MomentumOptions.com Pre-Market Update for 8/10/2021
Tech Rebounds on Overall Dip
The stock market slipped on Monday as the resurgent pandemic pushed oil and energy stocks lower. Energy was the weakest sector after shedding 1.4% as mounting coronavirus cases, and the potential for restrictions, raised worries about the fuel demand outlook.
Tech and the Financial stocks showed strength following a rise in Treasury yields to keep the major indexes near record highs. Volatility was higher for the first time in five sessions but held a key level of resistance.
The Nasdaq closed at 14,860 after trading to a high of 14,883 (+0.2%). Key resistance at 14,900 was challenged but held. A pop above this level and last Thursday’s all-time high at 14,896 would be a bullish signal for a run towards 15,000-15,150.
The Russell 2000 finished at 2,234 (-0.6%) with the late day low hitting 2,131. Current and upper support at 2,225-2,200 was challenged but held. A move below the latter would suggest a retest towards 2,175-2,150. Below is a chart of the IWM.
The Dow tested a morning low of 35,041 before ending at 35,101 (-0.3%). Key support at 35,000 easily held. A drop below this level would indicate a fade towards 34,750-34,500 and the 50-day moving average.
The S&P 500 tagged an intraday low of 4,424 before settling at 4,432 (-0.1%). Near-term and upper support at 4,425-4,400 was breached but held. A close below the latter would likely lead to additional weakness towards 4,375-4,350.
Shares of Golden Nugget Online Gaming (GNOG) surged 50% after agreeing to be acquired by DraftKings (DKNG) in an all-stock transaction that has an implied equity value of roughly $1.56 billion.
The deal will enable DraftKings to leverage Golden Nugget’s well-known brand, iGaming product experience and existing combined database of more than five million customers.
The Volatility Index (VIX) snapped a four-session slide after trading to a high of 17.39. Fresh and lower resistance at 17-17.50 and the 50-day moving average were breached but levels that held. A close above the latter would signal additional strength towards 18-18.50.
Support is at 16.50-16.
The iShares Russell Growth 1000 ETF (NYSE: IWF) fell for the second-straight session with the low reaching $282.30. Near-term and upper support at $282.50-$282 was tripped but held. A move below the latter and would suggest a further slide towards $281-$280.50.
Resistance is at $283.50-$284 with the late July all-time peak at $284.47.
RSI has leveled out with key support at 60 holding. A close below this level would suggest weakness towards 55-50 and levels from mid-July. Resistance is at 65-70.
The Energy Select Sector SPDR Fund (NYSE: XLE) had its two-session winning streak snapped following the pullback to $48.48. Current and upper support at $48.50-$48 was triggered but held. A close below the latter would signal ongoing weakness towards $47-$46.50.
Resistance is at $49-$49.50.
RSI is in a downtrend with key support at 40 holding. A close below this level would indicate additional weakness towards 35-30 and prior lows from mid-July. Key resistance is at 45.
The uptick in the VIX was a mild concern but nothing alarming as long as the 50-day moving average holds this week. Even then, there is wiggle room towards 20 as I have been covering for the past two months.
The action still feels like higher highs for the market are in store but the pace may be slower than previous breakouts throughout this year. Wall Street is still enjoying the last few weeks of summer vacation and the action will likely get more pronounced once we get to the Fed meeting later this month.
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.
JetBlue Airways (JBLU, $15.14, down $0.11)
JBLU September 14 puts (JBLU210917P00014000, $0.42, up $0.03)
Entry Price: $0.40 (8/9/2021)
Exit Target: $0.80
Stop Target: None
Action: Monday’s low kissed $14.76 with prior and upper support at $15-$14.75 getting breached but holding. Resistance is at $15.25-$15.50.
The 50-day moving average has fallen below the 200-day moving average to form a death cross. This is typically a bearish development for lower lows. The longer-term chart shows a possible drop towards $13-$12.50 if shares close below $14 and the July low at $13.93.
Juniper Networks (JNPR, $28.22, down $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 tested a low of $28.15 with upper support at $28.25-$28 failing to hold. Resistance is at $28.50-$28.75.
Smith & Wesson Brands (SWBI, $24.89, up $0.22)
SWBI September 30 calls (SWBI210917C00030000, $0.70, up $0.05)
Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Stop Target: None
Action: Monday’s peak reached $25.25 with key resistance at the 50-day moving average holding. Support is at $24.75-$24.50.
International Game Tech (IGT, $19.65, up $0.20)
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 $20-$20.25 was cleared but held on the push to $20.17. Rising support is at $19.50-$19.25.