MomentumOptions.com Pre-Market Update for 8/18/2021

Weaker Retail Sales Weight on Market

8:00am (EST)

The stock market fell on Tuesday, with the broader market recording its biggest one-day percentage drop in roughly a month, as retail sales raised concerns about the economic recovery. The Commerce Department reported retail sales fell by 1.1% in July from June.

Specifically, spending at online and other nonstore retailers fell 3.1% while sales at car dealers fell 4.3%. The pullback snapped five session winning streaks for the Dow and S&P 500 with volatility rising back above a key level of resistance.

The Russell 2000 tagged a midday low of 2,152 while closing at 2,177 (-1.2%). Prior and upper support from mid-July at 2,175-2,150 was breached but held. A drop below the latter would indicate additional weakness towards 2,125-2,100 with the July bottom at 2,107. Below is a chart of the IWM.

The Nasdaq ended at 14,656 (-0.9%) with the afternoon low hitting 14,550. Near-term and upper support at 14,650-14,500 was breached but held for the second-straight day. A move below the latter and the 50-day moving average reopens downside pressure towards 14,350-14,200.

The Dow tested an intraday low of 35,120 before settling at 35,343 (-0.8%). Fresh and upper support at 35,250-35,000 was tripped but held. A close below the latter below would suggest an ongoing fade towards 34,750-34,500 and the 50-day moving average.

The S&P 500 tapped a low of 4,417 while finishing at 4,448 (-0.7%). New 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 and the 50-day moving average.

Market Movers

Shares of Alfi (ALF) zoomed 40% after announcing an update on the rollout of its artificially-intelligent tablets directly to drivers who opted into the rideshare program. The expansion into new markets marks the ramp-up of Alfi revenues and expands the successful partnership the company has developed with Uber and Lyft.

Volatility Index

The Volatility Index (VIX) rose for the second-straight session after soaring to a high of 19.56. Prior and lower resistance at 19.50-20 was cleared but held. A close above the latter would suggest ongoing strength towards 20.50-21 and the 200-day moving average.

Fresh support is at 17.50-17 and the 50-day moving average.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) was down for the first time in six sessions with the low hitting $440.85. Prior and upper support at $441-$440.50 was tripped but held. A close below the latter would indicate additional weakness towards $439-$438.50.

Resistance is at $445-$445.50 with Monday’s all-time peak at $447.11.

RSI (relative strength index) is back in a downtrend with key support at 60 holding. A close below this level would signal further weakness towards 55-50 and levels from mid-July. Resistance is at 65-70.

Sector

The iShares MSCI Emerging Markets ETF (NYSE: EEM) extended its losing streak to four-straight sessions following the pullback to $50.12. Prior and upper support from late July at $50.50-$50 failed to hold. A close below the latter would would suggest a further fade towards $49-$48.50.

New resistance is at $51-$51.50.

RSI remains in a downtrend with key support at 30 holding. A close below this level would signal weakness towards 25-20 and oversold levels from March 2020. Resistance is at 35-40.

Market Outlook

The Federal Open Market Committee will release the minutes from its late-July monetary-policy meeting at 2pm (EST). Trading could get volatile ahead of the closing bell, depending on the language, with key support and resistance levels likely coming into play.

The bulls will be trying to get volatility back below 17 and the 50-day moving average while the bears will be hoping for another push towards 20 and the 200-day moving average.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 20-17 (54%). 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.

Western Union (WU, $22.33, down $0.09)

WU September 22 puts (WU210917P00022000, $0.55, up $0.05)

Entry Price: $0.55 (8/17/2021)
Exit Target: $1.10
Return: 0%
Stop Target: None

Action: Tuesday’s low tagged $22.11 with near-term and upper support at $22.25-$22 getting breached but holding. Resistance is at $22.50-$22.75.

The August low is at $21.97 with a move below this level likely leading to a deeper pullback towards $21.50-$21.25 and levels from January. If shares trade down to $20.90, technically, by September 17th, these calls will be $1.10 “in-the-money” for a nice 30-day double up.

JetBlue Airways (JBLU, $14.76, down $0.38)

JBLU September 14 puts (JBLU210917P00014000, $0.48, up $0.14)

Entry Price: $0.40 (8/9/2021)
Exit Target: $0.80
Return: 20%
Stop Target: None

Action: Shares bottomed at $14.55 with prior and upper support at $14.75-$14.50 getting breached but holding by a penny. Lowered resistance is at $15-$15.25.

Juniper Networks (JNPR, $28.40, down $0.27)

JNPR September 30 calls (JNPR210917C00030000, $0.25, down $0.05)

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -55%
Stop Target: None

Action: Shares pulled back for the second-straight session with the low hitting $28.19. Current and upper support at $28.25-$28 was breached but held. Resistance is at $28.50-$28.75.

Smith & Wesson Brands (SWBI, $23.94, down $0.23)

SWBI September 30 calls (SWBI210917C00030000, $0.40, unchanged)

Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Return: -53%
Stop Target: None

Action: Yesterday’s low tapped $23.67 with upper support at $23.75-$23.50 getting tripped but holding. Resistance is at $24-$24.25.