MomentumOptions.com Pre-Market Update for 7/15/2021

Fed Talks Inflation

8:00am (EST)

The stock market was choppy on Wednesday before closing mixed following comments from Fed Chairman Powell. He stated the central bank can wait before it starts to ease its bond purchases despite surging inflation readings.

The Fed chair said he still expects inflation to moderate with the dovish testimony providing some initial support for the market. However, traders appeared cautious over near-record high valuations and the potential for peak earnings this quarter.

The S&P 500 traded to an all-time high of 4,393 before settling at 4,374 (+0.1%). Unchartered territory and key resistance at 4,400 was challenged but held for the second-straight session. A close above this level would indicate further upside towards 4,425-4,450.

The Dow ended at 34,933 (+0.1%) after testing a morning peak of 35,069. Key resistance at 35,000 was cleared but held for the third-straight session. 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 Nasdaq made an opening run to 14,790 while finishing slightly lower at 14,644 (-0.2%). Key resistance at 14,750 was cleared but also held for the third-straight session. Continued closes above this level would signal additional strength towards 14,850-15,000.

The Russell 2000 fell for the second-straight session after bottoming at 2,201 while closing at 2,202 (-1.6%). Prior and upper support at 2,225-2,200 failed to hold. A move below the latter reopens downside risk towards 2,175-2,150. Below is a chart of the IWM.

Market Movers

Shares of Wheels Up Experience (UP) rose 16% after becoming the first private aviation company to be traded on the New York Stock Exchange through its transaction with Aspirational Consumer Lifestyle Corp. (ASPL), a special purpose acquisition company.

Volatility Index

The Volatility Index (VIX) was up for the third time in four sessions with the high hitting at 17.51. Lower resistance at 17.50-18 was breached but held. A move above the latter and the 50-day moving average would indicate another retest towards 19.50-20.

Support is at 16.50-16 followed by 15.50-15.

Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) traded in a 46-point range with the session low reaching 2,652. Key support at 2,650 was challenged but held. A drop below this level would suggest a retest towards 2,625-2,600.

Resistance is at 2,675-2,700 and the 50-day moving average.

RSI (relative strength index) is in a downtrend with upper support at 45-40 failing to hold. A move below the latter would signal weakness towards 35-30 and last month’s lows. Resistance is at 50-55.

Sector

The Spider S&P Retail ETF (NYSE: XRT) was down for the second-straight session following the pullback to $95.16. Near-term and upper support at $95.50-$95 failed to hold. A close below $94.50 and and the 50-day moving average would suggest a further slide towards $93-$92.50.

Resistance is at $97-$97.50.

RSI is back in a downtrend with key support at 50 failing to hold. Continued closes below this level would indicate weakness towards 45-40 and levels from mid-May. Resistance is at 55-60.

Market Outlook

The small-caps are nearing the monthly low and will need to hold 2,192 to avoid a further selloff. The VIX will need to hold the 18 level on continued weakness. These are the two most important indicators to watch for today. If they are breached and fail to hold, the market could see a near-term pullback.

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, $84.72, down $1.29)

GDDY August 97.50 calls (GDDY210820C00097500, $0.30, down $0.20)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -75%
Stop Target: None

Action: Shares tapped a low of $84.69 with prior and upper support at $85-$84.50 failing to hold. Lowered resistance is at $85.50-$86. Earnings are due out on August 4th.

Juniper Networks (JNPR, $28.05, up $0.60)

JNPR August 28 calls (JNPR210820C00028000, $1.10, up $0.25)

Entry Price: $0.70 (7/7/2021)
Exit Target: $1.40 (closed half at $1.05 on 7/14)
Return: 53%
Stop Target: 85 cents, raise to 95 cents (Stop Limit)

Action: Raise the Stop Limit from 85 cents to 95 cents.

Wednesday’s high reached $28.20 with prior and lower resistance from early June at $28-$28.25 getting recovered. Rising support is at $27.75-$27.50.

Himax Technologies (HIMX, $14.79, down $0.16)

HIMX August 20 calls (HIMX210820C00020000, $0.20, down $0.10)

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: -80%
Stop Target: None

Action: Shares traded down to $14.72 with upper support at $14.75-$14.50 getting breached but holding. Resistance is at $15-$15.25. Earnings are due out in early August.

Canoo (GOEV, $8.71, down $0.26)

GOEV August 10 calls (GOEV210820C00010000, $0.45, down $0.10)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: -58%
Stop Target: None

Action: Yesterday’s low tapped $8.67 with upper support at $8.75-$8.50 and the 50-day moving average failing to hold. Resistance is at $9-$9.25.

Marathon Oil (MRO, $12.52, down $0.60)

MRO August 15 calls (MRO210820C00015000, $0.20, down $0.15)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -71%
Stop Target: None

Action: Prior and upper support at $12.50-$12.25 was breached but held on the fade to $12.38. Resistance is at $12.75-$13.

Ford Motor (F, $14.25, 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: Wednesday’s low hit $14.20 with upper support at $14.25-$14 getting tripped but holding. Resistance remains at $14.50-$14.75. Earnings are due out July 28th.