MomentumOptions.com Pre-Market Update for 7/28/2021
Volatility Rises on Market Pullback
The stock market pulled back on Tuesday as traders remained cautious ahead of key earnings reports after the bell and Wednesday’s Federal Reserve announcement. Ongoing weakness in U.S.-listed Chinese stocks also weighed on sentiment as fears over more regulations persisted with volatility clearing but holding a key level of resistance.
The Nasdaq tumbled to a midday low of 14,503 before closing at 14,660 (-1.2%). New and upper support at 14,650-14,500 was tripped but held. A move below the latter would signal risk towards 14,350-14,200 and the 50-day moving average.
The Russell 2000 settled at 2,191 (-1.1%) with the intraday low reaching 2,171. Prior and upper support at 2,175-2,150 was breached but held. A close below the latter would suggest ongoing weakness towards 2,125-2,100. Below is a chart of the IWM.
The S&P 500 tested a low of 4,372 before finishing at 4,401 (-0.5%). Fresh and upper support at 4,375-4,350 was breached but held. A close below the latter would signal additional weakness towards 4,325-4,300.
The Dow ended at 35,058 (-0.2%) with the low kissing 34,878. Current and upper support at 35,000-34,750 was clipped but held. A close below the latter would likely lead to a retest towards 34,500-34,250 and the 50-day moving average.
Turning Point Brands (TPB) rallied 10% after announcing earnings. The company reported a profit of 84 cents a share on revenue of $123 million versus forecasts for a profit of 65 cents on sales of $106 million.
The Volatility Index (VIX) was up for the second-straight session with the intraday peak reaching 20.44. Prior and lower resistance at 20-20.50 was breached but held on the close back above the 50-day moving average. There is risk towards 21.50-22 and the 200-day moving average on continued strength.
Rising support is at 18-17.50.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) fell for the first time in six sessions with the low kissing $348.73. Near-term and upper support at $349-$348.50 was breached but held. A close below the latter would signal additional weakness towards the $347.50-$347 area.
Resistance is at $351-$351.50 with Monday’s all-time peak at $351.45.
RSI is showing signs of rolling over with upper support at 55-50 holding. A move below the latter would indicate weakness towards 45-40 and prior levels from earlier this month. Key resistance is at 60.
The Technology Select Sector Spider Fund (NYSE: XLK) was down for the second-straight session after tapping a low of $151.05. Prior and upper support at $151.50-$151 was tripped but held. A close below the latter would suggest weakness towards $150-$149.50.
Resistance is at $154.50-$155 Monday’s all-time peak at $154.72.
RSI is in a downtrend with upper support at 65-60 failing to hold. A close below the latter would signal weakness towards 55-50. Resistance is at 70.
Futures were showing a slightly lower open when I was finishing up my late night research despite another round of good earnings after the closing bell. It will be interesting to see how the VIX reacts throughout today’s session and when the Fed speaks. It feels like the market could be topping out as we head into August but we should get a better read on the near-term action by week’s end and how the month could unfold.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 19-14 (58%). 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, $19.88, down $0.31)
IGT August 22 calls (IGT210820C00022000, $0.55, down $0.05)
Entry Price: $0.70 (7/21/2021)
Exit Target: $1.40
Stop Target: None
Action: Monday’s low hit $19.21 with upper support at $19.25-$19 getting breached but holding. Resistance is at $20.25-$20.50.
GoDaddy (GDDY, $83.92, down $1.57)
GDDY August 97.50 calls (GDDY210820C00097500, $0.30, down $0.10)
Entry Price: $1.20 (7/7/2021)
Exit Target: $2.40
Stop Target: None
Action: Upper support at $84-$83.50 and the 50-day moving average failed to hold on the backtest to $82.95. Lowered resistance is at $84.50-$85.
Canoo (GOEV, $8.09, down $0.26)
GOEV August 10 calls (GOEV210820C00010000, $0.20, down $0.05)
Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Stop Target: None
Action: Shares traded down to $7.92 with upper support at $8-$7.75 getting breached but holding. Lowered resistance is at $8.25-$8.50.
Ford Motor (F, $13.79, down $0.24)
F August 18 calls (F210820C00018000, $0.05, unchanged)
Entry Price: $0.55 (6/9/2021)
Exit Target: $1.10
Stop Target: None
Action: Near-term and upper support at $13.75-$13.50 was tripped but held on the fade to $13.65. Resistance remains at $14-$14.25. Earnings are due out after the closing bell.