MomentumOptions.com Pre-Market Update for 7/13/2021

Dow Clears 35,000

8:00am (EST)

The stock market rose on Monday, with the broader market and Tech hitting another round of record highs, as Wall Street awaited the start of the second-quarter earnings season. The blue-chips and small-caps also showed strength with the former closing just below a key technical level of resistance.

Volatility also nudged lower after spending much of the session slightly elevated as traders also showed some nervousness with Tuesday’s inflation data due out ahead of the opening bell. Financials and Real Estate were the strongest sectors after rising 1% and 0.9%, respectively.

The Dow settled at 34,996 (+0.4%) following the intraday push to 35,014. Key resistance at 35,000 was cleared but held. A close above this level and the early May record peak at 35,091 would suggest a possible breakout towards 35,250-35,500.

The S&P 500 was up for the third time in four sessions after ending at 4,384 (+0.4%) with the fresh all-time high reaching 4,386. Key resistance at 4,375 was cleared and held. Continued closes above this level keeps additional upside towards 4,400-4,425 in focus.

The Nasdaq traded to another lifetime high of 14,761 before closing at 14,733 (+0.2%). Unchartered territory and key resistance at 14,750 was tripped but held. A close above this level would indicate ongoing momentum towards 14,850-15,000.

The Russell 2000 finished at 2,281 (+0.1%) with the afternoon high hitting 2,283. Major resistance at 2,300 was challenged but held. A move above this level would signal a run towards 2,325-2,350 with the record high from early March at 2,360. Below is a chart of the IWM.

Market Movers

Shares of Verso (VRS) jumped 10% to a fresh 52-week high on no specific news. The company produces and sells coated papers/ pulp and recently announced the sale of its closed mill in Duluth, Minnesota.

Volatility Index

The Volatility Index (VIX) was down for the second-straight session with the late day low reaching 16.14. Near-term and upper support at 16-15.50 was challenged but held. A close below the latter would signal another fade towards 15-14.50 with the late June 52-week low at 14.10.

Lowered resistance is at 17.50-18 and the 50-day moving average.

Market Analysis

The Wilshire 5000 Composite Index (NYSE: WLSH) showed continued strength with the fresh all-time high hitting 45,800. Key resistance at 45,750 was cleared and held. Continued closes above this level would indicate additional momentum towards 46,000-46,250.

Support is at 45,500-45,250 with a close below 45,000 signaling a possible near-term top.

RSI (relative strength index) is in an uptrend with key resistance at 70 holding. A close above this level could lead to a run toward 75 and the early January top. Support is at 65-60.

Sector

The SPDR S&P Homebuilders ETF (NYSE: XHB) was up for the second-straight session with the intraday peak hitting $73.49. Key resistance at $73.50 and the 50-day moving average were challenged but levels that held. A close above the latter would suggest ongoing strength towards $74.50-$75.

Support is at $73-$72.50.

RSI is is in a slight uptrend with lower resistance at 55-60 holding. A close above the latter would indicate strength towards 65-70 and prior levels from early May. Support is at 50-45.

Market Outlook

The slow and steady climb higher remains a bullish signal for the overall market with the Dow finally showing signs of breaking out to all-time highs. The prior pullback in the small-caps was a slight disappointment but a close above 2,300 would set them up to join the party.

There are forecasts this could be the best earnings quarter since 2009 and would be a bullish thesis for continued strength. It remains somewhat of a nuisance volatility has remained above the 15 level but its hard to ignore price action. This will be something to keep an eye on, but for now, it is not to worrisome.

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, $86.13, down $1.30)

GDDY August 97.50 calls (GDDY210820C00097500, $0.50, down $0.20)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -57%
Stop Target: None

Action: Yesterday’s low tapped $85.93 with prior and upper support at $86-$85.50 getting tripped but holding. Resistance is at $86.50-$87 followed by $88-$88.50.

Juniper Networks (JNPR, $27.32, down $0.30)

JNPR August 28 calls (JNPR210820C00028000, $0.80, down $0.10)

Entry Price: $0.70 (7/7/2021)
Exit Target: $1.40
Return: 14%
Stop Target: None

Action: Shares traded down to $27.31 with upper support at $27.25-$27 holding. Resistance is at $27.50-$27.75.

Himax Technologies (HIMX, $15.39, up $0.24)

HIMX August 20 calls (HIMX210820C00020000, $0.40, unchanged)

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

Action: Monday’s high tagged $15.67 with lower resistance at $15.50-$15.75 getting tripped but holding. Rising support is at $15.25-$15.

Canoo (GOEV, $9.11, up $0.10)

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 peak reached $9.23 with lower resistance at $9.25-$9.50 getting challenged but holding. Support is at $9-$8.75 and the 50-day moving average.

Marathon Oil (MRO, $13.33, up $0.07)

MRO August 15 calls (MRO210820C00015000, $0.40, unchanged)

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

Action: Lower resistance at $13.50-$13.75 was challenged but held on the run to $13.44. Support is at $13.25-$13.

Ford Motor (F, $14.61, up $0.13)

F August 18 calls (F210820C00018000, $0.13, unchanged)

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

Action: Shares tested a high of $14.74 with lower resistance at $14.50-$14.75 getting cleared and holding. Support remains at $14.25-$14 and the 50-day moving average.