MomentumOptions.com Pre-Market Update for 9/7/2023
50-Day MA’s Back in Play
8:00am (EST)
Commentary
The stock market showed ongoing weakness on Wednesday’s despite upbeat economic news. Specifically, the ISM reading checked in at 54.5 versus forecasts for a print of 52.5, marking the eighth-straight month of higher activity.
The Nasdaq tested a low of 13,802 before settling at 13,872 (-1.1%). Key support at 13,850 and the 50-day moving average were clipped but held. A close below these levels would likely suggest weakness to 13,750-13,600. Resistance is at 14,000-14,150.
The S&P 500 closed at 4,465 (-0.7%) and back below its 50-day moving average with the low hitting 4,442. Upper support at 4,450-4,400 was breached but held. A move below the latter would imply another retest towards the 4,350 area. Resistance is at 4,500-4,550.
The Dow tagged an intraday low of 34,291 while finishing at 34,443 (-0.6%). Upper support at 34,500-34,250 failed to hold. A close below the latter would signal downside action to 34,000-33,750 and the 200-day moving average. Resistance is at 34,750-35,000 and the 50-day moving average.
Volatility Index
The Volatility Index (VIX) was up for the second-straight session with the high at 15.30. Prior and lower resistance at 15-15.50 and the 50-day moving average were topped but levels that held. A close above the latter would indicate upside to 16.50-17. Rising support is at 14-13.50.
Thursday’s earnings announcements:
Before the open: ABM Industries (ABM), Toro (TTC), Korn/Ferry International (KFY), Science Applications International (SAIC), SecureWorks (SCWX)
After the close: Braze (BRZE), DocuSign (DOCU), RH (RH), Smartsheet (SMAR), Smith & Wesson Brands (SWBI), Zumiez (ZUMZ)
Economic news:
Initial Jobless Claims – 8:30am
Productivity and Costs – 8:30am
Market Thoughts
The v-shape recoveries that were in play on the Nasdaq and S&P 500 last Friday have been busted with this week’s pullback. The one silver lining was the Nasdaq’s ability to hold its 50-day MA into the closing bell. However, the Dow’s second-straight close below its 50-day MA was a concern.
The VIX holding below 15 was also a slight win but the bulls inability to crack 13 to start the shortened week was an omen. We talked about the 52 week low on June 22nd at 12.73 and the low of 12.74 on July 27th needing to be taken out this week…
As far as the relative strength index (RSI) levels, the Dow is once again approaching key support at 40 with stretch towards 35 on continued weakness. The latter has been holding since late May with a close below 35 being a bearish development for the blue-chips.
The Nasdaq and S&P held 50 into yesterday’s closing bell with a close below this level also being a red flag. This is the biggest technical indicator we will be watching today and into the weekend.
A shortened week following a three-day weekend to end summer has added to some of this week’s volatility. Wall Street will be back in full swing next week so a mini trading range could develop until then. However, weakness today could lead to a retest of the August market lows with the VIX likely pushing its 200-day moving average.
We have closed five-straight winners, but we are slightly disappointed as Stop Limits were tripped instead of us banking triple-digit winners. We came close with SLV and SNAP at or near 100% wins before momentum faded. Both are still on our Watch List.
We do have some bearish setups we like as well but we are still doing research and the math to find the best setups. If we take action, we will send out a Trade Alert.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 20-8 (71%). 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, $15.84, down $0.08)
GOLD October 17 calls (GOLD231020C00017000, $0.25, down $0.05)
Entry Price: $0.45 (8/29/2023)
Exit Target: $0.90
Return: -44%
Stop Target: None
Action: Upper support at $15.75-$15.50 was kissed but held on the session low. Resistance is at $16-$16.25.
Petróleo Brasileiro (PBR, $14.93, up $0.13)
PBR September 15 calls (PBR230915C00015000, $0.28, up $0.03)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -20%
Stop Target: None
Action: The calls traded up to 38 cents yesterday to give us a brief profit as shares tested a high of $15.12. Lower resistance at $15-$15.25 was cleared but held. Fresh support is at $14.75-$14.50.
We still think shares can make a run towards $15.50-$16 but we need to see $14.50 hold on any weakness. If breached, we could exit the trade, or roll over in October calls, as these options expire next Friday.
Iovance Biotherapeutics (IOVA, $5.99, down $0.05)
IOVA December 12.50 calls (IOVA231215C00012500, $0.25, unchanged)
Entry Price: $0.80 (7/10/2023)
Exit Target: $1.60
Return: -69%
Stop Target: None
Action: Wednesday’s low tagged $5.80 with new and upper support at $6-$5.75 failing to hold. Key resistance is at $6.25.
For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.
