MomentumOptions.com Pre-Market Update for 11/22/2022

Lackluster Action Holds Support

8:00am (EST)

The stock market settled lower on Monday as Wall Street prepared for a shortened week and Wednesday’s Fed minutes. Covid concerns in China also weighed on sentiment as the country may implement fresh restrictions to mitigate recent outbreaks.

The Nasdaq ended at 11,024 (-1.1%) after bottoming at 10,999. Key support at 11,000 was breached but held. A close below this level would imply a further slide to 10,900-10,750 and the 50/ 20-day moving averages.

The Russell 2000 finished at 1,839 (-0.6%) with the midday low tapping 1,828. Upper support at 1,825-1,800 was challenged but held. A drop below the latter and the 20-day moving average would indicate weakness to 1,775-1,750 and the 50-day moving average. Below is a chart of the IWM.

The S&P 500 traded down to 3,933 before settling at 3,949 (-0.4%). Current and upper support at 3,950-3,925 was breached and failed to hold by a smidge. A fade below the latter would signal ongoing weakness towards 3,900-3,875 and the 20-day moving average.

The Dow closed at 33,700 (-0.1%) with the low kissing 33,559. Near-term and upper support at 33,500-33,250 was challenged and held. A move below the latter would suggest a further pullback towards 33,000-32,750.

Volatility Index

The Volatility Index (VIX) extended its losing streak to four-straight sessions with the monthly low reaching 22.30. Upper support at 22.50-22 was recovered. A close below the latter would imply weakness to 21-20.50.

Resistance remains at 24-24.50.

Market Analysis

The S&P 400 Mid Cap Index (MID) was down for the third time in four sessions after tagging a low of 2,492. Upper support at 2,500-2,475 was tripped but held. A drop below the latter and the 200-day moving average would suggest downside action towards 2,475-2,450 and the 20-day moving average.

Resistance is at 2,525-2,550.

RSI (relative strength index) is showing signs of rolling over with upper support at 55-50 holding. A close below the latter would indicate further weakness towards 45-40 and levels from mid-October. Resistance is at 60-65.

Sector

The Spiders S&P Homebuilders ETF (XHB) also fell for the third time in four sessions with the intraday low kissing $60.25. Current and upper support at $60.50-$60 was tripped but held. A move below the latter would imply additional weakness towards $59-$58.50.

Resistance is at $61-$61.50 and the 200-day moving average.

RSI has flatlined with upper support at 55-50 holding. A drop below the latter would suggest weakness to 45-40 and levels from earlier this month. Resistance is at 60-65.

Market Outlook

The current trading range could last all week, or longer, with Wednesday’s Fed minutes likely being the most important market moving event. Meanwhile, volatility could continue to languish as trading volume will likely remain thin.

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, $30.45, down $0.30)

PSTG December 32 calls (PSTG221216C00032000, $1.25, down $0.15)

Entry Price: $1.75 (11/14/2022)
Exit Target: $3.50
Return: -29% 
Stop Target: $1

Action: Yesterday’s low touched $30.06 with upper support at $30.25-$30 getting tripped but holding. Resistance is at $30.50-$30.75 and the 20-day moving average.

Verizon Communications (VZ, $38.62, up $0.07)

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: Lower resistance at $39-$39.25 was cleared but held with the peak hitting $39.13. Support remains at $38.25-$38 and the 50-day moving average.

Rocket Companies (RKT, $7.41, down $0.09)

RKT December 8 calls (RKT221216C00008000, $0.30, down $0.05)

Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -68% 
Stop Target: None

Action: Upper support at $7.50-$7.25 failed to hold following the intraday pullback to $7.39. Resistance remains at $7.75-$8.

Diana Shipping (DSX, $4.34, up $0.04)

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 challenged and held with the high at $4.39. Support is at $4.30-$4.20 and the 20/ 50-day moving averages.