MomentumOptions.com Pre-Market Update for 10/19/2022

Bulls Get Back-to-Back Wins

8:00am (EST)

The stock market was up for the second-straight session with Tuesday’s gains getting the 20-day moving averages in focus. The back-to-back wins were the first since the start of the month and just the third time it has happened since early September.

The Russell 2000 traded up to 1,782 before settling at 1,755 (+1.2%). Prior and lower resistance from the beginning of the month at 1,775-1,800 was cleared but held. A move above the latter would signal a further run to 1,825-1,850 and the 50-day moving average. Below is a chart of the IWM. 

The S&P 500 closed at 3,719 (+1.1%) after surging to an opening peak of 3,762. Lower resistance at 3,750-3,775 was cleared but held. A pop past the latter would be a bullish development for strength towards 3,800-3,825.

The Dow tapped a morning high of 30,837 while settling at 30,523 (+1.1%). New and lower resistance at 30,750-31,000 was topped but held. A close above the latter would suggest upside to 31,250-31,500 and the 50-day moving average.

The Nasdaq went out at 10,772 (+0.9%) with the high hitting 10,972. Fresh and lower resistance at 10,850-11,000 and the 20-day moving average were cleared but levels that held. A move above the latter would indicate additional gains towards 11,100-11,250 with the early month peak at 11,230.

Volatility Index

The Volatility Index (VIX) fell for the second-straight session and for the fourth time in five after trading down to 30.42. Prior and upper support at 30.50-30 was recovered. A drop below the latter would suggest a further slide to 29-28.50.

Lowered resistance is at 31.50-32.

Market Analysis

The iShares Russell Growth 1000 ETF (IWF) was up for the second-straight day with the peak at $219.41. Prior and lower resistance at $219-$219.50 was tripped but held. A close above the latter would indicate upside action towards $221-$221.50.

Support is at $214-$213.50.

RSI (relative strength index) is in an uptrend with lower resistance at 45-50 getting cleared and holding. A close above the latter would suggest strength towards 55-60 and levels from mid-September. Support is at 40-35.

Sector

The Real Estate Select Sector Spider (XLRE) extended its winning streak to two-straight after tapping an intraday high of $35.97. Lower resistance at $35.50-$36 was cleared but held. A close above the latter and the 20-day moving average would signal additional strength towards $36.50-$37.

Support is at $35-$34.50.

RSI is in an uptrend with key resistance at 40 getting recovered. Continued closes above this level would indicate upside action towards 45-50 and levels from the first half of last month. Support is at 35-30.

Market Outlook

The surge past last Friday’s opening highs by the major indexes was a bullish sign traders are buying the rally and hoping a near-term bottom has been reached. We still need to see the VIX to close below 30 at some point this week.

The pullback off the highs kept us on the sidelines for a new trade as I didn’t want to add call options until volatility does close below 30. We have two trades we will be closing on Thursday so we have plenty of room to add fresh positions. Hopefully, we can get into fresh plays today so stay tuned for a possible Text Alert.

Momentum Options Play List

Closed Momentum Options Trades for 2022: 24-17 (59%). 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.

Walgreens Boots Alliance (WBA, $33.10, up $0.10)

WBA October 33 calls (closed at $0.90 on 10/14)

WBA October 31 puts (WBA221021P00031000, $0.05, down $0.02)

Entry Price: $1.70 (10/12/2022)
Exit Target: $2 (Limit Order on calls)
Return: -44% 
Stop Target: None

Action: Continue to hold for another day.

ProShares Bitcoin Strategy ETF (BITO, $11.84, down $0.21)

BITO October 10.50 puts (BITO221021P00010500, $0.05, unchanged)

Entry Price: $0.51 (9/22/2022)
Exit Target: $1.05
Return: -90% 
Stop Target: None

Action: Continue to hold for another day.

Rocket Companies (RKT, $6.95, unchanged)

RKT December 8 calls (RKT221216C00008000, $0.40, unchanged)

Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -58% 
Stop Target: None

Action: Key resistance from the start of the month at $7.25 was cleared but held following the trip to $7.27. Support remains at $6.75-$6.50.

Diana Shipping (DSX, $4.25, up $0.14)

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: Lower resistance at $4.20-$4.30 was topped and held with shares closing on the session high. Support is at $4.10-$4 and the 20-day moving average.