MomentumOptions.com Pre-Market Update for 8/23/2021

Bulls Recover Key Resistance Levels but Bears Win the Week

8:00am (EST)

The stock market rallied to close sharply higher on Friday as better-than-expected earnings and oversold conditions fueled sentiment. Volatility fell back below a key level of support as monthly August options expired although the gains weren’t enough to offset a losing week for the major indexes.

The Russell 2000 ended at 2,167 (+1.7%) after hitting a late day high of 2,169 and recovering its 200-day moving average. Lower resistance at 2,150-2,175 was cleared and held. A close above the latter would suggest a retest towards 2,200-2,225. Below is a chart of the IWM.

The Nasdaq closed at 14,714 (+1.2%) and back above its 50-day moving average with the peak reaching 14,722. Lower resistance at 14,700-14,850 was recovered. A close above the latter and the recent all-time high at 14,896 would indicate strength towards 15,000-15,150.

The S&P 500 tagged a high of 4,444 before finishing at 4,441 (+0.8%). Lower resistance at 4,425-4,450 was cleared and held. A move above the latter would signal additional upside towards 4,475-4,500 with last Monday’s record top at 4,480.

The Dow snapped a three-session slide after trading up to 35,177 before settling at 35,120 (+0.7%). Prior and lower resistance at 35,000-35,250 was recovered. A pop above the latter would be a renewed bullish development for additional gains towards 35,500-35,750 with the lifetime peak at 35,631.

Market Movers

Shares of Foot Locker (FL) rose 7% after announcing solid results. The company reported earnings of $2.21 a share on revenue of $2.28 billion versus forecasts of $1.00 and $2.09 billion, respectively.

Foot Locker also said second-quarter comparable-store sales were up by 6.9%.

Volatility Index

The Volatility Index (VIX) fell for the first time in five sessions with the intraday low reaching 18.18. Fresh and upper support at 18.50-18 was breached but held on the close back below the 200-day moving average. A drop below the latter gets 17.50-17 and the 50-day moving average back in play.

Resistance is at 19-19.50.

Market Analysis

The Invesco QQQ Trust (Nasdaq: QQQ) was up for the second-straight session after tagging a high of $368.14. Lower resistance at $368-$368.50 was cleared but held. A close above the latter would indicate a retest towards $369.50-$370 with this month’s all-time peak at $369.91.

Support at $365-$364.50.

RSI (relative strength indicator) is in an uptrend after recovering lower Resistance at 55-60. A close above the latter would suggest additional strength towards 65-70 and prior levels from late July. Key support is at 50.

Sector

The SPDR Gold Shares (NYSE: GLD) rebounded with the intraday high reaching $167.14. Near-term and lower resistance at $167-$167.50 was cleared but held. A close above the latter would would be signal a run towards $168-$168.50 and the 50-day moving average.

Support is at $166-$165.50.

RSI has flatlined with key resistance at 50 holding. Continued closes above this level would signal strength towards 55-60. Support is at 45-40.

Market Outlook

For the week, with the Dow fell 1.1%; the Nasdaq gave back 0.7%; and the S&P 500 was down 0.6%. With the VIX falling back below 20, the bulls will be looking for another run at all-time highs. However, there could be some caution, and choppiness, until the some news comes out from this week’s Fed update from Jackson Hole.

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.

Rite Aid (RAD, $16.04, up $0.90)

RAD September 15 puts (RAD210917P00015000, $0.60, down $0.40)

Entry Price: $0.82 (8/19/2021)
Exit Target: $1.65
Return: -27%
Stop Target: None

Action: Friday’s peak reached $16.06 with lower resistance at $16-$16.25 getting cleared and holding. Support at $15.75-$15.

Western Union (WU, $21.61, down $0.06)

WU September 22 puts (WU210917P00022000, $0.90, unchanged)

Entry Price: $0.55 (8/17/2021)
Exit Target: $1.65 (Limit Order on half)
Return: 64%
Stop Target: 70 cents (Stop Limit)

Action: Shares tapped a low of $21.44 with current and upper support at $21.50-$21.25 getting breached but holding. Lowered resistance is at $21.75-$22.

JetBlue Airways (JBLU, $14.16, up $0.05)

JBLU September 14 puts (JBLU210917P00014000, $0.60, down $0.10)

Entry Price: $0.40 (8/9/2021)
Exit Target: $1.00 (Limit Order on half)
Return: 50%
Stop Target: 52 cents (Stop Limit)

Action: Friday’s low kissed $14.03 with key support at $14 getting challenged but holding. A close below this level and the July 19th low of $13.93 reopens downside risk towards $13.75-$13.50 and levels from last November. Resistance remains at $14.25-$14.50.

Juniper Networks (JNPR, $29.07, up $0.05)

JNPR September 30 calls (JNPR210917C00030000, $0.45, down $0.05)

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -18%
Stop Target: None

Action: Shares traded up to $29.12 with lower resistance at $29.25-$29.50 easily holding. A close above $29.75 and last Thursday’s 52-week peak at $29.67 should get a run past $30 in play. Support remains at $28.75-$28.50.

Smith & Wesson Brands (SWBI, $23.50, up $0.33)

SWBI September 30 calls (SWBI210917C00030000, $0.25, down $0.05)

Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Return: -71%
Stop Target: None

Action: Shares snapped a three-session slide with the session high hitting $23.60. Lower resistance at $23.50-$23.75 was recovered. Support is at $23.25-$23.