MomentumOptions.com Pre-Market Update for 12/23/2022
52-Week Lows Back in Focus
8:00am (EST)
The stock market retreated on Thursday as fresh resistance levels that served as prior support levels easily held. There was a slight bounce off the lows into the close as some bullish traders try to position themselves for a possible yearend rally.
The Nasdaq tested a low of 10,313 before going out at 10,476 (-2.2%). Prior and upper support from early November at 10,400-10,250 was tripped but held. A fade below the latter and the November 4th low at 10,262 would indicate an ongoing retreat towards 10,150-10,000 with the October 13th 52-week low at 10,088.
The Russell 2000 bottomed at 1,726 before finishing at 1,754 (-1.3%). Late October and upper support at 1,750-1,725 was breached but held. A close below the latter would imply a further slide towards 1,700-1,675 with the October 13th 52-week low at 1,641. Below is a chart of the IWM.
The S&P 500 settled at 3,822 (-1.5%) after stumbling to a fresh monthly low of 3,764. Early November and key support at 3,800-3,750 was breached but held. A drop below the latter would suggest additional weakness to 3,700-3,675 with the November 3rd low at 3,698.
The Dow ended at 33,027 (-1.1%) with the low touching 32,573. Current and upper support 32,750-32,500 and the 50-day moving average were triggered but levels that held. A close below the latter and the 200-day moving average would be a fresh bearish development with downside risk to 32,250-32,000.
Volatility Index
The Volatility Index (VIX) snapped a four-session slide after spiking to a high of 24.30. Prior and lower resistance at 24-24.50 was cleared but held. A close above the latter and the 50-day moving average would imply another run towards 25.50-26 and the 200-day moving average.
Support remains at 20.50-20.
Market Analysis
The S&P 400 Mid Cap Index (MID) was down for the first time in three days following the intraday fade to 2,378. Near-term and upper support at 2,400-2,375 was tripped but held. A drop below the latter would suggest downside action towards 2,325-2,300 with the early November low at 2,326.
Resistance is at 2,425-2,450 and the 50-day/ 200-day moving averages.
RSI (relative strength index) is back in a downtrend key support at 40 holding. A close below this level would indicate further weakness towards 35-30 and levels from late September. Resistance is at 45-50.
Sector
The Communication Services (XLC) had its two-session winning streak snapped following the pullback to $46.48. Key support at $46.50 was cracked but held. A close below this level would signal weakness towards $45.50-$45 with the November 4th 52-week bottom at $44.86.
Resistance is at $48-$48.50 and the 50-day/ 20-day moving averages.
RSI also held key support at 40. A fade below this level would indicate additional weakness towards 35-30 and levels from early November. Resistance is at 45-50.
Market Outlook
The bounce off the midday lows and the fact the VIX held its 50-day moving average were slightly bullish signals heading into today’s action. However, the market is closed on Monday and the Nasdaq failed to hold 10,500 so traders might be reluctant to hold positions over a three-day weekend.
I want to take this time to let everyone know how much I appreciate your patronage again for 2022 and I’m looking forward to an incredible 2023. I will be taking off the week of Christmas with today being the last Daily Update for 2022.
I could still have New Trades, or Trade Alerts, today and into next week as we wrap up the year and get ready for 2023. In the meantime, I hope everyone has a fantastic holiday and I will be in touch.
Momentum Options Play List
Closed Momentum Options Trades for 2022: 26-22 (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.
Pfizer (PFE, $51.64, down $0.02)
PFE January 50 puts (PFE230120P00050000, $0.75, up $0.05)
Entry Price: $0.80 (12/22/2022)
Exit Target: $1.60
Return: -6%
Stop Target: None
Action: Shares tagged a low of $50.95 with upper support at $51-$50.50 and the 20-day moving average getting tripped but holding. Resistance is at $52-$52.50.
A close below $51 should get $50-$49 back in focus with the major moving averages just below the latter. If shares fall below the 200-day moving average and test $48.40, technically, by January 20th, the options would be $1.60 in-the-money, for at least a 100% return. If shares clear $53 today, or next week, we will likely exit the position.
Intel (INTC, $25.97, down $0.86)
INTC January 26 puts (INTC230120P00026000, $1.05, up $0.40)
Entry Price: $0.85 (12/16/2022)
Exit Target: $1.70
Return: 23%
Stop Target: 90 cents (Stop Limit)
Action: Set a Stop Limit at 90 cents to start protecting profits and to avoid a loss.
Fresh and upper support from mid-October at $25.50-$25.25 was breached but held with the low touching $25.35. Resistance is at $26.25-$26.50.
DraftKings (DKNG, $11.60, down $0.17)
DKNG January 12.50 puts (DKNG230120P00012500, $1.45, up $0.10)
Entry Price: $0.70 (12/6/2022)
Exit Target: $2.10
Return: 107%
Stop Target: $1.05, raise to $1.15 (Stop Limit)
Action: Raise the Stop Limit from $1.05 to $1.15 to further protect profits.
Key support at $11 held with the session low at $11.06. The puts peaked at $1.79. A close below $11 would be super bearish but the trade could be running its course on a close back above $12.
