MomentumOptions.com Pre-Market Update for 1/21/2021
Record Highs Back in Play
The stock market tested fresh record highs on Wednesday as Joe Biden was sworn in as the 46th U.S. president. Biden wasted little time turning the page on the Trump era, signing 15 executive actions in the afternoon on issues including the coronavirus pandemic, the economy, and climate change.
Solid earnings results from the Financial and Tech sectors added to the bullish sentiment along with expectations for $2 trillion in stimulus from the Biden administration.
The Nasdaq tested an intraday peak of 13,486 while finishing at 13,457 (+2%). Unchartered territory and lower resistance at 13,400-13,500 was cleared and held. A move above the latter would suggest additional strength towards 13,600-13,700.
The S&P 500 traded to an afternoon high of 3,859 before ending at 3,851 (+1.4%). New and lower resistance at 3,850-3,875 was breached and held. A close above the latter would indicate additional momentum towards 3,900-3,925.
The Dow closed at 31,188 (+0.8%) while topping out at 31,235. Near-term and lower resistance at 31,200-31,400 was cleared but held. A pop above the latter would signal further upside towards 31,500-31,750.
The Russell 2000 tagged an opening high of 2,173 before settling at 2,160 (+0.4%). Fresh and lower resistance at 2,160-2,180 was cleared and held. A move above the latter would indicate additional strength towards 2,200-2,220.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the second-straight session with the late low tapping 21.37. Current and upper support at 21.50-21 was tripped but held. A move below the latter would signal further weakness towards 20.50-20.
Lowered resistance is 22.50-23 and the 50-day moving average.
The S&P 400 Mid Cap Index (NYSE: MID) was up for the second-straight session after testing an all-time intraday high of 2,470. Unchartered territory and lower resistance at 2,450-2,475 was cleared and held. A close above the latter would indicate further momentum towards 2,500-2,525.
Fresh support is at 2,425-2,400 followed by 2,375-2,350.
RSI (relative strength index) is in an uptrend with lower resistance at 70-75 getting cleared and holding. A move above the latter would signal a possible run towards 80 and the overbought peak from early October 2017. Support is at 65-60.
The Health Care Select Sector SPDR Fund (NYSE: XLV) extended its winning streak to three-straight sessions with the record peak hitting $118.69. New and lower resistance at $118.50-$119 was breached but held. A close above the latter would signal continued strength towards $120-$120.50.
Support is at $117.50-$117 with backup help at $116-$115.50.
RSI remains in an uptrend with key resistance at 70 getting recovered. Continued closes above this level would indicate additional upside towards 75-80 with the latter representing the monthly high. Support is at 65-60.
The AAII Sentiment Survey revealed bullish sentiment, expectations that stock prices will rise over the next six months, closed at 45.2% last week. Optimism has remained above its historical average of 38% for the 10th-straight week.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, was at 23.1% and below its historical average of 31.5%.
Bearish sentiment, expectations that stock prices will fall over the next six months, was seen at 31.7%. Pessimism was above its historical average of 30.5% for the first time in 10 weeks.
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, $31.06, up $0.53)
MGM February 34 calls (MGM210219C00034000, $0.85, up $0.15)
Entry Price: $0.80 (1/13/2021)
Exit Target: $1.60
Stop Target: None
Action: Yesterday’s peak reached $31.27 with lower resistance from earlier this month at $31.25-$31.50 getting cleared but holding. A close above $32 would be a super bullish signal. Support is at $30.75-$30.50.
AT&T (T, $28.96, up $0.01)
T February 31 calls (T210219C00031000, $0.25, flat)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Shares tagged a low of $28.74 with key support at $28.75 and the 50-day moving average getting breached but holding. Resistance is at $29-$29.25.
Boston Scientific (BSX, $36.66, up $0.39)
BSX February 31 puts (BSX210219P00031000, $0.10, down $0.05)
Entry Price: $0.85 (12/14/2020)
Exit Target: $1.70
Stop Target: None
Action: Shares traded to a high of $36.81 with lower resistance at $36.75-$37 getting cleared but holding. Support is at $36.25-$36.