MomentumOptions.com Pre-Market Update for 8/31/2021

Bulls Continue Record Run

8:00am (EST)

The stock market was mixed on Monday with Tech and the broader market staying hot while the blue-chips and small-caps slumped. Real Estate and Technology were the strongest sectors after rising 1.2% and 1.1%, respectively.

Financials were the weakest sector after falling 1.4%. Volatility stayed slighted elevated throughout the first half of action before easing into the closing bell but continues to struggle with key support levels.

The Nasdaq finished at 15,265 (+0.9%) with the intraday all-time high hitting 15,288. Unchartered territory and lower resistance at 15,200-15,350 was cleared and held. A move above the latter would signal ongoing momentum towards 15,500-15,650.

The S&P 500 closed at 4,528 (+0.4%) after testing a fresh record high of 4,537. New and lower resistance at 4,525-4,550 was cleared and held. A close above the latter would indicate additional upside towards 4,575-4,600.

The Russell 2000 tapped a late day low of 2,264 before settling at 2,265 (-0.5%). Current and upper support at 2,275-2,250 failed to hold. A drop below the latter would signal a retest towards 2,225-2,200 and the 50-day moving average. Below is a chart of the IWM.

The Dow tagged a low of 35,374 while ending at 35,399 (-0.2%). Near-term and upper support at 35,250-35,500 was challenged but easily held. A move below the latter would suggest a further fade towards 35,000-34,750 and the 50-day moving average.

Market Movers

Shares of Affirm (AFRM) zoomed 46% after announcing a partnership with Amazon.com (AMZN). As a result of the deal, select Amazon customers will have the option to split the total cost of purchases of $50 or more into monthly payments by using Affirm.

Volatility Index

The Volatility Index (VIX) fell for the second-straight session after testing a low hitting 15.98. Near-term and upper support at 16-15.50 was breached and held. A move below the latter get 15-14.50 back in focus.

Lowered resistance is at 16.50-17 with a pop above 17.50 and the 50-day moving average being a slightly bearish development.

Market Analysis

The Wilshire 5000 Composite Index (NYSE: WLSH) rose for the second-straight session and for the sixth time in seven with the intraday all-time peak reaching 47,137. Unchartered territory and key resistance at 47,000 was cleared and held. Continued closes above this level would suggest ongoing strength towards 47,250-47,500.

New support is at 46,750-46,500.

RSI (relative strength index) cleared and held lower resistance at 65-70. A move above the latter would indicate a trip toward 75-80 and the overbought highs from August 2020. Support is at 60-55.

Sector

The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) extended its winning streak to eight-straight sessions following the run to an all-time high of $476.53. Unchartered territory and lower resistance at $476.50-$476 was breached but held. A close above the latter would signal additional momentum towards $477.50-$478.

Fresh support is at $470.50-$470.

RSI is showing signs of rolling over with key resistance at 70 holding. A close above this level would suggest additional strength towards 75-80 and levels from January. Support is at 65-60.

Market Outlook

Continued optimism that the Federal Reserve will not immediately due away with its highly accommodative monetary policies has helped the bulls maintain momentum. How long this last remains to be seen as the economic news gets a little busier this week, highlighted by Friday’s non-farm payrolls report.

The key indicator will be if volatility can clear and hold the 15 level after this week. If so, I think the market could start showing signs of topping out with the VIX possibility trading down to 13.50. This would setup a back half of September fade with third-quarter earnings coming in October.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 22-17 (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.

Agenus (AGEN, $6.63, up $0.37)

AGEN January 7 calls (AGEN220121C00007000, $1.35, up $0.20)

Entry Price: $1.20 (8/26/2021)
Exit Target: $2.40
Return: 13%
Stop Target: None

Action: Monday’s 52-week peak kissed $6.79 with new and lower resistance at $6.75- $7 getting breached but holding. Support is at $6.50-$6.25.

Financial Select Sector SPDR Fund (XLF, $38.45, down $0.55)

XLF October 40 calls (XLF211015C00040000, $0.35, down $0.15)

Entry Price: $0.50 (8/25/2021)
Exit Target: $1.00
Return: -30%
Stop Target: None

Action: Shares tapped a low of $38.43 with near-term and upper support at $38.50-$38.25 failing to hold. Resistance is at $38.75- $39.

Keurig Dr Pepper (KDP, $35.26, up $0.13)

KDP October 36 calls (KDP211015C00036000, $0.55, up $0.05)

Entry Price: $0.55 (8/23/2021)
Exit Target: $1.10
Return: 0%
Stop Target: None

Action: Lower resistance at $35.25-$35.50 was cleared and held on the trip to $35.30. Support is at $35-$34.75 and the 50-day moving average.

Rite Aid (RAD, $17.05, up $0.54)

RAD September 15 puts (RAD210917P00015000, $0.25, down $0.05)

Entry Price: $0.82 (8/19/2021)
Exit Target: $1.65
Return: -71%
Stop Target: None

Action: Yesterday’s peak reached $17.39 with lower resistance at $17.25-$17.50 getting breached but holding. Support is at $17-$16.75.

Juniper Networks (JNPR, $29.45, down $0.05)

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

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -45%
Stop Target: None

Action: Upper support at $29.50-$29.25 failed to hold on the late day fade to $29.43. Key resistance is at $29.75.

Smith & Wesson Brands (SWBI, $24.25, down $0.17)

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: Shares tested a low of $23.66 with upper support at $23.75-$23.50 getting breached but holding. Resistance is at $24.50-$24.75.