MomentumOptions.com Pre-Market Update for 10/7/2022

Jobs Report in Focus

8:00am (EST)

The stock market fell for the second-straight session with Thursday’s losses keeping a mini three-day trading range in play. Some of the nervousness can be attributed to this morning’s jobs report as bullish and bearish traders await the update ahead of the weekend.

The Dow tapped a late day low of 29,859 before settling at 29,926 (-1.2%). Key support at 30,000 failed to hold. Continued closes below this level would suggest a further fade to 29,750-29,500.

The S&P 500 finished at 3,744 (-1%) following the intraday pullback to 3,739. Upper support at 3,750-3,725 was breached and failed to hold. A drop below the latter would be a slightly bearish development for a retest towards 3,700-3,675.

The Nasdaq traded down to 11,051 while ending at 11,073 (-0.7%). Crucial support at 11,000 was challenged but held for the second-straight day. A close below this level would indicate weakness to 10,900-10,750.

The Russell 2000 tagged an opening low of 1,747 before going out at 1,752 (-0.6%). Upper support at 1,750-1,725 was tripped but held. A close below the latter would signal ongoing weakness towards 1,700-1,675. Below is a chart of the IWM. 

Volatility Index

The Volatility Index (VIX) was up for the first time in five sessions with the peak reaching 30.74. Prior and lower resistance at 30.50-31 was cleared and held. A move above the latter would suggest upside action to 32.50-33.

Support is at 29-28.50.

Market Analysis

The SPDR S&P 500 ETF (SPY) remained in a tight range after testing a low of $372.68. Near-term and upper support at $373-$372.50 was tripped but held. A fall below the latter would suggest additional weakness towards $370.50-$370.

Resistance is at $378.50-$379.

RSI (relative strength index) is in a downtrend with key support at 40 holding. A close below this level would signal further downside action towards 35-30 and recent lows. Resistance is at 45-50.

Sector

The Spider S&P Retail ETF (XRT) was down for the second-straight session with the low reaching $59.31. Near-term and upper support at $59.50-$59 was tripped but held. A drop below the latter would indicate a further slide towards $58-$57.50.

Resistance is at $60.50-$61.

RSI has flatlined with upper support at 45-40 holding. A drop below the latter would suggest a further slide towards 35-30 and the lows from last month. Resistance is at 50-55.

Market Outlook

The three-day trading range comes following Monday’s massive rebound off last Friday’s 52-week lows for the Dow and S&P. The bulls have a solid lead for the week but the recent volatility doesn’t suggest anything can be taken for granted.

A closer look at yesterday’s tug-of-war showed the Nasdaq and the Russell made a higher high on the open while avoiding a lower low into the close. The Dow and the S&P failed to make a higher high with the blue-chips making a lower low.

The close above 30 on the VIX gives the bears a slight advantage with the bulls needing to hold 33 on any weakness today.

Momentum Options Play List

Closed Momentum Options Trades for 2022: 24-16 (60%). 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.

Tyson Foods (TSN, $65.52, down $1.12)

TSN October 70 calls (TSN221021C00070000, $0.25, down $0.20)

Entry Price: $0.50 (10/3/2022)
Exit Target: $1.00
Return: -50% 
Stop Target: None

Action: Shares tapped a fresh 52-week low of $65.11 with new and upper support at $65.50-$65 getting breached but holding. Resistance is at $66-$66.50.

ProShares Bitcoin Strategy ETF (BITO, $12.35, down $0.06)

BITO October 10.50 puts (BITO221021P00010500, $0.20, unchanged)

Entry Price: $0.51 (9/22/2022)
Exit Target: $1.05
Return: -61% 
Stop Target: None

Action: Upper support at $12.25-$12 was kissed but held on the session low. Resistance remains at $12.50-$12.75.

Rocket Companies (RKT, $6.99, down $0.06)

RKT December 8 calls (RKT221216C00008000, $0.45, unchanged)

Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -47% 
Stop Target: None

Action: Key support at $6.75 easily held with the low at $6.89. Resistance remains at $7.25-$7.50.

Diana Shipping (DSX, $4.05, down $0.04)

DSX December 6 calls (DSX221216C00006000, $0.10, unchanged)

Entry Price: $0.40 (8/18/2022)
Exit Target: $1.00
Return: -75% 
Stop Target: None

Action: Thursday’s opening high tapped $4.19 with lower resistance at $4.10-$4.20 getting cleared but holding for the second-straight day. Support remains at $4-$3.90.