MomentumOptions.com Pre-Market Update for 8/17/2021

Market Mixed on Geopolitical Concerns

8:00am (EST)

The stock market recovered from its opening losses to end mixed on Monday as Wall Street overlooked geopolitical and ongoing covid concerns. The chaos in Afghanistan and disappointing economic news out of China weighed further on global markets with the late day rebound here at home sending the broader market and the blue-chips higher. 

Tech and the small-caps struggled but held key levels of support while recouping some of their losses. Meanwhile, volatility edged higher for the first time in four sessions but held a key level of resistance despite the choppiness.

The Dow traded to a late day record high of 35,631 before closing at 35,625 (+0.3%). Unchartered territory and new resistance at 35,750 was challenged but held. A move above this level would be an ongoing bullish development for continued strength towards 36,000.

The S&P 500 tested an all-time high of 4,480 while ending at 4,479 (+0.3%). Fresh and key resistance at 4,475 was cleared and held. Continued closes above this level would likely suggest additional momentum towards 4,500-4,525.

The Nasdaq fell to an opening low of 14,610 before settling at 14,793 (-0.2%). Current and upper support at 14,650-14,500 was breached but held. A close below the latter and the 50-day moving average would signal risk towards 14,350-14,200.

The Russell 2000 finished at 2,203 (-0.9%) with the morning low reaching 2,192. Upper support at 2,200-2,175 was tripped but held. A move below the latter would suggest a retest towards 2,150-2,125 with the July 19th low at 2,107. Below is a chart of the IWM.

Market Movers

Shares of Paysafe fell 15% despite announcing better-than-expected earnings. The company reported net income $6.6 million versus forecasts for a net loss of $15.9 million. Revenue of $383.3 million also topped expectations of $378.45 million.

Volatility Index

The Volatility Index (VIX) showed strength with the session peak hitting 17.71. Lower resistance at 17.50-18 and the 50-day moving average were breached but levels that held. A close above the latter would indicate strength towards 19-19.50.

Current support is at 15.50-15.

Market Analysis

The Spiders Dow Jones Industrial Average ETF (NYSE: DIA) was up for the fifth-straight session with the record high reaching $356.60. New and lower resistance at $356.50-$357 was cleared and held. A close above the latter would signal momentum towards $358.50-$359.

Support is at $353-$352.50.

RSI remains in an uptrend with lower resistance at 65-70 getting challenged but holding. A move above the latter would suggest strength towards 75 and the early May peak. Key support is at 60.

Sector

The Industrials Select Sector SPDR Fund (NYSE: XLI) snapped a two-session slide despite tagging a low of $104. Current and upper support at $104-$103.50 was kissed but held. A close below the latter would indicate additional risk towards $103-$102.50 and the 50-day moving average.

Resistance is at $105.50-$106 with the all-time top from early May at $106.81.

RSI is back in a slight uptrend with key resistance at 60 holding. A pop above this level would likely lead to a run towards 65-70 and levels from early May, as well. Support is at 55-50.

Market Outlook

Geopolitical concerns are typically short-term market events unless they escalate into something more serious. I won’t speculate on the situation in Afghanistan but it is something to keep an eye on.

For now, we can concentrate on the VIX which is now back in an uptrend after once again failing to clear and hold the 15 level. This is signaling near-term choppiness with our focus on watching to see if Tech and the small-caps can rebound today, or hold key support levels on continued weakness.

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 $0.21)

JBLU September 14 puts (JBLU210917P00014000, $0.34, up $0.02)

Entry Price: $0.40 (8/9/2021)
Exit Target: $0.80
Return: -16%
Stop Target: None

Action: Monday’s low hit $14.90 with upper support at $15-$14.75 getting breached but holding. Lowered resistance is at $15.25-$15.50.

Juniper Networks (JNPR, $28.67, down $0.22)

JNPR September 30 calls (JNPR210917C00030000, $0.30, down $0.05)

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -46%
Stop Target: None

Action: Support at $28.50-$28.25 was breached bur held on the pullback to $28.49. Resistance remains at $28.75-$29.

Smith & Wesson Brands (SWBI, $24.17, up $0.09)

SWBI September 30 calls (SWBI210917C00030000, $0.45, unchanged)

Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Return: -47%
Stop Target: None

Action: Prior and upper support at $23.50-$23.25 was breached but held on the intraday drop to $23.41. Resistance is at $24.25-$24.50.

International Game Tech (IGT, $19.34, down $0.44)

IGT August 22 calls (IGT210820C00022000, $0.05, down $0.05)

Entry Price: $0.70 (7/21/2021)
Exit Target: $1.40
Return: -93%
Stop Target: None

Action: Close the trade this morning to save the remaining premium.

With shares failing to regain the $20 level, there are too many hurdles to clear for this trade to recover by Friday’s closing bell.