MomentumOptions.com Pre-Market Update for 3/3/2021
Market Pulls Back after Lackluster Session
The stock market traded in a tight range for much of Tuesday’s session before closing lower as traders await upcoming comments from Fed Chairman Powell and Friday’s jobs report. Losses in the Technology and Consumer Discretionary sectors weighed on sentiment with Zoom Video Communications (ZM) falling 9% despite reporting earnings that topped Wall Street’s expectations.
The Russell 2000 finished on its session low of 2,231 (-2%). Current and upper support at 2,250-2,225 was breached and failed to hold. A drop below the latter would signal a continued backtest towards 2,200-2,175.
The Nasdaq closed at 13,358 (-1.7%) following the late day tumble to 13,352. Near-term and upper support at 13,400-13,300 failed to hold. A move below the latter and the 50-day moving average would indicate further weakness towards 13,200-13,100.
The S&P 500 ended at 3,870 (-0.8%) on the fade to 3,868 ahead of the closing bell. Upper support at 3,875-3,850 was breached and failed to hold. A close below the latter would suggest a retest towards 3,825-3,800 and the 50-day moving average
The Dow settled at 31,391 (-0.5%) after bottoming 31,377. Current and upper support at 31,500-31,250 failed to hold. A close below the latter would signal a further pullback towards 31,000-30,750 and the 50-day moving average.
Shares of Rocket Companies surged 71% on no apparent new news from the company. However, the stock currently has large short bets placed against it by hedge funds and appears to have garnered some bullish interest from day traders on Reddit’s infamous WallStreetBets forum.
Roughly 40% of Rocket Companies available shares are sold short and is one of the top U.S. companies in terms of size of short bets initiated by hedge funds.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) rebounded despite the intraday low tagging 22.80. Current and upper support at 23-22.50 was breached but held. A close below the latter would signal ongoing weakness towards 21.50-21.
Resistance at 23.75-24.25 and the 50-day moving average was cleared an held on the late day bounce to 24.60.
The Invesco QQQ Trust (Nasdaq: QQQ) was down for the first time in three sessions despite testing an opening high of $324.33. Lower resistance at $324-$324.50 was tripped but held. A close above the latter would suggest further upside towards $325.50-$326.
Current support is at $318-$317.50 following the late day pullback to $318.14 and close back below the 50-day moving average.
RSI (relative strength indicator) is showing signs of rolling over with upper support at 45-40 failing to hold. A close below the latter would indicate additional weakness towards 35 and last month’s low. Key resistance is at 50.
The iShares MSCI Emerging Markets ETF (NYSE: EEM) was down for the fourth time in five sessions with the intraday low reaching $54.46. Current and upper support at $54.50-$54 was breached but held. A close below the latter would and the 50-day moving average would signal a further pullback towards $53-$52.50.
Resistance is at $55-$55.50 followed by $56.50-$57.
RSI is in a slight downtrend with upper support at 45-40 failing to hold. A close below the latter would indicate weakness towards 35 and the late February low. Resistance is at 50.
Marvell Technology Group (MRVL) will announce fourth-quarter earnings after today’s closing bell. The company is expected to report a profit of 29 cents a share on revenue just below $795 million. The high estimate is at 30 cents a share with the low forecast at a 29 cents loss. This would equate to a penny beat, or a match.
The company matched forecasts last quarter and topped estimates the previous three quarters by a penny twice and by four cents in between. There are 27 analysts that cover the stock with seven Strong Buy ratings, 13 Buys, seven Hold recommendations.
I was hoping to get into a new trade yesterday but some of the market’s nervousness could signal choppiness for another session or two. The VIX’s close back above the 50-day moving average was also a slight concern.
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General Electric (GE, $12.98, down $0.13)
GE April 13 calls (GE210416C00013000, $0.75, down $0.08)
Entry Price: $0.75 (3/1/2021)
Exit Target: $1.50
Stop Target: None
Action: Tuesday’s low tapped $12.97 with current and upper support at $13-12.90 getting breached and failing to hold. A move below the latter would signal a retest towards $12.80-$12.70. Resistance is at $13.10-$13.20.