MomentumOptions.com Pre-Market Update for 3/10/2021
Tech Recovers 13,000 Level
The stock market closed sharply higher on Tuesday, led by a resurgence in Tech amid a decline in Treasury yields. Additionally, the U.S. House of Representatives is set to vote on Wednesday and the $1.9 trillion stimulus package the Senate advanced over the past weekend, putting the legislation on track for potential passage this week and teeing up the economy for another massive infusion of stimulus.
The Nasdaq zoomed to an afternoon of 13,151 before closing at 13,073 (+3.7%). Prior and lower resistance at 13,000-13,150 was cleared and held. A move above the latter would indicate additional strength towards 13,200-13,350 and the 50-day moving average.
The Russell 2000 traded to an intraday high of 2,261 while ending at 2,245 (+1.9%). Near-term and lower resistance at 2,250-2,275 was tripped but held. A close above the latter would suggest additional upside towards 2,300-2,325 with the current all-time peak at 2,318. Below is a chart of the IWM.
The S&P 500 closed at 3,875 (+1.4) after tapping a second half high of 3,903. Prior and lower resistance at 3,900-3,925 was breached but held. A pop above the latter would signal ongoing strength towards 3,950-3,975 with the former representing the record peak from February.
The Dow traded to an all-time lifetime high of 32,150 before settling at 31,832 (+0.1%). Current and lower resistance at 32,000-32,250 was cleared but held for the second-straight session. A close above the latter would indicate ongoing strength towards 32,500-32,750.
Shares of Stitch Fix (SFIX) sank 28% after announcing quarterly results. The company reported a second-quarter loss of 20 cents a share on revenue just north of $504 million. Expectations were for a loss of 22 cents on sales of $512 million. Stitch Fix said active clients rose to 3.9 million, an increase of 408,000, or 12% year over year, and 110,000 clients quarter-over-quarter.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the second time in three sessions with the intraday low tapping 22.90. Current and upper support at 23-22.50 and the 50-day moving average were breached but levels that held. A close below the latter would signal further weakness towards 21.50-21.
Lowered resistance is at 24.50-25 followed by 26-26.50 and the 200-day moving average.
The iShares Russell Growth 1000 ETF (NYSE: IWF) closed higher for just the second time in six sessions following the second half run to $239.07. Current and lower resistance at $239-$239.50 was breached but held. A close above the latter would indicate further strength towards $240.50-$241.
Shaky support is at $235-$234.50.
RSI is back in an uptrend with lower resistance at 40-45 getting cleared and holding. A close above the latter would suggest additional strength towards 50-55. Support is at 35-30.
The Dow Jones Transportation Average (NYSE: TRAN) extended its winning streak to three-straight sessions with the intraday high hitting 13,938. Current and lower resistance at 13,900-14,000 was breached but held. A close above the latter and Monday’s all-time high of 13,997 would indicate additional momentum towards 14,100-14,200.
Current support is at 13,800-13,700.
RSI is in a slight uptrend with lower resistance at 65-70 holding. A close above the latter would signal additional strength towards 75-80 and the highs from last August. Support is at 60.
The breakout in Tech was a relief for bullish traders but it remains to see if it was a dead cat bounce or if further momentum will continue. The VIX flirted with closing below its 50-day moving average but failed to close under 24. While there could be some near-term choppiness, it is crucial volatility holds the 26 level today and the rest of the week.
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.
IShares MSCI Emerging Markets ETF (EEM, $53.53, up $1.15)
EEM April 55 calls (EEM210416C00055000, $0.95, up $0.32)
Entry Price: $0.90 (3/9/2021)
Exit Target: $1.90
Stop Target: None
Action: Tuesday’s high tagged $53.83 with current and lower resistance at $53.50-$54 getting recovered. A close above the latter would suggest a retest towards $54.50-$55 and the 50-day moving average. Support is at $53-$52.50.
Ford Motor Company (F, $12.57, down $0.08)
F April 14 calls (F210416C00014000, $0.37, down $0.07)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Shares tested a low of $12.38 with near-term and upper support at $12.40-$12.30 getting breached but holding. Resistance is a $12.60-$12.70 with the current 52-week peak at $12.88.
Western Union (WU, $24.98, down $0.13
WU April 25 calls (WU210416C00025000, $0.90, unchanged)
Entry Price: $0.45 (3/3/2021)
Exit Target: $1.35 (closed half at $0.95 on 3/8/21)
Stop Target: 60 cents, raise to 75 cents (Stop Limit)
Action: Raise the Stop Limit on the other half of the position from 60 cents to 75 cents.
Shares traded to a fresh 52-week high of $25.73 before the slightly lower close with the options peaking at $1.30. Fresh and lower resistance at $25.50-$25.75 was cleared but held. Support is at $24.75-$24.50.
General Electric (GE, $14.00, down $0.17)
GE April 13 calls (GE210416C00013000, $1.45, down $0.10)
Entry Price: $0.75 (3/1/2021)
Exit Target: $2 (Limit Order on half)
Stop Target: $1.25 (Stop Limit)
Action: Upper support at $14-$13.85 was breached but held on yesterday’s backtest to $13.83. Resistance at $14.10-$14.25.