MomentumOptions.com Pre-Market Update for 9/10/2021
Blue-Chips Close Below 50-day Moving Average
The stock market fell again on Thursday despite news weekly jobless claims came in near an 18-month low. Specifically, initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 310,000 and represented the lowest reading since mid-March 2020.
The bad news was the report suggested job growth could be slowed by labor shortages rather than cooling demand for workers. Real estate and Healthcare were the weakest sectors after falling 2.1% and 1.2%, respectively, while Financials rose 0.3%.
The S&P 500 settled at 4,493 (-0.5%) with the late day low tapping 4,492. Key support at 4,500 failed to hold. Continued closes below this level keeps a further slide towards 4,475-4,450 in play.
The Dow bottomed at 34,847 before finishing at 34,879 (-0.4%). Crucial support at 35,000 and the 50-day moving average were breached and failed to hold. Continued closes below these levels would suggest weakness towards 34,750-34,500.
The Nasdaq tested an afternoon low of 15,245 while ending at 15,248 (-0.6%). Near-term and upper support at 15,250-15,100 failed to hold. A drop below the latter would indicate additional downside pressure towards 15,000-14,850.
The Russell 2000 ended at 2,249 (-0.03) after tagging an opening low of 2,244. Upper support at 2,225-2,200 and the 50-day moving average easily held. A move below the latter would signal additional weakness towards 2,175-2,150. Below is a chart of the IWM.
Shares of Lovesac (LOVE) surged 24% after announcing numbers. The company reported a profit of 52 cents a share versus estimates for a loss of eight cents. Revenue of $102 million also surpassed forecasts of $91 million.
The performance marked the 14-straight quarter of 25+% sales growth and profitability.
The Volatility Index (VIX) was up for the fourth time in five sessions with the peak hitting 19.54. Current and lower resistance at 19.50-20 was breached but held for the second-straight session. A pop above the latter and the 200-day moving average would signal upside risk towards 21.50-22.
Support remains at 17.50-17 and the 50-day moving average.
The Wilshire 5000 Composite Index (NYSE: WLSH) extended its losing streak to four-straight sessions after touching a low 46,704. Near-term and upper support 46,750-46,500 failed to hold. A move below the latter would suggest ongoing weakness towards 46,250-46,000 and the 50-day moving average.
Resistance is at 47,000-47,250 with last week’s all-time peak at 47,277.
RSI (relative strength index) remains in a downtrend with upper support at 55-50 holding. A move below the latter would indicate weakness toward 45-40 and levels from August. Resistance is at 60-65.
The Industrials Select Sector SPDR Fund (NYSE: XLI) was down for the third time in four sessions with the low kissing $102.17. Key support at $102 was challenged but held. A close below this level would signal additional risk towards $101-$100.50.
Resistance is at $103-$103.50 and the 50-day moving average.
RSI is in a slight downtrend with key resistance at 40 holding. A drop below this level would likely lead to a retest towards 35-30 and oversold levels from mid-June. Resistance is at 45-50.
Futures were slightly up after midnight and indicating a higher open but nothing is official until the bells rings. This morning’s Producer Price Index at 8:30am and the Wholesale Trade numbers at 10:00am could impact trading once the market gets going.
It is too early to say if volatility formed a near-term double-top as the VIX held 20 in back-to-back sessions. If this level is cleared and held today, I mentioned the start of next week could be bearish.
If the bears remain aggressive and the above scenario plays out this morning, I could add another put position. If the bulls can recover 17.50 and the 50-day moving average by the closing bell, we will remain on the sidelines while keeping the portfolio light.
Momentum Options Play List
Closed Momentum Options Trades for 2021: 23-20 (53%). 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.
Campbell Soup Company (CPB, $42.80, down $0.22)
CPB October 42 puts (CPB211015P00042000, $0.85, up $0.10)
Entry Price: $0.70 (9/8/2021)
Exit Target: $1.40
Stop Target: None
Action: Yesterday’s low tapped $42.67 with upper support at $42.75-$42.50 getting tripped but holding. Resistance is at $43-$43.25.
Agenus (AGEN, $6.54, up $0.18)
AGEN January 7 calls (AGEN220121C00007000, $1.20, up $0.10)
Entry Price: $1.20 (8/26/2021)
Exit Target: $2.40
Stop Target: None
Action: Shares made a run to $6.64 with lower resistance at $6.50-$6.75 getting recovered. Support at $6.25-$6.
Financial Select Sector SPDR Fund (XLF, $37.86, up $0.11)
XLF October 40 calls (XLF211015C00040000, $0.15, unchanged)
Entry Price: $0.50 (8/25/2021)
Exit Target: $1.00
Stop Target: None
Action: Shares snapped a three-session slide after tagging a high of $38.22. Lower resistance at $38-$38.25 was cleared but held. Support is at $37.75-$37.50.