MomentumOptions.com Pre-Market Update for 8/6/2021
Major Indexes Resume Assault at Record Highs
The stock market rebounded on Thursday following better-than-expected jobless claims numbers with the major indexes resuming another run at all-time highs. Specifically, initial claims fell by 14,000 to 385,000, while layoffs dropped to their lowest level in more than two decades.
The gains pushed the overall market into positive territory for the week and ahead of Friday’s key report on non-farm payrolls. Meanwhile, volatility fell back below a key level of support for the first time in nine sessions.
The Russell 2000 showed the most strength after closing on the session high of 2,236 (+1.8%). Near-term and lower resistance at 2,225-2,250 was recovered. 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 Dow finished at 35,064 (+0.8%) after tapping a late day peak of 35,067. Key resistance at 35,000 was cleared and held. A close above 35,200 and the recent all-time high at 35,192 would indicate a breakout towards 35,250-35,500.
The Nasdaq reached a record peak of 14,896 before ending at 14,895 (+0.8%). Key resistance at 14,850 was breached and held. Continued closes above this level keeps a trip towards 15,000-15,150 in focus.
The S&P 500 settled on the session high of 4,429 (+0.6%) while coming with a fifth of a point of another all-time top. Key resistance at 4,425 was cleared and held. Continued closes above this level would be an ongoing bullish development for additional upside towards 4,450-4,475.
Shares of (FSLY) sank 10% after announcing second-quarter numbers. The company reported a loss of 15 cents a share on revenue of $85 million versus forecasts for a loss of 15 cents on sales of $85.7 million.
The Volatility Index (VIX) was down for the third-straight session with the low hitting 17.23. Upper support at 17.50-17 was recovered on the close back below the 50-day moving average. A drop below the latter would suggest weakness towards 16.50-16.
Lowered resistance is at 18-18.50.
The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) rebounded with the session peak reaching $350.65. Near-term and lower resistance at $350.50-$351 was recovered. A close above the latter would signal another push towards $351.50-$352 with Monday’s all-time high at $351.91.
Support is at $349-$348.50.
RSI is back in an uptrend with lower resistance at 55-60 getting cleared and holding. A move above the latter would signal strength towards 65-70 and levels from early May. Key support is at 50.
The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) extended its winning streak to seven-straight sessions following the intraday pop to an all-time high of $471.38. Unchartered territory and lower resistance at $471-$471.50 was breached but held. A close above the latter would signal ongoing strength towards $472.50-$473.
Rising support is at $468.50-$468 followed by $467-$466.50.
RSI is showing signs of rolling over with key resistance at 70 holding. A close above this level would suggest additional strength towards 75-80 and levels from January. Support is at 65-60.
All eyes will be on this morning’s job update and the numbers will likely dictate today action, bullish or bearish. A weaker-than-expected report will likely keep the major indexes in their current 2-week trading range while a surprise, or better-than-anticipated outcome pushing the three major indexes towards another round of record highs.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 20-16 (56%). 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.
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Juniper Networks (JNPR, $28.22, down $0.33)
JNPR September 30 calls (JNPR210917C00030000, $0.40, down $ 0.10)
Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Stop Target: None
Action: Shares fell for the second-straight session with the low tapping $28.15. Upper support at $28.25-$28 was breached but held. Resistance is at $28.50-$28.75.
Smith & Wesson Brands (SWBI, $25.22, up $0.29)
SWBI September 30 calls (SWBI210917C00030000, $0.85, up $0.05)
Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Stop Target: None
Action: Yesterday’s peak reached $25.82 with lower resistance at $25.75-26 getting tripped but holding on the close back above the 50-day moving average. Support is at $25-$24.75.
International Game Tech (IGT, $18.77, up $0.67)
IGT August 22 calls (IGT210820C00022000, $0.15, unchanged)
Entry Price: $0.70 (7/21/2021)
Exit Target: $1.40
Stop Target: None
Action: Lower resistance at $19.25-$19.50 was cleared but held on the rebound to $19.27. Support is at $18.50-$18.25.