MomentumOptions.com Pre-Market Update for 11/1/2022
Market Slips Ahead of Busy Week
8:00am (EST)
The stock market settled lower on Monday and the final trading day for October as Wall Street prepares for a busy week. Aside from Wednesday’s Fed policy update and another rise in interest rates, ongoing earnings, and an update on employment will also be in focus.
The Nasdaq traded down to 10,914 while going out at 10,988 (-1%). Upper support at 11,000-10,850 failed to hold. A close below the latter would suggest a further pullback towards 10,750-10,600.
The S&P 500 closed at 3,871 (-0.8%) after kissing a morning low of 3,863. Fresh and upper support at 3,875-3,850 was breached and failed to hold. A move below the latter and the 50-day moving average would signal a retest to 3,825-3,800.
The Dow tested a low of 32,586 before settling at 32,732 (-0.4%). New and upper support at 32,750-32,500 failed to hold. A slide below the latter and the 200-day moving average would indicate weakness towards 32,250-32,000.
The Russell 2000 was basically flat after ending at 1,846 (-0.0%) with the intraday low at 1,833. Upper support at 1,825-1,800 was challenged but easily held. A drop below the latter would imply weakness towards 1,775-1,750 and the 50-day moving average. Below is a chart of the IWM.
Volatility Index
The Volatility Index (VIX) held its 200-day moving average despite the pop to 27.07. New and lower resistance at 27.50-28 held. A close above the latter and the 50-day moving average would suggest strength to 29.50-30 and the 20-day moving average.
Support is at 25.50-25.
Market Analysis
The Invesco QQQ Trust (QQQ) was down for the third time in four sessions following the intraday fade to $275.99. Near-term and upper support at $276-$275.50 was breached but held. A drop below the latter would signal weakness towards $273.50-$273 and the 20-day moving average.
Resistance is at $279.50-$280.
RSI (relative strength indicator) is in a downtrend with key support at 50 holding. A close below this level would indicate weakness towards 45-40 and the lows from a couple of weeks ago. Resistance is at 55 and the October high.
Sector
The Spider S&P Retail ETF (XRT) had its two-session winning streak snapped following the intraday pullback to $62.55. Near-term and upper support at $63-$62.50 failed to hold. A drop below the latter would indicate a retest towards $61.50-$61 and the 50-day moving average.
Resistance is at $63.50-$64.
RSI has rolled over with upper support at 55-50 holding. A drop below the latter would suggest a further slide towards 45-40 and the lows from last month. Resistance is at 60.
Market Outlook
For the month of October, the Dow zoomed 14%, its best month since 1976, while the Russell rallied 11%. The S&P soared 8% and the Nasdaq was up nearly 4%. It is also important to note, these
The “inside day” on the VIX simply means a high high or lower low wasn’t made from the previous session. The candlestick pattern confirmed some indecision in the market as it showed little price movement relative to the previous trading days.
I’m hoping to get into another new trade this week but we may have to wait until Wednesday afternoon, or Thursday, to see how the market reacts to the Fed minutes and commentary afterwards.
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, $19.20, up $0.13)
KWEB November 24 calls (KWEB221118C00024000, $0.15, unchanged)
Entry Price: $0.58 (10/21/2022)
Exit Target: $1.20
Return: -74%
Stop Target: None
Action: Shares tapped a high of $19.50 with lower resistance at $19.50-$19.75 getting kissed but holding on the session peak. Support is at $19-$18.75.
Rocket Companies (RKT, $6.90, up $0.19)
RKT December 8 calls (RKT221216C00008000, $0.30, up $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -69%
Stop Target: None
Action: Key resistance at $7 was challenged but held after shares traded up to $6.95. Fresh support is at $6.75-$6.50 and the 20-day moving average.
Diana Shipping (DSX, $4.32, up $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: Yesterday’s peak reached $4.39 with new and lower resistance at $4.40-$4.50 getting challenged but holding. Support remains at $4.20-$4.10 and the 20-day moving average.
