MomentumOptions.com Pre-Market Update for 2/8/2024

Bulls Get 5th-Straight Weekly Win

8:00am (EST)

Commentary

The stock market continued its quest towards nice round numbers with Friday’s gains giving the bulls their fifth-straight weekly win. A better-than-expected consumer price index helped sentiment along with solid earnings.

The Nasdaq traded to a 52-week peak of 16,007 before ending at 15,990 (+1.3%). New and lower resistance at 16,000-16,150 was cleared but held. A move above the latter would suggest upside to 16,300-16,450. Rising support is at 15,800-15,650.

The S&P 500 settled at 5,026 (+0.6%) after tagging an intraday lifetime high of 5,030. Key resistance at 5,000 was topped and held. Continued closes above this level would imply momentum towards 5,050-5,100. Support is at 4,950-4,900.

The Dow tested a low of 38,567 while finishing at 38,671 (-0.1%). Upper support 38,500-38,250 was challenged and held. A drop below the latter would signal weakness to 38,000-37,750. Resistance remains at 38,750-39,000.

Volatility Index

The Volatility Index (VIX) topped out at 13.01 with lower resistance at 13-13.25 and the 50-day moving average holding. Support is at 12.75-12.50.

Monday’s earnings announcements:

Before the open: Alexanders (ALX), Trimble (TRMB)

After the close: Arista Networks (ANET), Cadence Design Systems (CDNS), Lattice Semiconductor (LSCC), Waste Management (WM)

Economic News

Treasury Budget – 2:00pm

Market Thoughts

For the week, the Nasdaq jumped 2.3%; the S&P added 1.4%; and the Dow added 17 points. Aside from its fifth-straight winning week, the market is also up 14 out of the past 15.

The S&P’s close above 5,000 on Friday was the first index to clear and hold our December price targets for the major indexes. The Nasdaq cleared 16,000 on Friday to become the second and needs continued closes above this level to take out its all-time high. The Dow could still make a run at 40,000 but needs a 3% pop from current levels.

The gains off the October lows continue to impress. The Nasdaq bottomed out at 12,543 on October 26th and is up 28% on Friday’s intraday peak. The S&P has surged 23% from its late October 27th low of 4,103. The Dow tagged a low of 32,327 on October 27th with the February 2nd peak at 38,783 giving the blue-chips a return of 20%.

The RSI (relative strength index) levels for the Nasdaq and the S&P have hit overbought levels after closing Friday at 71 and 73, respectively. They can still go higher, obviously, but a close back below 70 is needed to get some of the fluff out of the overall market.

We are still looking for the VIX to make continue closes below 12.50 so that it can make a retest to 12.25-11.75 and fresh 52-week lows. It has also been hard to believe the VIX hasn’t tested 10 and single-digits during this 15-week rally. As far as market risk, there is no need for us to get bearish until the VIX clears and closes above 15 for multiple sessions.

As far as a few stocks we are watching this week: Roku (ROKU) has rallied 31% the past two earnings cycles and reports numbers on Thursday. The calls and put options that expire this Friday are super juiced so we will likely be on the sidelines but a stock worth mentioning.

DraftKings (DKNG) also announces on Thursday with shares pushing a fresh 52-week peak north of $44 on Friday. We are looking at a possible way to play a major move of 10+% (up or down) in the stock by using options.

We are also looking at a number of credit spread trades after cashing out on Netflix (NFLX) and running the RedZone Track Record to 5-0 to start the year. Our covered call newsletter, Real Wealth Income, is also 5-0.

On that note, we could have a new trade today so stay locked-and-loaded.

Momentum Options Play List

Closed Momentum Options Trades for 2024: 4-1 (80%). 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.

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Continue to hold:

Snap (SNAP)
SNAP March 20 calls (SNAP240315C00020000)

Ford Motor (F)
F March 11 puts (F240315P00011000)