MomentumOptions.com Pre-Market Update for 4/30/2021
S&P 500/ Nasdaq Tag Record Highs
The stock market hit record levels on Thursday’s open but was somewhat choppy afterwards as Wall Street weighed a batch of better-than-expected Tech earnings and proposals from President Biden’s first address before a joint session of Congress.
A rise in treasury yields slowed momentum before a recovery afterwards with more key earnings updates, including Amazon.com (AMZN) and Twitter (TWTR), after the closing bell.
The Dow rebounded after trading to an afternoon high of 34,087 while ending at 34,060 (+0.7%). Current and lower resistance at 34,000-34,250 was recovered. A move above the latter and the mid-month all-time peak at 34,256 would indicate additional upside towards 34,500-34,750
The S&P 500 closed at 4,211 (+0.7%) with the record high hitting 4,218. Key resistance at 4,200 was breached and held. Continued closes above this level keeps additional upside towards 4,225-4,250 in play.
The Nasdaq finished at 14,082 (+0.2%) after trading to an intraday all-time high of 14,211. Unchartered territory and lower resistance at 14,200-14,350 was cleared but held. A pop above the latter would suggest ongoing strength towards 14,500-14,650.
The Russell 2000 settled at 2,295 (-0.4%) after having its four-session winning streak snapped on the midday pullback to 2,278. Near-term and upper support at 2,300-2,275 failed to hold. A drop below the latter would signal a retest towards 2.250-2,225 and the 50-day moving average. Below is a chart of the IWM.
Shares of Ford (F) stumbled 9% despite reporting better-than-expected earnings and revenue. The company warned it will lose 10% of planned second-half 2021 production due to consequences from the semiconductor shortage, which it said was made worse by a recent supplier fire in Japan.
The iPath S&P Vix Short-Term Futures (NYSE: VIX) rose for the first time in three sessions after spiking to a high of 18.87. Prior and lower resistance at 18.50-19 was breached but held. A close above the latter would suggest strength towards 20-20.50 and the 50-day moving average.
Support is at 17-16.50 followed by 16-15.50.
The Wilshire 5000 Composite Index (NYSE: WLSH) snapped a two-session slide with the intraday high tapping 44,386. Unchartered territory and lower resistance at 44,250-44,500 was cleared but held. A move above the latter would indicate ongoing strength towards 44,750-45,000.
Support is at 44,000-43,750.
RSI (relative strength index) is in a slight uptrend with key resistance at 70 holding. Continued closes above this level would suggest strength towards 75 and the early January high. Support is at 65-60 with the latter holding since the start of the month.
The SPDR S&P Homebuilders ETF (NYSE: XHB) was up for the fourth time in five sessions following the intraday run to $76.93 and fresh all-time peak. New and lower resistance at $76.50-$77 was breached and held. A close above the latter would signal additional momentum towards $78-$78.50.
Support is at $76-$75.50.
RSI has curled higher with key resistance at 70 holding. A close above this level would suggest additional strength towards 75 and overbought levels from mid-January. Support is at 65-60.
Amazon.com and Twitter reported better-than-expected numbers after Thursday’s close and could keep Tech trending higher. The close above 17.50 on the VIX was a slight concern with a close below this level likely indicating strength into next week. May is typically known as the month to sell and go away but in recent years has been bullish.
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.
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.
iShares MSCI Emerging Markets ETF (EEM, $54.95, down $0.13)
EEM May 55 calls (EEM210521C00055000, $0.90, down $0.10)
Entry Price: $1.00 (4/5/2021)
Exit Target: $2.00
Stop Target: None
Action: Shares tested a low of $54.59 with current and upper support at $55-$54.50 failing to hold. Resistance remains at $54.50-$54 and the 50-day moving average.