MomentumOptions.com Pre-Market Update for 7/1/2021

Dow Clears Key Resistance

8:00am (EST)

The stock market was mostly higher on Wednesday as the bulls wrapped up a solid month, and quarter, following stronger-than-expected economic news on employment and pending home sales. Specifically, ADP reported private payrolls rose for the sixth-straight monthly, with jobs rising by 692,000 versus forecasts for a print of 600,000. Meanwhile, May pending home sales rebounded 8% following April’s -4.4% decline.

The Dow traded to an late day high of 34,553 while closing at 34,502 (+0.6%). Key resistance at 34,500 was recovered. Continued closes above this level would be a bullish development for a retest towards 34,750-35,000 with the all-time peak from early May at 35,091.

The S&P 500 tested a second half record peak of 4,302 before ending at 4,297 (+0.1%). Fresh resistance at 4,300 was breached but held. Continued closes above this level would indicate a continued breakout towards 4,325-4,350.

The Russell 2000 tapped a high of 2,317 before settling at 2,310 (+0.1%). Near-term and lower resistance at 2,325-2,350 easily held. A close above the latter and the record high of 2,360 would be a more bullish signal for a run towards 2,375-2,400. Below is a chart of the IWM.

The Nasdaq touched a low of 14,478 while finishing at 14,503 (0.2%). Fresh and upper support at 14,500-14,350 was tripped but held. A close below the latter would suggest weakness towards 14,250-14,100.

Market Movers

Shares of DiDi Global opened at $16.65 in its initial public offering debut after being priced at $14 per share. The Chinese ride-hailing company raised about $4.4 billion in its IPO Tuesday, making it the biggest haul for a Chinese company since Alibaba Group Holding (BABA) listed shares.

Volatility Index

The Volatility Index (VIX) snapped a two-session slide despite trading to an opening high of 17.31. Current and lower resistance 17-17.50 was breached but held.

The fade to 15.58 challenged but held upper support at 15.50-15 with Tuesday’s 52-week low at 14.10.

Market Analysis

The Wilshire 5000 Composite Index (NYSE: WLSH) rebounded with the afternoon high hitting 45,161. Key resistance at 45,200 was approached but held. A close below this level and Tuesday’s all-time high at 45,206 would indicate additional strength towards 45,250-45,500.

Support is at 45,000-44,750 with a close below 44,500 signaling a possible near-term top.

RSI (relative strength index) has flatlined with key resistance from mid-April at 70 holding. A close above this level could lead to a run toward 75 and the January top. Support is at 60.

Sector

The Real Estate Select Sector SPDR Fund (NYSE: XLRE) was down for the second-straight session with the low reaching $44.28. Upper support at $44.50-$44 failed to hold. A close below the latter would suggest additional weakness towards $43.50-$43 and the 50-day moving average.

Resistance is at $45-$45.50 with the all-time high from early June at $45.81.

RSI is in a downtrend with key support at 50 holding. A move below this level would suggest a retest towards 45 and the early May low. Resistance is at 55-60.

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.

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Himax Technologies (HIMX, $16.66, up $0.71)

HIMX August 20 calls (HIMX210820C00020000, $1.00, up $0.40)

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: 0%
Stop Target: None

Action: Shares tested a high of $17.30 with prior and lower support from early February at $17.25-$17.50 getting tripped but holding. A move above $17.88 and the 52-week peak will likely get a trip towards $20 in play. Support is at $16.25-$16.

Canoo (GOEV, $9.94, up $0.12)

GOEV August 10 calls (GOEV210820C00010000, $1.20, up $0.05)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: 9%
Stop Target: None

Action: Wednesday’s high tapped $10.31 with current and lower resistance at $10.25-$10.50 getting breached but hold. Support is at $9.75-$9.50.

Marathon Oil (MRO, $13.62, up $0.29)

MRO August 15 calls (MRO210820C00015000, $0.60, up $0.10)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -14%
Stop Target: None

Action: Shares rebounded to a high of $13.75 with current and lower resistance at $13.75-$14 getting kissed but holding. Support is at $13.50-$13.25.

AT&T (T, $28.78, up $0.12)

T July 28 puts (T210716P00028000, $0.25, down $0.05)

Entry Price: $0.55 (6/18/2021)
Exit Target: $1.10
Return: -55%
Stop Target: None

Action: Yesterday’s peak reached $28.86 with key resistance at $29 holding. Support is at $28.75-$28.50 and the 200-day moving average. I would like to see a close below the latter this week or by early next week.

Ford Motor (F, $14.86, down $0.15)

F August 18 calls (F210820C00018000, $0.23, down $0.04)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -58%
Stop Target: None

Action: Wednesday’s bottom reached $14.81 with upper support is at $14.75-$14.50 getting challenged but holding. Resistance at $15-$15.25.

Tencent Music Entertainment Group (TME, $15.48, down $0.38)

TME July 17 calls (TME210716C00017000, $0.17, down $0.08)

Entry Price: $0.60 (6/9/2021)
Exit Target: $1.20
Return: -72%
Stop Target: None

Action: Upper support at $15.50-$15.25 failed to hold on the close on the session low. Resistance at $15.75-$16 and the 50-day moving average. I would like to see a close above the latter by early next week or we could be forced to close the trade to save the remaining premium.