MomentumOptions.com Pre-Market Update for 9/28/2022
VIX Surges Past 34
Wall Street was mixed on Tuesday with the broader market showing continued weakness while Tech and the small-caps posted slight gains. Comments from Chicago Fed President Charles Evans limited the gains after he said the U.S. central bank would need to raise interest rates by at least another percentage point this year.
The Russell 2000 closed at 1,662 (+0.4%) after trading to a morning peak of 1,689. Fresh and lower resistance at 1,675-1,700 was cleared but failed to hold. A move above the latter would be a slightly bullish development for additional strength to 1,725-1,750. Below is a chart of the IWM.
The Nasdaq tagged an opening high of 11,040 while ending at 10,829 (+0.3%). Key resistance at 11,000 was topped but held. Continued closes back above this level below would indicate upside towards 11,100-11,250.
The S&P 500 tested a 52-week low of 3,623 before finishing at 3,647 (-0.2%). Fresh and upper support at 3,625-3,600 was tripped but held. A drop below the latter would suggest further weakness towards 3,575-3,550.
The Dow settled at 29,134 (-0.4%) after tapping another 52-week low of 28,958. New and upper support at 29,000-28,750 was breached but held. A fade below the latter would signal additional weakness to 28,500-28,250.
The Volatility Index (VIX) extended its winning streak to three-straight sessions after making a run to 34.14. Key resistance at 34 was cleared but held. There is stretch up to 35. A close above this level and the June 13th peak at 35.05 would indicate upside pressure towards 36.50-37 with the May 2nd high at 36.64.
Support is at 30.50-30.
The SPDR S&P 500 ETF (SPY) was down for the sixth-straight session after testing a 52-week low of $360.87. Mid-June and upper support at $361-$360.50 was tripped but held. A fall below the latter would suggest additional weakness towards $358-$357.50.
Resistance is at $370-$370.50.
RSI (relative strength index) is in a downtrend with key support at 25 holding. A close below this level would signal further downside action towards 20 and the March 2020 low. Resistance is at 30-35.
The Spider Gold Shares (GLD) snapped a three-session slide after tagging a high of $152.73. New and lower resistance at $152.50-$153 was cleared but held. A pop above the latter would indicate further strength towards $154.50-$155.
Shaky support is at $151.50-$151 with Monday’s 52-week low at $151.03.
RSI has reversed course with key resistance at 30 holding. A close above this level would signal additional strength to 35-40 and levels from earlier this month. Support is at 25-20.
The bulls finally showed some signs of life on Tuesday after getting a split with the bears. Although lower lows were made, the major indexes remain in extremely oversold levels.
This doesn’t automatically qualify as a buying opportunity as I talked about a possible trading range coming into play over the next few weeks. The good news is that earnings season could provide some of the most explosive moves of the year for the market.
October’s earnings announcements could possibly reverse the recent trend downtrend, or continue to confirm the market is in a bear market. I will have more to say on the technical outlook Thursday morning as I took a peak at the 5-year charts last night.
Real quick, it is imperative the Dow holds 29,000 and the S&P holds 3,600 over the near-term.
Momentum Options Play List
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ProShares Bitcoin Strategy ETF (BITO, $11.74, down $0.07)
BITO October 10.50 puts (BITO221021P00010500, $0.50, up $0.03)
Entry Price: $0.51 (9/22/2022)
Exit Target: $1.05
Stop Target: None
Action: Tuesday’s low tagged $11.56 with upper support at $11.75-$11.50 failing to hold. A close below the latter and the 52-week low at $11.37 should get this trade rolling. Resistance is at $12.25-$12.50.
Rocket Companies (RKT, $6.56, down $0.16)
RKT December 8 calls (RKT221216C00008000, $0.40, down $0.08)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Stop Target: None
Action: Key support at $6.50 was tripped but held following the fade to $6.52. Lowered resistance is at $6.75-$7.
Diana Shipping (DSX, $3.97, up $0.09)
DSX December 6 calls (DSX221216C00006000, $0.10, unchanged)
Entry Price: $0.40 (8/18/2022)
Exit Target: $1.00
Stop Target: None
Action: Shares snapped a four-session slide after tapping an intraday high of $3.99. Fresh and lower resistance at $4-$4.10 was challenged but held. Support is at $3.85-$3.75.