MomentumOptions.com Pre-Market Update for 4/26/2021

Bears Get First Weekly Win in Five Weeks

8:00am (EST)

The stock market rebounded on Friday with the gains nearly giving the bulls the weekly win. However, the bears did just enough damage throughout the week to get their first overall victory in five weeks.

The rally was enough to lift the small-caps to a weekly gain with the S&P 500 setting a fresh all-time intraday peak in the process. Volatility also settled lower and below a key level of support ahead of the heart of the first-quarter earnings season and the end of month countdown.

The Russell 2000 settled at 2,271 (+1.8%) with the afternoon high tapping 2,281. Prior and lower resistance at 2,275-2,300 was cleared 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 14,016 (+1.4%) with the late day peak hitting 14,062. Near-term and lower resistance at 14,050-14,150 was breached but held. A close above the latter and the record high at 14,175 would likely lead to a breakout towards 14,250-14,400.

The S&P 500 closed at 4,180 (+1.1%) after reaching a record peak of 4,194 ahead of the closing bell. Current and lower resistance at 4,175-4,200 was recovered. A pop above the latter would indicate momentum towards 4,225-4,250.

The Dow traded to a second half high of 34,157 while finishing at 34,043 (+0.7%). Lower resistance at 34,000-34,250 was reclaimed. A move above the latter and the recent all-time peak at 34,256 would signal ongoing strength towards 34,500-34,750.

Market Movers

Shares of Silicon Labs (SLAB) rose nearly 7% after the company agreed to sell its Infrastructure & Automotive business to Skyworks Solutions (SWKS) for $2.75 billion.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSE: VIX) zigzagged for the fourth-straight session with the low tapping 16.80. Current and upper support at 17-16.50 was breached but held. A close below the latter would signal a retest towards 15.50-15.

Resistance is at 18-18.50 followed by 20-20.50 and the 50-day moving average..

Market Analysis

The Spider Small-Cap 600 ETF (NYSE: SLY) was up for the second time in three sessions following the intraday run to $96.55. Near-term and lower resistance at $96.50-$97 was cleared but failed to hold. A close above the latter would suggest additional strength towards $98-$98.50 with the all-time peak from mid-March at $99.71.

Support is at $95.50-$95 followed by $94-$93.50 and the 50-day moving average.

RSI (relative strength indicator) is back in a slight uptrend with lower resistance at 55-60 getting recovered. A move above the latter would suggest additional upside towards 65-70. Support is at 50-45.

Sector

The Consumer Staples Select SPDR Fund (NYSE: XLP) was down for the second-straight session after trading to a low of $69.29. Current and upper support at $69.50-$69 was tripped but held. A close below the latter would indicate additional weakness towards $68-$67.50.

Resistance is at $70-$70.50 with last Wednesday’s all-time high at $70.47.

RSI is in a downtrend with key support at 60 holding. A close below this level would suggest downside pressure towards 55-50. Resistance is at 65-70.

Market Outlook

I mentioned the current action would test our patience and the key for last week would be if the volatility could hold 20. Friday’s close below 17.50 was a slightly bullish signal and comes after the 20 level was challenged but held three times last week.

I also said the bulls would need a Hail Mary to win the week and they nearly pulled it off. This week will be filled with major earnings from a number of Tech companies and will likely be the catalyst for the Nasdaq in making a run at fresh all-time highs, or a possible near-term top.

Tesla (TSLA) earnings out after today’s close and will likely set the tone for Tuesday’s session. On that note, I could have another new trade, today or tomorrow, depending on the action.

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, $59.41, up $0.54)

ADM May 60 calls (ADM210521C00060000, $1.25, up $0.20)

Entry Price: $1.15 (4/16/2021)
Exit Target: $2.30
Return: 9%
Stop Target: None

Action: Friday”s peak reached $59.65 with near-term and lower resistance at $59.50-$60 getting cleared but failing to hold. A close above the latter and last Wednesday’s all-time peak at $59.94 would suggest a breakout towards $61-$51.50. Support is at $59-$58.50.

iShares MSCI Emerging Markets ETF (EEM, $54.63, up $0.78)

EEM May 55 calls (EEM210521C00055000, $0.80, up $0.20)

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

Action: Shares tested an intraday day high of $54.59 with lower resistance at $54.25-$54.75 and the 50-day moving average getting recovered. A close above the $55 level would suggest a retest towards $55.50-$56. Support is at $54-$53.50.