MomentumOptions.com Pre-Market Update for 7/1/2024
Nasdaq Clears 18,000
8:00am (EST)
Video
https://go.screenpal.com/watch/cZiVnaV8Ole
Commentary
The stock market showed ongoing strength on Friday’s open before selling pressure took over with the broader market and Tech setting new record highs. The blue-chips and small-caps also pulled back but are showing signs of making a run towards all-time and 52-week highs, respectively, as volatility is nearing fresh lows.
The Nasdaq ended lower at 17,732 (-0.7%) after tagging an all-time high of 18,035. Key resistance at 18,000 was topped but held. Continued closes above this level would imply upside to 18,150-18,300. Support is at 17,650-17,500.
The S&P 500 reached a record peak of 5,523 before settling in the red at 5,460 (-0.4%). Key resistance at 5,500 was cleared but held. A close above this level would indicate a further run to 5,550-5,600. Support remains at 5,450-5,400.
The Dow closed at 39,118 (-0.1%) after trading up to 39,443. Lower resistance at 39,250-39,500 was tripped but held. A move above the latter would suggest strength towards 39,750-40,000 with the May 20th all-time top at 40,077. Support is at 38,500-38,250
Volatility Index
The Volatility Index (VIX) went out at 12.44 with upper support at 12.50-12 getting breached and holding. A close below the latter would signal weakness to 11.50 with the May 23rd 52-week low at 11.52. Lowered resistance is at 13-13.50 and the 50-day moving average.
Monday’s earnings announcements:
Before the open: None
After the close: Cineverse (CNVS)
Economic News
PMI Manufacturing Index – 9:45am
Construction Spending – 10:00am
ISM Manufacturing Index – 10:00am
Market Thoughts
The start of last week started off shaky as the VIX spiked above 13.50 and the Nasdaq closed below 17,500. These fears were quickly erased when there was no follow thru by the bears on Tuesday, or the rest of the week for that matter. This is why we often wait for consecutive closes below key support and resistance levels as “stretch” can get traders guessing.
The major indexes continue to set record highs off the late October lows. The Nasdaq’s peak at 18,035 last Friday represents a 44% surge off the October 26th bottom at 12,543. The S&P has rocketed 35% higher from the October 27th low of 4,103 to 5,523 last Friday.
The Dow was up 24% from 32,327 on October 27th to 40,077 by May 20th. As for as the Russell, the index rallied 31% from the October 27th low of 1,633 to the March 28th peak at 2,135. Both could be setting up for bullish runs to prior highs as the 50-day moving averages are starting to curl sharply higher on both indexes.
On the other hand, the 50-day moving average on the VIX is rolling over again with the possibility of fresh 52-week lows coming this week. If the bulls can get continued closes below 11.50, the odds of a test into the single-digits go up dramatically.
Remember, for new investors, lower lows on the VIX tends to portray higher highs in the overall market.
The Dow closed above our renewed bullish target of 39,250 on Monday but failed to hold this level on Tuesday and failed to hold it into Friday’s closing bell. This will be this week’s focus for the bulls and is needed to get a run towards 40,000 going.
The Russell closed back above its 50-day moving average on Thursday while breaking out of a downtrend channel – both bullish signals with Friday’s gains likely confirming another run at 2,075.
The Nasdaq and S&P have topped or approached our near-term targets of 18,000 and 5,550, respectively, that we set in May. We could see 18,500 and 5,600 on an overshoot at some point this summer on the Nasdaq and S&P if the Dow and Russell test fresh highs.
In late February, we listed longer-term price targets (12-18 months) of Nasdaq 20,000; S&P 6,500; Dow 50,000; and Russell 2,500.
The bottom line is the technical outlook remains bullish going into July as long as the Nasdaq holds 17,500 and the S&P 5,400. If these levels crack, and the VIX closes above 13.50, we would likely start to get a little cautious on the overall market as they would be the start of near-term tops for the indexes and a possible bottom for the VIX.
We won’t be publishing on Thursday with the market closed for the July 4th holiday. However, we will likely have New Trades, and possible Profit Alerts throughout the week so stay locked-and-loaded. Again, no market update on Thursday.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 35-8 (81%). 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 Bitcoin Strategy ETF (BITO, $22.51, down $0.58)
BITO August 25 calls (BITO240816C00025000, $0.50, down $0.10)
Entry Price: $0.65 (6/25/2024)
Exit Target: $1.30
Return: -23%
Stop Target: None
Action: Friday’s low kissed $22.48 with upper support at $22.50-$22.25 holding. Resistance is at $22.75-$23 and the 200-day moving average.
AT&T (T, $19.11, up $0.36)
T September 19 calls (T240920C00019000, $0.78, up $0.22)
Entry Price: $0.40 (6/21/2024)
Exit Target: $1.00-$1.20 (Limit Order on HALF)
Return: 95%
Stop Target: 45 cents, raise to 60 cents (Stop Limit)
Action: Set a Limit Order to close half the trade at $1.00. Raise the Stop Limit at 45 cents to 60 cents to further protect profits.
Shares tested a fresh 52-week peak of $19.13 with lower resistance at $19-$19.25 getting cleared and holding. A close above the latter would suggest upside to $19.50-$19.75. New support is at $18.75-$18.50.
Petróleo Brasileiro (PBR, $14.49, unchanged)
PBR July 16 calls (PBR240719C00016000, $0.05, unchanged)
Entry Price: $0.25 (5/29/2024)
Exit Target: $0.75
Return: -88%
Stop Target: None
Action: Key resistance at $14.50 was tripped but held with the high at $14.54. Support is at $14.25-$14.
