MomentumOptions.com Pre-Market Update for 6/9/2021
Small-Caps Show Continued Strength
The stock market traded in another tight range on Tuesday as Wall Street weighed the latest economic news and the continued rally in meme stocks. Specifically, ongoing signs of labor shortages remained in play as the latest update on job openings showed more than nine million positions available. However, employers are still struggling to find qualified workers to fill positions as nearly 50% of small businesses reported they had unfilled job openings last month.
The Russell 2000 tapped an afternoon high of 2,348 before ending at 2,343 (+1.1%). Prior and lower resistance from mid-March at 2,325-2,350 was cleared and held. Continued closes above the latter and the all-time high at 2,360 would be a bullish development for momentum towards 2,375-2,400. Below is a chart of the IWM.
The Nasdaq closed at 13,924 (+0.3%) with the late day peak hitting 13,981. Prior and lower resistance at 13,900-14,000 was recovered. A close above the latter would suggest a retest towards 14,050-14,200 with the late April all-time top at 14,211.
The S&P 500 traded in a 28-point range while settling at 4,227 (-0.1%) and the intraday high tagging 4,236. Near-term and lower resistance at 4,235-4,250 was cleared but held. A pop above the latter and the lifetime high at 4,238 would signal a possible breakout towards 4,275-4,300.
The Dow kissed an intraday low of 34,452 before finishing at 34,599 (-0.1%). Near-term and upper support at 34,500-34,250 was breached but held. A drop below the latter would indicate a further fade towards 34,000 and the 50-day moving average.
Shares of Wendy’s (WEN) jumped nearly 26% after Reddit’s WallStreetBets mentioned the company as a potential short-squeeze target. However, also contributing to the breakout was a report by a brokerage firm that said its channel checks across major markets showed the company is gaining ground in the current quarter as weekly sales accelerated in April and May.
The Volatility Index (VIX) was up despite trading to an opening 52-week low of 15.15. Fresh and upper support at 15.50-15 was breached but held. A move below the latter would suggest weakness towards 14-13.50 and levels from February 2020.
The rebound to 17.75 breached but held lower resistance at 17.50-18. A close above the latter would be a warning sign for additional upside towards 18.50-19 and the 50-day moving average.
The iShares Russell Growth 1000 ETF (NYSE: IWF) was up for the third-straight session after reaching a peak of $259.54. Prior and lower resistance at $259.50-$260 was breached but held. A move above the latter would indicate further strength towards $262-$262.50 with the late April all-time high at $263.21.
Rising support is at $258.50-$258.
RSI is in an uptrend with key resistance at 60 holding. A move above this level would suggest additional upside towards 65-70 and levels from mid-April. Support is at 55-50.
The SPDR Gold Shares (NYSE: GLD) was down for the first time in three sessions with the low reaching $176.37. Current and upper support at $176.50-$176 was tripped but held. A close below the latter would suggest a retest towards $175-$174.50.
Resistance is at $177.50-$178 followed by $179.50-$180.
RSI is back in a slight downtrend with key support at 60 holding. A close below this level would signal weakness towards 55-50 with the latter holding since early April. Resistance is at 65-70.
This week’s strength in Tech and the small-caps continue to be bullish signals for the market but the action in the VIX yesterday was a slight disappointment. All of the major indexes are up for the month despite the tight trading ranges and what is typically the start of the summer doldrums.
With that said, I should have one, possibly two, new trades this morning. JetBlue Airways (JBLU) is one I’m looking at and have been watching like a hawk. I would like to get back into Marathon Oil (MRO) but want to see if a near-term bottom is in, or wait to see if $14 is cleared and held.
I want to be slightly careful using July options as they expire mid-month, or 37 days from today. This still gives us five weeks to play directional trades but the choppy action and possible pullbacks for the major indexes at key resistance levels needs to be considered.
A few weeks ago, I mentioned Ford Motor (F) as another trade I liked and we missed a 300% return. Shares have gapped higher on days I have been wanting to pull the trigger. On May 24th, I profiled the Ford June 14 calls at 40 cents and they have zoomed to $1.65 as of yesterday’s close.
I believe Ford shares could be headed to $18-$20 by August so stay tuned. There was heavy buying in the Ford August 20 calls yesterday as they closed at 40 cents with volume topping 48,000 contracts.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 18-9 (67%). 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.
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