MomentumOptions.com Pre-Market Update for 10/7/2021

October Volatility Continues

8:00am (EST)

The stock market was choppy on Wednesday despite news private payrolls increased by 568,000 jobs in September, or 140,000 more than expectations. The major indexes rebounded of the morning lows as positive developments in Congress to avert a government default by mid-month gained momentum.

Word that Senate Minority Leader McConnell has proposed to temporarily extend the government borrowing limit into December lifted spirits and would offer time to prevent a government default. Volatility eased after holding a key level of resistance on the open to remain in a seven-session trading range.

The Nasdaq tagged a high of 14,509 before ending at 14,501 (+0.5%). Lower resistance at 14,500-14,650 was recovered. A close above the latter keeps upside towards 14,750-14,900 and the 50-day moving average in focus.

The S&P 500 closed at 4,363 (+0.4%) with the peak hitting 4,365. Near-term and lower resistance at 4,350-4,375 was recovered. A move above the latter would signal additional strength towards 4,400-4,425 and the 50-day moving average.

The Dow tapped an intraday high of 34,432 while settling at 34,416 (+0.3%). Current and lower resistance at 34,350-34,500 was breached and held. A close above the latter would suggest further strength towards 34,600-34,850.

The Russell 2000 tested a low of 2,188 while finishing at 2,214 (-0.6%). Upper support at 2,200-2,175 was tripped but held. A close below the latter and the 200-day moving average would be an bearish development for downside risk towards 2,150-2,125. Below is a chart of the IWM.

Market Movers

Shares of Affirm (AFRM) rose 20% after Target (TGT) announced it will be partnering with the company and Sezzle to add new buy now, pay later payment options.

Volatility Index

The Volatility Index (VIX) remained in a six-session trading range following the backtest to 20.99. Near-term and upper support at 21-20.50 was recovered. A close below 20 and the 200-day moving average would be a more bullish development for a retest towards 19-18.50 and the 50-day moving average.

Resistance is at 22-22.50 followed by 24.50-25.

Market Analysis

The SPDR S&P 500 ETF (NYSE: SPY) remains in a five-session trading range after testing a low of $427.54 while closing slightly higher. Current and upper support at $428-$427.50 was tripped but held. A close below the latter would indicate additional weakness towards $425.50-$425.

Resistance is at $435-$435.50 followed by $437-$437.50.

RSI (relative strength index) is in a slight uptrend with lower resistance at 45-50 getting cleared and holding. A close above the latter would signal further strength towards 55-60. Support is at 40-35.

Sector

The SPDR Gold Shares (NYSE: GLD) was up for the fourth time in five sessions with the intraday high reaching $165.06. Near-term and lower resistance at $165-$165.50 was cleared and held. A close above the latter would be a bullish signal for a run towards $166.50-$167 and the 50-day moving average

Support is at $164-$163.50.

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

Market Outlook

The bulls held crucial support levels once again and the bears held the 20 level on the VIX. It appears this whipsaw action and ongoing trading range could last into next week and the start of the third-quarter earnings season. We are close to adding new trades once we get the signal so stay locked-and-loaded in case I take action.

Momentum Options Play List

Closed Momentum Options Trades for 2021: 27-22 (55%). 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, $31.71, down $0.49)

FCX November 30 puts (FCX211119P00030000, $1.40, up $0.15)

Entry Price: $1.25 (10/4/2021)
Exit Target: $2.50
Return: 12%
Stop Target: None

Action: Shares traded down to $30.93 with prior and upper support at $31-$30.75 getting breached but holding. Lowered resistance is at $32-$32.25.

Pfizer (PFE, $42.02, down $0.30)

PFE November 45 calls (PFE211119C00045000, $0.42, down $0.08)

Entry Price: $0.90 (9/29/2021)
Exit Target: $1.80
Return: -53%
Stop Target: None

Action: Wednesday’s low reached $41.69 with upper support from late July at $41.75-$41.25 getting tripped but holding. Resistance is at $42.25-$42.75.

AT&T (T, $27.31, down $0.04)

T October 26 puts (T211015P00026000, $0.10, unchanged)

Entry Price: $0.37 (9/20/2021)
Exit Target: $0.75
Return: -73%
Stop Target: None

Action: Crucial support at $27 was breached but held on the backtest to $26.97. Key resistance remains at $27.50 and the 50-day moving average.

Agenus (AGEN, $5.64, down $0.02)

AGEN January 7 calls (AGEN220121C00007000, $0.80, unchanged)

Entry Price: $1.20 (8/26/2021)
Exit Target: $2.40
Return: -33%
Stop Target: None

Action: Lower resistance at $5.75-$6 was challenged but held with the high reaching $5.70 for the second-straight. Support remains at $5.50-$5.25.