MomentumOptions.com Pre-Market Update for 7/23/2021

Bulls Stay Strong Despite Sluggish Session

8:00am (EST)

The stock market traded in a tighter range on Thursday and on both sides of the ledger before going out mostly higher. The small-caps slacked following two-straight day days of gains for the major indexes as traders prepared for a number of high profile earnings after the closing bell.

Volatility ticked lower but struggled in clearing another level of key support while holding its 50-day moving average. The bulls are still in control to get the weekly win but the bears can’t be counted out given the recent whipsaw action.

The Nasdaq reached a peak of 14,694 before ending at 14,684 (+0.4%). Prior and lower resistance at 14,650-14,800 was cleared and held. A move above the latter and the last week’s all-time high of 14,803 gets 15,000 in focus.

The S&P 500 settled at 4,367 (+0.2%) with the afternoon high tapping 4,369. Key resistance at 4,375 was challenged but held. A close above this level would signal a retest towards 4,400 with the recent lifetime top at 4,393.

The Dow traded up to 34,879 before closing at 34,823 (+0.1%). Key resistance at 35,000 easily held. A pop above this level and the record high from early May 35,091 would likely lead to a breakout towards 35,250-35,500.

The Russell 2000 tagged a midday low of 2,192 while finishing at 2,199 (+1.8%). Current and upper support at 2,200-2,175 failed to hold. A drop below the latter signal another fade towards 2,150-2,125 with Monday’s low at 2,107. Below is a chart of the IWM.

Market Movers

Shares of Domino’s Pizza jumped 14% after reporting a blowout quarter. Earnings came in at $3.12 a share on revenue of $1.03 billion versus forecasts for a print of $2.87 a share on sales of $972.3 million.

Volatility Index

The Volatility Index (VIX) fell for the third-straight day with the low kissing 17.40. Key support at 17.50 was breached but held. A close below this level would suggest weakness towards 16.50-16.

Lowered resistance is at 18-18.50 followed by 19.50-20.

Market Analysis

The Invesco QQQ Trust (Nasdaq: QQQ) extended its winning streak to three-straight sessions with the high tapping $363.96. Current and lower resistance at $363.50-$364 was recovered. A close above the latter would indicate ongoing strength towards $365-$365.50 with the all-time peak at $365.49

Rising support is at $362.50-$362.

RSI (relative strength indicator) remains in an uptrend with lower resistance at 65-70 getting cleared and holding. A close above the latter would suggest additional strength towards 75-80 and prior overbought levels from earlier this month. Support is at 60-55.

Sector

The Industrials Select Sector SPDR Fund (NYSE: XLI) was down for the first time in three sessions after tagging a low of $103.01. Current and upper support at $103.50-$103 failed to hold. A close below the latter and the 50-day moving average would suggest additional risk towards $102-$101.50.

Resistance is at $104-$104.50.

RSI is back in a slight downtrend with key support at 50 holding. A drop below this level would indicate weakness towards 45-40 and levels from Monday. Resistance is at 55-60.

Market Outlook

There were a number of good earnings after Thursday’s close and futures were showing strength early this morning. An up Friday would bold well for a return to all-time highs into next week and during the heart of the second-quarter earnings season.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 19-11 (63%). 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.

International Game Tech (IGT, $20.55, up $0.13)

IGT August 22 calls (IGT210820C00022000, $0.80, unchanged)

Entry Price: $0.70 (7/21/2021)
Exit Target: $1.40
Return: 14%
Stop Target: None

Action: Shares tested a high of $20.78 with fresh and lower resistance at $20.75-$21 getting cleared but holding. Rising support is at $20.25-$20.

AT&T (T, $28.01, up $0.11)

T August 27 puts (T210820P00027000, $0.31, down $0.02)

Entry Price: $0.42 (7/19/2021)
Exit Target: $0.85
Return: -23%
Stop Target: None

Action: Thursday’s peak reached $28.35 with lower resistance at $28.25-$28.50 and the 200-day moving average getting breached but levels that held. Support remains at $27.75-$27.50.

GoDaddy (GDDY, $85.50, up $0.07)

GDDY August 97.50 calls (GDDY210820C00097500, $0.30, unchanged)

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

Action: Lower resistance at $86-$86.50 was breached but held on the run to $86.22. Support remains at $85-$84.50.

Himax Technologies (HIMX, $13.49, down $0.49)

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

Entry Price: $1.00 (6/30/2021)
Exit Target: $2.00
Return: -95%
Stop Target: None

Action: Shares fell to a low of $13.27 with upper support at $13.50-$13.25 failing to hold on the close above the 50-day moving average. Resistance is at $13.75-$14.

Canoo (GOEV, $8.44, down $0.30)

GOEV August 10 calls (GOEV210820C00010000, $0.25, down $0.10)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: -77%
Stop Target: None

Action: Yesterday’s low hit $8.79 with upper support at $8.50-$8.25 failing to hold. Resistance is at $8.75-$9.

Marathon Oil (MRO, $11.70, down $0.17)

MRO August 15 calls (MRO210820C00015000, $0.10, unchanged)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -86%
Stop Target: None

Action: Upper support at $11.75-$11.50 failed to hold on the fade to $11.55. Resistance remains at $12-$12.25.

Ford Motor (F, $13.91, down $0.28)

F August 18 calls (F210820C00018000, $0.06, down $0.02)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -89%
Stop Target: None

Action: Thursday’s low reached $13.78 with upper support at $14-$13.75 failing to hold. Resistance is at $14-$14.25 and the 50-day moving average.