MomentumOptions.com Pre-Market Update for 12/14/2022
Wall Street Cheers Inflation Data
8:00am (EST)
The stock market showed strength for the second-straight day day following fresh inflation data that showed prices rose less-than-expected last month. Specifically, the Consumer Price Index for November checked in at a 7.1% increase in prices over last year but below expectations for a reading of 7.3%.
The Nasdaq finished at 11,256 (+1%) after trading to a fresh monthly high of 11,571. Key resistance at 11,500 was topped but held. Continued closes above this level would imply a possible run to 11,600-11,750.
The Russell 2000 ended at 1,832 (+0.8%) with the session peak reaching 1,880. Lower resistance at 1,875-1,900 and the 200-day moving average were cleared but levels that held. A move above the latter would indicate a mini breakout towards 1,925-1,950 and levels from late August. Below is a chart of the IWM.
The S&P 500 tested a morning peak of 4,100 before closing at 4,019 (+0.7%). Key resistance at 4,100 and the 200-day moving average were triggered but levels that also held. A close above the latter would suggest ongoing strength towards 4,125-4,150.
The Dow settled at 34,108 (+0.3%) following the opening run to 34,712 and fresh monthly peak. Lower resistance at 34,500-34,750 was cleared but held. A pop above the latter would setup a push towards 35,000-35,250 and levels from late April.
Volatility Index
The Volatility Index (VIX) had its two-session winning streak snapped despite trading to a high of 25.84. Key resistance at 26 was challenged and held. A move above the latter and the 50-day and 200-day moving averages would imply strength to 27-27.50 and levels from late October.
Support is at 22-21.50 and the 20-day moving average.
Market Analysis
The S&P 400 Mid Cap Index (MID) was up for the third time in four sessions with the peak reaching 2,564. Lower resistance at 2,550-2,575 was tripped but held. A pop above the latter would suggest upside action towards 2,600-2,625 with the beginning of the month high at 2,598.
Support is at 2,475-2,450 and the 200-day moving average.
RSI (relative strength index) is in an uptrend key resistance at 50 getting cleared and holding. Continued closes above this level would indicate further strength towards 55-60 and levels from earlier this month. Support is at 45-40.
Sector
The Dow Jones Transportation Average (TRAN) was up for the second-straight day with the high at 14,635. Lower resistance at 14,500-14,650 was tripped but held. A close above the latter would be a slightly bullish signal for further upside towards 14,750-14,900 and levels from late August.
Support is at 14,150-14,000 and the 200-day moving average.
RSI has flatlined with lower resistance at 55-60 holding. A move above the latter would indicate strength towards 65-70 and levels from mid-November. Support is at 50-45.
Market Outlook
The major indexes once again failed to hold key resistance levels with today’s afternoon Fed update being the perfect catalyst for the bulls to do so and continue to push higher highs. If not, the bears will once again take a crack of getting a breakdown out of the current four-week plus trading ranges.
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.
DraftKings (DKNG, $13.77, down $0.54)
DKNG January 12.50 puts (DKNG230120P00012500, $0.70, up $0.10)
Entry Price: $0.70 (12/6/2022)
Exit Target: $1.40
Return: 0%
Stop Target: None
Action: Tuesday’s low touched $13.50 with upper support at $13.50-$13.25 getting kissed and holding. Resistance is at $14-$14.25 and the 50-day/ 20-day moving averages.
Rocket Companies (RKT, $8.47, down $0.02)
RKT December 8 calls (RKT221216C00008000, $0.60, unchanged)
Entry Price: $0.95 (9/9/2022)
Exit Target: $1.90, lower to $1.35 (Limit Order)
Return: -37%
Stop Target: 25 cents (Stop Limit)
Action: Lower the Exit Target from $1.90 to $1.35 and make it a Limit Order. The options traded to a high of $1.04 yesterday.
Key resistance at $9 was cleared but held with the opening peak reaching $9.24. Support remains at $8.25-$8.