MomentumOptions.com Pre-Market Update for 10/12/2022
Dow/ Russell 2000 Snap Losing Streaks
8:00am (EST)
The stock market struggled again on Tuesday but finished mixed as the blue-chips and small-caps eked out small gains. All of the major indexes traded on both sides of the ledger with volatility once again holding key resistance levels.
The Dow finished at 29,239 (+0.1%) after reaching an intraday peak of 29,608. Prior and lower resistance at 29,500-29,750 was topped but held. A move above the latter would suggest additional strength towards 30,000-30,250.
The Russell 2000 tagged a high of 1,713 while closing at 1,692 (+0.1%). Key resistance at 1,700 was cleared but held. Continued closes above this level would suggest a retest to 1,725-1,750. Below is a chart of the IWM.
The Nasdaq touched another two-year low of 10,351 while ending at 10,426 (-1.1%). Upper support from July 2020 at 10,400-10,250 was breached but held. A drop below the latter would signal additional weakness towards 10,400-10,250.
The S&P 500 settled at 3,588 (-0.7%) after tapping a fresh 52-week low of 3,568. New and upper support at 3,575-3,550 was tripped but held. A fade below the latter would be an ongoing bearish development with weakness to 3,525-3,500.
Volatility Index
The Volatility Index (VIX) was up for the fourth-straight session with the high hitting 34.43. Late September and lower resistance at 34-35 was cleared but held. A close above the latter will likely lead to a surge towards 37.50-40.
Rising support is at 32.50-33.
Market Analysis
The Invesco QQQ Trust (QQQ) was down for the fifth-straight session following the intraday slide to $261.03 and new 52-week low. Fresh and upper support at $261.50-$260 was breached but held. A drop below the latter would signal additional downside action to $258.50-$258.
Resistance is at $267.50-$268.
RSI (relative strength indicator) is in a downtrend with key support at 30 holding. Continued closes below this level would indicate weakness towards 25-20 and the lows from March 2020. Resistance is at 35-40.
Sector
The Utilities Select Spider (XLU) fell for the fourth time in five sessions with the yearly low kissing $63.30. Current and upper support at $63.50-$63 was busted but held. A close below the latter would suggest downside pressure to $62-$61.50.
Resistance is at $64-$64.50.
RSI is showing signs of leveling out but key support at 30 failed to hold. Continued closes below this level would signal weakness towards 25-20 and levels from a couple of weeks ago. Resistance is at 35-40.
Market Outlook
The first batch of market moving economic news will come out before the open with the Producer Price Index due out at 8:30am and the Fed minutes at 2:00pm. We are still watching the price action in the Vix and if it holds the 35 level.
I will have a new trade this afternoon, likely in the final hour of action, so stay locked-and-loaded.
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, $63.95, down $0.15)
TSN October 70 calls (TSN221021C00070000, $0.10, unchanged)
Entry Price: $0.50 (10/3/2022)
Exit Target: $1.00
Return: -80%
Stop Target: None
Action: Shares traded down to $63.43 with key support at $63.50 getting tripped but holding. Resistance remains at $64.50-$65.
ProShares Bitcoin Strategy ETF (BITO, $11.66, down $0.13)
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: Yesterday’s low touched $11.57 with upper support at $11.50-$11.25 holding. Lowered resistance is at $11.75-$12.
Rocket Companies (RKT, $6.73, down $0.01)
RKT December 8 calls (RKT221216C00008000, $0.35, unchanged)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -63%
Stop Target: None
Action: Lower resistance at $6.75-$7 was cleared but held with shares tagging a high of $6.93. Support remains at $6.50-$6.25.
Diana Shipping (DSX, $3.98, down $0.02)
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: Upper support at $4-$3.90 failed to hold with the low at the latter. Resistance is at $4.10-$4.20.
