MomentumOptions.com Pre-Market Update for 12/9/2022
Trading Ranges Continue to Hold
8:00am (EST)
The stock market finally showed some strength on Thursday with the major indexes snapping multi-session losing streaks. The gains helped avoid a potential selloff as the bottom of the current trading ranges held for the third-straight session.
The Nasdaq finished at 11,082 (+1.1%) with the session high at 11,119. Current and lower resistance at 11,100-11,250 was cleared but held. A close above the latter and the 20-day moving average would imply another run towards 11,350-11,500.
The S&P 500 closed at 3,963 (+0.8%) after tagging an intraday peak of 3,974. Near-term and lower resistance at 3,950-3,975 was reclaimed. A pop above the latter and the 20-day moving average would suggest additional strength to 4,000-4,025.
The Russell 2000 tested a morning high of 1,833 before ending at 1,818 (+0.6%). Lower resistance at 1,825-1,850 was topped but held. A move above the latter and the 200/ 20-day moving averages would indicate a retest towards 1,875-1,900. Below is a chart of the IWM.
The Dow made a first half trip to 33,899 before settling at 33,781 (+0.6%). Lower resistance at 33,750-34,000 was recovered. A close above the latter and the 20-day moving average would setup another push towards 34,250-34,500.
Volatility Index
The Volatility Index (VIX) was down for the first time in four days despite tapping an intraday high of 23.28. Lower resistance at 23-23.50 was cleared but held for the second-straight session. A close above 24 would be a bearish development for the overall market.
Support remains 22-21.50.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) snapped a four-session slide after tagging a high of $226.37. Near-term and lower resistance at $226-$226.50 was tripped but held. A close above the latter and the 20-day moving average would imply upside action to $227.50-$228.
Support is at $223-$222.50.
RSI (relative strength index) is back in an uptrend with key resistance at 50 getting cleared and holding. Continued closes above this level would suggest strength towards 55-60 and levels from the start of the month. Support is at 45-40.
Sector
The Technology Select Sector Spiders (XLK) was up for the first time in five session with the high touching $132.10. Current and lower resistance at $132-$132.50 was triggered but held. A pop above the latter would suggest a further run towards $133.50-$134.
Support is at $130-$129.50
RSI is trending higher with key resistance at 50 getting reclaimed. Continued closes above this level would imply additional strength towards 55-60 and levels from last week. Support is at 45-40.
Market Outlook
The current trading ranges have now lasted 19-straight sessions with a little stretch to the upside last week and to the downside this week. The longer trading ranges continue, the chances of a bigger breakout, or larger breakdown, increases.
All of the major indexes are back within striking distance of their 20-day moving averages with a close above them today being a slightly bullish sign heading into next week. As far as volatility, a close back below 21.50 ahead of the weekend would be bullish while a close above 24 would be bearish.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 25-21 (54%). 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.
Apple (AAPL, $142.65, up $1.71)
Sold AAPL December 9th 144 calls @ $0.62
Bought AAPL December 9th 146 calls @ $0.27
Action: Shares traded up to $143.52 shortly after the open with fresh and lower resistance at $143.50-$144 getting cleared but holding. Support is at $141-$140.50.
The spread between the calls is at 42 cents with the 144 calls closing at 57 cents and the 146 calls at 15 cents.
DraftKings (DKNG, $14.61, up $0.71)
DKNG January 12.50 puts (DKNG230120P00012500, $0.60, down $0.20)
Entry Price: $0.70 (12/6/2022)
Exit Target: $1.40
Return: -14%
Stop Target: None
Action: Lower resistance at $14.75-$15 was cleared but held with the peak at $14.76. Support is at $14.25-$14.
Rocket Companies (RKT, $8.50, up $0.19)
RKT December 8 calls (RKT221216C00008000, $0.65, up $0.10)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90
Return: -27%
Stop Target: 25 cents (Stop Limit)
Action: Thursday’s high tagged $8.64 with resistance at $8.50 getting cleared but holding. Slightly rising support is at $8.25-$8.
