MomentumOptions.com Pre-Market Update for 5/28/2021

S&P 500 Recovers 4,200 Level

8:00am (EST)

The stock market showed continued strength on Thursday with the small-caps leading the way higher for the second-straight session. Better-than-expected news propelled bullish sentiment as initial jobless claims fell 38,000 to 406,000, a fresh post-pandemic low.

The Russell 2000 ended at 2,273 (+1.1%) after testing an afternoon high of 2,277. Lower resistance at 2,250-2,275 was recovered. A close above the latter would indicate additional strength towards 2,300-2,325. Below is a chart of the IWM.

The Dow traded to an opening peak of 34,608 before finishing at 34,464 (+0.4%). Key resistance at 34,500 was cleared but held. Continued closes above this level would signal ongoing upside towards 34,750-35,000 with the all-time high at 35,091.

The S&P 500 settled at 4,200 (+0.1%) with the first half hitting 4,213. Key resistance at 4,200 was recovered. Continued closes above this level keeps upside towards 4,225-4,250 in play with the record peak at 4,238.

The Nasdaq tagged an intraday high of 13,776 while closing at 13,736 (-0.01%). Near-term and lower resistance at 13,750-13,900 was breached but held. A move above the latter would suggest a retest towards 14,000-14,150 with the late April lifetime high at 14,211.

Market Movers

Shares of Ooma (OOMA) jumped 16% following better-than-expected first-quarter numbers. The company reported a profit of 11 cents a share on revenue of $45.6 million. Forecasts were at eight cents a share on sales of $44.3 million.

Volatility Index

The Volatility Index (VIX) was down for the second-straight session with the low hitting 16.52. Prior and upper support at 17-16.50 was breached and held. A close below the latter would suggest a further fade towards 15.50-15.

Lowered resistance is 17-17.50 followed by at 18.50-19 and the 50-day moving average.

Market Analysis

The iShares Russell Growth 1000 ETF (NYSE: IWF) was down for the first time in four sessions after closing on the low of $255.25. Current and upper support at $255.50-$250 was breached and failed to hold. A drop below the latter would indicate further weakness towards $253.50-$253.

Resistance is at $256.50-$257. A move above $257.50 would signal a renewed uptrend.

RSI is showing signs of rolling over with key support at 50 holding. A close below this level would suggest additional weakness towards 45-40. Resistance is at 55-60.

Sector

The Communication Services Select Sector SPDR (NYSE: XLC) was up for the second-straight session with the intraday and fresh 52-week peak hitting $79.24. Near-term and lower resistance at $79-$79.50 was cleared and held. A move above the latter would indicate momentum towards $80.50-$81.

Support is at $78.50-$78 followed by $77-$76.50 and the 50-day moving average.

RSI is in an uptrend with lower resistance at 60-65 getting cleared and holding. A close above the latter would signal additional strength towards 70-75 and levels from late mid-February. Support is at 55-50.

Market Outlook

A higher close today ahead of the three-day weekend would be a continued bullish development and would follow last Friday and Monday’s up sessions. This is an indication of cash flowing into the market. The S&P 500’s close above key resistance and the strength in the small-caps were also positive signs.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 17-6 (74%). 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.

Marathon Oil (MRO, $12.09, up $0.19)

MRO July 12 calls (MRO210716C00012000, $0.90, up $0.05)

Entry Price: $0.85 (5/24/2021)
Exit Target: $1.70
Return: 7%
Stop Target: None

Action: Thursday’s high reached $12.24 with lower resistance at $12-$12.25 getting recovered. Support remains at $11.75-$11.50.

Western Union (WU, $24.63, up $0.13)

WU June 26 calls (WU210618C00026000, $0.15, unchanged)

Entry Price: $0.65 (5/10/2021)
Exit Target: $1.30
Return: -77%
Stop Target: None

Action: Shares traded to a high of $24.79 with lower resistance at $24.75-$25 getting cleared but holding. Support is at $24.50-$24.25.

Intel (INTC, $57.73, up $0.81)

INTC June 60 calls (INTC210618C00060000, $0.50, up $0.15)

Entry Price: $0.65 (5/10/2021)
Exit Target: $1.30
Return: -23%
Stop Target: None

Action: Yesterday’s peak reached $57.88 with lower resistance at $57.75-$58 getting cleared but holding. Slightly rising support is at $57-$56.50.

Utilities Select Sector SPDR Fund (XLU, $64.81, down $0.44)

XLU June 69 calls (XLU210618C00069000, $0.05, down $0.05)

Entry Price: $0.65 (5/3/2021)
Exit Target: $1.30
Return: -93%
Stop Target: None

Action: Shares traded to a low of $64.79 with upper support at $65-$64.50 failing to hold. Lowered resistance at $65.50-$66.