MomentumOptions.com Pre-Market Update for 3/2/2021
Nasdaq Recovers 50-Day Moving Average
The stock market posted strong gains on Monday as Treasury yields fell while the approval of another coronavirus vaccine boosted bullish sentiment. Specifically, the Food and Drug Administration panel issued an emergency use authorization for Johnson & Johnson’s (JNJ) single-dose vaccine, and now the third shot approved in the United States.
Meanwhile, the yield on the 10-year note declined near the 1.45% area after surging to a one-year high north of 1.6% last week. The gains helped ease volatility which closed back below a key level of support.
The Russell 2000 showed the most strength after testing an afternoon high of 2,273 before settling at 2,279 (+3.4%). Near-term and lower resistance at 2,275-2,300 was recovered. A close above the latter and the recent record high at 2,318 would suggest a breakout towards 2,325-2,350. Below is a chart of the IWM.
The Nasdaq tagged an intraday high of 13,596 while ending at 13,588 (+3%) and closing back above its 50-day moving average. Current and lower resistance at 13,500-13,625 was cleared and held. A move above the latter would signal ongoing strength towards 13,675-13,800.
The S&P 500 traded to a high of 3,914 before closing at 3,901 (+2.4%). Prior and lower resistance at 3,900-3,925 was tripped and held. A pop above the latter would indicate additional upside towards 3,950-3,975 with the former representing the current lifetime top.
The Dow ended at 31,668 (+2%) after tapping a second half high of 31,668. Lower resistance at 31,500-31,750 was breached and held. A close above the latter would suggest a retest towards 32,000-32,250 with the recent all-time peak at 32,009.
Shares of Morphic Holding (MORF) zoomed nearly 135% after the company announced positive interim results concerning its Phase 1 clinical trial of a drug in development for the treatment of inflammatory bowel disease.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session and for the fourth time in five after plunging to a low of 23.17. Prior and upper support at 23.50-23 was recovered on the close back below the 50-day moving average. A move below the latter would signal a retest towards 22-21.50.
Resistance is at 25.50-26 and the 200-day moving average.
The Wilshire 5000 Composite Index (NYSE: WLSH) snapped a two-session slide after testing an intraday high of 41,655. Current and lower resistance at 41,500-41,750 was recovered. A move above the latter would indicate a retest towards 42,000-42,250 with the recent all-time peak at 42,290.
Support at 41,250-41,000 followed by 40,750-40,500 and the 50-day moving average.
RSI (relative strength index) is back in an uptrend with lower resistance at 55-60 getting cleared and holding. A close above the latter would signal strength towards 65-70 and the latter representing the 2021 high. Support is at 50-45.
The Industrials Select Sector SPDR Fund (NYSE: XLI) rebounded with the afternoon high hitting $93.62. Near-term and lower resistance at $93.50-$94 was breached but held. A close above the latter and last week’s all-time peak at $93.66 would signal a breakout towards $95-$95.50.
Support is at $92-$91.50 followed by $90.50-$90.
RSI is in an uptrend with key resistance at 60 getting cleared and holding. Continued closes above this level keeps upside towards 65-70 in play. Support is at 55-50.
The percentage of Nasdaq 100 stocks trading above the 50-day moving closed at 54.90%, up 9.81%. Near-term and lower resistance at 52.5%-55% was cleared and held. A move above the latter would signal strength towards 57.5%-60%. Support is at 50%-47.5%.
The percentage of S&P 500 stocks trading above the 200-day moving average settled at 83.56%, up 4.56%. Current and lower resistance at 82.5%-85% was recovered. A close above the latter would signal strength towards 87.5%-90% with the latter representing overbought levels throughout the first two months of the year. Support is at 80%-77.50%.
While the broader market is a bit overbought, the selloff in Tech last week is signaling slightly oversold levels. This is suggesting we are currently in a stock-picker’s market but the bulls will need to show additional follow through today to keep the momentum going.
I could have another New Trade today so stay locked-and-loaded. In the meantime, I have updated our current trades so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 9-2 (82%). 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, $13.11, up $0.57)
GE April 13 calls (GE210416C00013000, $0.82, up $0.20)
Entry Price: $0.75 (3/1/2021)
Exit Target: $1.50
Stop Target: None
Action: Monday’s high reached $13.29 with current and lower resistance at $13.20-13.30 getting cleared but holding. A move above the latter and last week’s 52-week peak at $13.35 would signal additional momentum towards $13.40-$13.50. Support is at $12.90-$12.80.