MomentumOptions.com Pre-Market Update for 4/6/2021
Dow and S&P 500 Touch Another Round of Record Highs
The stock market had a strong showing on Monday following a blowout employment report on Friday, which revealed the economy added a stunning 916,000 jobs last month with the unemployment rate falling to 6%. Better-than-expected economic news also fueled bullish sentiment and comes ahead of a busy week for Fed speak.
The Nasdaq tested an intraday peak of 13,720 before ending at 13,705 (+1.7%). Prior and lower resistance from early February at 13,600-13,750 was recovered. A move above the latter would indicate additional strength towards 13,850-14,000.
The S&P 500 tapped another all-time and midday high of 4,083 before settling at 4,077 (+1.4%). New and lower resistance at 4,075-4,100 was cleared and held. A close the latter would suggest ongoing momentum towards 4,125-4,150.
The Dow traded to a fresh all-time high of 33,617 before finishing at 33,527 (+1.1%). Unchartered territory and lower resistance at 33,500-33,750 was tripped and held. A pop above the latter would signal additional upside towards 34,000-34,250.
The Russell 2000 tagged an opening high of 2,280 before going out at 2,264 (+0.5%). Near-term and lower resistance at 2,275-2,300 was breached but held. A close above the latter would indicate ongoing strength towards 2,325-2,350 with the mid-March record peak at 2,360. Below is a chart of the IWM.
Nano-X Imaging (NNOX) zoomed 17% after announcing its digital X-ray device has received 510(k) clearance from the Food and Drug Administration. The company’s CEO said they remain on track to commence system shipments in the fourth quarter of this year and the first quarter of 2022 with the goal of finalizing deployment of the initial 15,000 Nanox.ARC systems by the end of 2024.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a three-session losing streak despite testing an opening low of 17.35. Near-term and upper support at 17.25-16.75 was challenged for the second-straight session. A close below the latter would indicate additional weakness towards 16-15.50.
The bounce to 18.40 afterwards cleared but failed to hold lower resistance at 18-18.50. A move above the latter would suggest a retest towards 19.50-20.
The Spider Small-Cap 600 ETF (NYSE: SLY) extended its winning streak to four-straight sessions following the intraday push to $96.37. Prior and lower resistance from early March at $96-$96.50 was breached but held. A close above the latter would signal additional upside towards $97.50-$98.
Support is at $95-$94.50 followed by $93.50-$93.
RSI (relative strength indicator) is in an uptrend with lower resistance at 55-60 getting cleared and holding. A move above the latter would suggest additional strength towards 65-70 and levels from mid-March. Key support is at 50.
The Consumer Discretionary Select Spiders (NYSE: XLY) was also higher for the fourth-straight session after zooming to an afternoon and all-time peak of $173.90. Prior and lower resistance from early February at $173.50-$174 was tripped but held. A close above the latter would likely indicate a further breakout towards $175.50-$176.
New support is at $172-$171.50 followed by $170-$169.50.
RSI remains in a strong uptrend with key resistance at 60 getting recovered. Continued closes above this level would suggest a retest towards 65-70 with the latter holding since mid-January. Support is at 55-50 on a move back below 60.
The breakouts in the Dow and S&P 500, along with the momentum in the Nasdaq and small-caps, remain bullish developments. However, the action in the VIX on Monday was a slight concern but nothing too alarming.
The Fed minutes will take center stage on Wednesday with Fed Chair Powell speaking on Thursday at an International Monetary Fund panel on the global economy. On Monday, Treasury Secretary stated the U.S. Treasury Department is working with other major nations to agree on a global minimum corporate tax rate, which would disincentivize companies from seeking to locate to regions with lower tax rates.
There are also a batch of earnings on Thursday that are worth watching as Apogee Enterprises (APOG), Conagra Brands (CAG), Constellation Brands (STZ), Levi Strauss & Co. (LEVI), PriceSmart (PSMT) and WD-40 (WDFC) will be reporting numbers. This comes ahead of next week’s official start to the first-quarter earnings season with the Financial sector coming into focus.
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iShares MSCI Emerging Markets ETF (EEM, $54.07, up $0.21)
EEM May 55 calls (EEM210521C00055000, $0.95, up $0.06)
Entry Price: $1.00 (4/5/2021)
Exit Target: $2.00
Stop Target: None
Action: Shares tested a morning high of $54.25 with current and lower resistance at $54-$54.50 getting cleared and holding. A close above $54.75 and the 50-day moving average would be a more bullish signal for additional strength towards $55-$55.50. Support is at $53.50-$53.
Utz Brands (UTZ, $25.51, up $0.51)
UTZ May 25 calls (UTZ210521C00025000, $1.75, up $0.25)
Entry Price: $1.45 (3/29/2021)
Exit Target: $2.90
Stop Target: None
Action: Monday’s peak reached $25.55 with early March and lower resistance at $25.50-$25.75 getting recovered. A close above the latter would likely signal a run towards $26.25-$26.50. Rising support is at $25.25-$25 and the 50-day moving average.
International Game Tech (IGT, $16.53, down $0.32)
IGT April 20 calls (IGT210416C00020000, $0.10, unchanged)
Entry Price: $0.95 (3/17/2021)
Exit Target: $1.90
Stop Target: None
Action: Shares traded to a first half high of $17.29 before closing in the red. Near-term and lower resistance at $17.25-$17.50 was cleared but held. Support remains at $16.50-$16.25.
If shares fail to clear and hold the 50-day moving average by Thursday or Friday, we will likely exit the trade. We are going to need shares to make a run towards $21 this week like they did during a four-day run back in mid-March just to get back to even.