MomentumOptions.com Pre-Market Update for 2/3/2021
Bulls Show Continued Momentum
The stock market closed higher for the second-straight session as ongoing stimulus hopes and improved progress on vaccines helped bullish sentiment. Meanwhile, shares of heavily shorts stocks, such as GameStop and AMC Entertainment, suffered heavy losses as the euphoria continues to fade.
The Dow closed at 30,687 (+1.6%) after tapping an intraday peak of 30,840. Near-term and lower resistance at 30,750-31,000 was cleared but held on the close back above the 50-day moving average. A close above the latter would signal a retest towards 31,250-31,500 with January’s record peak at 31,272.
The Nasdaq tested an intraday peak of 13,652 while finishing at 13,612 (+1.6%). Lower resistance at 13,600-13,700 was recovered. A move above the latter would suggest another run towards 13,700-13,800 with the current lifetime high at 13,728.
The S&P 500 traded to an afternoon high of 3,843 before ending at 3,826 (+1.4%). Current and lower resistance at 3,825-3,850 was cleared and held. A close above the latter would indicate additional strength towards 3,875-3,900 with the recent all-time high at 3,870.
The Russell 2000 tagged an intraday high of 2,154 before settling at 2,151 (+1.2%). Near-term and lower resistance at 2,140-2,160 was reclaimed. A close above the latter would indicate additional upside towards 2,170-2,190 with the all-time high at 2,194.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session after testing a low of 25.31. Fresh and upper support at 25.50-25 was breached but held. A close back below the latter would signal a retest towards 24-23.50 and the 50-day moving average.
New resistance is at 27-27.50 and the 200-day moving average.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) was up for the second-straight session following the midday run to $308.43. Near-term and lower resistance at $308-$308.50 was cleared but held. A close above the latter would signal further strength towards the $309.50-$310 area.
Support is at $305-$304.50 followed by $303.50-$303 and the 50-day moving average.
RSI is in an uptrend after clearing key resistance at 50. Continued closes above this level would suggest strength towards 55-60. Support is at 45-40.
The Industrials Select Sector SPDR Fund (NYSE: XLI) extended its winning streak to two-straight sessions with the high hitting $87.86. Near-term and lower resistance at $87.50-$88 was cleared but held. A close above the latter and the 50-day moving average would signal additional strength towards $89.50-$90.
Rising support is at $86.50-$86 followed by $85-$84.50.
RSI is in an uptrend with key resistance at 50 holding. A close above this level keeps upside towards 55-60 in play. 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: 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, $31.03, up $1.07)
BAC March 32 calls (BAC210319C00032000, $1.00, up $0.35)
Entry Price: $0.65 (2/2/2021)
Exit Target: $1.30
Stop Target: None
Action: Shares broke out to a high of $31.20 with prior and lower resistance at $31-$31.25 getting cleared and holding. New support is at $30.75-$30.50.
AT&T (T, $28.54, down $0.11)
T February 31 calls (T210219C00031000, $0.15, unchanged)
Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Stop Target: None
Action: Upper support at $28.50-$28.25 and the 200-day moving average were breached but levels that held. Resistance remains at $28.75-$29 and the 50-day moving average.
Boston Scientific (BSX, $36.64, up $0.69)
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: Earnings are due out this morning. The company has already pre-announced so if there isn’t a big selloff on the open we will likely close the position. This is our only remaining position from 2020.