MomentumOptions.com Pre-Market Update for 10/21/2022
Bears Even Weekly Scorecard
8:00am (EST)
The stock market fell for the second-straight session despite opening higher with Thursday’s losses keeping a mini trading range in play. Better-than-expected jobless claims helped bullish action on the open but the continued strength in bond yields ruined the rebound and run to higher highs.
The Russell 2000 tagged a low of 1,699 before going out at 1,704 (-1.2%). Key support at 1,700 was tripped but held. A close below this level and the 20-day moving average would signal ongoing weakness towards 1,675-1,650. Below is a chart of the IWM.
The S&P 500 finished at 3,665 (-0.8%) following the intraday pullback to 3,656. Upper support at 3,675-3,650 and the 20-day moving average were breached and failed to hold. A drop below the latter would be a slightly bearish development for a retest towards 3,625-3,600.
The Nasdaq traded down to 10,574 while ending at 10,614 (-0.6%). Near-term and upper support at 10,650-10,500 failed to hold. A close below the latter would indicate weakness to 10,400-10,250.
The Dow tapped a low of 30,265 before settling at 30,333 (-0.3%). Current and upper support at 30,250-30,000 was tripped but held. A close below the latter would suggest a further fade to 29,750-29,500 and the 20-day moving average.
Volatility Index
The Volatility Index (VIX) fell for the third time in four sessions with the low reaching 29.76. Prior and upper support from late September at 30-29.50 was reclaimed. A move below the latter would suggest downside action to 28.50 with the monthly lows at 28.56, 28.50, 28.56. More on this on Monday.
Lowered resistance is at 31-31.50 and the 20-day moving average.
Market Analysis
The Invesco QQQ Trust (QQQ) was down for the second-straight session following the intraday slide to $267.92. Current and upper support at $268-$267.50 was breached but held. A drop below the latter would signal additional weakness to $266-$265.50.
Resistance is at $271.50-$272 and the 20-day moving average.
RSI (relative strength indicator) is in a downtrend with key support at 40 holding. Continued closes below this level would indicate weakness towards 35-30 and the lows from earlier this month and late September. Resistance is at 45.
Sector
The Spider Gold Shares (GLD) was also down for the second-straight day after tagging a low of $151.27. Prior and upper support at $151.50-$151 failed to hold. A drop the latter and the late September 52-week low at $151.03 would indicate further weakness towards $150-$149.50.
Resistance is at $152.50-$153.
RSI is still showing weakness with key support at 35 holding. A close below this level would signal additional weakness to 30-25 and levels from late last month. Resistance is at 40-45.
Market Outlook
The bulls are still winning the week by a comfortable margin but nothing is granted given the current trading environment. Next week, Tech will be in the spotlight as far as earnings so there could be continued chop today.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 24-18 (58%). 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.
Rocket Companies (RKT, $6.28, down $0.27)
RKT December 8 calls (RKT221216C00008000, $0.25, down $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -72%
Stop Target: None
Action: Upper support at $6.50-$6.25 failed to hold with the low at $6.26. Resistance is at $6.75-$7 and the 20-day moving average.
Diana Shipping (DSX, $4.04, down $0.12)
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 low hit $4.03 with upper support at $4.10-$4 failing to hold. Resistance is at $4.10-$4.20.
