MomentumOptions.com Pre-Market Update for 2/11/2021

Bulls Take a Breather

8:00am (EST)

The stock market closed mostly lower on Wednesday with the S&P 500 slipping for the second-straight session. The Dow closed in positive territory while both the rest of the major indexes ended lower after rising to fresh record highs shortly after the opening bell. Volatility swung to both sides of the pendulum after pushing longer-term support while testing near-term resistance.

The Dow settled slightly higher at 31,437 (+0.2%) after trading to a record peak of 31,511. Fresh and lower resistance at 31,500-31,750 was breached but held. A close above the latter would suggest additional momentum towards the 32,000 level.

The S&P 500 tapped a new all-time high of 3,931 before ending slightly lower at 3,909 (-0.03%) while holding the 3,900 level. Key resistance at 3,925 was cleared but held. A close above this level would indicate ongoing strength towards 3,950-3,975.

The Nasdaq traded to an all-time morning peak of 14,109 while finishing at 13,972 (-0.3%) and back below the 14,000 level. Unchartered territory and lower resistance at 14,100-14,250 was tripped but held.

The Russell 2000 tested an opening record high of 2,318 before closing in the red at 2,282 (-0.7%). Fresh and lower resistance at 2,310-2,330 was cleared but held. A move above the latter would indicate additional strength towards 2,340-2,360.

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the third-straight session despite tapping an opening low of 19.69. Key support at 20 was breached but held. A close below this level and the late November low at 19.51 would be a bullish signal for continued upside in the market.

The bounce to 23.85 afterwards breached but held upper resistance at 23-23.50 and the 50-day moving average. A close above the 25 level would signal a retest towards 26.50-27 and the 200-day moving average.

The Spider Small-Cap 600 ETF (NYSE: SLY) had its seven-session winning streak snapped despite tagging an all-time intraday high of $92.91. Uncharted territory and lower resistance at $92-$92.50 was cleared but held. A close above the latter would suggest ongoing momentum towards $93.50-$94.

Rising support is at $91-$90.50 followed by $89.50-$89.

RSI (relative strength indicator) is showing signs of rolling over with key resistance at 75 holding. A close above this level would indicate additional strength towards 80 and the overbought high from early January. Support is at 70-65.

The Dow Jones Transportation Average (NYSE: TRAN) was down for the first time in eight sessions after trading to a high of 13,041. Key resistance at 13,000 was breached but held. Continued closes above this level would indicate a retest towards 13,100-13,200 with the all-time high just north of the latter at 13,208.

Current support is at 12,900-12,800 on the lower close followed by 12,700-12,600 and the 50-day moving average.

RSI has leveled out with key resistance at 60 holding. A close above this level would signal additional strength towards 65-70 and the latter representing the January top. Support is at 55-50.

I have updated our current trades so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 4-1 (80%). 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.

Pfizer (PFE, $34.74, down $0.23)

PFE March 36 calls (PFE210319C00036000, $0.55, down $0.08)

Entry Price: $0.55 (2/10/2021)
Exit Target: $1.10
Return: 0%
Stop Target: None

Action: Shares tested a low of $34.70 with upper support at $34.75-$34.50 and the 200-day moving average failing to hold. Resistance is at $35-$35.25.

iShares MSCI Emerging Markets ETF (EEM, $57.14, up $0.20)

EEM March 58 calls (EEM210319C00058000, $1.10, up $0.15)

Entry Price: $0.65 (2/5/2021)
Exit Target: $1.30
Return: 69%
Stop Target: 80 cents (Stop Limit)

Action: Set a Stop Limit at 80 cents to protect profits and to avoid a loss.

Wednesday’s fresh 52-week high reached $57.53 with new and lower resistance at $57.50-$57.75 getting cleared but holding. Support is at $57-$56.75.