MomentumOptions.com Pre-Market Update for 4/29/2024
Key Resistance Levels Back in Focus
8:00am (EST)
Video
https://go.screenpal.com/watch/cZfueAVMOmc
Commentary
The stock market rebounded on Friday to close out a positive week as better-than-expected Tech earnings overshadowed another sticky inflation report. Meanwhile, volatility continued to ease despite last week’s whipsaw action but held a key level of support as traders remain hedged heading into the heart of the first-quarter earnings season.
The Nasdaq made an intraday run to 15,981 before settling at 15,927 (+2%). Lower resistance at 15,900-16,050 was reclaimed. A close above the latter and the 50-day moving average would suggest continued upside to 16,200-16,350. Support is at 15,750-15,600.
The S&P 500 went out at 5,099 (+1%) after testing a high of 5,114. Key resistance at 5,100 was cleared but held. Continued closes above this level and the 50-day moving average would imply further strength towards 5,150-5,200. Support is at 5,050-5,000.
The Dow kissed 38,337 while finishing at 38,239 (+0.4%). Lower resistance at 38,250-38,500 was topped and held. A move above the latter would indicate additional gains to 38,750-39,000 and the 50-day moving average. Support is at 38,000-37,775.
Volatility Index
The Volatility Index (VIX) closed at 15.03 after tapping an intraday low of 14.92. Key support at 15 was tripped but held. Lowered resistance is at 16-16.50.
Monday’s earnings announcements:
Before the open: Domino’s Pizza (DPZ), JinkoSolar (JKS), SoFi (SOFI)
After the close: Chegg (CHGG), F5 Networks (FFIV), Lattice Semiconductor (LSCC), Paramount Global (PARA), Rambus (RMBS), Welltower (WELL)
Economic News
None
Market Thoughts
The RSI (relative strength index) level on the S&P and the Nasdaq are pushing 50 after tagging 31 and 30, respectively, the week before. We talked about buyers coming in last week with oversold conditions and last October lows in play.
This technical rebound played out nicely with a close above 50 across the board, including the Dow, being a renewed bullish signal. A rejection at this level would favor the bears so this is the first signal we are watching for Monday.
As for the Russell, the recovery of the 2,000 level on Friday was also bullish as the index joined the Dow and Nasdaq in breaking out of the current downtrend channels. The S&P came close and will need to get continued closes above 5,125 (and the 50-day moving average) to confirm a continued rally.
Otherwise, some of the action could be considered strength off oversold conditions. Again, the current charts shows nice downtrend channels the bulls are trying to break out of with closes above the 50-day moving averages confirming another run towards the March all-time and 52-week peaks.
There could be a slight trading range for the first part of the week as traders take caution ahead of two major earnings announcements. Qualcomm highlights Wednesday’s update while Wall Street will focused solely on Apple’s (AAPL) results on Thursday.
The Dow remains the lone index that failed to clear last week’s key hurdles at Nasdaq 15,600; S&P 5,000; Dow 38,750; and Russell 2,000. This wasn’t that big of a deal as this level also represents the 50-day moving average and where the other major indexes are perched just below.
Checking in on VIX again, we mentioned last Monday’s close back below 17.50 was a good clue the the week might be bullish. However, we said more important closes are below 15 to confirm a possible near-term market bottom. Same deal again with a close back above 17.50 being another red flag.
Downside risk on a return to lower lows this week remain at: Russell 1,900-1,850; Dow 37,000-36,750; S&P 4,900-4,850; and Nasdaq 15,000-14,850.
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SoFi Technologies (SOFI, $7.87, up $0.28)
SOFI May 8 calls (SOFI240517C00008000, $0.65, up $0.20)
Entry Price: $0.55 (4/8/2024)
Exit Target: $1.10
Return: 18%
Stop Target: None
Action: Shares traded to a high of $7.90 with key resistance at $8 getting challenged and holding. Support is at $7.75-$7.50.
In extended trading on Friday, SOFI was up nearly 3% and just north of $8. Earnings are due out before Monday’s opening the bell and a good signal ahead of the news. Of course, nothing is a given and the numbers and outlook need to be above Wall Street’s expectations.
Analysts are expecting a penny profit on revenue of $555 million.
