MomentumOptions.com Pre-Market Update for 9/15/2022
Bulls Hold Key Support Levels
The stock market showed some signs of stabilizing on Wednesday after testing and holding key support levels from the beginning of the month. The gains were limited, but much needed, with Tech and the small-caps showing the most strength.
The Nasdaq made a run to 11,746 while ending at 11,719 (+0.7%). Prior and lower resistance at 11,750-11,900 was challenged but held. A pop above the latter would suggest a retest to 12,000-12,150.
The Russell 2000 settled at 1,838 (+0.4%) with the high hitting 1,840. Current and lower resistance at 1,825-1,850 was cleared and held. A move above the latter and the 50-day moving average would signal additional upside towards 1,875-1,900. Below is a chart of the IWM.
The S&P 500 traded down to 3,912 while ending at 3,946 (+0.3%). Crucial support at 3,900 was challenged but held. A drop below this level would indicate a further slide to 3,875-3,850.
The Dow tagged a low of 30,885 before closing at 31,135 (+0.1%). Key support at 31,000 was breached but held. Continued closes below this level reopens downside risk towards 30,750-30,500.
The Volatility Index (VIX) pulled back after closing on the session low of 26.16. Upper support at 26.50-26 was reclaimed. A drop below the latter would suggest a further fade towards 25.50-25 and the 200-day moving average.
Key resistance remains at 28.
The Spider Small-Cap 600 ETF (SLY) fell for the second-straight session after testing a low of $82.03. Prior and upper support at $82.50-$82 was tripped but held. A fade below the latter would indicate additional downside action towards $81-$80.50.
Resistance is at $83-$83.50.
RSI (relative strength indicator) has flatlined with key support at 40 holding. A close below this level would suggest weakness to 35-30 and oversold levels from earlier this month and mid-June. Resistance is at 45-50.
The Energy Select Sector Spider (XLE) was up for the fourth time in five sessions with the intraday peak reaching $82.85. Current and lower resistance at $82.50-$83 was cleared but held. A close above the latter would signal additional strength towards $84-$84.50.
Support is at $81-$80.50.
RSI is back in an uptrend with key resistance at 60 holding. A move above this level would indicate upside towards 65-70 and levels from last month. Support is at 55-50.
Key support levels remain in play: Dow 31,000; S&P 3,900, Nasdaq 11,500; and Russell 1,775. The Dow was the only index that fell below crucial support yesterday but was able to recover and hold into the closing bell.
The volatility index held key resistance at 28.
If all of these levels are breached and hold, there will likely be a retest to the July and June lows. A recovery of the 50-day moving averages by the major indexes, and a close back below 25 on the VIX, would be renewed bullish signals for the market.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 24-15 (62%). 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.
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Intel (INTC, $29.18, down $0.11)
INTC (weekly) October 32 calls (INTC221007C00032000, $0.20, down $0.10)
Entry Price: $0.80 (9/9/2022)
Exit Target: $1.60
Stop Target: None
Action: Shares tested another 52-week low of $29.01 with upper support at $29.25-$29 failing to hold. Resistance is at $29.50-$29.75.
Rocket Companies (RKT, $7.53, down $0.20)
RKT December 8 calls (RKT221216C00008000, $0.75, down $0.10)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Stop Target: None
Action: Wednesday’s low tapped $7.45 with current and upper support at $7.50-$7.25 getting breached but holding for the second-straight session. Resistance is at $7.75-$8.
Diana Shipping (DSX, $4.95, down $0.10)
DSX December 6 calls (DSX221216C00006000, $0.20, unchanged)
Entry Price: $0.40 (8/18/2022)
Exit Target: $1.00
Stop Target: None
Action: Upper support at $4.90-$4.80 was challenged but held following the intraday pullback to $4.92. Resistance is at $5-$5.10 and the 50-day moving average.