MomentumOptions.com Pre-Market Update for 1/18/2023
Goldman Sachs (GS) Disappoints
8:00am (EST)
The stock market was mostly lower on Tuesday following another round of earnings from the banking sector that failed to impress. Goldman Sachs (GS) weighed heavily on the blue-chips after shares fell 6.4% following a substantial decline in dealmaking revenue and a higher provision for loan losses.
The Dow ended at 33,910 (-1.1%) with the low touching 33,860. Upper support at 34,000-33,750 was busted and failed to hold. A close below the latter would signal a retest to 33,500-33,000 and the 50-day moving average.
The S&P 500 closed at 3,990 (-0.2%) after tapping a low of 3,984. Upper support at 3,975-3,950 and the 200-day moving average were challenged but levels that held. A drop below the latter would suggest additional weakness to 3,925-3,900 and the 50-day moving average.
The Russell 2000 traded down to 1,880 while finishing at 1,884 (-0.2%). Near-term and upper support at 1,875-1,850 was tested but held. A close below the latter would imply a further fade towards 1,825-1,800. Below is a chart of the IWM.
The Nasdaq bucked the trend after trading up to 11,145 before settling at 11,095 (+0.1%). Current and lower resistance at 11,100-11,250 was cleared but held. A pop above the latter would indicate ongoing strength towards 11,350-11,500.
Volatility Index
The Volatility Index (VIX) snapped a two-session slide after trading to a high of 20.22. Fresh and lower resistance at 20-20.50 was cleared but held. A close above the latter would suggest upside action towards 21.50-22 and the 50-day moving average.
Support is at 19-18.50.
Market Analysis
The iShares Russell Growth 1000 ETF (IWF) were up for the seventh-straight session with the high tapping $225.32. Mid-December and lower resistance at $225-$225.50 was cleared but held. A close above the latter would signal upside action to $227-$227.50.
Support is at $223-$222.50.
RSI (relative strength index) is in an uptrend with key resistance at 60 holding. Continued closes above this level would suggest strength towards 65-70 and levels from last August. Support is at 55-50.
Sector
The Consumer Discretionary Select Spiders (XLY) also extended its winning streak to seven-straight following the run to $140.92. Mid-December and lower resistance at $140.50-$141 was tripped but held. A pop above the latter would suggest additional strength to $142-$142.50.
Support is at $139.50-$139.
RSI is showing signs of flatlining with key support at 60 holding. A close under this level would signal weakness to 55-50 and levels from early last week. Resistance is at 65-70.
Market Outlook
The RSI levels for the major indexes were at reasonable levels coming into the week so there is still some buying opportunities before we reach overbought conditions. A retest towards the December highs remains in play but would come into question if the VIX back above 20 for a few sessions.
Momentum Options Play List
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CSX (CSX, $32.60, up $0.18)
CSX February 33 calls (CSX230203C00033000, $0.70, unchanged)
Entry Price: $0.75 (1/9/2023)
Exit Target: $1.50
Return: -7%
Stop Target: None
Action: Yesterday’s peak reached $32.87 with lower resistance at $32.50-$32.75 getting cleared and holding. Support is at $32.25-$32.
