MomentumOptions.com Pre-Market Update for 9/1/2021

Consumer Confidence Weighs on Market

8:00am (EST)

The stock market was mostly lower on Tuesday following disappointing economic news, but still posted nice gains for August. Specifically, consumer confidence sank -11.3 points to 113.8 in August, another big miss, following the -3.8 point drop to 125.1 in July.

The small-caps showed strength despite the overall pullback with volatility edging slightly higher after trading in a tight range. The throwaway session still favors the bulls as the bears did little damage to slow down the current momentum.

The S&P 500 tested a low of 4,515 before settling at 4,522 (-0.1%). Near-term and upper support at 4,525-4,500 failed to hold. A drop below the latter would suggest weakness towards 4,475-4,450.

The Dow closed 35,360 (-0.1%) with the morning low hitting 35,289. Upper support at 35,250-35,000 was challenged but held for the second-straight session. A move below the latter and the 50-day moving average would be a bearish development with weakness towards 34,750-34,500.

The Nasdaq ended at 15,259 (-0.04%) after trading down to 15,202. Fresh and upper support at 15,250-15,100 was breached but held. A close below the latter would indicate a retest towards 15,000-14,850.

The Russell 2000 finished at 2,273 (+0.3%) following the afternoon run to 2,277. Lower resistance at 2,275-2,300 was tripped but held. A pop above the latter would suggest additional strength towards 2,325-2,350. Below is a chart of the IWM.

Market Movers

Shares of Pixelworks (PXLW) jumped 24% after announcing second-quarter numbers. The company reported a loss of five cents a share on revenue of $14.1 million versus forecasts for a loss of seven cents and $14 million, respectively.

One analyst raised their price target on Pixelworks to $10 from $5 while keeping a Buy rating on the shares following the news.

Volatility Index

The Volatility Index (VIX) was up for the first time in three sessions with the peak reaching 17.07. Current and lower resistance at 17-17.50 was breached but held. A close above the latter and the 50-day moving average would be a slightly bearish development with upside risk towards 18.50-19.

Support is at 16-15.50.

Market Analysis

The Invesco QQQ Trust (Nasdaq: QQQ) pulled back after tagging a low of $378.36. Fresh and upper support at $378.50-$378 was tripped but held. A close below the latter would indicate a retest towards $376.50-$376.

Resistance is at $380.50-$381 with Monday’s all-time peak at $380.76.

RSI (relative strength indicator) has flatlined with key resistance at 70 holding. A close above this level would suggest additional strength towards 75-80 and prior levels from July. Support is at 65-60.

Sector

The Spider S&P Retail ETF (NYSE: XRT) was lower for the first time in three sessions following the intraday fade to $94.94. Near-term and upper support at $95-$94.50 and the 50-day moving average were breached but levels that held.

Resistance is at $96.50-$97.

RSI is in a downtrend with key support at 50 holding. A close below this level would indicate suggest weakness towards 45-40 and levels from mid-August. Resistance is at 55-60.

Market Outlook

The Nasdaq outperformed with a gain of about 4% in August. The S&P 500 was up for the seventh-straight month after rising nearly 3% with the Russell also up roughly 3%. The Dow underperformed after rising just over 1%.

I have a few trades I have been wanting to get into this week, especially Campbell Soup (CPB), but the company is announcing earnings this morning so I wanted to wait. I would like to see an unimpressive quarter with shares showing strength but holding the $42 level.

If there is a chance to get into a trade on CPB, I will send out a Trade Alert. Otherwise, we might remain on the sidelines. Meanwhile, Smith & Wesson Brands (SWBI) will report after the close and have included my thoughts as well.

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, $6.17, down $0.46)

AGEN January 7 calls (AGEN220121C00007000, $1.10, down $0.25)

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

Action: Shares zigzagged for the fifth-straight session following the pullback to $6.12. Support at $6.25-$6 failed to hold. Resistance is at $6.50-$6.75.

Financial Select Sector SPDR Fund (XLF, $38.40, down $0.05)

XLF October 40 calls (XLF211015C00040000, $0.35, unchanged)

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

Action: Tuesday’s low kissed $38.26 with upper support at $38.25-$38 getting challenged but holding. Resistance is at $38.50-$38.75.

Keurig Dr Pepper (KDP, $35.67, up $0.41)

KDP October 36 calls (KDP211015C00036000, $0.65, up $0.10)

Entry Price: $0.55 (8/23/2021)
Exit Target: $1.10
Return: 18%
Stop Target: None

Action: Prior and lower resistance at $35.50-$35.75 was cleared and held with the high reaching the latter. Support is at $35.25-$35 and the 50-day moving average.

Rite Aid (RAD, $17.05, up $0.56)

RAD September 15 puts (RAD210917P00015000, $0.15, down $0.10)

Entry Price: $0.82 (8/19/2021)
Exit Target: $1.65
Return: -78%
Stop Target: None

Action: Shares tapped a high of $17.94 with lower resistance at $17.75-$18 getting breached but holding. Support is at $17-$16.75.

Juniper Networks (JNPR, $28.98, down $0.26)

JNPR September 30 calls (JNPR210917C00030000, $0.20, down $0.10)

Entry Price: $0.55 (8/3/2021)
Exit Target: $1.10
Return: -63%
Stop Target: None

Action: Yesterday’s pullback hit $28.93 with upper support at $29-$28.75 failing to hold. Lowered resistance is at $29.25-$29.50.

Smith & Wesson Brands (SWBI, $24.13, down $0.12)

SWBI September 30 calls (SWBI210917C00030000, $0.35, down $0.05)

Entry Price: $0.85 (8/3/2021)
Exit Target: $1.70
Return: -59%
Stop Target: None

Action: Shares tested a low of $23.84 with upper support at $24-$23.75 getting breached but holding. Resistance is at $24.25-$24.50.

Earnings are due out after today’s closing bell with the company blowing by Wall Street’s forecasts over the past four quarters. In mid-June, following a 69-cent beat, shares made a run from below $20 towards $40 in 10 trading sessions. I’m not sure if they will repeat this performance but a run past $31.70 by expiration would get us a double-up.