MomentumOptions.com Pre-Market Update for 1/11/2023
S&P Reclaims 50-Day Moving Average
8:00am (EST)
The stock market edged higher on Tuesday following another round of Fed speak and comments from Chairman Powell who said stable inflation is the foundation of a healthy economy. The major indexes are still showing signs of breaking out of their three-week trading ranges following the gains and ahead of the start of the fourth-quarter earnings season.
The Russell 2000 ended at 1,822 (+1.5%) and the day’s high. Lower resistance at 1,800-1,825 and the 50-day moving average were cleared and held. A pop above the latter and the 200-day moving average would suggest additional upside towards 1,850-1,875. Below is a chart of the IWM.
The Nasdaq tested an afternoon high of 10,743 while going out at 10,742 (+1%). Current and lower resistance at 10,750-10,900 was challenged but held. A close above the latter and the 50-day moving average would indicate a further push to 11,000-11,150.
The S&P 500 closed on the session peak at 3,919 (+0.7%). Lower resistance at 3,900-3,950 and the 50-day moving average were reclaimed. A move above the latter and the 200-day moving average would imply upside action towards 4,000-4,050.
The Dow settled at 33,704 (+0.6%) with the high hitting 33,726. Near-term and lower resistance at 33,750-34,000 was challenged but held. A close above this level would signal additional gains to 34,250-34,500.
Volatility Index
The Volatility Index (VIX) zigzagged for the fifth-straight session after closing on the session low of 20.58. Upper support at 21-20.50 was recovered. A drop below the latter would indicate downside action towards 19.50-19 with the December 2nd low at 18.95.
Resistance is at 21.50-22 and the 20-day moving average.
Market Analysis
The S&P 400 Mid Cap Index (MID) was up for the third-straight session following the close at 2,514 and session top. Near-term and lower resistance at 2,500-2,525 was tripped and held. A pop above the latter would suggest upside action towards 2,575-2,600 with the December 1st peak at 2,598.
Support is at 2,475-2,450 and the 50-day/ 200-day moving averages.
RSI (relative strength index) is in an uptrend key resistance at 60 holding. A close above this level would indicate further strength towards 65-70 and levels from November. Support is at 55-50.
Sector
The Technology Select Sector Spiders (XLK) was also up for the third-straight session with the high touching $127.16. Current and lower resistance at $127-$127.50 was triggered but held by a smidge. A pop above the latter would suggest a further run towards $129.50-$130.
Support is at $125.50-$125.
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 mid-December. Support is at 45-40.
Market Outlook
There is no major economic news due out today so the action could be timid ahead of Thursday morning’s update on the Consumer Price Index. The major indexes continue to show signs of breaking out of their current trading ranges and a better-than-expected report along with good earnings from the financial sector on Friday could be the catalysts.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 3-0 (100%). 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.
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CSX (CSX, $32.40, up $0.26)
CSX February 33 calls (CSX230203C00033000, $0.75, up $0.05)
Entry Price: $0.75 (1/9/2023)
Exit Target: $1.50
Return: 0%
Stop Target: None
Action: Shares rebounded to reach a peak of $32.40 with lower resistance at $32.50-$32.75 getting challenged but holding. Support remains at $32-$31.75.
