MomentumOptions.com Pre-Market Update for 11/16/2022
Bulls Cheer Inflation News
8:00am (EST)
The stock market resumed its recent uptrend on Tuesday after another inflation report signaled that price increases could be slowing. Specifically, the producer price index, showed a 0.2% increase last month versus forecasts for a print of 0.4%.
The Russell 2000 went out at 1,889 (+1.5%) after hitting a morning high of 1,905. Key resistance from early August at 1,900 was cleared but held. A close above this level would signal additional gains to 1,925-1,950. Below is a chart of the IWM.
The Nasdaq made an intraday trip to 11,492 while ending at 11,358 (+1.5%). Prior and lower resistance from mid-September at 11,350-11,500 was recovered. A move above the latter would indicate ongoing strength towards 11,600-11,750.
The S&P 500 settled at 3,991 (+0.9%) with the session peak reaching 4,028. Prior and lower resistance from early September at 4,025-4,050 was tripped but held. A move above the latter would imply further upside towards 4,075-4,100 and the 200-day moving average.
The Dow traded to a high of 33,987 before closing at 33,592 (+0.2%). Current and lower resistance from mid-August at 33,750-34,000 was cleared but held. A move above the latter would suggest strength to 34,250-34,500 with the August peak at 34,281.
Volatility Index
The Volatility Index (VIX) was up for the second-straight day after tapping an afternoon high of 26.22. Near-term and lower resistance at 26-26.50 was cleared but held. A close above the latter and the 20-day and 200-day moving averages would signal further upside towards 27.50-28 and the 50-day moving average.
Slightly rising support is at 23.50-23.
Market Analysis
The SPDR S&P 500 ETF (SPY) was up for the third time in four sessions with the high at $402.31. Fresh and lower resistance at $402-$402.50 was cleared but held. A pop above the latter would indicate additional strength to $404-$404.50 and the 200-day moving average
Support is at $395-$394.50.
RSI (relative strength index) is trying to curl higher with key resistance at 65 holding. A close above this level would signal further upside action towards 70-75 and levels from mid-August. Support is at 55-50.
Sector
The Consumer Staples Select Spiders (XLP) bounced back after testing an intraday high of $74.10. Lower resistance at $74-$74.50 was cleared but held for the second-straight day. A move above the latter would signal upside action towards $75.50-$76.
Key support is at $73 and the 200-day moving average.
RSI is back in an uptrend with key resistance at 60 getting recovered. Continued closes above this level would indicate further strength to 65-70 and levels from mid-August. Support is at 55-50.
Market Outlook
There was some midday volatility following a report Russian missiles crossed into Poland and killed two people. Geopolitical risks are always an uncertainty and the Polish Prime Minister said the government was investigating and raising its military preparedness.
We continue to see strength in our current trades 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, $31.56, up $0.49)
PSTG December 32 calls (PSTG221216C00032000, $1.90, up $0.15)
Entry Price: $1.75 (11/14/2022)
Exit Target: $3.50
Return: 9%
Stop Target: $1
Action: Current and lower resistance at $32.25-$32.50 was cleared but held for the second-straight day after shares traded up to $32.45. The calls peaked at $2.40. Rising support is at $31.25-$31.
Verizon Communications (VZ, $37.70, down $0.61)
VZ December 40 calls (VZ221216C00040000, $0.30, down $0.10)
Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -42%
Stop Target: None
Action: Upper support at $37.50-$37.25 was breached but held on the close back below the 50-day moving average. Resistance is at $38-$38.25.
Rocket Companies (RKT, $8.38, up $0.44)
RKT December 8 calls (RKT221216C00008000, $0.80, up $0.25)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -17%
Stop Target: None
Action: Tuesday’s peak reached $8.59 with the calls hitting 93 cents. Early July and lower resistance at $8.50-$8.75 was cleared but held. Rising support is at $8.25-$8.
Diana Shipping (DSX, $4.24, down $0.11)
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: Prior and upper support at $4.30-$4.20 was breached and failed to hold with the low hitting $4.23. Resistance is at $4.40-$4.50.
