MomentumOptions.com Pre-Market Update for 7/16/2021

Key Support Levels in Play

8:00am (EST)

The stock market reversed course on Thursday to close mostly lower following ongoing comments from Fed Chairman who once again stated he anticipated the shortages and high inflation would abate. It wasn’t enough to sooth Wall Street as traders continue to worry that more sustained inflation could lead to a sooner-than-expected tightening of monetary policy.

The Dow traded to an afternoon high of 34,990 before closing at 34,987 (+0.2%). Key resistance at 35,000 was challenged but held for the fourth-straight session. A close above this level and the all-time peak at 35,091 from early May would signal additional strength towards 35,250-35,500.

The S&P 500 finished at 4,360 (-0.3%) with the intraday low kissing 4,340. Fresh and upper support at 4,350-4,325 was breached but held. A drop below the latter would suggest a further fade towards 4,300-4,275.

The Russell 2000 extended its losing streak to three-straight sessions after tapping a monthly low of 2,166 while ending at 2,190 (-0.6%). Prior and upper support at 2,200-2,175 failed to hold. A move below the latter would be an ongoing bearish development with weakness towards 2,150-2,125 and levels from mid-May. Below is a chart of the IWM.

The Nasdaq tested an intraday low of 14,451 while settling at 14,543 (-0.7%). Near-term and upper support at 14,500-14,350 was breached but held. A close below the latter would indicate ongoing weakness towards 14,150-14,000 and the 50-day moving average.

Market Movers

Shares of F45 Training (FXLV), a fitness chain backed by Mark Wahlberg that offers customers functional 45-minute workouts, made its initial public offering debut after being priced at $16. Shares opened at $17 and traded up to $17.75 while closing slightly higher for the day.

Volatility Index

The Volatility Index (VIX) traded to a high of 18.09 with lower resistance at 18-18.50 getting cleared but holding. A close above the latter and the 50-day moving average would indicate strength towards 19.50-20.

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

Market Analysis

The Spider Small-Cap 600 ETF (NYSE: SLY) was down for the third-straight session with the intraday low reaching $92.64. Prior and upper support at $93-$92.50 was tripped but held. A move below the latter would indicate additional weakness towards $92-$91.50 and levels from mid-May and late April.

Resistance is at $93.50-$94.

RSI (relative strength indicator) is in a downtrend with key support at 40 failing to hold. Continued closes below this level would suggest additional weakness towards 35-30 and levels from September 2020. Resistance is at 45-50.

Sector

The Energy Select Sector SPDR Fund (NYSE: XLE) fell for the fourth-straight sessions with the intraday low tagging $49.86. New and upper support from late April at $50-$49.50 was triggered but held. A close below the latter would signal ongoing weakness towards $48.50-$48.

Resistance is at $50.50-$51.

RSI is in a downtrend with key support at 35 holding. A close below this level would indicate additional weakness towards the 30 area and prior low from October 2020. Resistance is at 40-45.

Market Outlook

The VIX held its 50-day moving average and the small-caps made a lower intraday low on Thursday. This was a neutral reading for the overall market so I will watching these two indicators again today. I would like to see a strong rebound today and into Monday as it would signal money is still moving into the market.

The August options still have over a month before expiration and I still like our current trades. However, calling a market top is never an easy task so we still need to be ready for adding possible put plays if one is being made this week.

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, $84.18, down $0.54)

GDDY August 97.50 calls (GDDY210820C00097500, $0.25, down $0.05)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -79%
Stop Target: None

Action: Thursday’s bottom hit $83.25 with prior and upper support at $83-$82.50 and the 50-day moving average getting violated but levels that held. Lowered resistance is at $84.50-$85. Earnings are due out on August 4th.

Juniper Networks (JNPR, $28.07, up $0.02)

JNPR August 28 calls (JNPR210820C00028000, $1.25, up $0.15)

Entry Price: $0.70 (7/7/2021)
Exit Target: $1.40 (closed half at $1.05 on 7/14)
Return: 64%
Stop Target: 95 cents, raise to $1.05 (Stop Limit)

Action: Raise the Stop Limit from 95 cents to $1.05.

Shares reached a peak of $28.28 with new and lower resistance from early June at $28.25-$28.50 getting cleared but holding. Support remains at $27.75-$27.50.

The options made a nice move despite the nearly flat finish as traders were bidding up the JNPR August 30 calls. Over 9,600 contracts traded and is signaling a run towards $30 could come on continued strength. They closed at 53 cents, up 47%.

I usually don’t piggy-back trades but they look tempting. However, RSI has leveled out with key resistance at $60 holding. If shares do pull back from current levels, we will lock-in at least a 50% profit.

Himax Technologies (HIMX, $14.29, down $0.50)

HIMX August 20 calls (HIMX210820C00020000, $0.15, down $0.05)

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: -85%
Stop Target: None

Action: Yesterday’s low reached $14.06 with upper support at $14.25-$14 getting breached but holding. Lowered resistance is at $14.50-$14.75. Earnings are due out in early August.

Canoo (GOEV, $8.82, up $0.11)

GOEV August 10 calls (GOEV210820C00010000, $0.45, unchanged)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: -59%
Stop Target: None

Action: Shares snapped a two-session slide with the intraday peak reaching $9.40. Lower resistance at $9.25-$9.50 was breached but held. Support remains at $8.75-$8.50 and the 50-day moving average.

Marathon Oil (MRO, $12.24, down $0.28)

MRO August 15 calls (MRO210820C00015000, $0.15, down $0.05)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -79%
Stop Target: None

Action: Prior and upper support at $12.25-$12 was breached and failed to hold on the pullback to $12.11. Resistance is at $12.50-$12.75.

The close below the bottom trading range was a slightly bearish development and could cause us to make an early exit on continued weakness. I would like to see a rebound towards the 50-day moving average today or by early next week.

Ford Motor (F, $14.01, down $0.24)

F August 18 calls (F210820C00018000, $0.08, down $0.02)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -85%
Stop Target: None

Action: Thursday’s low kissed $13.94 with upper support at $14-$13.75 getting tripped but holding on the close back below the 50-day moving average. Resistance is at $14.25-$14.50. Earnings are due out July 28th.