MomentumOptions.com Pre-Market Update for 7/29/2021

Market Mixed as Fed Stands Pat

8:00am (EST)

Wall Street was mixed on Wednesday following a heavy dose of earnings and the Fed’s meeting minutes. The Federal Reserve said the U.S. economic recovery remains on track with Chairman Powell adding the central bank remains a ways away from considering raising interest rates.

Powell also stated the job market still has some ground to cover before it would be time to pull back from the Fed’s ongoing support. Volatility eased but remains slightly elevated after failing to hold a key level of support.

The Russell 2000 showed the most strength after closing at 2,224 (+1.5%) with the high hitting 2,237. Near-term and lower resistance at 2,225-2,250 was cleared but held by a smidge. A move above the latter and the 50-day moving average would suggest a retest towards 2,275-2,300. Below is a chart of the IWM.

The Nasdaq reached a peak of 14,798 before ending at 14,762 (+0.7%). Current and lower resistance at 14,700-14,850 was recovered. A close above the latter and Monday’s all-time high at 14,863 gets a run towards 15,000-15,150 back in focus.

The S&P 500 settled at 4,400 (-0.02%) with the afternoon low kissing 4,387. Upper support at 4,400-4,375 was breached but held. A close below the latter would signal a further fade towards 4,350-4,325.

The Dow traded down to 34,876 before finishing at 34,930 (-0.4%). Near-term and upper support at 35,000-34,750 failed to hold. A drop below the latter would suggest additional weakness towards 34,500-34,250 and the 50-day moving average.

Market Movers

Shares of Infinity Pharmaceuticals (INFI) rebounded 61% following an analyst upgrade to Overweight from Equal Weight with a price target of $14, up from $4. The 52-week low is 82 cents with the 1-year peak at $5.98.

The company has a number of cancer drugs in early stages of clinical trials but is not yet profitable. The most promising drug could help breast cancer patients. This stock does list options and could be a candidate down the road for an option trade.

Volatility Index

The Volatility Index (VIX) was down for the first time this week after testing an intraday low of 17.52. Upper support at 18-17.50 was breached but held. A close below the latter and the 50-day moving average would be a renewed bullish development for the overall market.

Resistance at 19.50-20 followed by 21-21.50 and the 200-day moving average.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) fell for the second-straight session with the low tagging $437.31. Current and upper support at $437.50-$437 was tripped but held. A close below the latter would indicate additional weakness towards $435.50-$435.

Resistance is at $440-$440.50 with Monday’s all-time peak at $440.30.

RSI (relative strength index) is in a downtrend with key support at 60 holding. A close below this level would signal further weakness towards 55-50 and levels from earlier this month. Resistance is at 65-70.

Sector

The SPDR Gold Shares (NYSE: GLD) was up for the second-straight session with the late day high tapping $169.38. Near-term and lower resistance at $169-$169.50 was cleared and held. A close above the latter would would be a bullish signal for a run towards $170.50-$171 and the 200-day moving average.

Support is at $168-$167.50.

RSI is back in an uptrend with key resistance at 50 getting recovered. Continued closes above this level would signal strength towards 55-60. Support is at 45-40.

Market Outlook

The bulls are still showing signs they still want to push another round of all-time highs into early August but they will need to get the VIX back below the 17.50 level by week’s end.

I could have a New Trade today so stay locked-and-loaded in case I take action.

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, $19.87, down $0.01)

IGT August 22 calls (IGT210820C00022000, $0.55, unchanged)

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

Action: Upper support at $19.75-$19.50 was challenged but held on the late session dip to $19.80. Resistance is at $20-$20.25 with a close above $20.75 being a bullish development.

GoDaddy (GDDY, $84.99, up $1.07)

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: Shares traded up to $85.23 with lower resistance at $85-$85.50 getting breached but holding. Support is at $84.50-$84 and the 50-day moving average

Canoo (GOEV, $8.38, up $0.29)

GOEV August 10 calls (GOEV210820C00010000, $0.20, unchanged)

Entry Price: $1.10 (6/30/2021)
Exit Target: $2.20
Return: -81%
Stop Target: None

Action: Lower resistance at $8.25-$8.50 was recovered on yesterday’s bounce to $8.46. Support is at $8-$7.75.

Ford Motor (F, $13.86, up $0.07)

F August 18 calls (F210820C00018000, $0.05, unchanged)

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

Action: Wednesday’s low reached $13.56 before the slightly higher close. Near-term and upper support at $13.75-$13.50 was tripped but held. Resistance remains at $14-$14.25.

Shares were up 4% in after-hours to $14.40 following a beat-and-raise quarter. A close above the 50-day moving average by Thursday’s close would be slightly bullish development and enough to keep this trade open for another week or so. However, we are running out of time as these options will expire in a little over three weeks.