MomentumOptions.com Pre-Market Update for 11/8/2022
Dow Recovers 200-Day Moving Average
8:00am (EST)
The stock market showed strength for the second-straight session despite a supply chain warning from Apple (AAPL) as Wall Street prepares for a busy week. Aside from today’s midterm elections, key inflation data is due out that could gives clues into next month’s Fed update on interest rates.
The Dow traded to a high of 32,895 before closing at 32,827 (+1.3%). Prior and lower resistance at 32,750-33,000 and the 200-day moving average were reclaimed. A move above the latter and last Wednesday’s monthly peak at 33,071 would suggest strength to 33,250-33,500.
The S&P 500 settled at 3,806 (+1%) with the intraday peak reaching 3,813. Key resistance at 3,800 and the 50-day moving average were cleared and held. Continued closes above these levels would imply further upside towards 3,850-3,900.
The Nasdaq made an afternoon trip to 10,587 while ending at 10,564 (+0.9%). Key resistance at 10,500 was recovered. Continued closes above this level would indicate ongoing strength towards 10,600-10,750 and the 20-day moving average.
The Russell 2000 went out at 1,809 (+0.6%) after hitting a second half high of 1,814. Key resistance at 1,800 was cleared and held. Continued closes above this level would signal additional gains to 1,825-1,850 and the 200-day moving average. Below is a chart of the IWM.
Volatility Index
The Volatility Index (VIX) was down for the third-straight session with the low at 24.34. Upper support at 24.50-24 was breached and held. A close below the latter would imply ongoing weakness to 23-22.50.
Lowered resistance is at 25-25.50.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) was up for the second-straight day with the high tapping $214.66. New and lower resistance at $215-$215.50 was challenged but held. A close above the latter and the 20-day moving average would indicate upside action to $217-$217.50.
Support is at $211.50-$211.
RSI (relative strength index) is in a uptrend with lower resistance at 45-50 getting cleared and holding. A close above the latter would suggest strength towards 55 and last month’s peak. Support is at 40.
Sector
The Financial Select Sector Spiders (XLF) extended its winning streak to two-straight after kissing a high of $34.27. Current and lower resistance at $34-$34.50 was cleared but held. A close above the latter and the 200-day moving average would signal additional strength towards $35.50-$36.
Support is at $34-$33.50.
RSI has rebounded with key resistance at 60 getting recovered. Continued closes above this level would indicate upside action to 65-70 and levels from mid-August. Support is at 55-50.
Market Outlook
The higher Monday and last Friday’s gains were a slightly bullish signal as it showed money is moving in, or staying, in the market. Lower Friday and Monday closes can often indicate investors are nervous about holding money in the market over the weekend.
The major indexes could trade in a tighter range with a much more pronounced move coming on Wednesday. The close back above key resistance levels was a bullish signal and levels that need to hold on any pullback this week.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 25-18 (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.
Verizon Communications (VZ, $37.19, down $0.05)
VZ December 40 calls (VZ221216C00040000, $0.35, unchanged)
Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -36%
Stop Target: None
Action: Yesterday’s low touched $36.98 with upper support at $37-$36.75 and the 20-day moving average getting challenged but easily holding. Resistance is at $37.50-$37.75.
Rocket Companies (RKT, $6.36, up $0.05)
RKT December 8 calls (RKT221216C00008000, $0.15, unchanged)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -84%
Stop Target: None
Action: Lower resistance at $6.50-$6.75 and the 20-day moving average were challenged but held following the rebound to $6.45. Support remains at $6.25-$6.
Diana Shipping (DSX, $4.30, up $0.07)
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: Shares surged to a high of $4.57 with mid-July and lower resistance at $4.50-$4.60 getting reclaimed. A close above the latter and the 200-day moving average would imply a run towards $4.75-$5. Support is at $4.40-$4.30 and the 50-day moving average.
