MomentumOptions.com Pre-Market Update for 3/16/2021
Bulls Show Continued Momentum
The stock market traded in a tight range on Monday before making a strong move higher in the final hour as investors await further updates from the Federal Reserve’s policy meeting this week. Additionally, Treasury Secretary Janet Yellen said the Biden administration hasn’t decided whether to pursue a wealth tax, but will likely issue proposals to address the swelling federal budget deficit.
Yellen also added that U.S. inflation risks remain small and manageable but if inflation materializes, the Fed has tools to address it. Meanwhile, volatility continued to ease after falling for the fifth-straight session while testing a key level of support.
The Nasdaq settled at 13,459 (+1.1%) after kissing high of 13,460 just ahead of the closing bell. Current and lower resistance at 13,350-13,500 and the 50-day moving average were recovered. A close above the latter would indicate a push towards 13,600-13,750.
The S&P 500 tested a record high of 3,970 while ending at 3,968 (+0.7%). Current and lower resistance at 3,950-3,975 was cleared and held. A move above the latter would signal additional strength towards 4,000-4,025.
The Dow closed at 32,953 (+0.5%) with the late day all-time high hitting 32,973. Fresh and lower resistance at 33,000-33,250 was challenged but held. A move above the latter would suggest additional momentum towards 33,500-33,750.
The Russell 2000 finished on its session high of 2,360 (+0.3%) and new lifetime peak. Unchartered territory and lower resistance at 2,360-2,385 was cleared and held. A close above the latter would indicate ongoing strength towards 2,390-2,415. Below is a chart of the IWM.
Shares of Extended Stay America (STAY) jumped 13% after announcing a definitive agreement to be acquired in a 50/50 joint venture between funds managed by Blackstone Real Estate Partners (BX) and Starwood Capital Group for $19.50. The all-cash transaction deal was valued at approximately $6 billion.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) tapped a late day low of 19.87. Prior and upper support from mid-February at 20-19.50 was breached but held. A close below the latter and the February low at 19.69 would indicate additional weakness towards 18-17.50.
Lowered resistance is at 21.50-22 followed by 23.50-24 and the 50-day moving average.
The Spider Small-Cap 600 ETF (NYSE: SLY) had its six-session winning streak snapped following the intraday pullback to $98.56. New and upper support at $99-$98.50 was breached but held. A close below the latter would suggest additional weakness towards $97-$96.50.
Key resistance is at $100 with a close above this level and Friday’s all-time peak at $99.71 would likely suggest a run towards $101.50-$102.
RSI (relative strength indicator) has leveled out with key support at 70 holding. A move below this level would suggest additional weakness towards 65-60. Resistance is at 75 and the February high.
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) rebounded following the intraday trip to $412.22. Current and lower resistance at $412-$413.50 was breached but held. A close above the latter would suggest additional upside towards $415-$416.50.
Fresh support $409.50-$409 and the 50-day moving average.
RSI is back in a slight uptrend after clearing and holding key resistance at 50. Continued closes above this level would signal additional strength towards 55-60. Support is at 45-40.
Monday’s action into the closing bell was an ongoing bullish signal for the overall market with the only major index approaching slightly overbought territory being the Dow. The RSI (relative strength index) on the blue-chips cleared 70 and a level that has been holding since early September. There is a chance the index could push the mid-70’s but a slight pullback would be healthy before a charge past the 33,000 level.
Once again, the VIX flirted with closing below 20 but was unable to hold this level into the closing bell.
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.
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Pfizer (PFE, $35.41, up $0.47)
PFE April 36 calls (PFE210416C00036000, $0.64, up $0.15)
Entry Price: $0.55 (3/15/2021)
Exit Target: $1.10
Stop Target: None
Action: Monday’s peak reached $35.43 with prior and lower resistance from late January at $35.25-$35.50 and the 50-day moving average getting cleared and holding. Support is at $35-$37.25 and the 200-day moving average.
I would like to see a close above $36 over the next day or so as it would signal a possible retest towards $37 over the near-term. If reached, these options will be $1 or so in-the-money for a triple-digit return.
International Game Tech (IGT, $19.71, up $0.12)
IGT April 20 calls (IGT210416C00020000, $1.40, unchanged)
Entry Price: $1.10 (3/11/2021)
Exit Target: $2.20
Stop Target: $1.15 (Stop Limit)
Action: Shares tested another 52-week high of $20.30 with the options peaking at $1.65. New and lower resistance at $20.25-$20.50 was cleared but held. Rising support is at $19.50-$19.25.
The inability for shares to hold the $20 level was a slight disappointment but I’m hoping they can today.
Ford Motor Company (F, $13.20, down $0.17)
F April 14 calls (F210416C00014000, $0.50, down $0.07)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Shares traded to a fresh 52-week peak $13.62 before the lower close. New and lower resistance at $13.60-$13.70 was cleared but held. Rising support is at $13-$12.90.