Pre-Market Update for 3/23/2023

Fed Hikes Another Quarter-Point

8:00am (EST)

The stock market was choppy on Wednesday following another quarter percentage point rate hike amid an ongoing banking crisis. This raised the benchmark rate to a 4.75%-5% target range with the Fed also saying additional policy firming may be needed.

There was a growing feeling the Fed might stand pat given the recent banking shenanigans, but the major indexes gave up their gains in the final hour of action. Volatility tested key support on the session highs and held key resistance into the close near the session lows.

The S&P 500 ended on its session low of 3,936 (-1.7%). Upper support at 3,950-3,900 failed to hold. A move below the latter and 200-day moving average would imply another retest to 3,850-3,800. Key resistance is at 4,000 and the 50-day moving average.

The Dow traded down to 32,020 while settling at 32,030 (-1.6%). Key support at 32,000 was challenged and held. A close below this level would indicate another fade towards 31,750-31,500 and levels from last week. Resistance is at 32,250-32,500 and the 200-day moving average.

The Nasdaq tagged a devilish low of 11,666 while closing at 11,669 (-1.6%). Near-term and upper support at 11,750-11,500 failed to hold. A drop below the latter and the 50-day/ 200-day moving averages would suggest another trip towards the 11,350-11,200 area. Resistance is at 11,850-12,000.

Volatility Index

The Volatility Index (VIX) was up for the first time in three sessions despite tumbling to an intraday low of 19.94. Key support at 20 was tripped but held.

The bounce to 22.38 into the final bell held key resistance at 22.50. The is upside risk to 23.50-24 and the 200-day moving average again on a pop back above this level.

Thursday’s earnings announcements:

Before the open: Accenture (ACN), Darden Restaurants (DRI), FactSet Research Systems (FDS), General Mills (GIS), SecureWorks (SCWX)

After the close: Direct Digital (DRCT), GeoVax Labs (GOVX), One Stop Systems (OSS), Vasta Platform (VSTA)

Economic news:

Initial Jobless Claims – 8:30am
New Home Sales – 10:00am

Market Thoughts

Despite Wednesday’s reversal, the bulls are currently holding the weekly lead. However, yesterday’s close looked bearish. The Nasdaq has the most bullish technical setup following last week’s golden cross formation with the 50-day clearing the 200-day moving average.

The Nasdaq cleared two layers of resistance at 11,800-12,000 yesterday and levels we said to watch for this week. The S&P flirted with the 4,000 level the past two sessions. The index has more important hurdles at 4,050-4,100 to clear before we can say a near-term bottom has played out.

The Dow remains closer to crucial support than the Nasdaq and S&P and really needs to clear 33,500 and the 50-day moving average to reverse the current bear curse.

As far as volatility, a close above 24 would be a possible sell signal for the market. A close above 20 would be a bullish development for the market and higher highs.

We were whipsawed out of our Intel (INTC) put position yesterday but we were able to run the 2023 Track Record to 9-2 with six-straight winners. We could have a New Trade today so stay locked-and-loaded.

Momentum Options Play List

Closed Momentum Options Trades for 2023: 9-2 (82%). 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, $6.03, down $0.09)

RIG April 8 calls (RIG230421C00008000, $0.07, down $0.01)

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

Action: Shares have made a nice comeback this week with Tuesday’s peak hitting $6.43. Wednesday’s low tagged $6.01 with key support at $6 holding. There is retest potemtial to $5.75-$5.50 on a close below this level.