MomentumOptions.com Pre-Market Update for 2/24/2021
Nasdaq/ S&P 500 Hold 50-Day Moving Averages/ Profit Alert (FOXA)
The stock market opened with heavy losses to start Tuesday’s action as Wall Street awaited comments from Fed Chair Powell’s policy updates before the Senate Banking Committee. Powell reaffirmed the Fed will keep its current accommodative policy posturing for the time being, while keeping benchmark rates near zero.
The major indexes rebounded off the opening selloff and gained strength in the final hour of trading to settle mixed. Tech and the small-caps lagged while volatility tested a key level of resistance before closing slightly lower.
The S&P 500 tested a late day high of 3,895 before ending at 3,881 (+0.1%). Key resistance at 3,900 was challenged but held. A close above this level would indicate a retest towards 3,925-3,950 with the latter representing the current record high.
The Dow settle at 31,537 (+0.05%) with the late day and fresh all-time peak hitting 31,653. Unchartered territory and lower resistance at 31,750-32,000 was challenged but held. A move above the latter would signal ongoing momemtum towards 32,250-32,500.
The Nasdaq closed at 13,465 (-0.5%) following the morning plummet to 13,003. Fresh and upper support at 13,100-13,000 was breached and held along with the 50-day moving average. A close below the 13,000 level would indicate further weakness towards 12,900-12,800.
The Russell 2000 finished at 2,231 (-0.9%) after trading to a first half low of 2,169. Prior and upper support at 2,175-2,150 was breached but held. A drop below the latter would signal a continued backtest towards 2,125-2,100 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the second time in three sessions despite surging to an intraday high of 27.01. Prior and lower resistance at 27-27.50 and the 50/ 200-day moving averages were all breached but levels that held.
Support is at 22.50-22.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) was up for the second-straight session after testing an intraday low of $311.60. Current and upper support at $312-$311.50 was breached but held. A close below the latter would signal further weakness towards $310-$309.50.
The late day rebound to $316.49 cleared lower resistance at $316-$316.50 but a level that held. A close above the latter and the recent all-time peak at $316.91 would indicate a possible run towards $318-$318.50.
RSI has flatlined with key support at 60 holding. A close below this level would suggest weakness towards 55-50. Resistance is at 70.
The Utilities Select Spider Fund (NYSE: XLU) snapped a two-session slide after trading to an intraday high of $60.92. Near-term and lower resistance at $60.50-$61 was recovered. A move above the latter would indicate a retest towards $62-$62.50 and the 50-day moving average.
Support is at $60-$59.50 and the 200-day moving average.
RSI is back in a uptrend with key resistance at 40 holding. A close above this level would suggest additional strength towards 45-50. Support is at 35.
I have updated our current positions so let’s go check the tape.
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Closed Momentum Options Trades for 2021: 7-1 (88%). 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, $12.59, up $0.09)
GE April 13 calls (GE210416C00013000, $0.62, up $0.02)
Entry Price: $0.60 (2/22/2021)
Exit Target: $1.20
Stop Target: None
Action: Current and lower resistance at $12.60-$12.80 was cleared but held by a penny on the run to $12.65. Support is at $$12.40-$12.20.
Aflac (AFL, $49.26, up $0.05)
AFL April 50 calls (AFL210416C00050000, $1.65, unchanged)
Entry Price: $1.05 (2/19/2021)
Exit Target: $2.10 (Limit Order on half)
Stop Target: $1.35 (Stop Limit)
Action: Set a Limit Order to exit half the trade at $2.10.
Shares tested an opening 52-week high of $49.93 with fresh and lower resistance at $49.75-$50 getting cleared but holding. Support is at $49-$48.75.
RSI remains above 70 and slightly overbought levels. The November peak hit 75 and where shares could stall after 5-straight up days. I would like to see a push past $50 today and why I set the Limit Order on half. If I decide to close the other half of the trade on a pop past $2.10, I will send out a text alert.
If shares fade from current levels, we have the Stop Limit in place to protect profits.
Fox Corporation (FOXA, $34.12, down $0.57)
FOXA March 34 calls (FOXA210319C00034000, $1.45, down $0.35)
Entry Price: $1.05 (2/12/2021)
Exit Target: $2.65
Stop Target: $1.35 (Stop Limit)
Action: The Stop Limit at $1.35 triggered on the stock’s fade to $33.65 yesterday.
While disappointed we couldn’t squeeze more out of this trade, we could get back in with April calls if shares can clear and hold the $35 level.
Pfizer (PFE, $33.91, down $0.35)
PFE March 36 calls (PFE210319C00036000, $0.20, down $0.05)
Entry Price: $0.55 (2/10/2021)
Exit Target: $1.10
Stop Target: None
Action: Tuesday’s low kissed $33.68 with fresh and upper support from early November at $33.75-$33.50 getting breached but holding. Lowered resistance is at $34-$34.25.
Shares remain in oversold territory with RSI now below 30 but that doesn’t mean there can’t be additional weakness. With the dividend at 4.5%, I’m hoping bargain hunters start to appear this week.