MomentumOptions.com Pre-Market Update for 7/12/2021

Bulls Get Weekly Win

8:00am (EST)

The stock market continued its recent seesaw action on Friday after rebounding from the prior session losses that allowed the major indexes to notch slight gains for the week. The Financial sector led the way higher with a gain of 2.9% followed by Energy and Materials.

The return to record highs comes just ahead of the second quarter earnings season which starts on Tuesday with the banking stocks. Volatility also tumbled nearly 15% to ease bearish concerns while closing back below a key level of support.

The Russell 2000 snapped a four-session slide after settling on its session high of 2,280 (+2.2%). Prior and lower resistance at 2,275-2,300 was cleared and held on the close back above the 50-day moving average. A move above the latter would suggest a retest towards 2,325-2,350 with the record high from early March at 2,360. Below is a chart of the IWM.

The Dow closed at 34,870 (+1.3%) after trading to a late day high of 34,893. Key resistance at 34,750 was recovered. Continued closes above this level would be a bullish development for a run towards 35,000 with the all-time peak from early May at 35,091.

The S&P 500 tagged an afternoon lifetime of 4,371 before ending at 4,369 (+1.1%). Unchartered territory and new resistance at 4,375 was challenged but held. A move above this level would indicate a continued breakout towards 4,400-4,425.

The Nasdaq tapped a high of 14,710 before finishing at 14,701 (+1%). Current and key resistance at 14,750 was approached but held. A close above this level and last Wednesday all-time top at 14,755 would signal ongoing strength towards 14,850-15,000.

Market Movers

Shares of Stamps.com (STMP) zoomed 64% after agreeing to be acquired by Thoma Bravo, a leading software investment firm, in an all-cash deal that values the company at $6.6 billion, or $330 a share.

Volatility Index

The Volatility Index (VIX) dropped nearly 15% after testing a low of 16.08. Near-term and upper support at 16.50-16 was recovered. A close below the latter would signal a retest towards 15-14.50 with the late June 52-week low at 14.10.

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

Market Analysis

The iShares Russell Growth 1000 ETF (NYSE: IWF) rebounded after trading to a high of $278.27. Lower resistance at $278-$278.50 was cleared and held. A move above the latter and Wednesday’s all-time peak at $278.65 would indicate ongoing momentum towards $280-$280.50.

Support is at $276-$275.50 followed by $273-$272.50.

RSI is back in an uptrend with overbought resistance at 75 getting cleared and holding. Continued closes above this level would suggest strength towards 80 and the monthly high. Key support is at 70.

Sector

The Health Care Select Sector SPDR Fund (NYSE: XLV) was up for the second time in three sessions with the fresh record peak hitting $129.10. Unchartered territory and lower resistance at $129-$129.50 was breached but held. A close above the latter would suggest a further run towards $131-$131.50.

Support is at $127.50-$127.

RSI is trying to curl higher with key resistance at 70 holding. A close above this level would indicate strength towards 75-80 and levels from April. Support is at 65-60.

Market Outlook

The bulls managed to squeeze out a weekly win with Friday’s action but more importantly, held the VIX below 20 while getting a close back below the 50-day moving average. The Financial sector will be in focus this week, starting with earnings from Goldman Sachs Group (GS) and JPMorgan Chase & Co. (JPM) ahead of Tuesday’s opening bell.

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, $87.43, up $0.15)

GDDY August 97.50 calls (GDDY210820C00097500, $0.70, down $0.10)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -42%
Stop Target: None

Action: Friday’s low kissed $86.58 before the slightly higher close. Current and upper support at $87-$86.50 was breached but held for the second-straight session. Resistance is at $87.50-$88.

Juniper Networks (JNPR, $27.62, up $0.37)

JNPR August 28 calls (JNPR210820C00028000, $0.90, up $0.15)

Entry Price: $0.70 (7/7/2021)
Exit Target: $1.40
Return: 29%
Stop Target: None

Action: Shares surged to a high of $27.73 with prior and lower resistance at $27.50-$27.75 getting cleared and holding. Rising support is at $27.25-$27.

Himax Technologies (HIMX, $15.15, up $0.30)

HIMX August 20 calls (HIMX210820C00020000, $0.40, up $0.05)

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: -60%
Stop Target: None

Action: Shares tested a high of $15.34 with lower resistance at $15.25-$15.50 getting cleared but holding. Support is at $15-$14.75.

Canoo (GOEV, $9.01, up $0.18)

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: Friday’s peak tapped $9.05 with lower resistance at $9-$9.25 getting recovered. Support remains at $8.75-$8.50 and the 50-day moving average.

Marathon Oil (MRO, $13.26, up $0.31)

MRO August 15 calls (MRO210820C00015000, $0.40, up $0.05)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -43%
Stop Target: None

Action: Lower resistance at $13.25-$13.50 was cleared and held on the run to $13.35. Support is at $13-$12.75.

Ford Motor (F, $14.48, up $0.42)

F August 18 calls (F210820C00018000, $0.13, up $0.03)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -76%
Stop Target: None

Action: Shares snapped a three session slide with the high hitting $14.57. Fresh and lower resistance at $14.50-$14.75 was breached but held. Support is at $14.25-$14 and the 50-day moving average.