MomentumOptions.com Pre-Market Update for 3/11/2021
Dow Sets Another Record High
The stock market showed continued strength on Wednesday after the House Democrats voted to pass a $1.9 trillion stimulus package with President Biden expected to sign the bill on Friday. Better-than-expected economic news also helped bullish sentiment after consumer prices increased less than expected in February, making it appear that inflation remains non-threatening to the Fed.
The Russell 2000 finished at 2,285 (+1.8%) after testing a morning high of 2,299. Current and lower resistance at 2,275-2,300 was recovered. A close above the latter would suggest additional upside towards 2,325-2,350 with the recent record peak at 2,318. Below is a chart of the IWM.
The Dow tapped an all-time intraday high of 32,389 while ending at 32,297(+1.5%). Fresh and lower resistance at 32,250-32,500 was cleared and held. A pop above the latter would signal additional momentum towards 32,750-33,000.
The S&P 500 traded to an afternoon peak 3,917 before closing at 3,898 (+0.6%). Near-term and lower resistance at 3,900-3,925 was breached but held. A move above the latter would indicate ongoing upside towards 3,950-3,975 with the former representing the record high from February.
The Nasdaq closed slightly lower after testing an opening high of 13,277 while settling at 13,068 (-0.04%). Prior and lower resistance from late February at 13,250-13,400 was cleared but held. A close above the latter and the 50-day moving average would suggest strength towards 13,500-13,650.
Video game maker, Roblox (RBLX) surged x% after opening at $64.50 a share following its direct listing reference price at $45. The company sold nearly 200 million shares for selling stockholders instead of doing an initial public offering.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the third time in four sessions after trading to a low of 22.38. Upper support at 23-22.50 was recovered. A drop below the latter would indicate another backtest towards 21.50-21.
Lowered resistance is at 23.50-24 and the 50-day moving average.
The Wilshire 5000 Composite Index (NYSE: WLSH) was up for the second-straight session after testing an intraday high of 41,475. Current and lower resistance at 41,250-41,500 was cleared and held. A move above the latter would indicate a retest towards 41,750-42,000.
Support at 41,000-40,750 and the 50-day moving average.
RSI (relative strength index) is in an uptrend with lower resistance at 50-55 getting cleared and holding. A close above the latter would signal strength towards 60-65 and prior levels from early February. Support is at 45-40.
The Consumer Discretionary Select Spiders (NYSE: XLY) extended its winning streak to four-straight sessions with the high reaching $165.99. Prior and lower resistance from the start of the month at $165.50-$166 was tripped but held. A close above the latter and the 50-day moving average would likely indicate additional strength towards $167-$167.50.
Rising support is at $163-$162.50 followed by $161.50-$161.
RSI remains in a slight uptrend with key resistance at 50 holding. A move above this level would suggest a retest towards 55-60 with the latter representing the February peak. Support is at 45-40.
The action and late day fade in the Nasdaq was a slightly bearish signal while the close below the 50-day moving average on the VIX was a bullish development. The blue-chips and the transports continue to show momentum and the run in the small-caps also remains a bullish signal. This is signaling continued strength, overall, for the market.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 11-2 (85%). 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.
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IShares MSCI Emerging Markets ETF (EEM, $53.29, down $0.24)
EEM April 55 calls (EEM210416C00055000, $0.80, down $0.15)
Entry Price: $0.90 (3/9/2021)
Exit Target: $1.90
Stop Target: None
Action: Wednesday’s low reached $53.04 with near-term and upper support is at $53.25-$53 getting breached but holding. Resistance is at $53.50-$54.
Ford Motor Company (F, $12.91, up $0.34)
F April 14 calls (F210416C00014000, $0.44, up $0.07)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Shares tested a 52-week peak of $12.98 with fresh and upper support at $12.90-$13 getting cleared and holding. Support is a $12.80-$12.70.