MomentumOptions.com Pre-Market Update for 7/15/2024
Small-Caps Finally Showing Strength
8:00am (EST)
Video:
https://go.screenpal.com/watch/cZion8VPnZZ
Commentary
The stock market continued its run to fresh 52-week and record highs on Friday as the start of the second-quarter got underway. Results were mostly positive from the Financial sector as JPMorgan (JPM) and Citigroup (C) topped forecasts while Wells Fargo (WFC) missed expectations.
The Nasdaq closed at 18,398 (+0.6%) after tagging a high of 18,556. Lower resistance at 18,500-18,650 was cleared but held. A move above the latter and Thursday’s lifetime peak at 18,671 would imply upside to 18,750-18,900. Support is at 18,250-18,100.
The S&P 500 reached a record peak of 5,655 before ending at 5,615 (+0.6%). New and lower resistance at 5,650-5,700 was topped but held. A pop above the latter would indicate a further push to 5,750-5,800. Current support is at 5,600-5,550.
The Dow finished right on 40,000 (+0.6%) after trading to an all-time high of 40,257. Fresh and lower resistance at 40,250-40,500 was cleared but held. A close above the latter would suggest strength towards 40,750-41,000. Rising support is at 39,750-39,500.
Volatility Index
The Volatility Index (VIX) settled at 12.46 with upper support at 12.50-12 and the 50-day moving average getting recovered. A close below the latter and the May 23rd 52-week low at 11.52 would signal weakness to 11-10.50. Resistance is at 13-13.50.
Monday’s earnings announcements:
Before the open: BlackRock (BLK), Goldman Sachs (GS)
After the close: CrossFirst Bankshares (CFB), FB Financial (FBK), ServisFirst Bancshares (SFBS)
Economic News
Empire State Manufacturing Survey – 8:30am
Market Thoughts
The Russell outperformed the broader market for the second-straight session after rising over 1%. Thursday’s 3.6% surge past the 2,075 level and close above 2,100 were the key to Friday’s follow thru and run to 2,163. While this was a new 52-week peak, the index remains well below its all-time high of 2,444.
The RSI (relative strength index) for the Russell closed at 71 on Friday and typically indicates overbought conditions. However, like the Nasdaq and S&P, overbought conditions can get stretched up to 80 (and beyond) with the small-caps testing 75 last December.
Having said that, the Nasdaq and the S&P both backed off the 80 area on Thursday after we warned of extremely overbought conditions. The RSI levels for both closed at 66 and 72, respectively, on Friday. The Dow’s RSI went out at 71.
Once again, as a reminder, we have said overbought levels could remain in play throughout the summer.
The top end of our near-term price targets of Nasdaq 18,750 and S&P 5,700 remain in play. We have talked about higher highs. This summer for the blue-chips if the Dow cleared and held 40,000 and for the small-caps if the Russell reclaimed 2,100.
The current uptrend channels are calling for Nasdaq 19,000 if 18,750 clears and the S&P could test 5,700-5,725 if the index makes continued closes above 5,650.
The Dow could make a run towards 40,500-41,000 with ongoing strength while the Russell could trade up to 2,150-2,200 on continued momentum.
The high on the VIX reached 13.33 last Thursday and we have been warning multiple closes above 13.50 would be an early warning signal for a test towards 15.
Since early May, the VIX has closed above 13.50 just once. This year’s peak has been at 21.36 that was tagged on April 19th and highlights how quickly selling pressure could easily come back into the market.
We continue to see incredible trading opportunities over the near-term so stay locked-and-loaded once again as we will likely have New Trades and Alerts throughout the week.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 39-9 (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.
Rocket Companies (RKT, $14.33, up $0.17)
RKT August 15 calls (RKT240816C00015000, $0.65, up $0.05)
Entry Price: $0.55 (7/11/2024)
Exit Target: $1.10
Return: 18%
Stop Target: None
Action: Prior and lower resistance from mid-June at $14.25-$14.50 was topped and held on the afternoon trip to $14.38. Support is at $14 and the 50-day moving average.
Thursday’s pop above the 50-day moving average got our attention as we are once again looking for a run to $15-$15.25 over the near-term. The June 12th peak reached $15.81. There is breakout potential towards $18 and early November 2021 resistance on continued closes above $15.75-$16.
We have closed three 100% winners trading call options in RKT this year and we are looking for this one to be the fourth. We also had another RKT call option trade that banked 30%.
Ford (F, $14.03, up $0.56)
F August 13 calls (F240816C00013000, $1.15, up $0.35)
Entry Price: $0.35 (6/28/2024)
Exit Target: $1.40 (closed half at $1.05 on 7/12)
Return: 214%
Stop Target: $0.75, raise to $1.05 (Stop Limit)
Action: Raise the Stop Limit from $0.75 to $1.05. The calls peaked at $1.32 on Friday.
Key resistance at $14 was cleared and held with Friday’s peak at $14.21. Continued closes above this level would be an ongoing bullish signal for strength towards $14.25-$14.50. Support is at $13.75-$13.50.
Shares opened at $12.56 last Monday, up two cents from the prior Friday’s close, and zoomed 12% for the week. We mentioned the April 4th high touched $13.95 and where a near-term double top could form ahead of earnings that are due out on July 24th.
RSI is pushing 80 and is indicating extremely overbought conditions. This is why we have a tight Stop heading into this morning’s open.
Bank of America (BAC, $41.74, up $0.32)
BAC August 41 calls (BAC240816C00041000, $1.60, down $0.22)
Entry Price: $0.90 (6/28/2024)
Exit Target: $2.25
Return: 67%
Stop Target: $1.50 (Stop Limit)
Action: The Stop Limit at $1.50 tripped on Friday’s fade to $41.09. With earnings on Tuesday, we can now wait to see where shares are trading after the news.
ProShares Bitcoin Strategy ETF (BITO, $20.22, up $0.13)
BITO August 25 calls (BITO240816C00025000, $0.20, unchanged)
Entry Price: $0.65 (6/25/2024)
Exit Target: $1.30
Return: -69%
Stop Target: None
Action: Friday’s high tagged $20.52 with lower resistance at $20.50-$20.75 getting cleared but holding. Support is at $20-$19.75.
Petróleo Brasileiro (PBR, $15.09, down $0.10)
PBR July 16 calls (PBR240719C00016000, $0.10, unchanged)
Entry Price: $0.25 (5/29/2024)
Exit Target: $0.75
Return: -60%
Stop Target: None
Action: Exit the trade this morning to save the remaining premium.
