MomentumOptions.com Pre-Market Update for 3/31/2021

Small-Caps Show Strength in Lackluster Action

8:00am (EST)

The stock market showed continued weakness on Tuesday despite a blowout consumer confidence number as rising rates once again weighed on Tech and the broader indexes. The Conference Board’s closely watched consumer confidence index increased to 109.7 in March from 90.4 in February, representing the highest level since the start of the pandemic.

Meanwhile, the benchmark 10-year Treasury yield rose to about 1.75% and a 14-month peak. Small-caps managed to show strength despite the crosswinds while volatility eased back towards prior support levels.

The Nasdaq closed at 13,045 (-0.1%) with the opening low hitting 12,922. Near-term and upper support at 13,000-12,850 was clipped but held for the second-straight session. A drop below the latter would indicate weakness towards 12,750-12,600.

The Dow tested an intraday low of 32,988 before settling at 33,066 (-0.3%). Mid-month and upper support at 33,000-32,750 was breached but held. A move below the latter would signal a further slide towards 32,500-32,250.

The S&P 500 traded to a first half low of 3,944 while ending at 3,958 (-0.3%). Current and upper support at 3,950-3,925 was breached but also held for the second-straight session. A close below the latter would suggest a further fade towards 3,900-3,875 and the 50-day moving average.

The Russell 2000 finished at 2,195 (+1.7%) after tapping an afternoon peak of 2,202. Prior and lower resistance at 2,200-2,25 was cleared but held. A move above the latter would signal another run towards 2,225-2,250. Below is a chart of the IWM.

Market Movers

Shares of DXC Technology (DXC) rallied 9% following an analyst upgrade from Buy to Hold with a price target of $44, up from $28. The analyst believes the company looks poised for a strong fundamental rebound over the next year and beyond as channel checks point to considerably improved client service levels.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) fell for the third time in four sessions despite tagging an opening high of 21.75. Near-term and lower resistance at 21.50-22 was cleared but held. A close above the latter would suggest a retest towards 23-23.50 and the 50-day moving average.

Upper support at 19.50-19 was breached but held on the fade to 19.47 afterwards.

Market Analysis

The Wilshire 5000 Composite Index (NYSE: WLSH) fell for the second-straight session with the intraday low tapping 41,258. Current and upper support at 41,500-41,250 was tripped but held by a smidge. A move below the latter and the 50-day moving average would indicate a retest towards 41,000-40,750.

Resistance at 41,750-42,000.

RSI (relative strength index) is in a slight downtrend with key support at 50 holding. A close below this level would signal weakness towards 45-40 and lows from earlier this month. Resistance is at 55-60.

Sector

The SPDR Gold Shares (NYSE: GLD) plunged to a late day low of $157.55 to extend its losing streak to two-straight sessions. Prior and upper support from earlier this month at $158-$157.50 failed to hold. A close below the latter would signal additional downside risk towards $155.50-$155 and levels from last April.

Lowered resistance is at $158.50-$159 followed by $160-$160.50.

RSI is signaling oversold conditions with upper support at 30-25 holding. Resistance is at 35-40.

Market Outlook

Momentum Options Play List

Closed Momentum Options Trades for 2021: 14-3 (82%). 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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Utz Brands (UTZ, $24.75, down $0.26)

UTZ May 25 calls (UTZ210521C00025000, $1.50, down $0.15)

Entry Price: $1.45 (3/29/2021)
Exit Target: $2.90
Return: 3%
Stop Target: None

Action: Shares traded to a first half low of $24.33 with near-term and upper support at $24.50-$24.25 and the 50-day moving average getting tripped but levels that held. Resistance is at $25-$25.25.

International Game Tech (IGT, $15.94, down $0.10)

IGT April 20 calls (IGT210416C00020000, $0.10, unchanged)

Entry Price: $0.95 (3/17/2021)
Exit Target: $1.90
Return: -89%
Stop Target: None

Action: Tuesday’s low hit $15.67 with upper support at $15.75-$15.50 getting clipped but holding. Resistance remains at $16.25-$16.50.

Ford Motor Company (F, $12.46, up $0.31)

F April 14 calls (F210416C00014000, $0.09, up $0.02)

Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Return: -79%
Stop Target: None

Action: Shares rebounded to test a high of $12.48 with lower resistance at $12.40-$12.50 getting recovered. Support is at $12.20-$12.10.