MomentumOptions.com Pre-Market Update for 7/26/2021

Bulls Push Fresh all-Time Highs

8:00am (EST)

Wall Street showed continued momentum on Friday to extend its winning streak to four-straight sessions while hitting another round of fresh all-time highs. The gains easily gave the bulls the weekly win following last Monday’s mini selloff and comes ahead of the busiest week for the second-quarter earnings season.

The Nasdaq tapped an all-time high of 14,846 before finishing at 14,836 (+1%). Key resistance at 14,850 was challenged but held. A move above this level gets a run towards 15,000-15,150 in play.

The S&P 500 tagged a record peak of 4,415 before ending at 4,411 (+1%). Unchartered territory and lower resistance at 4,400-4,425 was cleared and held. A move above the latter would indicate additional momentum towards 4,425-4,450.

The Dow closed at 35,061 (+0.7%) after trading to a lifetime high of 35,095. Key resistance at 35,000 was breached and held. Continued closes above this level would be a an ongoing bullish development for a trip towards 35,250-35,500.

The Russell 2000 rebounded with the intraday peak reaching 2,212 while settling at 2,205 (+0.5%). Key resistance at 2,200 was recovered. Continued closes above this level would suggest a retest towards 2,225-2,250 and the 50-day moving average. Below is a chart of the IWM.

Market Movers

Shares of Snap (SNAP) rallied 24% after announcing quarterly numbers. The company reported a profit of 10 cents a share on revenue of $982 million versus expectations for a loss of a penny on revenue of $845 million.

Volatility Index

The Volatility Index (VIX) extended its losing streak to four-straight sessions after dropping to an intraday low of 16.33. Prior and upper support at 16.50-16 was breached but held on the close back below the 17.50 level. A close below the latter would signal a retest towards 15.50-15.

Resistance is at 17.50-18 and the 50-day moving average followed by 19-19.50.

Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) was up for the third time in four sessions after testing a high of 2,674. Lower resistance at 2,675-2,700 was challenged but held. A close above the latter and the 50-day moving average would suggest a retest towards 2,725-2,750.

Support at 2,650-2,625.

RSI (relative strength index) is in a slight uptrend after clearing and holding key resistance at 50. Continued closes above this level would signal strength towards 55-60 and last month’s highs. Support is at 45-40.

Sector

The iShares MSCI Emerging Markets ETF (NYSE: EEM) had its three-session winning streak snapped following the pullback to $52.23. Prior and upper support from mid-May at $52.50-$52 was tripped but held by a penny. A close below the latter and the 200-day moving average would would indicate a further fade towards $51.50-$51.

Resistance is at $52.75-$53.50.

RSI is back in a downtrend with key support at 35 holding. A close below this level would signal weakness towards 30-25 and levels from March 2020. Resistance is at 40-45.

Market Outlook

More than one-third of the S&P 500 is scheduled to report quarterly earnings this week with Amazon (AMZN), Alphabet (GOOG), Apple (AAPL) and Microsoft (MSFT) being the main focus.

These are the four largest U.S. companies by market value with all of these stocks at or near all-time highs. The breakouts in Alphabet and Microsoft last week were very bullish signals that should propel Amazon and Apple to fresh all-times highs that were set earlier this month.

Overall, second-quarter earnings have come in strong and are expected to have surged above 78% from a year ago, up from 65% at the start of the month. The one curveball this week could come from the Fed update on Wednesday, but not likely, as Chairman Powell will probably stop short of signaling that tapering is imminent.

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, $20.07, down $0.48)

IGT August 22 calls (IGT210820C00022000, $0.60, down $0.20)

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

Action: Friday’s fade touched a low of $19.77 with current and upper support at $20-$19.75 getting breached but holding. Resistance is at $20.50-$20.75. Earnings are due out August 4th.

AT&T (T, $28.15, up $0.14)

T August 27 puts (T210820P00027000, $0.25, down $0.06)

Entry Price: $0.42 (7/19/2021)
Exit Target: $0.85
Return: -40%
Stop Target: None

Action: Shares tagged a high of $28.21 with lower resistance at $28.25-$28.50 and the 200-day moving average getting challenged but holding. Support remains at $27.75-$27.50.

The technical setup remains bearish with the 50-day moving average on track to fall below the 200-day moving average. This would form a death cross and typically signals lower lows. A close below $27.50 should accelerate selling pressure with downside risk towards $27.25-$27.

GoDaddy (GDDY, $86.13, up $0.63)

GDDY August 97.50 calls (GDDY210820C00097500, $0.50, up $0.15)

Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Return: -58%
Stop Target: None

Action: Lower resistance at $86.50-$87 was breached but held on the trip to $86.63. Rising support is at $85.50-$85.

Earnings are due out August 4th and I would like to see a run towards $90 heading into the event. I’m expecting shares could move 10%, or more, based on a solid report that could propel fresh all-time highs and a surge towards the $100 level. This would be enough to get a triple-digit return if this scenario plays out. A close below $83 over-the near-term will force us out of the trade.

Himax Technologies (HIMX, $13.20, down $0.29)

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

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

Action: Shares fell to a low of $12.85 with prior and upper support at $13-$12.75 getting breached but holding. Lowered resistance is at $13.25-$13.50 and the 50-day moving average.

Earnings are due out August 5th but it likely won’t be enough to get these options to a profitable position with a number of resistance levels needing to be cleared. On that note, if shares continue to languish below the 50-day moving average, we will likely close the trade this week to save the remaining premium.

Canoo (GOEV, $8.20, down $0.24)

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: Friday’s low reached $8.09 with upper support at $8.25-$8 failing to hold. Lowered resistance is at $8.50-$8.75.

If shares fail to recover $9 and the 50-day moving average this week, or fall below $8, we will likely exit this trade to save the remaining premium.

Marathon Oil (MRO, $11.50, down $0.20)

MRO August 15 calls (MRO210820C00015000, $0.08, down $0.02)

Entry Price: $0.70 (6/25/2021)
Exit Target: $1.40
Return: -89%
Stop Target: None

Action: Upper support at $11.50-$11.25 was tripped but held on the pullback to $11.32. Lowered resistance is at $11.75-$12.

Earnings are due out August 4th and I would like to see a recovery of $12 this week to keep the position open. A drop below $11 will force an early exit.

Ford Motor (F, $13.82, down $0.09)

F August 18 calls (F210820C00018000, $0.05, down $0.01)

Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Return: -91%
Stop Target: None

Action: Shares failed to regain momentum with Friday’s low tapping $13.73. Upper support at $13.75-$13.50 was breached but held. Resistance is at $14-$14.25 and the 50-day moving average.

Earnings are due out on Wednesday and we are likely going to need a strong move above $15-$15.50 for this trade to make a comeback. The 50-day moving average remains in a strong uptrend with shares remaining slightly oversold.