MomentumOptions.com Pre-Market Update for 6/16/2021
Market Slips on Heavy Economic News
The stock market was weak across the board on Tuesday following mostly disappointing economic news and the start of the Fed’s two-day meeting. Retail sales were the biggest disappointment after dropping 1.3% in May versus expectations for a decline of 0.8%.
Elsewhere, business inventories fell -0.2% with forecasts calling for a pullback of 0.1%. And finally, the housing market index slipped -2 points to 81 in June versus forecasts for a print of 83. Technology paced the market’s losses with volatility holding a key level of resistance.
The Nasdaq fell for the first time in four sessions after testing a final hour low of 14,052 before ending at 14,072 (-0.7%). Key support 14,000 was challenged but held. A move below this level would indicate a retest towards 13,900-13,750 and the 50-day moving average.
The Russell 2000 closed at 2,320 (-0.3%) with the intraday low hitting 2,301. Key support at 2,300 was also challenged but held. A drop below this level would suggest a further fade towards 2,275-2,250. Below is a chart of the IWM.
The Dow tapped a first half low of 34,199 while finishing at 34,299 (-0.3%). Near-term and key support at 34,250 was breached but held for the second-straight session. A close below this level and the 50-day moving average would signal additional weakness towards 34,000-33,750.
The S&P 500 traded in a 19-point range after tagging another all-time high of 4,257 before settling lower at 4,246 (-0.2%). New and key support at 4,250 failed to hold. Continued closes below this level would likely indicate a further slide towards 4,225-4,200.
Shares of Canoo (GOEV) jumped nearly 17% late in the day after the electric vehicle startup company made news following details about its virus killing cabin climate control system with air purification qualities.
The weekly GOEV June 11 calls that expire this Friday were heavily traded after sky-rocketing 700%. The options opened at 14 cents, traded down to 10 cents, before kissing an intraday high of $1.20 as 22,000 contracts exchanged hands. The GOEV July 12.50 calls closed at 35 cents on Monday and were up 214% after settling at $1.10 on volume just over 9,000 contracts.
The Volatility Index (VIX) was up for the second-straight session with the intraday peak reaching 17.35. Lower resistance at 17-17.50 was cleared and held. A move above the latter would suggest a retest towards 18-18.50 and the 50-day moving average.
Rising support is at 16.50-16.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) was down for the second-straight session after kissing a low of $342.37. Upper support at $342.50-$342 was breached but held. A close below the latter would signal additional weakness towards the $340.50-$340 area.
Resistance is at $344.50-$345.
RSI is in a downtrend with key support at 50 holding. A move below this level would indicate weakness towards 45-40 and prior levels from late January. Resistance is at 55-60.
The SPDR S&P Homebuilders ETF (NYSE: XHB) rebounded with the intraday peak hitting $72.03. Lower resistance at $72-$72.50 was tripped but held. A close above the latter would suggest additional upside towards $74-$74.50 and the 50-day moving average.
Shaky support is at $71.50-$71.
RSI is is back in a slight uptrend after holding crucial support at 40. A close below this level would indicate weakness towards 35-30 and oversold levels from April 2020. Resistance is at 45-50.
The Fed minutes will be released at 2pm (EST) and will impact trading into the closing bell. The Fed will do its best to keep its commentary on the dovish side with likely no change in rates. A surprise in taper talk could rattle Wall Street with a break below key support levels mentioned earlier signaling continued weakness for the major indexes.
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, $15.00, up $0.13)
F August 18 calls (F210820C00018000, $0.35, unchanged)
Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Stop Target: None
Action: Tuesday’s peak reached $15.16 with prior and lower resistance at $15-$15.25 getting cleared and holding. Support is at $14.75-$14.50.
Tencent Music Entertainment Group (TME, $15.46, down $0.56)
TME July 17 calls (TME210716C00017000, $0.37, down $0.18)
Entry Price: $0.60 (6/9/2021)
Exit Target: $1.20
Stop Target: None
Action: Shares traded down to $15.42 with upper support at $15.50-$15.25 failing to hold. Resistance is at $15.75-$16.