MomentumOptions.com Pre-Market Update for 10/26/2022
Bulls Keep Momentum
8:00am (EST)
The stock market extended its winning streak to three-straight sessions with Tuesday’s gains pushing Tech towards its monthly high. The small-caps led the surge higher and are on the verge of joining the blue-chips in recovering its 50-day moving average.
The Russell 2000 zoomed to an intraday peak of 1,801 before finishing at 1,796 (+2.7%). Key resistance at 1,800 was topped but held. A close above this level and the 50-day moving average would be an ongoing bullish development for strength to 1,825-1,850. Below is a chart of the IWM.
The Nasdaq settled 11,199 after tagging an afternoon high of 11,210 (+0.9%). Lower resistance from the start of the month at 11,100-11,250 was recovered. A move above the latter high and the monthly peak at 11,230 would signal additional gains towards 11,350-11,500 and the 50-day moving average.
The S&P 500 made a run to 3,862 before settling at 3,859 (+1.6%). Key resistance and prior support from mid-September at 3,850 was cleared and held. Continued closes above this level would indicate momentum to 3,875-3,900.
The Dow ended at 31,836 (+1.1%) with the high hitting 31,876. Lower resistance from early September at 31,750-32,000 was reclaimed. A close above the latter would suggest additional gains towards 32,250-32,500.
Volatility Index
The Volatility Index (VIX) fell for the third time in four sessions with the low tagging 28.22. Upper support at 28.50-28 was breached and held. A drop below the latter would signal weakness to 27.50-27 and the 50-day moving average.
Lowered resistance is at 29.50-30.
Market Analysis
The Spiders Dow Jones Industrial Average ETF (DIA) tested a higher high at $318.78 to extend its winning streak to three-straight sessions. Prior and lower resistance from early September at $318.50-$319 was cleared but held by a penny. A close above the latter would be a bullish signal for a further trip towards $320.50-$321.
Rising support is at $314.50-$314.
RSI is in an uptrend with lower resistance at 60-65 getting topped and holding. A move above the latter would indicate upside action towards 70-75 and overbought levels from mid-August. Support is at 55-50.
Sector
The Consumer Discretionary Select Spiders (XLY) was up for the third-straight session with the high at $146.97. Lower resistance from the start of the month at $146.50-$147 was recovered. A move above the latter would suggest additional upside to $148.50-$150.
New support is at $143.50-$103.
RSI remains in a uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level would indicate strength to 55-60 and levels from the first half of September. Support is at 45-40.
Market Outlook
Futures were lower last night following the release of a number of key earnings reports. Tech was showing the most damage after Alphabet (GOOG) missed Wall Street’s expectations with shares down nearly 7% in after-hours yesterday.
If futures do hold up and there is a lower open, it will be an ongoing bullish signal if the major indexes can manage to extend their winning streak to four-straight by the close. There is wiggle room on the VIX for a retest towards 30 and the 20-day moving average so let’s see how the day shakes out.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 24-18 (57%). 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.
KraneShares CSI China Internet ETF (KWEB, $19.03, up $0.62)
KWEB November 24 calls (KWEB221118C00024000, $0.20, unchanged)
Entry Price: $0.58 (10/21/2022)
Exit Target: $1.20
Return: -62%
Stop Target: None
Action: Tuesday’s rebound reached $19.47 with fresh and lower resistance at $19.25-$19.50 getting breached but holding. Shaky support is at $18.75-$18.50.
Rocket Companies (RKT, $6.83, up $0.47)
RKT December 8 calls (RKT221216C00008000, $0.30, up $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -65%
Stop Target: None
Action: Shares traded up to $6.88 with lower resistance at $6.75-$7 getting reclaimed. Rising support is at $6.50-$6.25.
Diana Shipping (DSX, $4.24, up $0.01)
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: Key resistance at $4.25 was kissed but held on the session peak. Support remains at $4.10-$4 and the 20-day moving average.
