MomentumOptions.com Pre-Market Update for 6/8/2021

Small-Caps Show Strength/ Trade Alerts (WU, XLU)

8:00am (EST)

The stock market was mixed on Monday following weekend news of a global minimum corporate tax rate and lingering inflation fears. The small-caps and Tech showed strength with the former clearing a key level of resistance and the latter shrugging off a slightly weak open.

The Russell 2000 closed at 2,319 (+1.4%) with the late day peak reaching 2,321. Lower resistance at 2,300-2,325 was recovered. A move above the latter would suggest a run towards 2,350 with the all-time high from mid-March at 2,360. Below is a chart of the IWM.

The Nasdaq tested an intraday high of 13,889 before settling at 13,881 (+0.5%). Fresh and lower resistance at 13,900-14,000 was challenged but held. A close above the latter would indicate a retest towards 14,050-14,200 with the late April record peak at 14,211.

The S&P 500 finished at 4,226 (-0.1%) after tagging a midday low of 4,215. New and upper support at 4,225-4,200 was breached but held. A drop below the latter would be a slightly bearish development with additional weakness towards 4,175-4,150 and the 50-day moving average.

The Dow faded to a low of 34,574 while ending at 34,630 (-0.4%). Near-term and upper support at 34,500-34,250 was challenged but held. A close below the latter would signal a further backtest towards 34,000 and the 50-day moving average.

Market Movers

Shares of RA Medical Systems (RMED) zoomed 87% to lead the latest meme stock buying frenzy. Volume exploded with 129 million shares exchanging hands but the stock does not trade options.

Volatility Index

The Volatility Index (VIX) was unchanged despite trading to a low of 15.78. Prior and upper support at 16-15.50 was tripped but held. A close below the latter and the 52-week low from mid-April at 15.38 would be a bullish signal for the market with additional weakness towards 14.50-14.

Resistance remains at 17-17.50 followed by 18.50-19 and the 50-day moving average.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) pulled back with the intraday low hitting $421.19. Current and upper support at $421.50-$421 was tripped but held. A move below the latter would suggest additional weakness towards $420-$419.50.

Resistance is at $422.50-$423. A close above the latter and last Friday’s all-time high at $422.92 would indicate a possible breakout towards $424.50-$425.

RSI (relative strength index) is showing signs of rolling over with key support at 60 holding. A move below this level would signal further weakness towards 55-50. Resistance is at 65-70.

Sector

The Technology Select Sector Spider Fund (NYSE: XLK) fell for the second time in three sessions despite testing a high of $140.15. Near-term and lower resistance at $140.50-$141 easily held. A move above the latter would suggest strength towards $142-$142.50.

Support is at $139.50-$139 followed by $138.50-$138 and the 50-day moving average.

RSI has flatlined with upper support at 55-50 holding. A close below the latter would signal weakness towards 45-40. Key resistance is at 60.

Market Outlook

We are going to close our WU and XLU trades this morning to save the remaining premiums and to get into new trades this week. You should be able to get a nickel for both of them. While I hate losing trades more than I love winning trades, the Track Record for 2021 is at 17-8 for a 68% win rate and five triple-digit winners.

The mixed action is still signaling higher highs for the overall market and some of the current trades I like got a tad cheaper yesterday. However, some of them remain in trading ranges so I want to ensure current support levels hold.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 17-8 (68%). 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, $13.68, down $0.12)

MRO July 12 calls (MRO210716C00012000, $1.95, down $0.10)

Entry Price: $0.85 (5/24/2021)
Exit Target: $2.50 (closed 1/3 at $1.80 on 6/1/2021)
Return: 124%
Stop Target: $1.70 (Stop Limit)

Action: Shares have been in a four session trading range with yesterday’s low kissing $13.63. Upper support at $13.50-$13.25 was challenged but held. Key resistance remains at $14.

Western Union (WU, $24.63, down $0.40)

WU June 26 calls (WU210618C00026000, $0.05, down $0.05)

Entry Price: $0.65 (5/10/2021)
Exit Target: $1.30
Return: -92%
Stop Target: None

Action: Close the trade this morning to save the remaining premium.

This was the fourth trade on WU this year with the previous returns netting 100%, 89% and 20%. This one just isn’t working out. We can revisit WU if shares can recover the $25.25 level at some point down the road.

Intel (INTC, $57.09, down $0.28)

INTC June 60 calls (INTC210618C00060000, $0.15, down $0.10)

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

Action: Shares tagged a low of $56.78 with upper support at $57-$56.50 getting breached but holding. Resistance remains at $57.50-$58.

Utilities Select Sector SPDR Fund (XLU, $65.51, up $0.12)

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

Entry Price: $0.65 (5/3/2021)
Exit Target: $1.30
Return: -92%
Stop Target: None

Action: Close the trade this morning to save the remaining premium.

Shares have several layers of resistance to clear by next Friday’s close so it is best we move on and save the nickel in premium.