MomentumOptions.com Pre-Market Update for 8/9/2021
Wall Street Cheers Jobs Report, Nasdaq Lags
The stock market pushed another round of record highs on Friday following a stronger-than-expected rebound in employment and a drop in the jobless rate. The July jobs report showed 943,000 jobs were added in July as the unemployment rate fell to 5.4%, the lowest level since March 2020.
Tech lagged following a rise in Treasury yields but still ended the week in positive territory. Meanwhile, volatility continued to ease after falling towards mid-July support levels.
The Dow tested an intraday and all-time high of 35,246 before closing at 35,208 (+0.4%). Key resistance at 35,200 was cleared and held. Continued closes above this level would suggest momentum towards 35,500-35,750.
The S&P 500 tapped a record peak of 4,440 while ending at 4,436 (+0.2%). Unchartered territory and key resistance at 4,450 was challenged but held. A move above this level would indicate additional strength towards 4,475-4,500.
The Russell 2000 finished at 2,247 (+0.6%) after trading to an opening high of 2,258. Prior and lower resistance at 2,250-2,275 and the 50-day moving average were cleared but levels that held. A pop above the latter would signal ongoing strength towards 2,300-2,325. Below is a chart of the IWM.
The Nasdaq pushed a morning low of 14,788 before settling at 14,835 (-0.4%). Key support at 14,750 was challenged but held. A move below this level would likely lead to a retest towards 14,650-14,500.
Shares of Yelp (YELP) rose 5% after announcing earnings. The company reported a profit of five cents a share on revenue of $257 million versus forecasts for a loss of nine cents on revenue of $245 million. Yelp also said its board authorized a $250 million increase to buyback stock.
The Volatility Index (VIX) fell for the fourth-straight session after trading down to 16.14. Prior and upper support at 16.50-16 was recovered. A move below the latter would indicate a retest towards 15-14.50.
Lowered resistance is at 17-17.50 and the 50-day moving average.
The SPDR S&P 500 ETF (NYSE: SPY) was up for the second-straight session with the record high tagging $442.94. Fresh and lower resistance at $442.50-$443 was tripped but held. A close above the latter would indicate additional strength towards $444.50-$445.
Support is at $442-$441.50.
RSI (relative strength index) is in a uptrend with key resistance at 60 getting cleared and holding. Continued closes this level would signal further strength towards 65-70 and levels from early July. Support is at 55-50.
The Spider S&P Retail ETF (NYSE: XRT) extended its winning streak to two-straight sessions following the intraday trip to $96.18. Near-term and lower resistance at $96-$96.50 and the 50-day moving average were cleared but levels that held.
Support is at $94.50-$94.
RSI is in a uptrend with key resistance at 50 holding. Continued closes above this level would indicate strength towards 55-60 and levels from mid-July. Support is at 45-40.
For the week, the Russell jumped 1.9%; the Nasdaq added 1.1%; the S&P 500 advanced 0.9%; and the Dow was up 0.8%. The major indexes are showing signs of breaking out of their two-week trading ranges with follow through this week being a clear signal of ongoing record highs.
Although the height of earnings season is now behind us, there are still significant earnings from key companies that will be in focus over the next few weeks. The fact volatility has resumed another downtrend is also a bullish signal but the VIX must clear and hold the 15 level to confirm the next leg to higher highs.
There is a chance the VIX could test a low of 13.50 this month if 15 is cleared and held on back-to-back sessions. This level was breached several times in late June and early July but the bulls were unable to hold it into the close. The 52-week low is at 14.10 and the last time the Vix closed below 15 was February 2020.
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.
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.
Juniper Networks (JNPR, $28.39, up $0.17)
JNPR September 30 calls (JNPR210917C00030000, $0.40, unchanged)
Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Stop Target: None
Action: Shares snapped a two-session slide after trading to a high of $28.69. Lower resistance at $28.50-$28.75 was cleared but held. Support is at $28.25-$28.
Smith & Wesson Brands (SWBI, $24.67, down $0.55)
SWBI September 30 calls (SWBI210917C00030000, $0.65, down $0.20)
Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Stop Target: None
Action: Friday’s low tapped $24.44 with upper support at $24.50-$24.25 getting breached but holding. Resistance is at $25-$25.25 and the 50-day moving average.
International Game Tech (IGT, $19.45, up $0.68)
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 $19.50-$19.75 was cleared but held on the run to $19.51. Support is at $19.25-$19.