MomentumOptions.com Pre-Market Update for 4/22/2021

Bulls Bounce Back

8:00am (EST)

The stock market rebounded on Wednesday despite opening weakness and a major revenue miss from Netflix (NFLX). Specifically, the company reported a profit of $3.16 versus forecasts for a print of $2.68 but revenues of $7.3 billion fell shy of forecasts for nearly $7.4 billion.

Additionally, Netflix reported first-quarter subscriber growth that sharply missed expectations. Despite the news, the majority of other major companies reporting earnings this week have topped expectations and added to the bullish sentiment.

The Russell 2000 led the way higher after trading to an intraday peak of 2,240 before closing at 2,239 (+2.4%). Near-term and lower resistance at 2,225-2,250 was cleared and held. A close above the latter would indicate ongoing strength towards 2,275-2,300. Below is a chart of the IWM.

The Nasdaq tapped a second half high of 13,951 before ending at 13,950 (+1.2%). Current and lower resistance at 13,850-14,000 was recovered. A move above the latter would indicate additional strength towards 14,100-14,250 with the mid-February all-time high at 14,175.

The S&P 500 tested an afternoon high of 4,175 before settling at 4,173 (+0.9%). Prior and lower resistance at 4,175-4,200 was breached but held. A pop the latter and last Friday’s all-time peak at 4,191 would suggest ongoing strength towards 4,225-4,250.

The Dow tagged to a second half high of 34,160 before finishing at 34,137 (+0.9%). Near-term and lower resistance at 34,000-34,250 was recovered. A close above the latter and the recent record top at 34,256 would signal a possible breakout towards 34,500-34,750.

Market Movers

Shares of Welbilt (WBT) zoomed 44% after Middleby (MIDD) said it will acquire the company in an all-stock transaction with a value of $4.3 billion.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSE: VIX) was down for the first time in three sessions with the intraday low tapping 16.91. Prior and upper support at 17-16.50 was breached but held. A drop below the latter would be a more bullish development for retest towards 16-15.50.

Resistance is at 18.50-19.

Market Analysis

The Invesco QQQ Trust (Nasdaq: QQQ) snapped a two-session slide with the intraday peak reaching $339.48. Current and lower resistance at $339-$339.50 was recovered. A close above the $340 level would indicate another run towards $342-$342.50 with the recent all-time top at $342.23.

Support is at $338-$337.50 followed by $334.50-$334.

RSI (relative strength indicator) is back in a slight uptrend with lower resistance at 60-65 getting cleared and holding. A close below the latter would signal additional strength towards 70 and a level that has been holding since early December. Support is at 55-50.

Sector

The Technology Select Sector Spider Fund (NYSE: XLK) rose for the first time in four sessions after testing a high of $142.32. Near-term and lower resistance at $142-$142.50 was recovered. A move above the latter would signal additional upside towards $143.50-$144 with the recent record peak at $143.57.

Support is at $142-$141.50 followed by $140.50-$140.

RSI is in a slight uptrend with key support at 60 getting cleared and holding. Continued closes above this level would signal a retest 65-70. Support is at 55-50.

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

Momentum Options Play List

Closed Momentum Options Trades for 2021: 16-4 (80%). 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, $59.83, up $1.12)

ADM May 60 calls (ADM210521C00060000, $1.45, up $0.40)

Entry Price: $1.15 (4/16/2021)
Exit Target: $2.30
Return: 27x%
Stop Target: None

Action: Wednesday’s all-time peak reached $59.94 with prior and lower resistance at $59.50-$60 getting cleared and holding. A close above the latter would signal momentum towards $61-$61.50. Support is at $59-$58.50.

iShares MSCI Emerging Markets ETF (EEM, $54.04, up $0.33)

EEM May 55 calls (EEM210521C00055000, $0.60, unchanged)

Entry Price: $1.00 (4/5/2021)
Exit Target: $2.00
Return: -40%
Stop Target: None

Action: Shares tested a late day high of $54.06 with lower resistance at $54-$54.50 getting cleared and holding. A close above the latter and the 50-day moving average would be a more bullish development for continued upside. Support is at $53.50-$53.