MomentumOptions.com Pre-Market Update for 10/28/2022
Blue-Chips, Small-Caps Extend Winning Streaks
8:00am (EST)
The stock market was mixed again on Thursday despite better-than-expected economic news which showed gross domestic product grew at an annual rate of 2.6%. This follows two consecutive quarters of negative growth and topped forecasts for a print of 2.4%.
The Dow closed at 32,033 (+0.6%) after hitting a high of 32,388. Prior and lower resistance at 32,250-32,500 was cleared but held. A pop above the latter and the 200-day moving average would suggest ongoing momentum towards 32,750-33,000.
The Russell 2000 stretched its winning streak to five-straight sessions after ending at 1,806 (+0.1%) with the intraday peak reaching 1,832. Current and lower resistance at 1,825-1,850 was cleared but held for the second-straight day. A close above the latter and the 200-day moving average would imply additional strength to 1,875-1,900. Below is a chart of the IWM.
The S&P 500 traded down to 3,803 before settling at 3,807 (-0.6%). Near-term and upper support at 3,825-3,800 failed to hold. A drop below the latter would signal a further fade towards 3,775-3,750.
The Nasdaq finished at 10,792 (-2%) following the intraday fade to 10,780. New and upper support at 10,900-10,750 was breached and failed to hold. A slide below the latter and the 20-day moving average would indicate downside risk to 10,650-10,500.
Volatility Index
The Volatility Index (VIX) snapped a two-session losing streak following the bounce to 27.67. Fresh and lower resistance at 27.50-28 was tripped but held. A close above the latter and the 50-day moving average would signal strength towards 29.50-30.
Support is at 27-26.50 and the 200-day moving average.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) was down for the second-straight day with the low tapping $218.87. New and upper support at $219-$218.50 was breached but held. A close below the latter would indicate downside action to $217-$216.50.
Resistance is at $222-$222.50.
RSI (relative strength index) is in a downtrend with key support at 50 holding. A close below this level would suggest weakness towards 45-40 and levels from last week. Resistance is at 55-60.
Sector
The Spiders S&P Homebuilders ETF (XHB) was up for the fourth time in five sessions with the intraday high at $58.98. Prior and lower resistance from the start of the month at $58.50-$59 and the 50-day moving average were cleared but levels that held. A move above the latter would imply additional strength towards $60-$60.50.
Support is at $57.50-$57.
RSI has flatlined with key support at 50 holding. A drop below this level would suggest weakness to 45-40. Resistance is at 55-60.
Market Outlook
Earnings after yesterday’s closing bell were once again mixed with Apple (AAPL) topping revenue estimates while Amazon (AMZN) missed earnings forecasts. Shares of Apple were slightly up in after-hours trading while Amazon shares were last seen at $96, down 13%.
Futures were lower on the Nasdaq and the S&P last night while the Dow and the Russell were showing a higher open. The Nasdaq is the only index showing a loss for the week and the S&P needs to hold 3,753, on a negative close, to post a win.
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, $19.83, down $0.81)
KWEB November 24 calls (KWEB221118C00024000, $0.20, down $0.13)
Entry Price: $0.58 (10/21/2022)
Exit Target: $1.20
Return: -61%
Stop Target: None
Action: New and upper support at $19.75-$19.50 was tripped but held following the pullback to $19.70. Resistance is at $20-$20.25.
Rocket Companies (RKT, $6.35, down $0.05)
RKT December 8 calls (RKT221216C00008000, $0.20, unchanged)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -79%
Stop Target: None
Action: Yesterday’s low touched $6.32 with upper support at $6.25-$6 getting challenged but easily holding. Resistance is at $6.75-$7.
Diana Shipping (DSX, $4.17, 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 $4.10-$4 was kissed but held, along with the 20-day moving average, on the session low. Resistance at $4.20-$4.30.
