MomentumOptions.com Pre-Market Update for 9/2/2022
Bears Push Mid-July Support Levels
8:00am (EST)
The stock market was mixed on Thursday with the broader market and the blue-chips posting gains while Tech and the small-caps languished for the fifth-straight session. The bounce off the intraday lows was a slightly bullish signal and comes ahead of this morning’s jobs report.
Healthcare (+1.6%) was the strongest sector and Energy (-2.5%) was the weakest. Volatility traded on both sides of the ledger but held key resistance for the third time in four sessions while making a lower low into the closing bell.
The Dow made an afternoon run to 31,677 before settling at 31,656 (+0.5%). New and lower resistance at 31,750-32,000 was challenged but easily held. A close above 32,250 and the 50-day moving average would be a more bullish development of a possible near-term bottom.
The S&P 500 closed at 3,966 (+0.3%) with the late day rebound hitting 3,970. Fresh and lower resistance at 3,975-4,000 was also tested but held. A close above the latter and the 50-day moving average would suggest further strength towards 4,025-4,050.
The Russell 2000 ended at 1,822 (-1.2%) and back below its 50-day moving average after tapping an intraday low of 1,799. Mid-July and key support at 1,800 was breached but held. A close below this level reopens downside risk to 1,775-1,750. Below is a chart of the IWM.
The Nasdaq traded down to 11,546 while finishing at 11,785 (-0.3%). Upper support from late July at 11,750-11,600 was breached but held. A fade below the latter would suggest ongoing weakness towards 11,500-11,350.
Volatility Index
The Volatility Index (VIX) fell for the second-straight day following the second half slide to 25.25. Current and upper support at 25.50-25 was breached but held for the third-straight session. A close below 24 and the 200/50-day moving averages would suggest a near-term market bottom.
Resistance remains at 27.50-28.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) snapped a four-session slide despite tagging a low of $229.26. Prior and upper support at $229.50-$229 was tripped but held. A drop below the latter would indicate downside action towards $227.50-$227.
Resistance is at $234-$234.50.
RSI (relative strength index) is trying to level out with key support at 35 holding. A close below this level would signal weakness towards 30 and the May and June low. Resistance is at 40-45.
Sector
The Health Care Select Sector Spider (XLV) was up for the first time in five sessions with the peak reaching $126.87. New and lower resistance at $126.50-$127 was cleared and held. A close above the latter would imply further upside towards $128-$128.50.
Support is at $124.50-$124.
RSI is back in an uptrend with key resistance at 40 getting recovered. Continued closes above this level would suggest additional strength towards 45-50 and levels from mid-August. Support is at 35-30.
Market Outlook
This morning’s jobs report will likely shape today’s action and a higher close across the board for the major indexes would be somewhat a win for the bulls despite the possibility of the third-straight week of losses. If key support levels fail to hold, and if the VIX clears 28, chatter of the mid-June 52-week lows will become louder.
The market is closed on Monday and I will be on vacation all week. The next Daily Update will be on September 12th. I could, however, have new trades and possible alerts today and next week if action is needed or a compelling opportunity presents itself.
Until then, have a great and safe holiday.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 24-14 (63%). 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.
Diana Shipping (DSX, $4.80, down $0.05)
DSX December 6 calls (DSX221216C00006000, $0.20, unchanged)
Entry Price: $0.40 (8/18/2022)
Exit Target: $1.00
Return: -50%
Stop Target: None
Action: Thursday’s low touched $4.71 with upper support at $4.70-$4.60 holding. Resistance is at $4.90-$5 and the 50-day moving average.
ProShares Bitcoin Strategy ETF (BITO, $12.15, down $0.21)
BITO September 17 calls (BITO220916C00017000, $0.04, down $0.01)
Entry Price: $0.65 (8/11/2022)
Exit Target: $1.30
Return: -93%
Stop Target: None
Action: Upper support at $12-$11.75 was breached but held with the low reaching $11.91. Resistance is at $12.25-$12.50.
