MomentumOptions.com Pre-Market Update for 3/15/2021

Bulls Get Weekly Win

8:00am (EST)

The stock market closed mostly higher on Friday with the blue-chips showing continued momentum while technology stocks fell after treasury yields rose to a one-year high. Specifically, the benchmark 10-year Treasury yield added nearly 10 basis points to reach a peak of 1.6%, reigniting concerns over fast-rising inflation and the possibility of near-term tightening of monetary policy from the Federal Reserve.

The Dow traded to its 13th record for the year after tagging an all-time high of 32,793 while ending at 32,778 (+0.9%). Unchartered and lower resistance at 32,750-33,000 was cleared and held. A move above the latter would signal ongoing strength towards 33,250-33,500.

The Russell 2000 settled at 2,352 while tapping a late day record peak of 2,354 (+0.6%). Unchartered territory and lower resistance at 2,350-2,375 was cleared and held. A move above the latter would signal additional momentum towards 2,400-2,425. Below is a chart of the IWM.

The S&P 500 closed at 3,943 (+0.1%) after reaching a high of 3,944 ahead of the final bell. Current and lower resistance at 3,950-3,975 was challenged but held. A pop above the latter would indicate strength towards 4,000-4,025.

The Nasdaq tested a morning low of 13,158 while finishing at 13,319 (-0.6%) and back below its 50-day moving average. Current and upper support at 13,250-13,100 was breached but held. A close below the latter would suggest a retest towards 13,000-12,850.

Market Movers

Shares of Adient (ADNT) jumped nearly 18% after it entered into an agreement to sell joint venture interests in China for $1.5 billion.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the fourth-straight session after tapping a low hitting 20.63. Prior and upper support from late February at 21-20.50 was recovered. A move below the latter would signal ongoing weakness towards 20-19.50 with the mid-February low at 19.69.

Resistance remains at 22.50-23 followed by 23.50-24 and the 50-day moving average.

Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) was up for the sixth-straight session after trading to an all-time peak of 2,647. Unchartered territory and lower resistance at 2,625-2,650 was cleared and held. A move above the latter would indicate additional momentum towards 2,675-2,700.

Rising support is at 2,600-2,575 followed by 2,550-2,525.

RSI (relative strength index) remains in an uptrend with lower resistance at 65-70 getting cleared and holding. A move above the latter would signal additional strength towards 75 and the late January high. Support is at 60.

Sector

The SPDR S&P Homebuilders ETF (NYSE: XHB) had its two-session winning streak snapped following the intraday pullback to $65.22. Near-term and upper support at $65.50-$65 was breached but held. A close below the latter would signal additional weakness towards the $64-$63.50 area.

Resistance is at $66.50-$67 with last Thursday’s all-time peak at $66.66.

RSI has flatlined with key support at 60 holding. A close below this level would suggest additional risk towards 55-50. Resistance is at 65-70.

Market Outlook

The percentage of Nasdaq 100 stocks trading above the 50-day moving closed at 41.17%, up 0.98%. Near-term and lower resistance at 42.5%-45% was challenged but held. A move above the latter would signal a retest towards 47.5%-50%. Support is at 40%-37.5%.

The percentage of S&P 500 stocks trading above the 200-day moving average settled at 85.54%, up 0.79%. Current and lower resistance at 85%-87.5% was cleared and held. A close above the latter would signal strength overbought levels towards 90%-92.5% and the 2021 highs. Support is at 82.5%-80%.

These indicators are likely signaling a possible near-term top for the broader market but momentum could continue for another week or so to test the January peaks. Tech remains slightly oversold with the lows from earlier this month falling below the 20% level and extremely oversold conditions.

The blue-chips and the small-caps are riding six-session winning streaks while the S&P 500 has been up in five of the past six sessions. Tech remains shaky with the Nasdaq failing to see positive territory throughout Friday’s session. A consolidation period this week would be bullish for continued gains this month, but more importantly, the VIX needs to clear and hold 20, and a level I highlighted again on Friday.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 12-2 (86%). 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.

International Game Tech (IGT, $19.59, up $0.30)

IGT April 20 calls (IGT210416C00020000, $1.40, up $0.15)

Entry Price: $1.10 (3/11/2021)
Exit Target: $2.20
Return: 27%
Stop Target: $1.15 (Stop Limit)

Action: Set an initial Stop Limit at $1.15 to start protecting profits and to avoid a loss.

Friday’s fresh 52-week peak reached $19.92 with new and lower resistance at $19.75-$20 getting cleared but holding. Rising support is at $19.25-$19.

I would love to see a close above $20 to start the week and RSI remains in a solid uptrend with a possible shot at 70-75 coming into play on continued strength. However, if shares fade from current levels, we will be protected for a slight profit on a possible backtest towards the 50-day moving average.

Ford Motor Company (F, $13.37, up $0.56)

F April 14 calls (F210416C00014000, $0.57, up $0.20)

Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Return: 27%
Stop Target: None

Action: Shares tagged a new 52-week peak of $13.43 with the calls hitting a high of 61 cents. Fresh and lower resistance at $13.40-$13.50 was cleared but held. Rising support is a $13.20-$13 followed by $12.90-$12.80.

There was heavy action in the F April 13, 14, 15, 16, and 17 calls on Friday. This is signaling traders are expecting continued strength in the stock. The chart shows RSI tested a high of 80 in January and a level I would like to see reached before a possible pullback.

This would likely push shares towards the $14 level and where we can start taking profits. As you can see, shares fell for six-straight sessions after RSI tapped 80. I didn’t list a Stop Limit because Friday’s low in these calls was at 36 cents. However, if shares fall below $13 today, I could issue a Trade Alert.