MomentumOptions.com Pre-Market Update for 6/3/2021

Bulls Continue to Push Higher Highs

8:00am (EST)

The stock market showed continued gains on Wednesday after trading in a tight range and on both sides of the ledger. The Fed’s Beige Book provided some late day strength after saying the economy expanded at a somewhat faster pace from early April to late May.

The Nasdaq closed at 13,756 (+0.1%) after trading in an 86-point range with the high hitting 13,775. Current and lower resistance at 13,750-13,900 was cleared and held. A move above the latter would signal upside towards 14,000-14,150 with the late April lifetime peak at 14,211.

The S&P 500 made a first half run to 4,217 before ending at 4,208 (+0.1%). Key resistance at 4,225 was challenged but easily held. A pop above this level and the all-time high at 4,238 would be a bullish development with breakout potential towards 4,250-4,275.

The Russell 2000 traded to an midday peak of 2,302 while finishing at 2,268 (+0.1%). Key resistance from late April at 2,300 was cleared but held. Continued closes above this level would indicate additional upside towards 2,325-2,350 with the March record high at 2,360. Below is a chart of the IWM.

The Dow settled at 34,600 (+0.1%) to extend its winning streak to five-straight sessions after tagging an intraday high of 34,706. Key resistance at 34,750 was challenged but held. A close above this level would suggest a retest towards 35,000 with the all-time high from early May at 35,091.

Market Movers

Shares of AMC Entertainment (AMC) skyrocketed 95% as meme stocks stayed hot. The company announced earlier this week that it raised $230 million by selling 8.5 million shares to Mudrick Capital Management with the cash being used to buy new leases and enhance consumer appeal in existing locations. However, Mudrick Capital has already sold all of its stock in AMC, telling clients the shares are massively overvalued.

Volatility Index

The Volatility Index (VIX) fell for the first time in three sessions after trading down to 16.74. Current and upper support at 17-16.50 was breached but held. A close back below the latter would suggest a retest towards 16-15.50.

Resistance is at 18.50-19 and the 50-day moving average.

Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) had its four-session winning streak snapped following the intraday pullback to 2,723. Fresh and upper support at 2,725-2,700 was tripped but held. A close below the latter would suggest additional weakness towards 2,675-2,650 and the 50-day moving average.

Resistance is at 2,750-2,275 with the early May all-time peak at 2,780.

RSI (relative strength index) has rolled over with upper support 55-50 failing to hold. A close below the latter would signal ongoing weakness towards 45-40. Resistance is at 60.

Sector

The Industrials Select Sector SPDR Fund (NYSE: XLI) fell for the first time in five sessions after tapping a low of $105.07. Fresh and upper support at $105.50-$105 failed to hold. A close below the latter would signal downside risk towards $104-$103.50.

Resistance is at $106-$106.50 with the all-time high at $106.81.

RSI is in a downtrend with key support at 60 holding. A drop below this level would indicate weakness towards 55-50. Resistance is at 65-70.

Market Outlook

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, $13.89, up $0.13)

MRO July 12 calls (MRO210716C00012000, $2.10, up $0.10)

Entry Price: $0.85 (5/24/2021)
Exit Target: $2.50 (closed 1/3 at $1.80 on 6/1/2021)
Return: 135%
Stop Target: $1.50, raise to $1.70 (Stop Limit)

Action: Raise the Stop Limit from $1.50 to $1.70 to further protect profits and to ensure a triple-digit winner.

Wednesday’s 52-week high reached $14.03 with 3-year and key resistance at $14 getting cleared but holding. A close above this level should get a possible run towards $14.50-$15 in play. My target is $16 by mid-July. Current support is at $13.50-$13.25.

Western Union (WU, $25.00, up $0.42)

WU June 26 calls (WU210618C00026000, $0.30, up $0.20)

Entry Price: $0.65 (5/10/2021)
Exit Target: $1.30
Return: -56x%
Stop Target: None

Action: Shares surged to a high of $25.18 with prior and lower resistance at $25-$25.25 getting cleared and holding. Fresh support is at $24.75-$24.50.

Intel (INTC, $57.48, up $0.59)

INTC June 60 calls (INTC210618C00060000, $0.30, up $0.05)

Entry Price: $0.65 (5/10/2021)
Exit Target: $1.30
Return: -54%
Stop Target: None

Action: Lower resistance at $57.50-$58 was breached but held on yesterday’s rebound to $57.69. Support remains at $57-$56.50.

Utilities Select Sector SPDR Fund (XLU, $65.10, up $0.34)

XLU June 69 calls (XLU210618C00069000, $0.10, up $0.05)

Entry Price: $0.65 (5/3/2021)
Exit Target: $1.30
Return: -85%
Stop Target: None

Action: Shares traded to a high of $65.46 with lower resistance at $65-$65.50 getting recovered. Support is at $64.50-$64.