MomentumOptions.com Pre-Market Update for 7/9/2021

Major Indexes Turn Lower for the Week

8:00am (EST)

The stock market reversed course on Thursday to close lower for the second time in three sessions as unemployment benefits rose slightly last week. Specifically, initial claims rose 2,000 to 373,000 versus forecasts for a print of 350,000 to give mixed signals on the jobs recovery from the coronavirus pandemic.

The benchmark 10-year Treasury yield also weighed on sentiment after testing an intraday low 1.25%, with the dip in rates highlighting both easing inflation expectations but also uncertainty over the sustainability of the economic recovery.

The Russell 2000 tested an opening low of 2,192 before closing at 2,231 (-0.9%). Prior and upper support from late May at 2,200-2,175 was breached but held. A close below the latter would suggest ongoing weakness towards 2,150-2,125. Below is a chart of the IWM.

The S&P 500 settled at 4,320 (-0.9%) after falling to an intraday low of 4,289. Fresh and upper support at 4,300-4,275 was tripped but held. A drop below the latter would signal a further fade towards 4,250-4,225.

The Dow tagged a low of 34,145 before finishing at 34,421 (-0.8%). Key support at 34,250 and the 50-day moving average were tripped but levels that held. A close below these levels would likely lead to additional weakness towards 34,000-33,750.

The Nasdaq ended at 14,559 (-0.7%) with the low hitting 14,371. Fresh and upper support at 14,500-14,350 was breached but held. A move below the latter would be a bearish development for downside risk towards 14,250-14,100.

Market Movers

Shares of Moving iMage Technologies (MITQ) skyrocketed 700% after pricing 4.2 million shares at $3.00 with the deal size increased from 3.5 million. The company is a manufacturer and integrator of “purpose-built” technology and equipment that supports a variety of entertainment applications, with the main focus on motion picture exhibition.

Volatility Index

The Volatility Index (VIX) zoomed 17% after zooming to an intraday high of 21.29. Prior and lower resistance at 21-21.50 was breached but held. More importantly, the index held the 20 level.

Fresh support is at 18.50-18 and the 50-day moving average.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) was down for the second time in three sessions with the intraday low reaching $427.52. Fresh and upper support at $428-$427.50 was tripped but held. A close below the latter would indicate additional weakness towards $425.50-$425.

Lowered resistance is at $431.50-$432 followed by $434.50-$435 with Wednesday’s all-time peak at $434.76.

RSI (relative strength index) is back in a downtrend with key support at 60 holding. A close below this level would signal further weakness towards 55-50 and levels from late June. Resistance is at 65-70.

Sector

The Consumer Discretionary Select Spiders (NYSE: XLY) was down for the second-straight session with the low tapping $177.64. Current and upper support at $178-$177.50 was clipped but held. A close below the latter would likely suggest a retest towards $175.50-$175.

Resistance is at $181-$181.50 followed by $182-$182.50 with Tuesday’s lifetime top at at $182.29.

RSI has rolled over with key support at 70 holding. A close below this level would signal weakness towards 55-50. Overbought resistance is at 75.

Market Outlook

The bottom uptrend channels on the Nasdaq (13,750), S&P 500 (4,200) and the Dow (34,000) from the November intraday lows came into play yesterday but easily held into the closing bell. Despite the pullback, all of our trades were unchanged with GoDaddy the only exception.

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, $87.28, down $1.72)

GDDY August 97.50 calls (GDDY210820C00097500, $0.80, down $0.35)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -33%
Stop Target: None

Action: Prior and upper support at $87-$86.50 was breached but held on the pullback to $86.52. A close below $86 could lead to a further fade towards $84-$83.50. Lowered resistance at $87.50-$88.

GoDaddy is best known for its website domain businesses but is also expanding into other areas that should significantly enhance its bottom line.

GoDaddy recently announced the launch of GoDaddy Payments, a new payments solution platform that enables its customers to handle all of their commerce transactions. The technology was acquired from Poynt last December and provides websites a fast and secure way for GoDaddy’s ecommerce customers to get paid.

The setup process is fairly simple that enable customers to begin using GoDaddy Payments for processing their customers’ transactions within minutes. The payments are processed securely and efficiently, with the money deposited into users’ bank accounts within 24 hours.

The company also has payment integrations deals with Amazon, eBay, Google, Instagram, Shopify and Square that allows businesses to create a professional and unique online shopping experience for success in the digital economy. With more consumers shopping online than ever before, these payments deals are meeting a brand-new generation of new and established digital retailers.

The company has topped or matched Wall Street’s earnings expectations in three of the past four quarters. In its most recent quarter, GoDaddy topped forecasts by five cents in May after reporting a profit of 30 cents a share on revenue of $874 million.

GoDaddy also announced fourth-quarter total bookings of $943.1 million, up 13% year-over-year with domains revenue topping $402 million. For the current quarter, with results expected in early August, the company expects Q1 revenue of $885 million versus forecasts of $878.5 million. This would represent approximately 12% year-over-year growth.

For fiscal year 2021, the company estimated revenue of $3.7 billion versus expectations of $3.66 billion. Free cash flow was forecast at $945 million, representing growth of 15%, and up from the $825 million of free cash generated in 2020.

There were four price target upgrades following the prior earnings results that ranged from $100 to $113. Currently there are 25 analysts that cover the stock with four Strong Buy ratings, 19 Holds, and two Underperforms.

The current chart shows the consolidation period throughout May between $79 and $83 with a breakout above the latter and the 50-day moving average in mid-June. Shares recently tested a high of $90.43 this month with the all-time peak from February at $93.75.

Juniper Networks (JNPR, $27.25, down $0.07)

JNPR August 28 calls (JNPR210820C00028000, $0.75, unchanged)

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

Action: Thursday’s low kissed $26.99 with upper support at $27-$26.75 and the 50-day moving average getting breached but levels that held. Resistance remains at $27.25-$27.50.

Himax Technologies (HIMX, $14.85, down $0.05)

HIMX August 20 calls (HIMX210820C00020000, $0.35, unchanged)

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

Action: Shares traded down to $13.86 with prior and upper support at $14-$13.75 getting tripped but holding. Resistance remains at $15-$15.25.

Canoo (GOEV, $8.83, up $0.02)

GOEV August 10 calls (GOEV210820C00010000, $0.60, unchanged)

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

Action: Yesterday’s low tagged $8.41 before shares closed slightly higher. Support at $8.75-$8.50 and the 50-day moving average were all breached but levels that held. Resistance remains at $9-$9.25.

Marathon Oil (MRO, $12.95, up $0.02)

MRO August 15 calls (MRO210820C00015000, $0.35, unchanged)

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

Action: Lower resistance at $13-$13.25 was cleared but held on the midday bounce to $13.17. Support is at $12.75-$12.50.

Ford Motor (F, $14.06, down $0.17)

F August 18 calls (F210820C00018000, $0.10, unchanged)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -82%
Stop Target: None

Action: Shares tested a low of $13.73 with support at $14-$13.75 and the 50-day moving average getting violated but levels that all held. Resistance is at $14.25-$14.50. A close below $13.50 will likely force us out of this trade.