MomentumOptions.com Pre-Market Update for 2/16/2021
Volatility Closes Below 20
The stock market struggled for direction on Friday following weaker-than-expected economic news before a late day upswing lifted all of the major indexes into positive territory. The gains helped the major indexes close higher for the second-straight week with volatility closing below a key level of support.
The Nasdaq showed the most strength for the second-straight session after testing a high of 14,102 while ending at 14,095 (+0.5%). Key resistance at 14,100 was cleared but held with a close above this level and the all-time peak at 14,109 signaling momentum towards 14,200-14,350.
The S&P 500 traded to a fresh all-time peak of 3,937 before closing at 3,934 (+0.5%). Lower resistance at 3,925-3,950 was cleared and held. A move above the latter would indicate additional upside towards 3,975-4,000.
The Russell 2000 reached a midday high of 2,293 before settling at 2,289 (+0.2%). Near-term and lower resistance at 2,300-2,325 was tripped but held. A close above the latter and last Wednesday’s record high of 2,318 would suggest a breakout towards 2,335-2,360. Below is a chart of the IWM.
The Dow ended at 31,458 (+0.1%) after trading to a high of 31,475 ahead of the closing bell. Current and lower resistance at 31,500-31,750 was challenged but held. A close above the latter and last week’s all-time peak at 31,543 would indicate a run towards the 32,000 level.
For the week, Nasdaq soared 1.7%; the Russell 2000 rallied 1.6%; the S&P 500 jumped 1.2%; and the Dow was up 1%.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was also down for the second-straight session after tapping a low of 19.95 ahead of the closing bell. Near-term and upper support at 20-19.50 was recovered. A close below the latter and the November low at 19.51 would be an ongoing bullish signal for the market.
Lowered resistance is at 21.50-22.
The SPDR S&P 500 ETF (NYSE: SPY) was up for the second-straight session after trading to an late day and all-time high of $392.90. Unchartered territory and lower resistance at $392.50-$393 was cleared and held. A close above the latter would indicate additional momentum towards $394.50-$395.
Support is at $391.50-$391 followed by $390-$389.50.
RSI is curling higher with lower resistance at 65-70 getting cleared and holding. A close above the latter would suggest additional strength towards 75-80 and levels from late August/ early September. Support is at 60.
The Health Care Select Sector SPDR Fund (NYSE: XLV) extended its winning streak to seven-straight sessions with the intraday peak reaching $117.41. Current and lower resistance at $117-$117.50 was recovered. A close above the latter would signal continued strength towards $118-$118.50 with the current record high at $118.99.
Support is at $116-$115.50 with backup help at $114.50-$114.
RSI remains in an uptrend with lower resistance at 55-60 getting recovered. A close above the latter would indicate additional upside towards 65-70. Support is at 50-45.
With the VIX closing below 20 for the first time since last February (21st), it remains to be seen of this is a bullish development for the market. Despite making all-time highs for months, the index has failed to hold this level into the closing bell, while flirting with the 19 level intraday. Until now. Typically, when the market is making all-time highs, volatility trades in the lows teens, and even single-digits.
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.
Fox Corporation (FOXA, $32.59, up $0.59)
FOXA March 34 calls (FOXA210319C00034000, $1.05, up $0.15)
Entry Price: $1.05 (2/12/2021)
Exit Target: $2.10
Stop Target: None
Action: Friday’s peak reached $32.83 with lower resistance at $32.75-$33 getting cleared but holding. A close above the latter would be a very bullish signal for a retest towards $34-$35. Support is at $32-$31.75.
Pfizer (PFE, $34.72, up $0.29)
PFE March 36 calls (PFE210319C00036000, $0.55, up $0.05)
Entry Price: $0.55 (2/10/2021)
Exit Target: $1.10
Stop Target: None
Action: Shares tested a high of $34.95 with lower resistance at $34.75-$35 and the 200-day moving average getting cleared but holding. Support is at $34.25-$34.
iShares MSCI Emerging Markets ETF (EEM, $57.80, up $0.05)
EEM March 58 calls (EEM210319C00058000, $1.30, unchanged)
Entry Price: $0.65 (2/5/2021)
Exit Target: $1.85 (closed half at $1.40 on 2/11/2021)
Stop Target: $1.00 (Stop Limit)
Action: Friday’s high reached $57.97 with current and lower resistance at $58-$58.25 getting challenged but holding. Support is at $57.25-$57.