MomentumOptions.com Pre-Market Update for 11/10/2022

Delayed Elections Results Whacks Wall Street

8:00am (EST)

The stock market had its three-session winning streak snapped after the results from the midterm elections provided no clear answers about which party would control Congress. A selloff in Bitcoin also weighed on sentiment as the cryptocurrency sank to a two-year low.

The Russell 2000 ended at 1,760 (-2.7%) and back below its 50-day moving average with the session low at 1,757. Upper support at 1,775-1,750 failed to hold. A fade below the latter would signal weakness to 1,725-1,700. Below is a chart of the IWM.

The Nasdaq tapped a late day low of 10,344 while settling at 10,353 (-2.5%). Near-term and upper support at 10,400-10,250 failed to hold. A move below the latter would suggest additional weakness towards 10,150-10,000 with the mid-October 52-week low at 10,088.

The S&P 500 closed at 3,748 (-2.1%) and back below its 20-day moving average after tagging an afternoon low of 3,744. Current and upper support at 3,750-3,700 failed to hold. A close below the latter would indicate a further fade to 3,650-3,600.

The Dow hit a second half low of 32,478 before finishing at 32,513 (-2%) and back below its 200-day moving average. Upper support at 32,500-32,250 was breached but held. A drop below the latter would imply a retest towards 32,000-31,750 and the 20-day moving average.

Volatility Index

The Volatility Index (VIX) was up for the second-straight day with the high at 26.35. Lower resistance at 26-26.50 was cleared and held. A close above the latter and the 200-day moving average would suggest upside action to 27.50-28 and the 20/50-day moving averages.

Slightly rising support is at 25-24.50.

Market Analysis

The Invesco QQQ Trust (QQQ) was down for the first time in four sessions with the intraday low touching $263.03. Near-term and upper support at $263.50-$263 was breached and failed to hold. A drop below the latter would signal weakness towards $260.50-$260.

Resistance is at $268-$268.50.

RSI (relative strength indicator) is in a downtrend with key support at 40 holding. A close below this level would indicate weakness towards 35-30 and the lows from mid-October/ late September. Resistance is at 45-50.

Sector

The Industrials Select Sector Spider (XLI) had its four session winning streak snapped following the pullback to $95.46. Fresh and upper support at $95.50-$95 was tripped but held. A close below the latter would signal additional weakness to $94-$93.50 and the 200-day moving average.

Resistance is at $96.50-$97.

RSI has rolled over with upper support at 65-60 failing to hold. A move below the latter would suggest downside action towards 55-50. Key resistance is at 70.

Market Outlook

The close back below key support levels on a couple of the indexes yesterday was a slightly bearish signal. The Nasdaq failed to hold 10,500 and the S&P settled below 3,750 on the retest and close back below 3,850 and the 50-day moving average.

As for the the Russell, the 1,750 level held. The Dow has wiggle room down to 31,500 before a possible near-term top can be called. The action in the VIX isn’t too alarming, yet, but something that needs to be watched into Friday’s closing bell.

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.

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Verizon Communications (VZ, $37.62, down $0.25)

VZ December 40 calls (VZ221216C00040000, $0.35, down $0.05)

Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -36% 
Stop Target: None

Action: Shares tagged a high of $38.13 before ending in the red. Lower resistance at $38-$38.25 was cleared but held. Support is at $37.50-$37.25.

Rocket Companies (RKT, $6.51, down $0.06)

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: Wednesday’s low touched $6.36 with upper support at $6.50-$6.25 getting breached but holding. Resistance is at $6.75-$7 and the 20/50-day moving averages.

Diana Shipping (DSX, $4.35, down $0.09)

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 $4.40-$4.30 failed to hold following the intraday slide to $4.31 and dip below the 50-day moving average. Key resistance is at $4.60 and the 200-day moving average.