MomentumOptions.com Pre-Market Update for 9/15/2021

Bears Regain Momentum

8:00am (EST)

The stock market was choppy on Tuesday after opening higher following better-than-expected inflation news. The Consumer Price Index rose 0.3% in August and below forecasts for a rise of 0.4%.

The gains were short lived as the major indexes turned south shortly afterwards as the report still showed a heightened level of inflation across consumer goods and services. Despite the whipsaw action, volatility held a key level of resistance after closing modestly higher.

The Russell 2000 settled at 2,209 (-1.4%) with the midday low reaching 2,204. Current and upper support at 2,225-2,200 and the 50-day moving average were breached and failed to hold. A drop below the latter would suggest ongoing weakness towards 2,175-2,150. Below is a chart of the IWM.

The Dow ended at 34,577 (-0.8%) with the low kissing 34,510. Upper support at 34,750-34,500 failed to hold. A close below the latter will likely lead to a further fade towards 34,250-34,000 and levels from mid-July.

The S&P 500 tested a low of 4,435 before finishing at 4,443 (-0.6%). Current and upper support at 4,450-4,425 was tripped and failed to hold. A move below the latter and the 50-day moving average would be a bearish development with additional weakness towards 4,400-4,375 and levels from mid-August.

The Nasdaq traded to an intraday low of 15,008 before closing at 15,037 (-0.5%). Key support at 15,000 was challenged but held for the second-straight session. A fall below this level would indicate a further pullback towards 14,850-14,700 and the 50-day moving average.

Market Movers

Shares of Las Vegas Sands (LVS) was down nearly 10% after Macau’s government announced it will conduct a public consultation for the amendment of the existing legal framework concerning the operation of casino games. The review could also tighten the regulation and supervisory measures for the casino industry’s long-term development.

Volatility Index

The Volatility Index (VIX) was up for the third time in four sessions with the peak reaching 20.47. Lower resistance at 20-20.50 and the 200-day moving average were breached but levels that held. A close above the latter would indicate upside risk towards 21.50-22.

Support remains at 19-18.50.

Market Analysis

The Spider Small-Cap 600 ETF (NYSE: SLY) was down for the sixth time in seven sessions with the late day low hitting $93.62. Prior and upper support from mid-August at $94-$93.50 failed to hold. A close below the latter would indicate ongoing weakness towards $92.50- $92.

Resistance is at $95-$95.50 and the 50-day moving average.

RSI (relative strength indicator) is back in a downtrend with key support at 40 holding. A close below this level would likely signal weakness towards 35-30 with the latter representing the mid-July low. Resistance is at 45-50.

Sector

The SPDR Gold Shares (NYSE: GLD) was up for the second-straight session with the intraday high reaching $169.16. Near-term and lower resistance at $169-$169.50 was cleared but held. A close above the latter and the 200-day moving average would be a bullish signal for a run towards $170.50-$171.

Support is at $168.50-$168 and the 50-day moving average.

RSI is in an uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level would signal strength towards 55-60 and levels from earlier this month. Support is at 45-40.

Market Outlook

Aside from a couple of days in January, the S&P 500 has basically held it 50-day moving average since last October has hasn’t had a 5% pullback over this time frame. The rest of this week will be interesting to see if traders buy this month’s dip on a close below this area.

If not, the selling pressure could intensify for the overall market. I will be watching this development and the action in the Nasdaq to see if the bears can penetrate the 15,000 level. As far as the VIX, a close or move above 21.50 could also signal some panic selling.

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.

Freeport McMoRan (FCX, $34.79, down $0.50)

FCX October 33 puts (FCX211015C00033000, $1.05, up $0.11)

Entry Price: $0.95 (9/14/2021)
Exit Target: $1.90
Return: 11%
Stop Target: None

Action: Tuesday’s low kissed $34.65 with current and upper support at $34.75-$34.50 getting breached but holding. A close below the latter and the 200-day moving average would likely lead to a return trip towards $33.50-$33.

I’m looking for a retest near the $31.50 area over the next few weeks. A drop towards $31 by mid-October would get us a triple-digit return as the options would be $2 in-the-money.

Campbell Soup Company (CPB, $43.36, down $0.47)

CPB October 42 puts (CPB211015P00042000, $0.70, up $0.20)

Entry Price: $0.70 (9/8/2021)
Exit Target: $1.40
Return: 0%
Stop Target: None

Action: Yesterday’s low tagged $43.07 with near-term and upper support at $43.25-$43 getting breached but holding. Resistance is at $43.50-$43.75 and the 50-day moving average.

Agenus (AGEN, $5.59, down $0.76)

AGEN January 7 calls (AGEN220121C00007000, $0.85, down $0.30)

Entry Price: $1.20 (8/26/2021)
Exit Target: $2.40
Return: -29%
Stop Target: None

Action: Shares tumbled to a low of $5.57 with prior and upper support at $5.75-$5.50 failing to hold. Lowered resistance is at $5.75-$6 and the 50-day moving average.

Financial Select Sector SPDR Fund (XLF, $37.50, down $0.51)

XLF October 40 calls (XLF211015C00040000, $0.10, down $0.05)

Entry Price: $0.50 (8/25/2021)
Exit Target: $1.00
Return: -80%
Stop Target: None

Action: Prior and upper support from mid-August at $37.50-$37.25 was triggered but held on the fade to $37.38. A close below the latter and the 50-day moving average would be a bearish development. Resistance at $37.75-$38.