MomentumOptions.com Pre-Market Update for 3/18/2021
Dow Closes Above 33,000 Level
8:00am (EST)
The stock market rallied off its morning lows after the Fed signaled there was no change to its monetary policy this year and that borrowing costs would likely remain near zero through at least 2023. Additionally, the Fed also lowered its outlook for unemployment to 4.5% with inflation of 2.4%.
This was welcome news to the bulls as the broader market and the blue-chips set another round of record highs. Tech and the small-caps were also higher after trading in negative territory until comments from Fed Chairman Powell lifted sentiment.
The Russell 2000 settled at 2,336 after testing an afternoon high of 2,339 (+0.7%). Prior and lower resistance at 2,325-2,350 was recovered. A close above the latter and the recent all-time high of 2,360 would suggest further upside towards 2,375-2,400. Below is a chart of the IWM.
The Dow traded to a fresh record peak of 33,047 while closing at 33,015 (+0.6%). Uncharted territory and lower resistance at 33,000-33,250 was cleared and held. A pop above the latter would signal ongoing strength towards 33,500-33,750.
The Nasdaq made a run to 13,595 before ending at 13,525 (+0.4%). Near-term and lower resistance at 13,500-13,650 was recovered. A move above the latter would indicate a retest towards 13,750-13,900.
The S&P 500 tagged a lifetime high of 3,983 while finishing at 3,974 (+0.3%). Current and lower resistance at 3,975-4,000 was cleared but held for the second-straight session. A close above the latter would suggest additional momentum towards 4,025-4,050.
Market Movers
Shares of Plug Power (PLUG) fell nearly 8% after the company said it will restate its previously issued financial statements for fiscal years 2018 and 20219 and its quarterly filings for 2019 and 2020.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) extended its losing streak to seven-straight sessions despite the morning jump to 20.95. Fresh and lower resistance at 20.50-21 was cleared but held.
The fade to 19.18 afterwards breached and held upper support at 19.50-19. A close below the latter would signal ongoing weakness towards 18-17.50.
Market Analysis
The SPDR S&P 500 ETF (NYSE: SPY) rose for the sixth time in seven sessions after trading to a fresh all-time high of $398.12. New and lower resistance at $398-$398.50 was cleared but held. A close above the latter would indicate additional upside towards $400-$400.50.
Current support at $395.50-$395 followed by $393.50-$393.
RSI (relative strength index) remains in a slight uptrend with lower resistance at 60-65 getting cleared and holding. A close above the latter would suggest a test towards 70 and a level that has been holding since early September. Support is at 55-50.
Sector
The Energy Select Sector SPDR Fund (NYSE: XLE) rebounded after tagging a high of $52.10. Current and lower resistance at $52-$52.50 was cleared but held. A close above the latter would suggest additional strength towards $53.50-$54 with the current 52-week peak at $54.37.
Support is at $51.50-$50.
RSI is back in an uptrend with lower resistance at 65-70 holding. A close above the latter would signal strength towards 75 and the recent high. Support is at 60-55.
Market Outlook
The rebound in the major indexes off the morning lows and the second-straight close below 20 on the VIX were very bullish signals for the market. Although the rise in the yield on the benchmark 10-year Treasury note jumped to more than 1.65%, investors seem to be bracing for a possible push towards 2%. The Fed’s outlook for 6% GDP growth was a rally cry for higher highs in the stock market over the near-term and for 2021.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 14-2 (88%). 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, $19.40, up $0.84)
IGT April 20 calls (IGT210416C00020000, $1.25, up $0.35)
Entry Price: $0.95 (3/17/2021)
Exit Target: $1.90
Return: 32%
Stop Target: None
Action: Wednesday’s late day peak reached $19.43 with prior and lower resistance at $19.25-$19.50 getting cleared and holding. Support is at $19-$18.75 followed by $18.25-$18.
Volume was super heavy as these contracts traded over 9,700 contracts. More importantly, nearly 24,000 contracts of the IGT April 21 calls exchanged hands and is signaling bullish traders are expecting another run past $20 with the recent 52-week high at $20.30.
Altria Group (MO, $49.78, up $0.34)
MO April 47.50 puts (MO210416P00047500, $0.75, down $0.09)
Entry Price: $0.75 (3/16/2021)
Exit Target: $1.50
Return: 0%
Stop Target: None
Action: Shares tested a high of $49.87 with current and lower resistance at $50-$50.50 getting challenged but holding for the third-straight session. Support remains at $49-$48.50.
Ford Motor Company (F, $12.69, up $0.20)
F April 14 calls (F210416C00014000, $0.33, up $0.03)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Return: -27%
Stop Target: None
Action: Lower resistance at $12.70-$12.80 was tapped but held by a penny on yesterday’s high. Support is at $12.50-$12.40 followed by $12.30-$12.20.
