MomentumOptions.com Pre-Market Update for 1/23/2023
Nasdaq Bucks Trend
8:00am (EST)
The stock market snapped a three-session slide on Friday after holding key support levels on the open while posting solid gains, led by Technology. The bears still got the overall shortened weekly win but the Nasdaq was up for the week while volatility fell back below a key level of support.
The Nasdaq closed at 11,140 (+2.7%) and back above its 50-day moving average with the intraday peak hitting 11,143. Lower resistance at 11,000-11,150 was cleared and held. Continued closes above the latter would imply a retest to 11,250-11,400.
The S&P 500 settled on the session high of 3,972 (+1.9%). Lower resistance at 3,950-4,000 the 50-day and 200-day moving averages were recovered. A pop above the latter and last Tuesday’s peak at 4,015 would suggest another push towards 4,050-4,100.
The Russell 2000 also went out on the day’s peak at 1,867 (+1.7%). Prior and lower resistance at 1,850-1,875 was cleared and held. A close above the latter would signal further strength to 1,900-1,925 with last Wednesday’s monthly peak at 1,903. Below is a chart of the IWM.
The Dow ended at 33,375 (+1%) after tapping an afternoon high of 33,381. Lower resistance at 33,250-33,500 was reclaimed. A move above the latter would indicate strength to 33,750-34,000.
Volatility Index
The Volatility Index (VIX) was down for the first time in four sessions after tapping an intraday low of 19.41. Upper support at 19.50-19 was breached but held. A fade below the latter would be a renewed bullish development with weakness towards 18.50-18 and the mid-month low at 18.01.
Resistance is at 20.50-21.
Market Thoughts
With the portfolio light, we have plenty of room to add new trades but I’ve been cautious coming into last week as I did feel as though the market could be peaking. I still think there is a reasonable chance the major indexes can make a run towards the December peaks but there needs to be a rebound this week to make up for last week’s losses.
The action in the VIX was slightly bullish for the market but lower lows need to be made into month end, preferably a drop below 18. Fourth-quarter earnings season kicks up a notch with a full week of action following the light “official” start the Friday before last.
I have a small announcement to make this morning, nothing major. I want to let you know the Daily update will now come out on Monday’s and Thursday’s starting this week and going forward. Although I love writing every day, I want to spend more time zoning in on stock and option setups while keeping you more engaged in the technical aspects of the major indexes and specific trades that I’m looking at.
The market commentary and technical analysis will remain top notch but most subscribers want more trades and that is where my focus will be. I also want to stress that I won’t be overtrading and will still trade light if a clear trend isn’t in play.
I have Pfizer (PFE) on my Watch List as shares are trying to make a bottoming process. While we made a decent 25% earlier this month with put options, we were whipsawed out of the position as the gains could have been 400%. With the stock in oversold territory, I’m now targeting call options.
We did make a triple-digit return with DraftKings (DKNG) and I was hoping shares would have held the longer-term downtrend line last week. There was a slight breakout before shares retreated and are now in a holding pattern.
There is a trade that I’m looking at for the S&P VIX (VXX) as it traded to an all-time low last week but would like to see continued closes back above 13 before taking action. And finally, Nike (NKE) may have peaked and I’m looking at a directional and bearish put option to possibly play an overdue backtest towards the $115 level.
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.
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 Otherwise, follow instructions at all times in the updates on Monday’s and Thursday’s along with the Text Alerts throughout the week.
CSX (CSX, $31.55, down $0.68)
CSX February 33 calls (CSX230203C00033000, $0.40, unchanged)
Entry Price: $0.75 (1/9/2023)
Exit Target: $1.50
Return: -47%
Stop Target: None
Action: New and upper support at $31.50-$31.25 was breached but held on the opening fade to $31.26. Lower resistance at $32-$32.25 was recovered on the rebound to $32.03 afterwards.
We need to see a recovery of at least the $32.50 level this week, preferably $33, to stay in this trade. If these levels aren’t reached by Friday, or if there is a drop below $31, we will exit the position to save the remaining premium.
