MomentumOptions.com Pre-Market Update for 11/9/2022
Bulls Get Hat Trick
8:00am (EST)
The stock market traded on both sides of the ledger on Tuesday before closing higher for the third-straight session. Some of the nervousness was expected ahead of the midterm election with the results determining which party will control of the House and Senate for the remainder of President Biden’s first term.
The Dow finished at 33,160 (+1%) after testing a midday high of 33,355. Prior and lower resistance from late August at 33,250-33,500 was cleared but held. A close above the latter and would imply further upside towards 33,750-34,000.
The S&P 500 tagged a high of 3,859 before ending at 3,828 (+0.6%). Lower resistance at 3,850-3,875 was tripped but held. A pop above the latter would suggest additional strength to 3,900-3,925.
The Nasdaq closed at 10,616 (+0.5%) after hitting a first half peak of 10,745. Prior and lower resistance at 10,600-10,750 was recovered. A close above the latter and the 20-day moving average would signal additional gains towards 10,850-10,900.
The Russell 2000 sank to a second half low of 1,790 while settling just a point lower at 1,808 (-0.1%). Current and upper support at 1,800-1,775 was tripped but held. A drop below the latter would be a slightly bearish development for a further backtest towards 1,750-1,725 and the 20/50-day moving averages. Below is a chart of the IWM.
Volatility Index
The Volatility Index (VIX) snapped a three session slide after trading to a high of 26.16. Lower resistance at 26-26.50 was cleared but held. A close above the latter and the 200-day moving average would indicate strength towards 27.50-28 and the 50/20-day moving averages.
Support is at 24.50-24.
Market Analysis
The Wilshire 5000 Composite Index (WLSH) extended its winning streak to three-straight sessions after closing back above its 50-day moving average with the peak reaching 38,460. Near-term and lower resistance at 38,250-38,500 was triggered but held. A move above the latter would signal additional strength to 38,750-39,000.
Support is at 37,750-37,500.
RSI (relative strength index) is back in an uptrend with key resistance at 50 getting reclaimed. Continued closes above this level would indicate strength to 55-60 and the highs from last month. Support is at 45-40.
Sector
The MSCI Emerging Markets iShares (EEM) was up for the fourth-straight session after tagging a high of $36.67. Prior and lower resistance from early October at $36.50-$37 was cleared but failed to hold. A close above the latter would indicate a further run towards $37.50-$38.
Resistance is at $36-$35.50.
RSI remains in a slight uptrend with key resistance at 60 holding. Continued closes above this level would imply strength towards 65-70 and the highs from January. Support is at 55-50.
Market Outlook
Futures are showing a slightly lower opening this morning following last night’s midterm elections. The action could pickup once trading gets underway so stay locked-and-loaded in case we take action on a new trade.
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, $37.87, up $0.68)
VZ December 40 calls (VZ221216C00040000, $0.40, up $0.10)
Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -28%
Stop Target: None
Action: Tuesday’s peak reached $37.99 with lower resistance at $37.75-$38 getting cleared and holding. Slightly rising support is at $37.50-$37.25.
Rocket Companies (RKT, $6.57, up $0.21)
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: Shares surged to a high of $6.84 with lower resistance at $6.75-$7 and the 20-day moving average getting cleared but levels that held. Support is at $6.50-$6.25.
Diana Shipping (DSX, $4.44, down $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: Key resistance at $4.60 and the 200-day moving average were challenged but levels that held following the intraday trip to $4.58. Support remains at $4.40-$4.30 and the 50-day moving average.
