MomentumOptions.com Pre-Market Update for 2/23/2021
Blue-Chips Stay Strong, Tech Tumbles
The stock market was choppy on Monday following a lower open as worries over rising rates and expectations of higher inflation weighed on sentiment. Specifically, the yield on the benchmark 10-year Treasury note briefly traded above 1.39% to reach a fresh one-year high.
Tech underperformed while the blue-chips outperformed with volatility rising for the fourth time in five sessions.
The Dow settled at 31,521 (0.1%) after trading to a record peak of 31,653. Lower resistance at 31,500-31,750 was cleared and held. A close above the latter would indicate additional momentum towards 32,000-32,250.
The S&P 500 closed at 3,876 (-0.8%) following the morning fade to 3,874. Near-term and upper support at 3,875-3,850 was breached but held. A drop below the latter would suggest additional weakness towards 3,825-3,800.
The Russell 2000 finished at 2,251 (-0.7%) after trading to an opening low of 2,247. Current and upper support at 2,250-2,225 was tripped but held. A close below the latter would signal a continued backtest towards 2,200-2,175.
The Nasdaq ended at 13,533 (-2.5%) following the late day tumble to 13,530. Fresh and upper support at 13,600-13,500 failed to hold. A close below the latter would indicate further weakness towards 13,300-13,200 and the 50-day moving average.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the third-straight session following the intraday pullback to $141.72. Fresh and upper support at $142-$141.50 was breached but held. A move below the latter would indicate additional weakness towards $140.50-$140.
Lowered resistance is at $143.50-$144 followed by $145-$145.50.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the fourth time in five sessions session after testing a high of 25.09 while holding its 50-day moving average into the closing bell. Prior and lower resistance from late January at 25-25.50 was breached but held. A close above the latter would suggest upside towards 26-26.50 and the 200-day moving average
Rising support is at 22.50-22 followed by 21-20.50.
The Spider Small-Cap 600 ETF (NYSE: SLY) was up for the second-straight session with the intraday high reaching $92.92. Near-term and lower resistance at $92.50-$93 was cleared but held. A close above the latter and the current all-time peak at $93.14 would suggest a possible breakout towards $94.50-$95.
Rising support is at $91.50-$91 followed by $90-$89.50.
RSI (relative strength indicator) is in an uptrend with lower resistance at 65-70 getting cleared and holding. A close above the latter would indicate additional strength towards 75 and the slightly overbought high from earlier this month. Key support is at 60.
The Communication Services Select Sector SPDR (NYSE: XLC) extended its losing streak to three-straight sessions following the morning fade to $71.74. Fresh and upper support is at $72-$71.50 was tripped but held. A close below the latter would suggest further weakness towards $70.50-$70.
Resistance is at $73-$73.50 with the current record peak at $73.85.
RSI is trying to flatten out with key support 60 holding. A drop below this level would indicate additional weakness towards 55-50 with the latter representing the late January low. Resistance is at 65-70.
I have updated our current positions with a number of trade instructions so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 6-1 (86%). 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.
General Electric (GE, $12.50, up $0.48)
GE April 13 calls (GE210416C00013000, $0.60, up $0.22)
Entry Price: $0.60 (2/22/2021)
Exit Target: $1.20
Stop Target: None
Action: Fresh and lower resistance at $12.50-$12.70 was cleared but held on the surge to the latter. New support is at $$12.20-$12.
Volume was heavy as over 11,000 contracts traded with over 3,500 and 4,100 traded in the 14 and 15 strikes. This is signaling bullish traders are expecting shares to make a run towards $15 by mid-April.
Aflac (AFL, $49.21, up $1.13)
AFL April 50 calls (AFL210416C00050000, $1.65, up $0.45)
Entry Price: $1.05 (2/19/2021)
Exit Target: $2.10
Stop Target: $1.35 (Stop Limit)
Action: Set an initial Stop Limit at $1.35 to start protecting profits and to avoid a loss.
Shares tested an intraday high of $49.70 with fresh and lower resistance at $49.50-$49.75 getting cleared and holding. Fresh and rising support is at $49-$48.75.
Fox Corporation (FOXA, $34.69, up $0.91)
FOXA March 34 calls (FOXA210319C00034000, $1.80, up $0.50)
Entry Price: $1.05 (2/12/2021)
Exit Target: $2.10, raise to $2.65
Stop Target: $1.35 (Stop Limit)
Action: Raise the Exit Target from $2.10 to $2.65. Set an initial Stop Limit at $1.35 to start protecting profits and to avoid a loss.
Monday’s peak reached $35.33 with the options tapping a high of $2.15. Prior and lower resistance from late January at $35.25-$35.50 getting cleared but holding. New support is at $34.25-$34.
Pfizer (PFE, $34.26, down $0.18)
PFE March 36 calls (PFE210319C00036000, $0.25, down $0.05)
Entry Price: $0.55 (2/10/2021)
Exit Target: $1.10
Stop Target: None
Action: Monday’s low tapped $34.04 with upper support at $34.25-$34 getting breached but holding. New resistance is at $34.50-$34.75 and the 200-day moving average.