MomentumOptions.com Pre-Market Update for 2/25/2021
Bulls Regain Momentum
The stock market rebounded off the opening losses and another pop Treasury yields to close higher on Wednesday after Federal Reserve Chairman Jerome Powell said the rise in the 10-year Treasury was a statement of confidence on the part of markets that the US will have a robust and ultimately complete recovery. He also reaffirmed that he believes any inflation in the coming months will prove transitory.
News that FDA members have determined ahead of a review meeting on Friday that they believe Johnson & Johnson’s (NYSE: JNJ) COVID-19 vaccine candidate to be both safe and effective also help sentiment. If approved, it would be the third drug to combat the coronavirus.
The Russell 2000 showed the most strength after testing a late day high of 2,286 before settling at 2,284 (+2.4%). Near-term and lower resistance at 2,275-2,300 was recovered. A close above the latter and the record high of 2,318 would suggest a breakout towards 2,325-2,350. Below is a chart of the IWM.
The Dow ended at 31,961 (+1.4%) after tapping a fresh lifetime high of 32,009 ahead of the closing bell. Unchartered territory and lower resistance at 31,750-32,000 was cleared and held. A close above the latter and last would indicate ongoing momentum towards the 32,250-32,500.
The S&P 500 traded to a high of 3,928 before closing at 3,925 (+1.1%). Lower resistance at 3,925-3,950 was cleared and held. A pop above the latter and current record peak would indicate additional upside towards 3,975-4,000.
The Nasdaq tagged an intraday high of 13,607 while ending at 13,597 (+1%). Near-term and lower resistance at 13,600-13,700 was cleared but held. A close above the latter would signal a retest towards 13,800-13,900.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session following the intraday fade to 21.35. Prior and upper support at 21.50-21 was recovered. A close below the latter would signal a retest towards 20-19.50.
Resistance is at 23.50-24 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) was up for the second-straight session after trading to an afternoon high of $392.23. Near-term and lower resistance at $392-$392.50 was cleared but held. A close above the latter would indicate upside towards $393.50-$394 with the current all-time peak at $394.17.
Support is at $387.50-$387 followed by $385.50-$385.
RSI is in an uptrend with lower resistance at 60-65 getting cleared and holding. A close above the latter would suggest additional strength towards 70 and the January peak. Support is at 55-50.
The Materials Select Sector Spider Fund (NYSE: XLB) extended its winning streak to four-straight sessions with the intraday high tapping $76.58. Near-term and lower resistance at $76.50-$77 was breached but held. A close above the latter would indicate a retest towards $77.50-$78 with the recent all-time high at $77.77.
Support is at $75-$74.50 followed by $73.50-$73 and the 50-day moving average.
RSI is in an uptrend with lower resistance at 65-70 getting breached but holding. A close above the latter would suggest further upside towards 75 and the January high. Key support is at 60.
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, $13.12, up $0.53)
GE April 13 calls (GE210416C00013000, $0.90, up $0.28)
Entry Price: $0.60 (2/22/2021)
Exit Target: $1.20
Stop Target: 70 cents (Stop Limit)
Action: Set an initial Stop Limit at 70 cents to start protecting profits and to avoid a loss.
Shares zoomed to a fresh 52-week high of $13.35 with the options peaking at $1.04. Longer-term and lower resistance from October 2018 at $13.30-$13.50 was cleared but held. Support is at $13.10-$12.90.
The 5-year chart is showing a possible run towards $15-$15.50 on continued momentum. RSI at 74 is approaching slightly overbought levels but I’m hoping there is continued momentum this week towards the 80 level. From there we can lock-in some profits and let the rest ride before a possible pullback.
Aflac (AFL, $49.85, up $0.59)
AFL April 50 calls (AFL210416C00050000, $1.95, up $0.30)
Entry Price: $1.05 (2/19/2021)
Exit Target: $2.10, raise to $2.50 (Limit Order on half)
Stop Target: $1.35, raise to $1.70 (Stop Limit)
Action: Raise the Limit Order on half the trade at $2.10 to $2.50. Yesterday’s high on the calls tapped $2. Raise the Stop Limit from $1.35 to $1.70.
On that note, I could send out a Profit Alert if the options clear $2.10 but don’t tag $2.50 so stay locked-and-loaded throughout the day in case I take action.
Shares tested an afternoon and 52-week high of $49.97 with longer-term and lower resistance at $50-$50.50 getting challenged but holding. Support is at $49.25-$49.
I would like to a possible run past $50 today but the new Stop Limit will further protect profits if shares fade from here.
Pfizer (PFE, $33.75, down $0.16)
PFE March 36 calls (PFE210319C00036000, $0.20, down $0.02)
Entry Price: $0.55 (2/10/2021)
Exit Target: $1.10
Stop Target: None
Action: Thursday’s low tapped $33.67 with current and upper support from early November at $33.75-$33.50 getting breached but holding. Resistance is at $34-$34.25.
I would like to say shares are nearing a bottom but RSI reached 20 last March before bargain hunting started. These options expire in three weeks so we could cut losses to save the remaining premium if shares can’t recover $34 by Friday’s closing bell.