MomentumOptions.com Pre-Market Update for 6/24/2021

Tech Stays Strong but Broader Market Slips

8:00am (EST)

The major indexes were mixed on Wednesday with Tech hitting another all-time high while the broader market pulled back. Better-than-expected economic news helped sentiment as factory activity in June rose. Specifically, the Purchasing Managers’ Index checked in at 62.6, topping forecasts of 61.5, although manufacturers are still struggling to secure raw materials and qualified workers.

The Russell 2000 showed the most strength after settling at 2,303 (+0.3%) with the second half high reaching 2,314. Key resistance at 2,300 was reclaimed. Continued closes above this level keeps upside towards 2,325-2,350 in play with all-time high at 2,360. Below is a chart of the IWM.

The Nasdaq extended its winning streak to three-straight sessions after tagging a record peak of 14,317 before ending at 14,271 (+0.1%). Unchartered territory and fresh resistance at 14,300 was cleared but held. Continued closes above this level would indicate additional momentum towards 14,350-14,500.

The S&P 500 came within a point of a fresh lifetime top after finishing at 4,241 (-0.1%) while tapping an intraday high of 4,256. Key resistance at 4,250 was cleared but held for the second-straight session. A close above this level would suggest a possible run towards 4,275-4,300.

The Dow traded in a 140-point range with the high reaching 34,009 and a lower close at 33,874 (-0.2%). Key resistance at 34,000 was breached but also held for the second-straight day. Continued closes above this level and the 50-day moving average would signal a return trip towards 34,250-34,500.

Market Movers

Shares of Twitter rose 4% to extend its winning streak to five-straight sessions following news the company is opening applications for a limited test of its Super Follows and Ticketed Spaces features. Twitter is selecting a small group of users to test its new monetization features that will compete with Amazon’s Twitch and YouTube users. 

Volatility Index

The Volatility Index (VIX) tested a fresh 52-week low of 14.86 with longer-term and upper support 15-14.50 getting breached but holding. A close below the latter would be an ongoing bullish signal for the market with further weakness towards 13.50-13.

Lowered resistance is at 16.50-17 followed by 18-18.50 and the 50-day moving average.

Market Analysis

The Spider Small-Cap 600 ETF (NYSE: SLY) was up for the third-straight session with the intraday high reaching $97.96. Prior and lower resistance at $97.50-$98 was cleared but held. A close above the latter would indicate additional strength towards $99-$99.50 with the all-time high from earlier this month at $100.94.

Support is at $97-$96.50 and the 50-day moving average.

RSI (relative strength indicator) remains in a slight uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level would suggest additional strength towards 55-60. Support is at 45-40.

Sector

The Materials Select Sector Spider Fund (NYSE: XLB) had its two-session winning streak snapped following the late day pullback to $81.85. Near-term and upper support at $82-$81.50 failed to hold. A move below the latter would suggest a retest towards $80.50-$80.

Resistance is at $82.50-$83.

RSI is showing signs of rolling over after failing key resistance at 40. A close above this level would signal further upside towards 45-50. Support is at 35-30.

Market Outlook

We are still grinding through the month of June but this week’s action has maintained a bullish thesis. The action is the VIX has also given indication the market remains in rebound mode following last week’s weakness but we still need to see continued closes below the 15 level.

I mentioned this morning’s GDP report could dictate how the rest of the week unfolds and it comes out before the opening bell. There are a few trades on my Watch List I’m ready to pull the trigger on but I’d like to see a little bit more recovery in our current trades before adding bullish 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.

AT&T (T, $28.65, down $0.13)

T July 28 puts (T210716P00028000, $0.35, up $0.02)

Entry Price: $0.55 (6/18/2021)
Exit Target: $1.10
Return: -36%
Stop Target: None

Action: Tuesday’s low tapped $28.64 with upper support at $28.75-$28.50 and the 200-day moving average failing to hold. Resistance remains at $29-$29.25.

Ford Motor (F, $15.42, up $0.51)

F August 18 calls (F210820C00018000, $0.38, up $0.13)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -31%
Stop Target: None

Action: Shares surged to a high of $15.53 with prior and lower resistance at $15.50-$15.75 getting breached but holding. Rising support is at $15.25-$15.

Tencent Music Entertainment Group (TME, $15.23, up $0.02)

TME July 17 calls (TME210716C00017000, $0.25, unchanged)

Entry Price: $0.60 (6/9/2021)
Exit Target: $1.20
Return: -58%
Stop Target: None

Action: Shares reached a peak of $15.54 with prior and lower resistance at $15.50-$15.75 getting cleared but holding. Support is at $15-$14.75.