MomentumOptions.com Pre-Market Update for 1/25/2024
Overbought Levels Back in Focus
8:00am (EST)
Commentary
The stock market showed ongoing intraday strength but was mixed on Wednesday with the blue-chips and small-caps lagging. The broader recorded its fourth-straight record high while Tech hit another fresh 52-week peak.
The Nasdaq closed at 15,481 (+0.4%) with the high at 15,629. Longer-term and lower resistance at 15,500-15,650 was cleared but held. A close above the latter would signal ongoing momentum to 15,750-15,900. Rising support is at 15,450-15,300.
The S&P 500 made a run to 4,903 before settling at 4,868 (+0.1%). Undefined and lower resistance at 4,900-4,950 was topped but held. A pop above the latter would imply upside towards 5,000-5,050. Rising support is at 4,850-4,800.
The Dow ended at 37,806 (-0.3%) after peaking 38,064. Key resistance at 38,000 was cleared but held. Continued closes close above this level keeps 38,000-38,250 in play. Support remains at 37,500-37,250.
Volatility Index
The Volatility Index (VIX) snapped a four-session slide after trading to a high of 13.18. Lower resistance at 13-13.50 was cleared and held. A move above the latter and the 50-day moving average would suggest a retest to 14-14.50. Support remains at 12.75-12.50.
Thursday’s earnings announcements:
Before the open: American Airlines (AAL), Blackstone (BX), Humana (HUM), Southwest Airlines (LUV), STMicroelectronics (STM), Valero Energy (VLO)
After the close: Intel (INTC), Levi Strauss (LEVI), T-Mobile (TMUS), Visa (V)
Economic news:
GDP – 8:30am
Initial Jobless Claims – 8:30am
Wholesale Inventories – 10:00am
New Home Sales – 10:00am
Market Thoughts
The RSI (relative strength index) levels for the major indexes have been flirting with overbought territory with readings north of 70. The Dow has backed off this level following two days of consolidation but the Nasdaq and the S&P are at 72 and 70, respectively.
Overbought levels were prevalent throughout December before a trading range, and slight pullbacks, ensued coming into the New Year. We don’t believe February will unfold like December as it is typically a bearish month for the overall market.
We talked about this week being flat to slightly higher as Wall Street preps for next week’s biggest earnings releases for the fourth-quarter. We will cover this in more detail on Monday but we have also predicted this is when the market could make a near-term top.
Our late December Price targets of Nasdaq 15,150-15,300; Dow 38,000-38,250; and S&P 4,850-4,900 remain in play with additional gains added fluff.
Key support levels to watch into the weekend: Nasdaq 15,300; S&P 4,800; Dow 37,500; and Russell 1,925.
We only have one open trade and it is down as we used the SQQQ’s as “insurance” for a market pullback. We thought about closing this trade today but we may able to get another 10-15 cents back if the market has peaked over the near-term.
We would still like to add a New Trade this week so stay locked-and-loaded in case we take action.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 2-0 (100%). 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.
ProShares UltraPro Short QQQ (SQQQ, $11.99, down $0.20)
SQQQ February 16 calls (SQQQ240216C00016000, $0.06, down $0.01)
Entry Price: $0.60 (1/3/2024)
Exit Target: $1.20
Return: -90%
Stop Target: None
Action: New and upper support at $11.75-$11.50 was tripped but held following the pullback to $11.65. Lowered resistance is at $12-$12.25.
