MomentumOptions.com Pre-Market Update for 4/29/2021
Fed Update Lifts Stocks Off Lows
The stock market was choppy heading into the latest update from the Federal Reserve on Wednesday but gained momentum after the announcement of holding interest rates near-zero. The minutes were a little more upbeat than last month, noting progress on vaccinations and strong policy support are helping strengthen economic indicators, including employment.
The Fed reiterated the path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The turnaround off the session lows but slightly lower close remains a bullish setup heading into the last two trading days of April with first-quarter earnings remaining strong.
The Russell 2000 reached an afternoon high of 2,309 before finishing at 2,304 (+0.1%). Lower resistance at 2,310-2,335 was challenged but held. A move above the latter would suggest additional strength towards 2,350-2,375 with the all-time peak at 2,360. Below is a chart of the IWM.
The S&P 500 tagged a record peak of 4,201 while closing slightly lower at 4,183 (-0.1%). Unchartered territory and key resistance at 4,200 was cleared but held. A close above this level would indicate a breakout towards 4,225-4,250.
The Nasdaq ended at 14,051 after tapping a second half high of 14,133 (-0.3%). Key resistance at 14,150 was challenged but held. A pop above this level and the record high at 14,175 would indicate momentum towards 14,250-14,400.
The Dow traded in negative territory throughout the session while settling at 33,820 (-0.5%) with the morning low hitting 33,805. Near-term and upper support at 33,750-33,500 was challenged but held. A drop below the latter would signal weakness towards 33,250-33,000.
Starbucks (SBUX) slid 3% after reporting an earnings beat but lower-than-expected revenue, with the company citing the resurgent in coronavirus restrictions in China weighing on sales.
The iPath S&P Vix Short-Term Futures (NYSE: VIX) fell for the second-straight session after kissing a low of 16.67. Upper support at 17-16.50 was breached but held for the sixth-straight session. A close below the latter would signal weakness towards 16-15.50 with the 52-week and mid-month low at 15.38.
Resistance remains at 18-18.50 with the latter holding for the fourth-straight session.
The iShares Russell Growth 1000 ETF (NYSE: IWF) fell for the second-straight session with the late day low hitting $260.64. Current and upper support at $261-$260.50 failed to hold. A move below the latter would suggest further risk towards $259-$258.50.
Resistance is at $262-$262.50 with Tuesday’s all-time peak at $262.70.
RSI has flatlined with key support at 60 holding. A close below this level would signal additional weakness towards 55-50 and levels from late March. Resistance is at 65-70.
The Health Care Select Sector SPDR Fund (NYSE: XLV) extended its losing streak to three-straight sessions after testing an intraday low of $121.96. Near-term and upper support at $122-$121.50 was breached but held. A close below the latter would indicate weakness towards $120.50-$120.
Resistance is at $123-$123.50 with last Friday’s all-time high at $123.96.
RSI is in a downtrend with upper support at 65-60 holding. A close below the latter would indicate additional weakness towards 55-50 and levels from mid-March. Resistance is at 70-75.
Momentum Options Play List
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iShares MSCI Emerging Markets ETF (EEM, $55.08, up $0.41)
EEM May 55 calls (EEM210521C00055000, $0.95, up $0.15)
Entry Price: $1.00 (4/5/2021)
Exit Target: $2.00
Stop Target: None
Action: Wednesday’s peak reached $55.34 with prior and lower resistance from the start of March at $55-$55.50 getting cleared and holding. Support remains at $54.50-$54 and the 50-day moving average.