MomentumOptions.com Pre-Market Update for 8/11/2021

Infrastructure Bill Propels Gains

8:00am (EST)

The stock market showed strength after the Senate passed a $1 trillion infrastructure bill aimed at rebuilding roads, bridges and other infrastructure projects across the country. The bill will now head to the House of Representatives for a final vote. 

Senators also began voting on a follow-up $3.5 trillion spending package that Democrats plan to pass without Republican votes. The news gave a boost to the Energy, Industrials and Materials sectors, which stand to benefit the most from an economic recovery, while the Tech sector lagged.

The Dow tested an intraday and all-time high of 35,285 before closing at 35,264 (+0.5%). Unchartered territory and key resistance at 35,250 was cleared and held. Continued closes above this level would suggest momentum towards 35,500-35,750.

The Russell 2000 finished at 2,239 (+0.2%) after trading to an afternoon high of 2,245. Key resistance at 2,250 was challenged but held. A pop above the latter and the 50-day moving average would signal additional strength towards 2,275-2,300. Below is a chart of the IWM.

The S&P 500 tapped a record peak of 4,445 while ending at 4,436 (+0.1%). Fresh and key resistance at 4,450 was challenged but held. A move above this level would indicate additional upside towards 4,475-4,500.

The Nasdaq kissed a morning low of 14,754 before settling at 14,788 (-0.5%). Key support at 14,750 was approached but held. A move below this level would likely lead to a retest towards 14,650-14,500.

Market Movers

Shares of 3D Systems (DDD) jumped 21% after announcing quarterly numbers. The company reported a profit of 12 cents a share on revenue of $162 million versus forecasts of five cents a share on sales of $143 million.

Volatility Index

The Volatility Index (VIX) snapped a four-session slide after trading to a high of 17.05. Current and lower resistance at 17-17.50 was breached but held. A close above the latter and the 50-day moving average would indicate another retest towards 18-18.50.

Support remains at 16.50-16.

Market Analysis

The Wilshire 5000 Composite Index (NYSE: WLSH) rebounded after hitting an all-time peak of 46,251. Unchartered territory and fresh resistance at 46,250 was cleared but failed to hold. A close above this level would likely suggest strength towards 46,500-46,750.

Support is at 46,000-45,750.

RSI (relative strength index) cleared resistance at 60. Continued closes above this level would likely lead to another trip toward 65-70 and the highs from early July. Support is at 55-50.

Sector

The Communication Services Select Sector SPDR (NYSE: XLC) was up for the fourth time in five sessions with the intraday high reaching $82.92. Near-term and key resistance at $83 was challenged but held. A move above this level would indicate a retest towards $83.50-$84 with the late July all-time top at $84.18.

Support is at $82.50-$82.

RSI is trying to curl higher with key resistance at 60 holding. A close above this level would signal additional strength towards 65-70 and levels from early and late July. Support is at 55-50.

Market Outlook

Canada Goose (GOOS), FTC Solar (FTCI), Hyzon Motors (HYZN), Kamada (KMDA), Repros Therapeutics (RPRX) and Wendy’s (WEN) are some of the companies reporting numbers this morning.

Array Technologies (ARRY), Blink Charging (BLNK), eBay (EBAY), Lordstown Motors (RIDE), Rackspace Technology (RXT) and Sonos (SONO) are the some of the better-known companies announcing after the closing bell.

The near-term call options on EBAY and SONO are expensive but two stocks that could do well on better-than-expected earnings. Announcements are always tricky to trade but there could be an opportunity to add them to the Watch List on pullbacks as the charts are bullish.

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, $15.50, up $0.36)

JBLU September 14 puts (JBLU210917P00014000, $0.33, down $0.09)

Entry Price: $0.40 (8/9/2021)
Exit Target: $0.80
Return: -13%
Stop Target: None

Action: Shares rebounded to test a high of $15.73 with prior and lower resistance at $15.50-$15.75 getting recovered. Support is at $15.25-$15.

Juniper Networks (JNPR, $28.22, unchanged)

JNPR September 30 calls (JNPR210917C00030000, $0.40, unchanged)

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -27%
Stop Target: None

Action: Tuesday’s low touched $28.11 with key support at $28 getting challenged but holding. Resistance is at $28.25-$28.50.

Smith & Wesson Brands (SWBI, $24.79, down $0.10)

SWBI September 30 calls (SWBI210917C00030000, $0.65, down $0.05)

Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Return: -24%
Stop Target: None

Action: Upper support at $24.75-$24.50 was breached but held on the fade to $24.61. Resistance is at $25-$25.25 and the 50-day moving average.

International Game Tech (IGT, $19.89, up $0.24)

IGT August 22 calls (IGT210820C00022000, $0.15, unchanged)

Entry Price: $0.70 (7/21/2021)
Exit Target: $1.40
Return: -79%
Stop Target: None

Action: Shares extended their winning streak to four-straight sessions after tapping an intraday high of $20.29. Prior and lower resistance at $20.25-$20.50 was cleared but held. Rising support is at $19.75-$19.50.