MomentumOptions.com Pre-Market Update for 1/29/2021
Bulls Rebound on Upbeat Economic News
The stock market recovered the prior day’s steep declines after new economic data showed a bigger dip in new unemployment claims than expected. The S&P 500 and Dow showed the most strength on Thursday after logging their biggest drops since October on Wednesday.
The S&P 500 traded to an afternoon high of 3,830 before ending at 3,787 (+1%). Current and lower resistance at 3,800-3,825 was breached but held. A close above the latter would indicate additional strength towards 3,850-3,875 with the recent all-time high at 3,870.
The Dow closed at 30,603 (+1%) while topping out at 30,951. Near-term and lower resistance at 30,750-31,000 was cleared but held. A pop above the latter would signal a retest upside towards 31,250-31,500 with last week’s record peak at 31,272.
The Nasdaq tested an intraday peak of 13,507 while finishing at 13,337 (+0.5%). Lower resistance at 13,500-13,600 was tripped but held. A move above the latter would suggest another run towards 13,700-13,800 with the current lifetime high at 13,728.
The Russell 2000 tagged an opening high of 2,138 before settling at 2,106 (-0.1%). Near-term and lower resistance at 2,120-2,140 was cleared but held. A close above the latter would indicate additional upside towards 2,150-2,170.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) retreated following the intraday pullback to 27.39. Near-term and upper support at 27.50-27 was tripped but held. A close below the latter and the 200-day moving average would be a slightly bullish signal for the market with additional downside hurdles at 25.50-25.
Resistance is at 32.50-33 followed by 35.50-36.
The Invesco QQQ Trust (Nasdaq: QQQ) rebounded with the intraday high reaching $326.42. Current and lower resistance at $326-$326.50 was breached but held. A close above the latter would indicate a retest towards $327.50-$328.
Support is at $320-$319.50 followed by $318-$317.50.
RSI (relative strength indicator) is back in a slight uptrend with key resistance at 60 getting challenged but holding. A close above this level would signal additional strength towards 65-70 with the latter holding since early December. Support is at 55-50.
The Utilities Select Spider Fund (NYSE: XLU) snapped a two-session slide after trading to an intraday high reaching $63.44 while settling back above the 50-day moving average. Near-term and lower resistance at $63-$63.50 was cleared but held. A move above the latter would indicate a retest towards $64-$64.50.
Support is at $62-$61.50.
RSI is back in a uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level would suggest additional strength towards 55-60 with the latter representing the monthly peak. Support is at 45-40.
I have updated our current trades so let’s go check the tape.
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.
Western Union (WU, $22.92, down $0.23)
WU March 23 calls (WU210319C00023000, $1.25, down $0.20)
Entry Price: $0.65 (1/21/2021)
Exit Target: $2 (closed half at $1.50 on 1/27/2021)
Stop Target: $1.10 (Stop Limit)
Action: Shares traded a high of $23.83 for the second-straight before closing in the red. Lower resistance at $23.75-$24 was cleared but held. Upper support at $23-$22.75 failed to hold on the fade to $22.92 ahead of the closing bell.
This is signaling shares could be topping out but will lock in our first triple-digit winner for 2021 if this is the case.
MGM Resorts International (MGM, $29.56, up $1.20)
MGM February 34 calls (MGM210219C00034000, $0.55, up $0.10)
Entry Price: $0.80 (1/13/2021)
Exit Target: $1.60
Stop Target: None
Action: Thursday’s high reached $29.91 with near-term and lower resistance at $29.75-$30 getting cleared and holding. Support is at $29.25-$29.
AT&T (T, $28.80, down $0.34)
T February 31 calls (T210219C00031000, $0.20, down $0.10)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Thursday’s low kissed $28.78 with upper support is at $29-$28.75 and the 50-day moving average failing to hold. Resistance is at $29.25-$29.50.
Boston Scientific (BSX, $36.34, up $0.52)
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: Yesterday’s high reached $36.57 with lower resistance at $36.50-$36.75 getting breached but holding. Support is at $36-$35.75.