MomentumOptions.com Pre-Market Update for 3/8/2021
Bulls Rebound to Split Week With the Bears
The stock market showed continued volatility on Friday despite a strong employment report that came in with a better-than-expected 379,000 jobs added in February. This reaffirmed the building momentum in the economic recovery, but also causing a rise in Treasury yields and concerns over higher inflation.
The major indexes rallied in the final hour of trading, shaking off earlier declines while ending three-session losing streaks. The gains helped erase weekly losses for the broader market and the blue-chips as both closed higher while Tech and the small-caps settled lower for the week.
The Russell 2000 showed the most strength after testing a late day peak of 2,193 before closing at 2,192 (+2.1%). Near-term and lower resistance at 2,175-2,200 was recovered. A move above the latter would signal continued upside towards 2,225-2,250. Below is a chart of the IWM.
The S&P 500 traded to a high of 3,851 before finishing at 3,841 (+2%) and back above the 50-day moving average. New and lower resistance at 3,850-3,875 was cleared and held. A pop above the latter would indicate a retest towards 3,900-3,925.
The Dow ended at 31,496 (+1.9%) after tagging a second half high of 31,580. Lower resistance at 31,500-31,750 was breached but held. A close above the latter would suggest a continued rebound towards 32,000-32,250 with the February all-time peak at 32,009.
The Nasdaq tapped an intraday high of 12,941 while settling at 12,920 (+1.6%). Fresh and lower resistance at 12,875-13,000 was cleared and held. A move above the latter would suggest ongoing strength towards 13,100-13,225.
Shares of Sify Technologies (SIFY) surged 46% following a report Blackstone (BX) is in exclusive talks to acquire a minority stake in the company.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the first time in four sessions despite trading to an intraday high of 30.03. Lower resistance at 30-32 was breached but held.
The fade to 24.33 afterwards and close below upper support at 26-24 and the 200-day moving average were slightly bullish developments.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) snap a three session slide after testing an afternoon high of $316.05. Current and lower resistance at $316-$316.50 was breached but held. A close above the latter would signal further strength towards $318-$318.50.
Support is at $312.50-$312 followed by $310-$309.50 and the 50-day moving average.
RSI is back in an uptrend with lower resistance at 55-60 holding. A close above the latter would suggest strength towards 65-70 with the latter golding since early September. Support is at 50-45.
The SPDR Gold Shares (NYSE: GLD) was up just second time in nine sessions with the intraday peak reaching $159.82. New and lower resistance at $159.50-$160 was breached but held. A close above the latter would signal upside towards $161-$161.50.
Shaky support is at $159-$158.50. A close below $158 could signal another round of selling pressure towards $157-$156.50. This would likely represent a great buying opportunity so keep GLD on your watchlist.
RSI is signaling oversold conditions with key resistance at 30 holding. A close above the this level would suggest additional strength towards 35-40. Support os at 25-20 and levels from March 2020.
Friday was an extremely volatile session but the late day action and bounce off the intraday lows were slightly bullish signals. However, the bulls will need to push higher highs in today’s session with another positive close to possible signal near-term bottoms for the major indexes. Additionally, volatility will need to hold 30 with a close above this level signaling another wave of selling pressure.
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Western Union (WU, $24.09, up $0.62)
WU April 25 calls (WU210416C00025000, $0.45, up $0.15)
Entry Price: $0.45 (3/3/2021)
Exit Target: $0.90
Stop Target: None
Action: Shares rebounded to test an intraday high of $24.13 with lower resistance at $24-$24.25 getting breached and holding. Support is at $23.75-$23.50.
A close above $24.50 would be a very bullish development with the chance for a breakout towards $25-$25.25 over the near-term. The 52-week peak is at $25.13. I think shares can make a run towards $27-$27.25 by mid-April if the aforementioned resistance levels are cleared and held. If so, this would get these call options to $2+ “in-the-money” for over a 300% return.
General Electric (GE, $13.60, up $0.04)
GE April 13 calls (GE210416C00013000, $1.15, unchanged)
Entry Price: $0.75 (3/1/2021)
Exit Target: $2 (Limit Order on half)
Stop Target: $1 (Stop Limit)
Action: Friday’s high reached $13.81 with current and lower resistance at $13.80-$14 getting cleared but holding. A move above the latter would signal a continued breakout towards $14.30-$14.50 and fresh 3-year highs. Support remains at $13.30-$13.10.