MomentumOptions.com Pre-Market Update for 9/4/2023
VIX Nearing 52-Week Low
8:00am (EST)
Video: This should be another exciting week for the market and there are a number of setups we like – both bullish and bearish…
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Commentary
The stock market was mixed on Friday following a surprise in the jobs data. Specifically, 187,000 jobs were created in August versus forecasts for a print of 170,000. Meanwhile, the unemployment rate rose to 3.8%, and well above expectations of 3.5%.
The Nasdaq traded up to 14,149 before ending slightly lower at 14,031 (-0.02%). Lower resistance at 14,100-14,250 was cleared but held. A pop above the latter would suggest another run to 14,250-14,400 with the July 19th 52-week high at 14,446. Support remains at 13,900-13,750 and the 50-day moving average.
The S&P 500 settled at 4,515 (+0.2%) after topping out at 4,541. Prior and lower resistance at 4,550-4,600 was challenged and held. A move above the latter and the late July 52-week high at 4,607 would indicate a breakout towards 4,650-4,700. Shaky support is at 4,500 followed by 4,450-4,400 and the 50-day moving average.
The Dow tagged a high of 34,979 while finishing at 34,837 (+0.3%). Lower resistance at 35,000-35,250 was approached and held. A close above the latter would signal upside towards 35,500-35,750 with the August 1st peak at 35,679. Support is at 34,750-34,500 and the 50-day moving average.
Volatility Index
The Volatility Index (VIX) extended its losing streak to six-straight sessions with the low at 13.02. Prior and upper support at 13.25-12.75 was breached and held. A close below the latter and the June 22nd 52-week low at 12.73 would be indicate weakness to 12.50-12. Lowered resistance is at 13.50-14.
Monday’s earnings announcements:
Before the open: None
After the close: None
Economic News
None
Market Thoughts
For the week, the Nasdaq jumped 3.3%; the S&P 500 gained 2.5%; and the Dow added 1.4%. Materials and Energy were the strongest sectors after soaring 3.7% and 3.6% for the week while Utilities dropped 1.6% to pace the laggards.
The Russell 2000 made a nice run last week as it also rallied 3.3% to recover the 1,900 level and the 50-day moving average. We have highlighted prior resistance just north of the 2,000 level and where the small-caps peaked in late July.
We have showed the chart of a double-top peak at 2,008 and 2,007 in back-to-back sessions on February 2nd and February 3rd earlier this year. The Russell closed at 2,003 on August 1st before falling 9% to and intraday low of 1,830 by August 18th.
The action in the VIX was very bullish last week as the index not only recovered 15 and the 50-day moving average, but ended the week below 13.50. We mentioned a close below 15 would reign in some volatility and this week will be crucial to see if new lows are made.
We highlighted the 52 week low on June 22nd at 12.73 – and the low of 12.74 on July 27th formed a perfect “double-bottom” – to also help confirm the market peak and the end of the summer rally. If new lows are set this week, the major indexes could once again be testing fresh 52-week highs.
The talking heads were relentless on how “terrible” August was but the rebound to end the month and v-shape recovery we predicted has improved the technical setup, dramatically. However, if the major indexes stall at the recent peaks, and the VIX fails to make lower lows, this month could signal a return to volatility.
September, and October, are famous for market crashes and something to keep in mind if the market fails to make new highs this month. October is also the start of another round of the earnings cycle and typically induces volatile price action.
The market is closed for the Labor Day holiday so we have to wait another day for the action to start. Until, then let’s check in on our current positions.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 19-8 (70%). 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.
Barrick Gold (GOLD, $16.12, down $0.09)
GOLD October 17 calls (GOLD231020C00017000, $0.35, down $0.05)
Entry Price: $0.45 (8/29/2023)
Exit Target: $0.90
Return: -22%
Stop Target: None
Action: Upper support at $16-$15.75 was challenged and held on the fade to $16.10. Resistance is at $16.25-$16.50 and the 50-day moving average.
Our price target is $17.75-$18 by the time these options expire which represents mid-July and mid-May resistance. If the latter is reached, these calls will be $1 in-the-money for a 100+% return from the profiled price.
Snap (SNAP, $10.44, up $0.09)
SNAP October 10 calls (SNAP231020C00010000, $1.00, up $0.03)
Entry Price: $0.55 (8/29/2023)
Exit Target: $1.10, raise to $1.50
Return: 82%
Stop Target: 60 cents, raise to 80 cents (Stop Limit)
Action: Raise the Exit Target at $1.10 to $1.50. Raise the Stop Limit at 60 cents to 80 cents to further protect profits.
Friday’s high touched $10.54 with new and lower resistance at $10.50-$10.75 getting topped but holding. Rising support is at $10.25-$10 and the 200-day moving average.
Petróleo Brasileiro (PBR, $14.49, up $0.44)
PBR September 15 calls (PBR230915C00015000, $0.15, up $0.06)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -57%
Stop Target: None
Action: Lower resistance at $14.50-$14.75 was kissed but held on the session high. Support is at $14.25-$14.
Iovance Biotherapeutics (IOVA, $6.15, up $0.11)
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 reached $6.19 with lower resistance at $6.25-$6.50 holding. Shaky support remains at $6 followed by $5.75-$5.50.
For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.
