MomentumOptions.com Pre-Market Update for 12/21/2022
Market Snaps Losing Streak
8:00am (EST)
The stock market snapped a four session slide on Tuesday despite most of the major indexes tapping another round of monthly lows. Volume was somewhat light as Wall Street starts preparing for the upcoming holidays and traders shying away from being too aggressive.
The Russell 2000 ended at 1,748 (+0.5%) with the session peak reaching 1,755. Key resistance at 1,750 was cleared but held. Continued closes above this level would indicate a retest towards towards 1,775-1,800 and the 50-day moving average. Below is a chart of the IWM.
The Dow settled at 32,849 (+0.3%) following the afternoon run to 32,992. New resistance at 33,000 was challenged and held. A close above this level would setup a push towards 33,250-33,500.
The S&P 500 tested a morning peak of 3,838 before closing at 3,821 (+0.1%). Lower resistance at 3,825-3,850 was tripped but held. A move above the latter would suggest strength towards 3,875-3,900 and the 50-day moving average.
The Nasdaq finished at 10,547 (+0.01%) after trading to a high of 10,609. Current and lower resistance at 10,600-10,750 was topped but held. A pop above the latter would imply upside to 10,850-11,000 and the 50-day/ 20-day moving averages.
Volatility Index
The Volatility Index (VIX) fell for the third-straight session after tapping a low of 21.35. Key support at 21.50 was reclaimed. A move below the latter would signal a further fade towards 20.50-20.
Lowered resistance is at 23-23.50.
Market Analysis
The Wilshire 5000 Composite Index (WLSH) snapped a four-session slide after tagging a high of 38,055. Key resistance at 38,000 was cleared but held. Continued closes above this level would signal strength to 38,250-38,500 and the 50-day moving average.
Support is at 37,500-37,250.
RSI (relative strength index) is trying to curl higher with key resistance at 40 holding. A pop above this level would imply strength to 45-50 and levels from early last week. Support is at 35-30.
Sector
The Spider S&P Retail ETF (XRT) was down for the fourth-straight session following the intraday pullback to $58.86. Early November and upper support at $59-$58.50 was breached but held. A drop below the latter would indicate weakness towards $57.50-$57.
Resistance is at $60-$60.50.
RSI remains in a downtrend with key support at 30 holding. A drop below this level would suggest a further slide to 25-20 and the January lows. Resistance is at 35-40.
Market Outlook
The bulls are trying to start a near-term bottoming process but will need to see some follow thru today, and more importantly, the rest of the week. Nike (NKE) and FedEx (FDX) were higher in extended trading following yesterday’s close after announcing earnings and should help sentiment today.
The action in the VIX has produced a five session trading range between 21 and 23 and could be the best clue in determining how the rest of the year and the start of January unfold. A close below 21 would be slightly bullish development while a move above 23 would be bearish for the overall market.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 25-22 (53%). 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.
Intel (INTC, $26.44, down $0.35)
INTC January 26 puts (INTC230120P00026000, $0.85, up $0.10)
Entry Price: $0.85 (12/16/2022)
Exit Target: $1.70
Return: 0%
Stop Target: None
Action: Upper support at $26.50-$26.25 failed to hold with the session low at $26.42. Lowered resistance is at $26.75-$27.
Cisco Systems (CSCO, $47.37, down $0.03)
CSCO January 47 puts (CSCO230120P00047000, $1.15, down $0.05)
Entry Price: $0.95 (12/15/2022)
Exit Target: $1.90
Return: 21%
Stop Target: 97 cents (Stop Limit)
Action: Yesterday’s low kissed $46.79 with new and upper support at $47-$46.50 getting triggered but holding. Resistance is at $47.50-$48.
DraftKings (DKNG, $11.83, up $0.17)
DKNG January 12.50 puts (DKNG230120P00012500, $1.35, down $0.05)
Entry Price: $0.70 (12/6/2022)
Exit Target: $2.10
Return: 92%
Stop Target: $1.05 (Stop Limit)
Action: Fresh and lower resistance at $12-$12.25 was cleared but held following the rebound to $12.03. Shaky support is at $11.75-$11.50.
