MomentumOptions.com Pre-Market Update for 4/28/2021

Market Mixed Ahead a Key Earnings/ Fed Minutes

8:00am (EST)

The stock market was mixed on Tuesday as Wall Street awaited more corporate earnings results from major companies and the upcoming Federal Reserve monetary policy decision. Big Tech companies will be closely watched, with these stocks having largely underperformed against the broader market rally following the rotation into cyclical and value stocks. 

The Russell 2000 continues to outperform after settling at 2,301 (+0.1%) while testing a first half peak of 2,309. Lower resistance from early March at 2,300-2,325 was recovered. A close above the latter would indicate ongoing strength towards 2,350-2,375 with the all-time peak at 2,360. Below is a chart of the IWM.

The Dow traded to an afternoon high of 34,043 before closing at 33,984 (+0.01%). Current and lower resistance at 34,000-34,250 was breached but held. A move above the latter and the recent all-time peak at 34,256 would suggest additional upside towards 34,500-34,750.

The S&P 500 finished at at 4,186 (-0.02%) after tagging a morning low of 4,176. Near-term and upper support at 4,175-4,150 was challenged but held. A drop below the latter would signal a further fade towards 4,125-4,100.

The Nasdaq tested an intraday low of 14,064 while ending at 14,090 (-0.3%). Key support at 14,000 easily held. A close below this level would indicate additional weakness towards 13,900-13,750.

Market Movers

Shares of Crocs (CROX) jumped 15% after reporting earnings of $1.49 a share on revenue of $460 million. Forecasts were at 89 cents a share on revenue of $415 million.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSE: VIX) remained in a seven session trading range with the low tapping 16.97. Upper support at 17-16.50 was breached but held. A close below the latter would signal a retest towards 16-15.50.

Resistance remains at 18-18.50.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) was down for the first time in three sessions after trading to a low of $416.30. Current and upper support at $416.50-$416 was tripped but held. A close below the latter would indicate additional weakness towards $414.50-$414.

Resistance is at $418-$418.50 with last Friday’s all-time peak at $418.25.

RSI (relative strength index) has flatlined with key resistance at 70 holding. A close above this level would suggest a run towards 75 and slightly overbought territory from earlier this month. Support is at 65-60.

Sector

The Consumer Discretionary Select Spiders (NYSE: XLY) had its two-session winning streak snapped following the intraday pullback to $177.99. Near-term and upper support at $178-$177.50 was breached but held. A close below the latter would likely signal a further slide towards $176-$175.50.

Resistance is at $179-$179.50 with the mid-month record peak at $180.16.

RSI has rolled over with key support at 60 holding. A close below this level would suggest a retest towards 55-50. Resistance is at 65-70.

Market Outlook

Boeing (BA), CME Group (CME), Discovery Communications (DISCA), Garmin (GRMN), Wingstop (WING) and Yum Brands (YUM) are announcing numbers ahead of the opening bell this morning.

Apple (AAPL), Cheesecake Factory (CAKE), eBay (EBAY), Facebook (FB), Ford Motor (F), MGM Resorts International (MGM) and Qualcomm (QCOM) are the major companies announcing after the close.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 17-4 (81%). 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.

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iShares MSCI Emerging Markets ETF (EEM, $54.67, down $0.03)

EEM May 55 calls (EEM210521C00055000, $0.80, unchanged)

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

Action: Shares tagged an intraday day high of $54.84 before closing slightly in the red. Lower resistance from early March at $54.75-$55.25 was breached but held for the second-straight session. Support is at $54.50-$54 and the 50-day moving average.