Pre-Market Update for 8/28/2023

Powell’s Punchlines Bails Out Bulls

8:00am (EST)


The stock market rebounded off intraday lows on Friday to end the week on a high note after Fed Chair Powell indicated the need to proceed carefully with additional interest rate hikes. He also noted that the Fed will remain flexible as it contemplates future moves, but gave little indication that they are ready to start easing anytime soon.

The Nasdaq ended at 13,590 (+0.9%) with the afternoon peak reaching 13,633. Current and lower resistance at 13,500-13,650 was reclaimed. A close above the latter would suggest another retest to 13,750-13,900 and the 50-day moving average . Support is at 13,350-13,200.

The S&P 500 made a push to 4,418 while closing at 4,405 (+0.7%). Lower resistance at 4,400-4,450 was cleared and held. A move above the latter and the 50-day moving average would imply upside towards 4,500-4,550. Key support remains at 4,350.

The Dow finished at 34,346 (+0.7%) after trading up to 34,441. Lower resistance at 34,250-34,500 was reclaimed. A close above the latter and the 50-day moving average would be a more bullish signal for additional strength to 34,750-35,000. Support is at 34,000-33,750 and the 200-day moving average.

Volatility Index

The Volatility Index (VIX) was down for the fifth time in six sessions after tagging a second half low of 15.45. Upper support at 15.50-15 was tripped but held. A close below 15-14.50 and 50-day moving average would be a slightly bullish development and a breakdown out of the current trading range. Resistance remains at 17-17.50.

Monday’s earnings announcements:

Before the open: Baozun (BZUN), Greatbatch (GB), Nordic American Tankers (NAT)

After the close: Afya (AFYA), FinVolution (FINV), LifeVantage (LFVN), Riviera Holdings (RIV), Tarena International (TEDU)

Economic News


Market Thoughts

For the week, the Nasdaq rallied 2.3%; the S&P 500 gained 0.8%; and the Dow was up 0.5%. Technology was the strongest sector after jumping 2.3% for the week while Energy fell 1.4% to pace the laggards.

The S&P and Nasdaq snapped multi-week losing streaks but failed to clear their 50-day moving averages which have flatlined. The Dow is in the same boat and this remains a slightly bearish development, especially if the 50-day MA’s start to roll over.

Lost in Friday’s whipsaw action was the fact the Dow tapped a fresh monthly low after holding key support at 34,000. If this round number is cracked, it will be almost a given the 200-day moving average comes into focus. We doubt it holds, if breached.

The Nasdaq held 13,500 into the weekend but we mentioned the bigger hurdle remains at 13,850. We will be watching this battle again this week with a move below the monthly low of 13,161 being another strike against the bulls.

We wanted to see a close above 4,500 on the S&P 500, and a possible v-shape recovery forming, but Friday’s action voided that setup. A fade below 4,350 and the monthly low at 4,335 could also induce another round of selling pressure.

As far as the VIX, a pop above 18.50-19 and the 200-day moving average would be a very bearish development and would confirm another round of lower lows for the major indexes. We mentioned earlier, the bulls need to get the index back below 15-14.50 and 50-day moving average to reign in the recent volatility.

Other stocks that could make massive moves on earnings that we are watching this week include: Chewy (CHWY) and Pure Storage (PSTG) after Wednesday’s close and Lululemon Athletica (LULU) after Thursday’s close.

We could have new trades again this week so stay locked-and-loaded.

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, $22.22, up $0.11)

SLV October 22 calls (SLV231020C00022000, $0.95, up $0.05)

Entry Price: $0.60 (8/22/2023)
Exit Target: $1.20
Return: 58%
Stop Target: 80 cents (Stop Limit)

Action: Shares rebounded to trade to a high of $22.35 with lower resistance at $22.25-$22.50 getting cleared but holding. Support is at $22-$21.75 followed by the major moving averages.

Petróleo Brasileiro (PBR, $14.31, down $0.18)

PBR September 15 calls (PBR230915C00015000, $0.23, down $0.05)

Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -34%
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.

Iovance Biotherapeutics (IOVA, $6.15, up $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: Friday’s peak hit $6.24 with lower resistance at $6.25-$6.50 holding. Support is at $6-$5.75.

For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.