MomentumOptions.com Pre-Market Update for 3/17/2021
Volatility Settles Below Key Level of Support
The stock market closed mostly lower on Tuesday following a disappointing report on retail sales and the start of the Federal Reserve’s two-day policy meeting. Specifically, retail sales fell 3% in February, and declined 2.7% excluding autos, which were bigger drops than expected.
Tech showed continued strength after notching a small gain while the small-caps were the leading laggard despite volatility closing below a key level of support for just the second time in over a year.
The Nasdaq traded to an intraday peak of 13,620 before settling at 13,471 (+0.1%). Prior and lower resistance from the start of the month at 13,600-13,750 was cleared but held. A close above the latter would indicate a retest towards 13,850-14,000.
The Russell 2000 tapped an afternoon low of 2,304 before closing at 2,319 (-1.7%). Fresh and upper support at 2,325-2,300 failed to hold. A move below the latter would suggest a further fade towards 2,275-2,250. Here is a chart of the IWM.
The Dow ended at 32,825 (-0.4%) with the intraday low tagging 32,778. New and upper support at 32,750-32,500 was challenged but held. A drop below the latter would signal weakness towards 32,250-32,000.
The S&P 500 kissed another opening all-time high of 3,981 but finished slightly lower at 3,962 (-0.1%). Unchartered territory and lower resistance at 3,975-4,000 was cleared but held. A pop above the latter would indicate additional momentum towards 4,025-4,050.
Bioceres Crop Solutions (BIOX), jumped 11% after announcing it acquired a 6% ownership interest in Moolec Science. Bioceres addresses the demand for higher crop yields and productivity in sustainable and environmentally-conscious ways.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the sixth-straight session with the intraday low reaching 19.33. Prior and upper support from late November at 19.75-19.50 was breached but held. A close below the latter would suggest further weakness towards 18.50-18.
Lowered resistance is at 20-20.50 followed by 21.50-22.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) had its seven session winning streak snapped with the intraday low hitting $328.32. Current and upper support at $328.50-$328 was breached but held. A close below the latter would signal a retest towards the $325.50-$325 area.
Resistance is at $330-$330.50 with Monday’s all-time peak at $330.24.
RSI is back in a slight downtrend with upper support at 65-60 holding. A move below the latter would indicate weakness towards 55-50. Resistance is at 70-75 with the latter representing the late February high.
The Spider S&P Retail ETF (NYSE: XRT) fell for the second-straight session following the morning pullback to $90.08. Fresh and upper support at $90.50-$90 was tripped but held. A close below the latter would suggest additional weakness towards $88-$87.50.
Resistance is at $92.50-$93 followed by $94.50-$95.
RSI is in a downtrend with upper support at 65-60 holding. A close below the 60 level would suggest weakness towards 55-50 with the latter holding since mid-November. Resistance is at 70-75.
Aside from the Nasdaq, the major indexes have basically been holding their 50-day moving averages since early November and remain in strong uptrends. This is a bullish signal over the near-term. Additionally, the close below 20 on the VIX was noticed by a lot of talking heads and technicians but hasn’t held this level in back-to-back sessions in over a year and the next important test.
Comments from Fed Chairman Powell will likely influence today’s outcome into the closing bell. He will likely downplay inflation worries and reiterate the Fed will be ready to do whatever is necessary to address these issues. Depending on the action, I could have another New Trade later in the day so stay locked-and-loaded in case I take action.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 13-2 (87%). 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.
Altria Group (MO, $49.44, down $0.40)
MO April 47.50 puts (MO210416P00047500, $0.84, down $0.01)
Entry Price: $0.75 (3/16/2021)
Exit Target: $1.50
Stop Target: None
Action: Shares traded to a 52-week peak of $49.95 on Monday and topped out at $49.91 midday on Tuesday. Two-year resistance from late March 2019 at $50-$50.50 was challenged but held. Current and upper support at $49-$48.50 held into the close with a move below the latter signaling a possible retest towards the $47-$47.50 area.
RSI (relative strength index) was pushing 75-80 and levels that signals overbought conditions. This has historically led a pullback in the stock. Additionally, an analyst downgrade could weigh on the shares over the near-term after Citi lowered it rating to Neutral from Buy.
Pfizer (PFE, $35.83, up $0.42)
PFE April 36 calls (PFE210416C00036000, $0.77, up $0.15)
Entry Price: $0.55 (3/15/2021)
Exit Target: $1.10
Stop Target: None
Action: Tuesday’s high tapped $35.86 with prior and lower resistance from late January at $35.75-$36 getting cleared and holding. Rising support is at $35.25-$35 and the 50-day moving average.
Ford Motor Company (F, $12.49, down $0.71)
F April 14 calls (F210416C00014000, $0.30, down $0.20)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Shares tapped a low of $12.43 with prior and upper support at $12.50-$12.40 failing to hold. Lowered resistance is at $12.70-$12.80.