MomentumOptions.com Pre-Market Update for 3/19/2021
Nasdaq Falls Back Below 50-Day Moving Average
The stock market closed lower on Thursday as another spike in Treasury yields and a weaker-than-expected jobs report weighed on sentiment. Specifically, the 10-year Treasury yield rose to a 14-month peak of 1.74% while initial jobless claims jumped to 770,000 versus forecasts for a print of 700,000.
Despite the disappointment and higher yields, the blue-chips managed to set a fresh intraday all-time high but succumbed to the overall selling pressure. Meanwhile, volatility trended higher after failing to hold a key level of resistance.
The Dow tapped an intraday all-time high of 33,227 before settling in the red at 32,862 (-0.5%). Uncharted territory and lower resistance at 33,250-33,500 was challenged and held. A move above the latter would indicate additional momentum towards 33,750-34,000.
The S&P 500 ended at 3,915 (-1.5%) after testing a low of 3,910. Current and upper support at 3,925-3,900 failed to hold. A close below the latter would suggest additional weakness towards 3,875-3,850 and the 50-day moving average.
The Russell 2000 finished at 2,267 (-2.9%) with the late day bottom reaching 2,262. Fresh and upper support at 2,275-2,250 was breached and failed to hold. A close below the latter would likely lead to a further pullback towards 2,225-2,200 and the 50-day moving average. Below is a chart of the IWM.
The Nasdaq hit an afternoon low of 13,101 while closing at 13,116 (-3%) and back below its 50-day moving average. Prior and upper support at 13,250-13,100 was breached and failed to hold. A drop below the latter would signal a retest towards 13,000-12,850.
Shares of Williams-Sonoma (WSM) surged 18% after announcing quarterly results. The company report fourth-quarter earnings of $3.95 a share on revenue of $2.29 billion versus forecasts for a profit of $3.39 a share on sales of $2.17 billion. A slew of analyst upgrades and Price Target hikes helped propel sentiment.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a seven-session losing streak after tapping an opening low of 18.95. Longer-term and upper support from February 2020 at 19-18.50 was breached but held.
The bounce to 22.60 afterwards cleared with prior and lower resistance at 22.50-23 holding. A close above the latter would additional strength towards 23.50-24 and the 50-day moving average.
The iShares Russell Growth 1000 ETF (NYSE: IWF) fell for the first time in four sessions with the intraday low kissing $237.78 Current and upper support at $238-$237.50 was tripped and failed to hold. A move below the latter would indicate further weakness towards $235.50-$235.
Resistance is at $241.50-$242 followed by $244-$244.50 and the 50-day moving average.
RSI is back in a downtrend with upper support at 45-40 failing to hold. A fall below the latter would suggest additional weakness towards 35-30 and the lows from earlier this month. Key resistance is at 50.
The Communication Services Select Sector SPDR (NYSE: XLC) had its three session winning streak snapped following the late day pullback to $74.68. Near-term and upper support at $75-$74.50 failed to hold. A drop below the latter would suggest a further fade towards $73.50-$72.
Resistance is at $75.50-$76 with the current record peak at $76.60.
RSI has rolled over with key support 60 failing to hold. Continued closes below this level would indicate additional weakness towards 55-50 with the latter holding since late January. Resistance is at 65-70.
Thursday’s selloff wiped away most of the weekly gains for the major indexes and it will important for the bulls to salvage the week with a strong rebound today. If not, the start of next week could lead to continued weakness. The action in the VIX was very disappointing but the 50-day moving average is in a slight downtrend. However, if the index can’t hold this level, or closes above 24, it would be a clear signal near-term weakness has returned.
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.
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International Game Tech (IGT, $18.26, down $1.14)
IGT April 20 calls (IGT210416C00020000, $0.80, down $0.45)
Entry Price: $0.95 (3/17/2021)
Exit Target: $1.90
Stop Target: None
Action: Thursday’s low tapped $18.16 with current and upper support at $18.25-$18 getting breached but holding. Resistance is at $18.75-$19 followed by $19.50-$19.75.
Altria Group (MO, $50.57, up $0.79)
MO April 47.50 puts (MO210416P00047500, $0.60, down $0.15)
Entry Price: $0.75 (3/16/2021)
Exit Target: $1.50
Stop Target: None
Action: Shares tested a high of $50.84 with 2-year and lower resistance at $50.50-$51 getting cleared and holding. New support is at $50-$49.50.
Ford Motor Company (F, $12.49, down $0.20)
F April 14 calls (F210416C00014000, $0.30, down $0.03)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Upper support at $12.50-$12.40 failed to hold on the late day fade to $12.44. Resistance is at $12.60-$12.70 followed by $12.90-$13.