MomentumOptions.com Pre-Market Update for 6/15/2021
Stocks Mixed Ahead of Fed Update
The stock market was mixed on Monday with the broader market and Tech showing strength while the blue-chips and small-caps struggled. Much of the nervousness comes ahead of the Fed’s midweek update and what actions they may or may not take concerning their monetary policy decision.
Wall Street will be listening for an update on taper talk and if it is going to happen sooner, rather than later. The Fed has indicated its first course of action could be cutting back easing its asset purchase program, which is currently at $120 billion per month.
The Russell 2000 settled at 2,326 (-0.4%) after trading down to 2,320. Upper support at 2,325-2,300 was breached but held. A drop below the latter would signal weakness towards 2,275-2,250. Below is a chart of the IWM.
The Dow ended at 34,393 (-0.3%) while testing an intraday low of 34,211. Current and upper support at 34,250-34,000 was tripped but held. A move below the latter and the 50-day moving average would indicate a further slide towards 33,750-33,500 and previous level from mid-May.
The S&P 500 closed on a fresh all-time high 4,255 (+0.2%). Key resistance at 4,250 was cleared and held. Continued closes above this level would suggest continued upside towards 4,275-4,300.
The Nasdaq finished at 14,174 (+0.8%) to extended its winning streak to three-straight sessions with the late day high hitting 14,175. Prior and lower resistance from late April at 14,100-14,200 was cleared and held. A close above the latter and all-time peak at 14,211 would be a bullish development for additional momentum towards 14,350-14,500.
Shares of Corsair Gaming (CRSR) jumped 11% to become the latest meme stock favorite among investors, following increased coverage on Wall Street Bets Reddit page. The company went public last September at $15 a share while raising $238 million in the offering.
The Volatility Index (VIX) was up for the first time in three sessions despite tapping a fresh 52-week low of 15.04. Key support at 15 was challenged but held.
The bounce to 17.04 afterwards breached but held lower resistance at 17-17.50. A move above the latter would indicate risk towards 18-18.50 and the 50-day moving average.
The Spider Small-Cap 600 ETF (NYSE: SLY) was down for the third time in four sessions with the intraday low reaching $98.51. Current and upper support at $99-$98.50 failed to hold. A close below the $97.50 level would signal additional weakness towards $96.50-$96 and the 50-day moving average.
Resistance is at $100-$100.50 with last Tuesday’s record high at $100.94.
RSI (relative strength indicator) has rolled over with upper support at 55-50 holding. A move below the latter would indicate additional weakness towards 45-40 and prior levels from mid-May. Key resistance is at 60.
The Health Care Select Sector SPDR Fund (NYSE: XLV) was up for the third time in four sessions despite kissing an intraday low of $123.78. Near-term and upper support at $124-$123.50 was breached but held. A close below the latter would suggest a further fade towards $122-$121.50.
Resistance is at $125-$125.50 with the May record peak at $125.66.
RSI is trying to curl higher with key resistance at 60 holding. A close above this level would indicate strength towards 65-70 and levels from early May. Support is at 55-50.
I mentioned the heavy call option activity in the iShares Silver Trust (SLV, $25.84, down $0.03) last Friday but I wanted to see shares clear and hold $26.50 on Monday, or this week, before possibly going long. This would suggest a triple-top breakout with the previous beginning of the month high at $26.43 and the May peak at $26.39.
In the meantime, there are also a couple of other stocks at the top of my Watch List that I’m waiting for price action to confirm before initiating new positions.
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.
Ford Motor (F, $14.87, down $0.41)
F August 18 calls (F210820C00018000, $0.35, down $0.08)
Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Stop Target: None
Action: Monday’s low tapped $14.81 with fresh and upper support at $15-$14.75 failing to hold. Resistance is at $15.25-$15.50.
It is always hard to pinpoint an exact bottom in a stock and I mentioned there was risk towards $14.50 when we got into this position. However, this is why I went with the August call options to give the trade plenty of time to play out. Although shares remain in a downtrend, a close back above $15.50 should get momentum returning into the stock.
Tencent Music Entertainment Group (TME, $16.02, up $0.55)
TME July 17 calls (TME210716C00017000, $0.55, up $0.10)
Entry Price: $0.60 (6/9/2021)
Exit Target: $1.20
Stop Target: None
Action: Shares tagged a high of $16.32 with the calls peaking at 66 cents. Lower resistance at $16.25-$16.50 was cleared but held. A close above $16.75 and the 50-day moving average would be a bullish development. Support is at $15.75-$15.50.