MomentumOptions.com Pre-Market Update for 7/8/2021

Market Rebounds on Fed Minutes

8:00am (EST)

Wall Street was choppy on Wednesday as traders awaited the latest Fed minutes while closing out the session mostly higher. The main takeaway is that most Fed officials did not believe trimming purchases will occur anytime soon.

Some Fed participants mentioned tapering conditions could be met sooner rather than later while others saw incoming data as providing a less clear signal on underlying conditions. The lack of any new, and potentially bearish developments, helped the major indexes regain their momentum although the small-caps remained weak.

The S&P 500 was up for the eighth time in nine sessions after ending at 4,358 (+0.3%) with the fresh all-time high reaching 4,361. Key resistance at 4,350 was recovered. Continued closes above this level keeps additional upside towards 4,375-4,400 in play.

The Dow settled at 34,681 (+0.3%) following the intraday bounce to 34,708. Key resistance at 34,750 was challenged but held. A close above this level would signal a retest towards 35,000 with the record peak from early May at 35,091.

The Nasdaq traded to another lifetime high of 14,755 before closing at 14,665 (+0.01%). Unchartered territory and key resistance at 14,750 was cleared but held. A close above this level would indicate ongoing momentum towards 14,850-15,000.

The Russell 2000 finished at 2,252 (-1%) with the morning low kissing 2,235. Prior and upper support at 2,250-2,225 was tripped but held on the close back below the 50-day moving average. A drop below the latter would be an ongoing bearish development with downside risk towards 2,200-2,175. Below is a chart of the IWM.

Market Movers

Shares of Newegg Commerce (NEGG) skyrocketed 148% after the company announced it will offer professional PC assembly to customers who design their own computers on the Newegg PC Builder.

Options recently listed on the stock just a week ago helped fueled the action as the difficulty to borrow shares increased. The NEGG July 30 calls opened at $3.40 while closing at $33 for a gain of 931%.

Volatility Index

The Volatility Index (VIX) fell for the third time in four sessions despite tapping a first half high of 17.64. Current and lower resistance at 17.50-18 was breached but held.

Upper support is at 16.50-16 was recovered on the backtest to 16.08 afterwards.

Market Analysis

The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) rebounded with the high reaching $347.14. Near-term and lower resistance at $347-$347.50 was cleared but held. A close above the latter would signal additional strength towards the $349-$349.50 area with the early May all-time top at $351.09.

Support is at $347.50-$347 and the 50-day moving average.

RSI is back in a uptrend with key resistance at 60 holding. A move above this level would indicate strength towards 65-70 and prior levels from early May. Support is at 55-50.

Sector

The Dow Jones Transportation Average (NYSE: TRAN) tested a high of 15,000 with lower resistance at 15,000-15,100 getting kissed but holding. A close above the latter would indicate a retest towards 15,200-15,350 and the 50-day moving average.

Support is at 14,900-14,750 followed by longer-term help at 14,650-14,500 and levels from late March.

RSI is in an uptrend with lower resistance at 45-50 getting cleared and holding. A close above the latter would signal strength towards 55-60. Key support is at 40 and a level that has been holding since mid-June.

I have updated our current trades so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 18-11 (62%). 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.

GoDaddy (GDDY, $89.00, up $0.36)

GDDY August 97.50 calls (GDDY210820C00097500, $1.15, up $0.15)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -5%
Stop Target: None

Action: Lower resistance at $90-$90.50 was tapped but held on the session peak. A close above the latter could lead to a quick trip towards $92-$94. Support is at $89-$88.50.

Juniper Networks (JNPR, $27.32, up $0.18)

JNPR August 28 calls (JNPR210820C00028000, $0.75, up $0.10)

Entry Price: $0.70 (7/7/2021)
Exit Target: $1.40
Return: 7%
Stop Target: None

Action: Wednesday’s peak touched $27.33 with lower resistance at $27.25-$27.50 getting recovered. Support is at $27-$26.25 and the 50-day moving average.

Himax Technologies (HIMX, $14.90, down $0.53)

HIMX August 20 calls (HIMX210820C00020000, $0.35, down $0.15)

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: -65%
Stop Target: None

Action: Yesterday’s low tagged $14.57 with upper support at $14.75-$14.50 getting tripped but holding. Resistance is at $15-$15.25.

Canoo (GOEV, $8.81, down $0.31)

GOEV August 10 calls (GOEV210820C00010000, $0.60, down $0.20)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: -45%
Stop Target: None

Action: Shares fell to a low of $8.54 with upper support at $8.75-$8.50 and the 50-day moving average getting tripped but holding. Lowered resistance is at $9-$9.25.

Marathon Oil (MRO, $12.93, down $0.28)

MRO August 15 calls (MRO210820C00015000, $0.35, down $0.05)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -50%
Stop Target: None

Action: Wednesday’s low reached $12.69 with prior and upper support at $12.75-$12.50 getting stretched but holding. Lowered resistance is at $13-$13.25.

Ford Motor (F, $14.23, down $0.27

F August 18 calls (F210820C00018000, $0.10, down $0.05)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -81%
Stop Target: None

Action: Fresh and upper support at $14.25-$14 failed to hold on the intraday drop to $14.02. Lowered resistance is at $14.50-$14.75.