MomentumOptions.com Pre-Market Update for 11/17/2022
Mini Trading Range Continues
8:00am (EST)
The stock market remained choppy after pulling back on Wednesday to remain in a mini four-session trading range. Retail sales came in better-than-expected after jumping 1.3% in October versus estimates for a rise of 1%.
Disappointing earnings from Target (TGT) likely offset the robust consumer spending update as shares sank 13%. Micron Technology (MU) weighed on Tech after the company said it was cutting production and would miss upcoming earnings.
The Russell 2000 ended at 1,853 (-1.x%) and back below its 200-day moving average with the session low at 1,850. Upper support at 1,850-1,825 was kissed but held. A fade below the latter would signal weakness to 1,800-1,775 and the 20-day moving average. Below is a chart of the IWM.
The Nasdaq tapped a morning low of 11,162 while settling at 11,183 (-1.5%). Near-term and upper support at 11,250-11,100 failed to hold. A move below the latter would suggest a retest towards 11,000-10,850 and the 50/20-day moving averages.
The S&P 500 closed at 3,958 (-0.8%) after tagging a low of 3,954. Current and upper support at 3,975-3,950 was tripped and failed to hold. A close below the latter would indicate a further slide to 3,925-3,900.
The Dow hit a second half low of 33,516 before finishing at 33,553 (-0.1%). Upper support at 33,500-33,250 was challenged and held. A drop below the latter would imply additional weakness towards 33,000-32,750.
Volatility Index
The Volatility Index (VIX) was lower for the first time in three days despite the market weakness with the low hitting 23.99. Current support at 24-23.50 was tripped but held. Resistance is at 26-26.50 and the 20-day and 200-day moving averages.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) was down for the second time in three days with the low tapping $225.65. Near-term and upper support at $226-$225.50 was breached but held. A close below the latter would indicate downside action to $223-$222.50.
Resistance is at $227.50-$228.
RSI (relative strength index) is in a downtrend with upper support at 55-50 holding. A close below the latter would suggest weakness towards 45-40 and this month’s lows. Resistance is at 60.
Sector
The Dow Jones Transportation Average (TRAN) showed weakness following the pullback to 14,285. Upper support at 14,400-14,250 failed to hold. A close below the latter and the 200-day moving average would be a slightly bearish signal for a further slide towards 14,150-14,000.
Resistance is at 14,600-14,750.
RSI has rolled over with key support at 60 holding. A move below this level would indicate weakness towards 55-50 and levels from the start of the month. Resistance is at 65-70.
Market Outlook
Although the major indexes remain in mini trading ranges from last Friday, the close below 11,250 on the Nasdaq was a slight concern. A drop below 1,825 on the Russell today or on Friday would be a double whammy for the bulls.
Key support we were watching coming into the week for the Dow and S&P are at 33,000 and 3,900, respectively. There are backup levels for the major indexes if all of the aforementioned support levels fail to hold, or get stretched, before near-term tops can be called.
As for volatility, the bears pushed the 200-day moving average on Tuesday but there is no reason to turn bearish until there are continued closes back above 28 and the 50-day moving average.
The trading environment still feels like higher highs are in the mix for the rest of the month and into December. Thanksgiving week is typically bullish despite the shortened week and a continued trading range to end this week would be a win for the bulls.
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, $30.48, down $1.08)
PSTG December 32 calls (PSTG221216C00032000, $1.40, down $0.50)
Entry Price: $1.75 (11/14/2022)
Exit Target: $3.50
Return: -20%
Stop Target: $1
Action: Shares tested a low of $30.33 with upper support at $30.50-$30.25 failing to hold. Lowered resistance is at $30.75-$31.
Verizon Communications (VZ, $37.88, up $0.18)
VZ December 40 calls (VZ221216C00040000, $0.30, unchanged)
Entry Price: $0.55 (11/2/2022)
Exit Target: $1.10
Return: -45%
Stop Target: None
Action: Key resistance at $38 and the 50-day moving average were cleared but levels that held following the intraday push to $38.07. Support is at $37.50-$37.25 and the 20-day moving average.
Rocket Companies (RKT, $7.74, down $0.64)
RKT December 8 calls (RKT221216C00008000, $0.40, down $0.40)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -58%
Stop Target: None
Action: Fresh and upper support at $7.50-$7.25 was breached but held on the intraday tumble to $7.48. Lowered resistance is at $8-$8.25.
Diana Shipping (DSX, $4.04, down $0.20)
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 support at $4 was challenged and held with the late day low at $4.02. New resistance is at $4.10-$4.20.
