MomentumOptions.com Pre-Market Update for 1/12/2023
Nasdaq Recovers 50-Day Moving Average
8:00am (EST)
The stock market showed ongoing strength on Wednesday with the major indexes making higher highs for the week while pushing prior and key resistance levels. The gains come ahead of this morning’s update on inflation and tomorrow’s “official” start to the fourth-quarter earnings season.
The Nasdaq finished at 10,931 (+1.8%) after trading to a late day high of 10,932. Prior and lower resistance from early November at 10,850-11,000 and the 50-day moving average were cleared and held. A pop above the latter would imply upside to 11,100-11,250.
The Russell 2000 ended at 1,844 (+1.2%) and the session high. Lower resistance at 1,825-1,850 and the 200-day moving average were recovered. A close above the latter would indicate a retest towards towards 1,875-1,900 with the December 1st and 2nd intraday peak just north of 1,898. Below is a chart of the IWM.
The S&P 500 tested an afternoon peak of 3,970 before closing at 3,969 (+1.3%). Lower resistance at 3,950-4,000 was reclaimed. A close above the latter and the 200-day moving average would suggest strength towards 4,050-4,100.
The Dow settled at 33,973 (+0.8%) following the second half run to 33,974. Lower resistance at 33,750-34,000 was cleared and held. A close above the latter would setup a retest towards 34,250-34,500 with the December 13th peak at 34,712.
Volatility Index
The Volatility Index (VIX) traded in a very tight range with the high hitting 21.25. Lower resistance at 21-21.50 was cleared and held. A move above the latter would suggest a retest towards 22.50-23 and the 50-day moving average.
Support is at 20.50-20.
Market Analysis
The Spider Small-Cap 600 ETF (SLY) extended its winning streak to four-straight after settling on the session peak of $86.30. Mid-December and lower resistance at $86-$86.50 was tripped and held. A move above the latter would indicate strength to $87.50-$88.
Support is at $86-$85.50.
RSI (relative strength indicator) remains in an uptrend with resistance at 60 getting cleared and holding. Continued closes above this level would suggest upside action to 65-70 and levels from mid-August. Support is at 55-50.
Sector
The Spider Gold Shares (GLD) were down for the first time in fourth sessions despite reaching an intraday peak of $174.79. Key resistance from early June at $175 was challenged and held. Continued closes above this level would imply further strength towards $176-$176.50.
Support is at $174-$173.50.
RSI is showing signs of rolling over with upper support at 65-60 holding. A close below the latter would signal additional weakness to 55-50 and levels from last month. Key resistance is at 70.
Market Outlook
December’s Consumer Price Index (CPI) is expected to come in at 6.5% and will likely sway speculation on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% next month, depending on the results. at the conclusion of its next meeting to start February.
As far as earnings, Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WF) will announce numbers ahead of Friday’s opening bell.
These two catalysts will likely help or hinder this week’s rally following the breakout from the recent trading ranges. A close below 20 on the VIX by week’s end would be a bullish signal heading into next week while a close above 24 would be a bearish development.
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, $32.45, up $0.05)
CSX February 33 calls (CSX230203C00033000, $0.75, unchanged)
Entry Price: $0.75 (1/9/2023)
Exit Target: $1.50
Return: 0%
Stop Target: None
Action: Shares tapped a low of $32.04 before closing slightly higher. Upper support at $32-$31.75 was challenged but held. Resistance remains at $32.50-$32.75.
