MomentumOptions.com Pre-Market Update for 3/9/2023
Powell’s Comments Halt Momentum
8:00am (EST)
The stock market was mixed on Wednesday to continue a choppy week following Fed Chair Powell’s comments during the previous session. Powell stated interest rates are likely to rise more than previously expected which led to Tuesday’s pullback.
Despite the volatility, the charts remain bullish for higher highs once key resistance are cleared and held. Today’s session could be more of the same action as Wall Street prepares for Friday’s jobs report.
The Nasdaq settled at 11,576 (+0.4%) following the intraday run to 11,601.
Lower resistance at 11,600-11,750 was cleared but held. A pop above the latter would suggest a retest towards 11,850-12,000. Support is at 11,450-11,300 and the 200-day/ 50-day moving averages.
The S&P 500 traded to a high 4,000 while ending at 3,992 (+0.1%). Key resistance at 4,000 and 50-day moving average were cleared but held. Continued closes above these levels would indicate upside to 4,050-4,100. Support is 3,950-3,900 and 200-day moving average.
The Dow went out at 32,798 (-0.2%) with the low kissing 32,612. Near-term and upper support at 32,750-32,500 was tripped but held. A move below the latter and the 200-day moving average would be a bearish development for ongoing weakness towards 32,250-32,000. Resistance is at 33,000-33,250.
Volatility Index
The Volatility Index (VIX) closed below 20 for the fifth-straight day despite tapping a high of 20.01. Lower resistance at 20-20.50 was topped but held. A close above the latter and the 50-day moving average would imply upside towards 21.50-22.
Rising support is at 19-18.50 with continued closes below 18 being a more bullish development for market strength. The February 1st close was at 17.87 and the only time the bulls have held 18 over the past year.
Thursday’s earnings announcements:
Before the open: Arhaus (ARHS), BJ’s Wholesale Club (BJ), Duluth Holdings (DLTH), FuelCell Energy (FCEL), JD.com (JD), Townsquare Media (TSQ), Vital Farms (VITL),
After the close: DocuSign (DOCU), El Pollo Loco (LOCO), Gap (GPS), Joint (JYNT), Oracle (ORCL), Smith & Wesson Brands (SWBI), Vail Resorts (MTN), Zumiez (ZUMZ)
Economic news:
Initial Jobless Claims – 8:30am
Market Thoughts
The next wave of resistance levels coming into the week were at: Dow 33,500; S&P 4,050; and Nasdaq 11,800. These have now become backup resistance but levels that need to be cleared and held for several occasions to establish possible near-term bottoms for the major indexes.
As far as the technical outlook, the Nasdaq is on the verge of forming a golden cross with the 50-day moving average on track to clear the 200-day moving average. If completed, the index would join the S&P and the Dow in accomplishing this feat and one that typically indicates higher highs.
The RSI (relative strength index) levels for the major indexes are at 50 and below but are showing signs of leveling out once again. This is a slightly bullish to neutral outlook for the overall market if they can resume their uptrend from last week.
Friday’s nonfarm payroll report and next week’s inflation readings for February are the next major market movers. The outcome from these economic reports will likely dictate the keys to whether the next rate hike from the Fed will be 25 or 50 basis points.
We will continue to trade what the market gives us while waiting for the next major trend to develop. This will likely start to take shape over the next week or so as Wall Street prepares for the end of the quarter and the start of the first-quarter earnings season.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 7-2 (78%). 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.
Transocean (RIG, $7.10, down $0.19)
RIG April 8 calls (RIG230421C00008000, $0.30, down $0.05)
Entry Price: $0.45 (3/3/2023)
Exit Target: $0.90
Return: -33%
Stop Target: None
Action: Wednesday’s low tapped $6.95 with upper support at $7-$6.85 getting tripped but holding. Lowered resistance is at $7.30-$7.45.
AT&T (T, $18.61, down $0.10)
T April 18 puts (T230421P00018000, $0.40, up $0.02)
Entry Price: $0.40 (3/1/2023)
Exit Target: $0.80
Return: 0%
Stop Target: None
Action: Shares tested a low of $18.18 with the puts peaking at 55 cents. Prior and upper support at $18.25-$18 and the 200-day moving average were breached but held. Lowered resistance is at $18.75-$19.
