MomentumOptions.com Pre-Market Update for 2/2/2021
Bulls Bounce Back on Renewed Stimulus Chatter/ New Trade (BAC)
The stock market recovered some of last week’s losses after rebounding on Monday with all of the major sectors showing strength. The rally was helped following news of renewed talks in DC on a relief package. The GOP has proposed a $618 billion stimulus bill, which includes $300 per week unemployment benefits through June and $1,000 direct payments, versus Biden’s plan for $1.9 trillion and $1,400 in stimulus checks.
The Nasdaq tested an intraday peak of 13,431 while finishing at 13,403 (+2.6%). Prior 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 with the recent all-time high at 13,728.
The Russell 2000 tagged an afternoon high of 2,130 before settling at 2,126 (+2.5%). Near-term and lower resistance at 2,120-2,140 was recovered. A pop above the latter would indicate additional strength towards 2,150-2,170.
The S&P 500 traded to an second half high of 3,784 before ending at 3,773 (+1.6%). Current and lower resistance at 3,775-3,800 was breached but held. A close above the latter would signal a retest towards 3,825-3,850.
The Dow closed at 30,211 (+0.8%) while topping out at 30,335. Near-term and lower resistance at 30,250-30,500 was cleared but held. A move above the latter would suggest further upside towards 30,750-31,000.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) retreated following the intraday fade to 29.03. Key support at 30 was breached but held. Continued closes back below this level would signal additional weakness towards 28-27.50 and the 200-day moving average.
Resistance is at 32-32.50 followed by 33.50-34.
The Spider Small-Cap 600 ETF (NYSE: SLY) snapped a four-session losing streak with the intraday high reaching $86.25. Near-term and lower resistance at $86-$86.50 was cleared and held. A close above the latter would likely suggest additional upside towards $87.50-$88.
Shaky support is at $84.50-$84 followed by $82.50-$82.
RSI (relative strength indicator) is back in an uptrend with key resistance at 60 holding. A close above this level would indicate additional strength towards 65-70. Support is at 55-50.
The Financial Select Sector Spider Fund (NYSE: XLF) was up for just the second-time in nine sessions after trading to a second half peak of $29.37. Fresh and lower resistance at $29.25-$29.50 and the 50-day moving average were reclaimed. A close above the latter would indicate a continued bounce towards $29.75-$30.
Support is at $29-$28.75 with a close below the latter signaling weakness towards $28.50-$28.25 and levels from mid-December.
RSI is back in a slight uptrend with lower resistance at 45-50 getting recovered. A move above the latter would indicate a run towards 55-60. Key support is at 40 and a level that has been holding since late October.
I have a New Trade this morning so let’s get on it.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 3-1 (75%). 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.
Bank of America (BAC, $29.96, up $0.31)
Buy to Open BAC March 32 calls (BAC210319C00032000, $0.65, up $0.05)
Action: I like these call options at current levels and you can use a Limit Order up to 75 cents to get the best fills. These are the regular BAC March 32 calls that expire on March 19th, 2021.
AT&T (T, $28.65, up $0.02)
T February 31 calls (T210219C00031000, $0.15, unchanged)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Lower resistance at $28.75-$29 and the 50-day moving average were cleared but levels that held. Support is at $28.50-$28.25 and the 200-day moving average.
Boston Scientific (BSX, $35.95, up $0.51)
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: Shares tested a low of $35.04 with prior and upper support at $35.25-$35 getting breached but holding. Lowered resistance is at $36-$36.25.