MomentumOptions.com Pre-Market Update for 11/18/2022
Market Slips on Fed Speak
8:00am (EST)
The stock market was weak throughout most of Thursday’s session as Fed speak soured sentiment. St. Louis Fed President Bullard became the latest policymaker to echo that interest rates had further to rise, possibly to the 5%-7% range, while warning of further financial stress ahead.
The Russell 2000 traded to a low of 1,820 while settling at 1,839 (-0.8%). Fresh and upper support at 1,825-1,800 was breached but held. A drop below the latter and the 20-day moving average would imply a further slide towards 1,775-1,750 and the 50-day moving average. Below is a chart of the IWM.
The Nasdaq ended at 11,144 (-0.4%) with the intraday bottom hitting 11,006. Key support at 11,000 and the 50-day moving average were challenged and held. A close below these levels would indicate weakness to 10,900-10,750 and the 20-day moving average.
The S&P 500 traded down to 3,906 before finishing at 3,946 (-0.3%). Key support at 3,900 was also approached and held. A move under this level would signal additional weakness towards 3,850-3,800 and the 20-day and 50-day moving averages.
The Dow went out at 33,546 (-0.02%) after kissing a first half low of 33,239. Upper support at 33,250-33,000 was tripped but held. A fade below the latter would suggest a further backtest to 32,750-32,500. and the 20-day and 200-day moving averages.
Volatility Index
The Volatility Index (VIX) traded up to 25.18 before closing slightly lower. Near-term resistance at 25-25.50 was cleared but held. A pop above the latter and the 20-day moving average would imply upside towards 26.50-27 and the 200-day moving average.
Support is at 23.50-23.
Market Analysis
The Wilshire 5000 Composite Index (WLSH) was down for the second-straight session with the low reaching 38,867. New and upper support at 39,000-38,750 was breached but held. A move below the latter would signal ongoing weakness to 38,500-38,250 and the 20-day moving average.
Resistance is at 39,500-39,750.
RSI (relative strength index) is in an downtrend with upper support at 55-50 holding. A close below the latter would indicate weakness to 45-40 and levels from mid-October. Key resistance is at 60.
Sector
The Consumer Discretionary Select Spiders (XLY) was down for the third time in four sessions following the intraday pullback to $139.48. Upper support from the start of the month at $139.50-$139 was tripped but held. A drop below the latter would suggest additional downside risk to $137.50-$137.
New resistance is at $141-$141.50 and the 20-day moving average.
RSI is trending lower with upper support at 45-40 holding. A close under the latter would signal weakness to 35-30 and levels from the prior week. Resistance is at 50-55.
Market Outlook
The major indexes made a nice bounce off the lows yesterday with Tech and the blue-chips briefly trading into positive territory during the second half of action. However, the overall losses gave the bears the upper hand to possibly get the weekly win.
The bulls have been holding the VIX below key resistance levels and could easily make a run towards the breakeven level on a strong session to close out the week. A six-session trading range for the overall market is now in play and could be extended into next week on just a mildly higher close.
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, $30.49, up $0.01)
PSTG December 32 calls (PSTG221216C00032000, $1.40, unchanged)
Entry Price: $1.75 (11/14/2022)
Exit Target: $3.50
Return: -20%
Stop Target: $1
Action: Yesterday’s low touched $29.67 with near-term and upper support at $29.75-$29.50 getting breached but holding. Resistance is at $30.75-$31.
Verizon Communications (VZ, $38.16, up $0.28)
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 reclaimed with the late day peak hitting $38.18. Support remains at $37.50-$37.25 and the 20-day moving average.
Rocket Companies (RKT, $7.56, down $0.18)
RKT December 8 calls (RKT221216C00008000, $0.35, down $0.05)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -63%
Stop Target: None
Action: Upper support at $7.50-$7.25 was breached but held following the fade to $7.36. Lowered resistance is at $7.75-$8.
Diana Shipping (DSX, $4.41, up $0.47)
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: Lower resistance at $4.40-$4.50 was recovered with the high at $4.47. Support is at $4.20-$4.10.
