Pre-Market Update for 2/5/2021

Record Highs Back in Play

8:00am (EST)

The stock market rallied to another round of fresh all-time highs, supported by expectations for more stimulus from Washington. Moderation in the spread of the virus and lockdowns, with progress on the administration of vaccines, helped underpin this week’s continued momentum.

The Russell 2000 closed on its record high of 2,202(+2%). Unchartered territory and lower resistance at 2,200-2,200 was cleared and held. A move above the latter would indicate additional upside towards 2,230-2,250.

The Nasdaq traded to a late day all-time peak of 13,778 while finishing at 13,777 (+1.2%). Key resistance at 13,800 was challenged but held. A close above this level would suggest a breakout towards 13,900-14,000.

The Dow settled at 31,055 (+1.1%) after reaching a high of 31,065 ahead of the closing bell. Near-term and lower resistance at 31,000-31,250 was recovered. A close above the latter and the January’s record peak at 31,272 would signal upside towards 31,500-31,750.

The S&P 500 tagged a high of 3,872 before ending at 3,871 (+1.1%). Key resistance at 3,875 was challenged but held. A close above this level would indicate additional strength towards 3,900-3,925.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the fourth-straight session with the late day low kissing 21.68. Prior and upper support at 22-21.50 was recovered. A close below the latter would indicate a retest towards 20.50-20 with the late November low at 19.51.

Lowered resistance is at 23-23.50 and the 50-day moving average.

The iShares Russell Growth 1000 ETF (NYSE: IWF) was up for the third time in four sessions after tagging a high of $250.46 just ahead of the closing bell. Current and lower resistance at $250-$250.50 was reclaimed. A close above the latter and the recent all-time peak at $250.70 would signal a possible breakout towards $252-$252.50.

Rising support is at $249-$248.50 followed by $247.50-$247.

RSI is curling higher after clearing and holding key resistance at 60. Continued closes above this level would suggest additional strength towards 65-70. Support is at 55-50.

The Real Estate Select Sector SPDR Fund (NYSE: XLRE) rebounded with the morning peak reaching $38.04. Key resistance at $38 was breached but held. A close above this level would suggest additional strength towards $38.25-$38.50 and the early November highs.

Support is at $37.50-$37.25.

RSI is back in a slight uptrend with multi-month resistance at 65 holding. A move above this level would indicate strength towards 70 and the high from early June. Support is at 60-55.

I have been flooded with emails about MGM so I’m profiling the trade again although its been closed in my personal account after shares closed below their 50-day moving average. Additionally, while I wanted to issue a New Trade yesterday, I wanted to see how today plays out as Friday’s have been weak in recent weeks. I could have one today if the bulls can reverse this trend so stay locked-and-loaded.

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, $32.50, up $0.92)

BAC March 32 calls (BAC210319C00032000, $1.55, up $0.40)

Entry Price: $0.65 (2/2/2021)
Exit Target: $1.30
Return: 123%
Stop Target: $1.30 (Stop Limit)

Action: Set an initial Stop Limit at $1.30 to protect a triple-digit profit and to avoid a loss.

Shares reached a peak of $32.53 with prior and lower resistance from early January at $32.50-$32.75 getting cleared and holding. Rising support is at $32-$31.75.

MGM Resorts International (MGM, $32.58, up $1.59)

MGM February 34 calls (MGM210219C00034000, $0.95, up $0.40)

Entry Price: $0.80 (1/13/2021)
Exit Target: $1.60
Return: 19%
Stop Target: None

Action: Shares traded to a multi-multi of $32.54 with key resistance at $32.50 getting cleared but holding. New support is a $32.25-$32.

AT&T (T, $28.89, up $0.38)

T February 31 calls (T210219C00031000, $0.10, unchanged)

Entry Price: $0.40 (1/6/2021)
Exit Target: $0.80
Return: -75%
Stop Target: None

Action: Lower resistance at $28.75-$29 was cleared and held on the run to $28.89. Support at $28.50-$28.25 and the 200-day moving average.