MomentumOptions.com Pre-Market Update for 11/15/2022
Rebound Rally Stalls After Fed Speak
8:00am (EST)
The stock market pulled back on Monday despite making higher highs as Fed speak weighed on sentiment. Fed Vice Chair Brainard suggested the central bank would likely slow its interest rate hikes with Federal Reserve Governor also stating the Fed may consider slowing the pace of increases at its next meeting.
The Russell 2000 finished on the session low at 1,861 (-1.1%). Upper support at 1,875-1,850 and the 200-day moving average were breached and levels that failed to hold. A close below the latter would indicate weakness to 1,825-1,800. Below is a chart of the IWM.
The Nasdaq ended at 11,196 (-1.1%) after bottoming at 11,167. New and upper support at 11,150-11,000 was challenged but held. A drop below the latter and the 50-day moving average would imply a further slide to 10,900-10,750 and the 20-day moving average.
The S&P 500 traded down to 3,956 before settling at 3,957 (-0.9%). Fresh and upper support at 3,950-3,900 was also challenged but held. A fade below the latter would signal ongoing weakness towards 3,850-3,800 and the 20-day and 50-day moving averages.
The Dow closed at 33,536 (-0.6%) with the low kissing 33,533. Current and upper support at 33,500-33,250 was approached but held. A move below the latter would suggest a further pullback towards 33,000-32,750.
Volatility Index
The Volatility Index (VIX) stayed slightly elevated throughout the day with the high at 24.33. New and lower resistance at 24-24.50 was cleared but held. A close above the latter would imply a retest towards 26-26.50 and the 200-day and 20-day moving averages.
Support is 22.50-22.
Market Analysis
The Spiders Dow Jones Industrial Average ETF (DIA) fell for the first time in three sessions after tagging a low of $335.56. Near-term and upper support at $336-$335.50 failed to hold. A close below the latter would suggest a further slide to $333.50-$333.
Resistance is at $339.50-$340 with the mid-August peak at $343.09.
RSI has rolled over with upper support at 65-60 holding. A close below the latter would indicate downside action towards 55-50 and prior levels from mid-October. Resistance is at 70-75.
Sector
The Spider Gold Shares (GLD) was up for the third-straight session after reaching a peak of $165.24. Prior and lower resistance at $165-$165.50 was cleared but held. A pop above the latter would imply further strength towards $166.50-$167.
Support is at $164-$163.50.
RSI is still showing strength with key resistance at 70 holding. A close above this level would signal additional upside to 75-80 and levels from early March. Support is at 65-60.
Market Outlook
The lower close was slightly disappointing as up Friday and Monday’s signal money is moving into the market and would have represented two-straight weeks the bulls had accomplished this feat. The damage wasn’t severe as the major indexes were all down about 1% after tapping higher intraday highs.
We added a new position yesterday so let’s go check the tape.
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.
Pure Storage (PSTG, $31.07, up $0.29)
PSTG December 32 calls (PSTG221216C00032000, $1.75, up $0.20)
Entry Price: $1.75 (11/14/2022)
Exit Target: $3.50
Return: 0%
Stop Target: $1
Action: Early March and lower resistance at $32.25-$32.50 was cleared but held following the intraday push to $32.39. Support is at $30.75-$30.50.
A close above $32 could signal a possible return trip towards $34-$36. If shares can clear $35.50, technically, by December 16th, these options will be $3.50 “in-the-money” for a 100% return. There was heavy buying in the PSTG December 36 calls yesterday which is signaling some traders expect continued strength in the stock.
Verizon Communications (VZ, $38.31, up $0.01)
VZ December 40 calls (VZ221216C00040000, $0.40, unchanged)
Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -27%
Stop Target: None
Action: Monday’s peak reached $38.99 with the calls peaking at 60 cents. Prior and lower resistance from early October at $38.75-$39 was cleared but held. Support is at $38.25-$38 and the 50-day moving average.
Rocket Companies (RKT, $7.94, down $0.19)
RKT December 8 calls (RKT221216C00008000, $0.55, down $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -42%
Stop Target: None
Action: Shares tested a low of $7.81 with new and upper support at $8-$7.75 failing to hold. Resistance is at $8.25-$8.50.
Diana Shipping (DSX, $4.35, down $0.10)
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: Current and upper support at $4.40-$4.30 was breached and failed to hold with the low hitting $4.32. Resistance is at $4.50-$4.60 and the 200-day moving average.
