MomentumOptions.com Pre-Market Update for 8/24/2023
Bulls Trying to Establish a Base
8:00am (EST)
Commentary
The stock market showed strength on Wednesday as Wall Street braced for a major earnings report from Nvidia (NVDA). The gains kept the broader market and Tech in positive territory for the week but weren’t enough to lift the blue-chips back to even.
The Nasdaq was up for the third-straight day with the high hitting 13,757 and close at 13,721 (+1.6%). Prior and lower resistance at 13,700-13,850 was recovered. A close above the latter and the 50-day moving average would signal a retest to 14,000-14,150. Support is at 13,650-13,500.
The S&P 500 settled at 4,396 (-0.01%) after tapping a high of 4,443. New and lower resistance at 4,400-4,450 was topped and held. A pop above the latter and the 50-day moving average would indicate strength towards 4,500-4,550. Key support is at 4,350.
The Dow traded up to 34,534 before closing at 34,472 (+0.5%). Lower resistance at 34,500-34,750 was cleared but held. A move above the latter and the 50-day moving average would suggest upside to 35,000-35,250. Support is at 34,250-34,000.
Volatility Index
The Volatility Index (VIX) fell for the fourth-straight session after bottoming at 15.91. Upper support at 16-15.50 was breached and held. A close below 15-14.50 and the latter and 50-day moving average would be a renewed bullish development. Resistance is at 17-17.50.
Thursday’s earnings announcements:
Before the open: Burlington Stores (BURL), Dollar Tree (DLTR), Petco Health and Wellness Company (WOOF), NetEase (NTES), OSI Systems (OSIS), TD Bank Group (TD), Weibo (WB)
After the close: Affirm Holdings (AFRM), Intuit (INTU), Gap (GPS), Marvell Technology (MRVL), Nordstrom (JWN), ULTA Beauty (ULTA), Workday (WDAY)
Economic news:
Initial Jobless Claims – 8:30am
Durable Goods Orders – 8:30am
Market Thoughts
We talked about last Friday’s reversal off of the intraday lows being a bullish signal coming into the week. Although the action has been choppy, the possible signs of a near-term bottom are appearing. Of course, this morning’s action and headline news will be about Nvidia’s earnings following Wednesday’s closing bell.
The company reported a profit of $2.70 a share versus forecasts of $2.09. Revenue of $13.5 billion was also a blowout versus estimates of $11.2 billion. They also guided Q3 revenue higher to $16 billion, plus or minus 2%. Analysts were at $12.6 billion.
In after-hours, NVDA shares were up over 6% and just north of $500. We are sure the analyst community will be tripping all over themselves with possible upgrades and price targets this morning so it will be interesting to see if shares make even higher highs, or fail to hold $500.
How shares of Nvidia close will heavily impact today’s market action. We expect Friday’s results to be swayed by Fed speak as Chairman Powell will be making remarks.
As far as the market action, the fact the Nasdaq recovered 13,500 this week was the first big step of a possible near-term bottom. This level needs to hold into the weekend, with the bigger hurdle at 13,850.
Continued closes above 4,500 on the S&P 500 would be a renewed bullish development. As for the Dow, a recovery above the 35,000 level would also complete a v-shape recovery and suggest a near-term bottom.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 18-8 (69%). 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 we list one. We will send out a “Profit Alert” or “New Trade” if we 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.
iShares Silver Trust (SLV, $22.29, up $0.83)
SLV October 22 calls (SLV231020C00022000, $1.05, up $0.45)
Entry Price: $0.60 (8/22/2023)
Exit Target: $1.20
Return: 75%
Stop Target: 80 cents (Stop Limit)
Action: Set an initial Stop Limit at 80 cents to protect profits and to avoid a loss.
Shares soared to a high of $22.34 late in the day with prior and lower resistance at $22.25-$22.50 getting cleared and holding. Fresh support is at $22-$21.75 followed by the major moving averages.
There was heavy volume in the SLV October 24 calls when we recommended this trade on Tuesday and typically indicates options traders are expecting higher highs.
Petróleo Brasileiro (PBR, $14.54, up $1.02)
PBR September 15 calls (PBR230915C00015000, $0.29, up $0.23)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -17%
Stop Target: None
Action: New and lower resistance at $15.25-$15.50 was topped but held with the high hitting $15.45. The 52-week peak is at $16.32. Support is at $14-$13.75 followed by $13.50 and the 50-day moving average.
Continued closes above $14.50 would be an ongoing bullish development. This is one of the main reasons we don’t list Stop Targets until we typically start to make a profit in a trade is contributed to this type of pin action. These calls zoomed 383% yesterday as shares surged 7.5%. However, the trade is still below the recommended entry price but the loss was at 83% and has been trimmed to just 17%.
Iovance Biotherapeutics (IOVA, $6.31, down $0.07)
IOVA December 12.50 calls (IOVA231215C00012500, $0.30, unchanged)
Entry Price: $0.80 (7/10/2023)
Exit Target: $1.60
Return: -44%
Stop Target: None
Action: Wednesday’s low was at $6.30 with upper support at $6.25-$6 holding. Resistance is $6.50-$6.75.
For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.
