MomentumOptions.com Pre-Market Update for 11/2/2022
Jobs Openings Remain Strong
8:00am (EST)
The stock market was mostly lower on Tuesday as jobs opening came in higher than expected. This ruined the opening gains as the good news was bad news for Wall Street which remained tentative ahead of this afternoon’s update from the Fed on interest rates.
The JOLTS report showed job openings jumped to 10.7 million, from 10.28 million, and well above forecasts for a decrease to about 10 million. The latter is likely what the Fed wanted to see in the labor market and keeps a 75 basis point hike in play instead of a smaller one.
The Nasdaq closed at 10,890 (-0.9%) after testing an afternoon low of 10,881. Near-term and upper support at 10,900-10,750 failed to hold. A drop below the latter and the 20-day moving average would imply a further slide to 10,650-10,500.
The S&P 500 traded down to 3,843 before settling at 3,856 (-0.4%). Upper support at 3,850-3,825 was breached but held. A fade below the latter and the 50-day moving average would suggest ongoing weakness towards 3,800-3,775.
The Dow ended at 32,653 (-0.2%) with the low reaching 32,485. Shaky support at 32,500 and the 200-day moving average were tripped but held. A close below these levels would signal downside action to 32,250-32,000.
The Russell 2000 made an opening run to 1,868 while going out at 1,851 (+0.3%). Prior and lower resistance from early September at 1,850-1,875 was recovered. A move above the latter and the 200-day moving average would indicate strength towards 1,900-1,925. Below is a chart of the IWM.
Volatility Index
The Volatility Index (VIX) held its 200-day moving average for the second-straight day after peaking at 26.35. Lowered resistance at 26.50-27 was challenged and held. A close above the latter would signal strength to 28-28.50 and the 50-day moving average.
Key support remains at 25.50.
Market Analysis
The S&P 400 Mid Cap Index (MID) rebounded after trading to a high of 2,458. Lower resistance from early September at 2,450-2,475 was cleared but held. A move above the latter and the 200-day moving average would suggest upside action towards 2,500-2,525.
Support is at 2,425-2,400.
RSI (relative strength index) is back in an uptrend with key support at 60 getting cleared and holding. Continued closes above this level would indicate further strength towards 65-70 and the mid-August highs. Support is at 55-50.
Sector
The Energy Select Sector Spider (XLE) extended its winning streak to 12-straight sessions with the intraday 52-week peak reaching $91.55. Prior and lower resistance from early June at $91.50-$92 was cleared but held. A close above the latter would signal additional momentum towards $93-$93.50.
Support is at $90.50-$90.
RSI remains in an uptrend with key resistance at 75 holding. A close above this level would suggest further strength to 80 and the overbought high from January, February and March. Support is at 70-65.
Market Outlook
The Fed news could be a non-event or a major market mover that could define the near-term trend into Thanksgiving. There could be a new trade this afternoon so stay locked-and-loaded.
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, $20.26, up $1.06)
KWEB November 24 calls (KWEB221118C00024000, $0.20, up $0.05)
Entry Price: $0.58 (10/21/2022)
Exit Target: $1.20
Return: -65%
Stop Target: None
Action: Tuesday’s top hit $21.13 with key resistance at $21 getting cleared but holding. This level served as key support from eight sessions ago and would be very bullish if reclaimed this week. Fresh support is at $20-$19.75.
Rocket Companies (RKT, $6.91, up $0.01)
RKT December 8 calls (RKT221216C00008000, $0.30, unchanged)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -69%
Stop Target: None
Action: Lower resistance at $7-$7.25 was cleared but held for the second-straight day with the high hitting $7.18. A close above the latter and the 50-day moving average would be a bullish development. Support is at $6.75-$6.50 and the 20-day moving average.
Diana Shipping (DSX, $4.38, up $0.06)
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 $4.40-$4.50 and the 50-day moving average were cleared but levels that held following the intraday trip to $4.45. Support has moved up to $4.30-$4.20.
