MomentumOptions.com Pre-Market Update for 9/20/2022
Prior Support Levels Back in Play
8:00am (EST)
The stock market rebounded on Monday despite a lower open as Wall Street prepares for this week’s Fed update on interest rates and inflation. The gains helped the major indexes push prior support levels from the beginning of the month with more important hurdles at the 50-day moving averages.
The Russell 2000 closed at 1,812 (+0.8%) after tagging a late day peak of 1,813. Key resistance at 1,800 was cleared and held. Continued closes above this level would signal additional strength to 1,825-1,850. Below is a chart of the IWM.
The Nasdaq finished at 11,535 (+0.8%) with the high hitting 11,538. Key resistance at 11,500 was reclaimed. Continued closes above this level would indicate a further push towards 11,600-11,750.
The S&P 500 settled at 3,899 (+0.7%) after reaching an intraday peak of 3,900. Key resistance at 3,900 was kissed but held by a tenth-point. A close above this level would be a slightly bullish development for ongoing upside to 3,925-3,950.
The Dow tested an afternoon high of 31,026 while ending at 31,019 (+0.6%). Key resistance at 31,000 was recovered. Continued closes above this level would suggest a retest towards 31,250-31,500.
Volatility Index
The Volatility Index (VIX) was down for the first time in three sessions with the low reaching 25.56. Upper support at 25.50-25 was challenged but held. A drop below the latter and the 200-day moving average would indicate further slippage towards 24-23.50 and the 50-day moving average.
Resistance is at 27.50-28.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) snapped a two-session slide after tagging a high of $229.36. Fresh and lower resistance at $229-$229.50 was tripped and held. A pop above the latter would signal upside action towards $232-$232.50.
Shaky support is at $225.50-$225.
RSI (relative strength index) is trying to curl higher with lower resistance at 40-45 getting recovered. A close above the latter would suggest strength towards 50-55 and levels from earlier this month. Support is at 35-30.
Sector
The Materials Select Sector (XLB) snapped a four-session losing streak with the peak hitting $73.79. New and lower resistance at $73.50-$74 was cleared and held. A close above the latter would signal strength towards $75-$75.50.
Near-term support is at $72-$71.50.
RSI is back in a slight uptrend with key resistance at 40 getting recovered. Continued closes above this level would be a bullish development for upside to 45-50 and levels from earlier this month, as well. Support is at 35-30.
Market Outlook
The bulls got a few, small victories by recovering prior support levels but there are still numerous layers to make it through before any continued comeback can be trusted. The major indexes also avoided lower lows but remain on shaky ground.
Volatility, once again, held the 28 level.
The combination of lower monthly lows for the major indexes and a surge past 28 on the VIX will be big clues to start fresh put, or bearish, positions. Continued closes back above the 50-day moving averages for the major indexes would suggest a near-term bottom is in place.
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.
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.
Intel (INTC, $29.44, up $0.20)
INTC (weekly) October 32 calls (INTC221007C00032000, $0.20, unchanged)
Entry Price: $0.80 (9/9/2022)
Exit Target: $1.60
Return: -75%
Stop Target: None
Action: Monday’s high reached $29.50 with lower resistance at $29.50-$29.75 getting kissed but holding. Support is at $29.25-$29.
Rocket Companies (RKT, $7.64, up $0.04)
RKT December 8 calls (RKT221216C00008000, $0.80, up $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -16%
Stop Target: None
Action: Lower resistance at $7.75-$8 was challenged but held following the intraday trip to $7.74. Support remains at $7.50-$7.25.
Diana Shipping (DSX, $4.55, down $0.18)
DSX December 6 calls (DSX221216C00006000, $0.10, down $0.05)
Entry Price: $0.40 (8/18/2022)
Exit Target: $1.00
Return: -75%
Stop Target: None
Action: Prior and upper support at $4.60-$4.50 failed to hold following the fade to $4.52. Lowered resistance is at $4.70-$4.80.
