MomentumOptions.com Pre-Market Update for 9/11/2023
Bears Defend 50-Day MA’s
8:00am (EST)
Commentary
The stock market closed higher across the board on Friday but the major indexes fell shy of clearing their 50-day moving averages. Trading was still choppy as the bulls failed to hold their intraday highs with the gains being minimal.
The Nasdaq finished at 13,872 (+0.9%) with the peak reaching 13,843. Key resistance at 13,850 and the 50-day moving average were challenged but held. A close above these levels would imply another run to 14,000-14,150. Shaky support is at 13,750-13,600.
The S&P 500 tested an intraday peak of 4,473 while settling at 4,457 (+0.1%). Key resistance at 4,475 and 50-day moving average held. A close above these levels would suggest strength towards the 4,500-4,550. Support is at 4,450-4,400.
The Dow closed at 34,576 (+0.2%) after trading to a high of 34,627. Lower resistance at 34,750-35,000 and the 50-day moving average easily held. A pop above the latter would be a more bullish setup for another run to 35,250-35,500. Support is at 34,250-34,000.
Volatility Index
The Volatility Index (VIX) fell for the second-straight session with the low tapping 13.58. Upper support at 14-13.50 was reclaimed. A drop below the latter would suggest a retest towards 13.25-12.75. Current resistance is at 14.50-15.
Monday’s earnings announcements:
Before the open: Bowlero (BOWL), FuelCell Energy (FCEL)
After the close: Casey’s General Stores (CASY), Oracle (ORCL), Mission Produce (AVO), Skillsoft (SKIL)
Economic News
None
Market Thoughts
The v-shape recoveries that were in play to start last week quickly fizzled with the Nasdaq’s failing to hold its 50-day MA during Thursday’s session. We mentioned it was the one bright spot for the bulls ahead of the open but the breakdown was a good clue Friday’s action would be a weak comeback before the bulls were literally saved by the bell.
With that said, the VIX holding 15 for the second-straight session remains slightly bullish. Once again, the 52 week low on June 22nd at 12.73 and the low of 12.74 on July 27th will be in play with a close below these levels likely getting the major indexes back above their 50-day moving averages.
Our June target to the downside for the VIX was at 12.50 that we penciled in for our prediction of a late July/ early August market peak. We were less than a quarter-point away from a bullseye and the VIX could see weakness towards 11.50-11 if the bulls crack 12.50.
The relative strength index (RSI) levels have all leveled out, or are back in a slight uptrend, after finishing just shy of 50. The Dow held key support at 40 during Thursday’s market weakness while the S&P and the Nasdaq held 45 but closed below 50.
This is a neutral reading heading into this week but could favor the bulls with higher closes for the major indexes on Monday. The 35-40 levels will be crucial in holding again this week. If not, the bears could get aggressive.
As far as key support / resistance levels to watch going forward: Dow 35,000-34,000; Nasdaq 13,200-14,200; and S&P 4,350-4,550. These are nice round numbers to remember and ALSO highlight a trading we mentioned could be developing into earnings season.
Continued closes below or above the aforementioned levels will likely lead to a double-digit pullback of at least 10% by late October, or a retest to fresh 52-week highs, over the next month or two.
We often talked about support and resistance levels getting stretched so it will be crucial for the bulls to avoid lower monthly lows this week, and more importantly, the August lows. This month also marks the end of the quarter, so the action could pick up over the next two to three weeks as fund managers dress up their books.
Wednesday’s CPI numbers could have a major impact on this week’s action, as well as a volatile Friday, with the regular September options expiring. Oracle’s earnings after the close could influence Tuesday’s action.
We have one trade, PBR, expiring this week so we have room to add a new trade or two. However, we want to see how the action plays out with the 50-day MA’s before getting too aggressive.
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, $15.78, down $0.01)
GOLD October 17 calls (GOLD231020C00017000, $0.25, unchanged)
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, $14.68, up $0.12)
PBR September 15 calls (PBR230915C00015000, $0.12, unchanged)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -66%
Stop Target: None
Action: Lower resistance at $15-$15.25 was challenged but held following Friday’s push to $14.92. Support is at $14.50-$14.25.
The $14.50 level held into the weekend but shares need to clear $15, and more specifically, $15.35 by this Friday’s close for the trade to be profitable. There are times where a negative trade does play out in the last week of action to turn positive (our recent DIS trade) but it really is a coin flip.
If shares aren’t above $15 by Thursday’s open, we will likely exit to save the remaining premium.
Iovance Biotherapeutics (IOVA, $5.95, up $0.15)
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: Friday’s high touched $6.10 with fresh and lower resistance at $6-$6.25 getting topped but holding. Support is at $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. We are expecting major news and possible FDA approval in November, maybe sooner, on one of the company’s drugs that could easily get shares into the mid-teens.
