MomentumOptions.com Pre-Market Update for 4/19/2021

Market Stays Hot for the Fourth-Straight Week

8:00am (EST)

The stock market closed higher on Friday following another record-setting rally, fueled by stronger-than-expected economic data and earnings. Specifically, housing starts rose 19.4% to a 1.74 million rate in March, while March building permits rose 2.7% to a 1.77 million rate. Additionally, the University of Michigan consumer sentiment survey reading increased 1.6 points to 86.5 in the preliminary April report.

Bank earnings continue to shine as Morgan Stanley (MS) reported better-than-expected numbers for the first quarter, with the company saying on its conference call that the quarter was marked by numerous performance records. The weekly gains were the fourth-straight for the overall market.

The Dow traded to an opening all-time high of 34,256 while finishing at 34,200 (+0.5%). Unchartered territory and lower resistance at 34,250-33,500 was cleared but held. A move above the latter would signal ongoing strength towards 34,750-35,000.

The S&P 500 closed at 4,185 (+0.4%) after reaching a record peak of 4,191 ahead of the final bell. Fresh and lower resistance at 4,175-4,200 was breached and held. A pop above the latter would indicate upside towards 4,225-4,250.

The Russell 2000 settled at 2,262 with the morning high tapping 2,273 (+0.3%). Near-term and lower resistance at 2,275-2,300 was challenged but held. A move above the latter would suggest additional strength towards 2,325-2,350 with the all-time top from mid-March at 2,360. Below is a chart of the IWM.

The Nasdaq ended at 14,052 (+0.1%) with the late day peak hitting 14,062. Prior and lower resistance from early February at 14,050-14,150 was cleared and held. A close above the latter and the record high at 14,175 would likely lead to a breakout towards 14,250-14,400.

Market Movers

Shares of Lattice Semiconductor (LSCC) jumped 13% following news it will be added to the S&P 400.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSE: VIX) fell for second-straight session with the low reaching 16.05. Current and upper support at 16-15.50 was challenged but held. A move below the latter would signal a further fade towards 15-14.50.

Resistance at 17-17.50 with a close above 18 being a slightly bearish development.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) was up for the seventh time in eight sessions after trading to a record high of $417.91. Unchartered territory and lower resistance at $417.50-$418 was cleared but held. A close above the latter would indicate additional upside towards $419.50-$420.

Near-term support is at $416-$415.50 followed by $414-$413.50.

RSI (relative strength index) remains in a slight uptrend with key resistance at 75 getting cleared and holding. Continued closes above this level would suggest a run towards 80 and overbought territory from late August/ early September. Support is at 70.

Sector

The Financial Select Sector Spider Fund (NYSE: XLF) rebounded after trading to an all-time peak of $35.53. Fresh and lower resistance at $35.50-$35.75 was tripped but held. A close above the latter would indicate continued strength towards $36.25-$36.50.

Support is at $35-$34.75.

RSI is curling higher with lower resistance at 65-70 getting recovered. A close above the latter would suggest upside towards 75-80 and the late February highs. Support is at 60-55.

I have updated our current trades so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 15-4 (79%). 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.

Archer Daniels Midland Company (ADM, $59.45, up $0.78)

ADM May 60 calls (ADM210521C00060000, $1.30, up $0.30)

Entry Price: $1.15 (4/16/2021)
Exit Target: $2.30
Return: 13%
Stop Target: None

Action: Friday’s all-time peak reached $59.58 with fresh and lower resistance at $59.50-$60 getting cleared but holding. A close above the latter could lead to a breakout towards $61.50-$62. Support is at $59-$58.50. Earnings are due out on April 27th.

Western Union (WU, $25.89, up $0.13)

WU May 26 calls (WU210521C00026000, $0.80, up $0.05)

Entry Price: $0.60 (4/7/2021)
Exit Target: $1.20
Return: 33%
Stop Target: 62 cents, raise to 66 cents (Stop Limit)

Action: Raise the Stop Limit from 62 cents to 66 cents.

Shares tested a high of $26 with current and lower resistance at $26-$26.25 getting breached but holding. A close above the latter and Thursday’s 52-week high at $26.16 would suggest continued strength towards $26.50-$26.75. Support is at $25.75-$25.50. Earnings are due out the first week of May.

iShares MSCI Emerging Markets ETF (EEM, $54.35, up $0.14)

EEM May 55 calls (EEM210521C00055000, $0.80, up $0.05)

Entry Price: $1.00 (4/5/2021)
Exit Target: $2.00
Return: -20%
Stop Target: None

Action: Friday’s peak reached $54.43 with near-term and lower resistance is at $54.25-$54.75 getting cleared and holding. A close above the latter and the 50-day moving average would be a bullish development for a run towards $55.50-$56. Support is at $54-$53.50.