MomentumOptions.com Pre-Market Update for 4/1/2021
S&P 500 Tags Fresh Record High
The stock market closed mostly higher on Wednesday on the heels of President Biden’s infrastructure program that was unveiled in Pittsburg, PA. Estimates have the price tag at $2.3 trillion, with the program focused on infrastructure, housing, green energy and manufacturing.
While additional stimulus might be welcomed by Wall Street, the prospect of higher taxes needed to pay for it remains to be seen. The news helped push the S&P 500 to a new all-time high while Tech showed the most strength.
The Nasdaq traded to an intraday peak of 13,325 while ending at 13,246 (+1.5%). Prior and lower resistance at 13,300-13,450 was cleared but held. A close above the latter and the 50-day moving average would signal additional upside towards 13,500-13,650.
The Russell 2000 closed at 2,220 (+1.1%) after testing a second half high of 2,237 while closing back above its 50-day moving average. Current and lower resistance at 2,225-2,250 was breached but held. A pop above the latter would suggest ongoing strength towards 2,275-2,300. Below is a chart of the IWM.
The S&P 500 tagged a fresh record high of 3,994 before settling at 3,972 (+0.4%). Unchartered territory and lower resistance at 3,975-4,000 was cleared but failed to hold. A move the latter would indicate a further breakout towards 4,025-4,050.
The Dow finished at 32,981 (-0.3%) with the late day low hitting 32,980. Key support at 33,000 failed to hold. Continued closes below this level keeps downside risk towards 32,750-32,500 in play.
Shares of Conn’s (CONN) soared 24% following the company’s fourth-quarter earnings results. The speciality retailer reported a profit of 91 cents a share on revenue of $367 million versus forecasts for 23 cents a share on revenue of $328 million.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the second-straight session with the intraday low reaching 18.85. Current and upper support at 19-18.50 was breached but held. A close below the latter and last Friday’s 52-week low of 18.68 would signal additional weakness towards 17.50-17.
Lowered resistance is at 20-20.50 followed by 21.50-22.
The Invesco QQQ Trust (Nasdaq: QQQ) snapped a two-session slide with the midday high kissing $320.74. Prior and lower resistance at $320.50-$321 was cleared but held. A close above the latter and the 50-day moving average would suggest further upside towards $322-$322.50.
Current support is at $318-$317.50 followed by $316-$315.50.
RSI (relative strength indicator) is back in an uptrend after clearing and holding key resistance at 50. Continued closes above this level would indicate additional strength towards 55-60. Support is at 45-40.
The Consumer Staples Select SPDR Fund (NYSE: XLP) was down for the second-straight session after trading to a low of $68.16. Current and upper support at $68.50-$68 was tripped and failed to hold. A close below the latter would indicate additional weakness towards $67.50-$67.
Resistance is at $69-$69.50 with the recent all-time high of $69.33.
RSI has flatlined with key support at 70 failing to hold. Continued closes below this level would suggest downside pressure towards 65-60. Resistance is at 70.
The strength in the S&P 500 and Nasdaq were bullish developments heading into the month of April. The Dow is also on the verge of possibly breaking out to new record highs and the small-caps recovery of its 50-day moving average was also a bullish signal.
I mentioned that April is typically a very bullish month for the market, especially for the Dow. Although historically, April is prone to weakness after the mid-month tax deadline, this has been moved out into May this year.
Friday’s jobs report with the market closed could be a wild card into how Monday and next week starts to unfold. However, expectations are it will be the best report in five months as vaccinations and business reopening’s boosted hiring in March.
With that said, our April positions are running out of time as there are two weeks left before expiration. Hopefully, a market rally can resume next week as the last few weeks of March led to some selling pressure. However, the current open positions still face uphill challenges and we will likely close out these trades next week.
The good news is there are a number of bullish setups I currently like that will carry us into May and possibly June. We closed March with four winners and one loser and for the year, my track record is at 14-3. I fully expect our new trades will make up for lost ground from the end of month weakness as a possible breakout for the major indexes comes into play.
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.
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.
Utz Brands (UTZ, $24.79, up $0.04)
UTZ May 25 calls (UTZ210521C00025000, $1.50, unchanged)
Entry Price: $1.45 (3/29/2021)
Exit Target: $2.90
Stop Target: None
Action: Wednesday’s high reached $24.98 with lower resistance at $25-$25.25 getting challenged but holding. Support remains at $24.50-$24.25 on a close back below the 50-day moving average.
International Game Tech (IGT, $16.05, up $0.11)
IGT April 20 calls (IGT210416C00020000, $0.10, unchanged)
Entry Price: $0.95 (3/17/2021)
Exit Target: $1.90
Stop Target: None
Action: Shares tested a high of $16.18 with lower resistance at $16-$16.25 getting cleared and holding. Support remains at $15.75-$15.50.
Ford Motor Company (F, $12.25, down $0.21)
F April 14 calls (F210416C00014000, $0.07, down $0.02)
Entry Price: $0.45 (3/8/2021)
Exit Target: $0.90
Stop Target: None
Action: Yesterday’s low reached $12.21 with near-term and upper support at $12.30-$12.20 failing to hold. Resistance is at $12.40-$12.50.