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Key Support Levels Back in Focus

8:00am (EST)

The stock market fell on Friday, marking the end of a tumultuous week dominated by the ongoing crisis in the banking sector. However, despite the chaos, the Nasdaq and the S&P 500 ended higher for the week while the Dow posted a slight decline.

The Nasdaq closed at 11,630 (-0.7%) following the intraday pullback to 11,562. Upper support at 11,600-11,450 was breached but held. A drop below the latter and the 50-day/ 200-day moving averages would suggest a retest towards 11,350-11,200. Key resistance is at 11,800.

The S&P 500 tested a low of 3,901 while finishing at 3,916 (-1.1%)
Current and upper support at 3,950-3,900 and 200-day moving average failed to hold. A move below the latter would imply another fade to 3,850-3,800. Key resistance is at 4,000 and the 50-day moving average.

The Dow settled at 31,861 (-1.2%) after kissing an intraday low of 31,728. Near-term and upper support 31,750-31,500 was breached but held. A close below the latter would suggest weakness towards 31,250-31,000 and levels from late October. Resistance is at 32,000-32,250 and the 200-day moving average.

Volatility Index

The Volatility Index (VIX) flipped flopped for the fifth-straight session with the high hitting 26.14. Lower resistance at 26-26.50 was cleared but held. A close above the latter would indicate another push to 27.50-28.

Support is at 24.50-24 and the 200-day moving average.

Monday’s earnings announcements:

Before the open: Foot Locker (FL), Navigator Holdings (NVGS), Pinduoduo (PDD), RVL Pharmaceuticals (RVLP)

After the close: Exagen (XGN), Lantern Pharma (LTRN), ProFrac Holding (ACDC), Sanara MedTech (SMTI)

Economic News

None

Market Thoughts

For the week, the Dow was slipped 0.1%; the S&P was up 1.4%; and the Nasdaq rallied 4.4%. As far as sector action, Technology showed the most strength after surging 5.7% for the week while Energy paced the laggards following a 6.9% shellacking.

The ongoing volatility in Financial sector remains a headwind going forward with more curveballs and surprises likely coming. We mentioned the ongoing debacle at Credit Suisse (CS) but things got even more interesting last week. Regional bank, First Republic (FRC) got $30 billion in uninsured deposits to stay afloat from 11 major banks including Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS).

With that said, over the weekend, UBS Group (UBS) said it will pay $3.23 billion for Credit Suisse and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023.

We won’t speculate on what may or may not happen as it is easier to let the charts show us where possible price action is headed. A quick snapshot of the Financial Sector Spiders (XLF) shows current support at $31 which was cracked but held the past three sessions. RSI also dipped below 20 to indicate extremely oversold levels. A close below $31 could led to weakness towards $30-$29.50 with the October 13th low at $29.45.

The VIX made lower highs and lower lows over the past three sessions so this could signal a near-term market bottom. We mentioned last week a bottoming process for the overall market won’t likely happen until there are continued closes back below 22.50-22 over the near-term.

In summary, key support for the Dow is at 31,500; 3,800 for the S&P; and 11,000 for the Nasdaq. Resistance levels are at: Dow 32,500; S&P 4,000; and Nasdaq 11,800. A close below, or above, these levels could signal the next near-term trend.

Momentum Options Play List

Closed Momentum Options Trades for 2023: 8-2 (80%). 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.

Intel (INTC, $29.81, down $0.37)

INTC April 27.50 puts (INTC230421P00027500, $0.58, up $0.11)

Entry Price: $0.55 (3/17/2023)
Exit Target: $1.10
Return: 5%
Stop Target: None

Action: Shares traded up to $31 and key resistance from mid-November and early February. A fade from here would confirm a possible triple-top reversal. RSI pushed 70 on Friday and a level that has been holding since early January. A close below shaky support at $29.50 would be beautiful to start the week.

Transocean (RIG, $5.63, down $0.14)

RIG April 8 calls (RIG230421C00008000, $0.07, down $0.02)

Entry Price: $0.45 (3/3/2023)
Exit Target: $0.90
Return: -84%
Stop Target: None

Action: Friday’s low tagged $5.51 with key support from mid-January at $5.50 holding. There is risk to $5.25-$5 on a close below this level. Resistance is at $5.75-$6.