MGM, $29.80, down $0.48)
MGM February 34 calls (MGM210219C00034000, $0.65, down $0.15)
Entry Price: $0.80 (1/13/2021)
Exit Target: $1.60
Stop Target: None
Action: Shares tested a low of $29.34 with upper support at $29.50-$29.25 getting breached but holding. Resistance is at $30-$30.25.
AT&T (T, $29.17, down $0.12)
T February 31 calls (T210219C00031000, $0.30, down $0.05)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Friday’s low tapped $28.82 with upper support at $29-$28.75 getting breached but holding. Resistance is at $29.25-$29.50.
Boston Scientific (BSX, $36.33, up $0.17)
BSX February 31 puts (BSX210219P00031000, $0.15, down $0.05)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Lower resistance at $36.50-$36.75 was breached but held on the run to $36.57. Support remains at $36-$35.75.