MomentumOptions.com Pre-Market Update for 7/18/2024
Volatility at Key Resistance
8:00am (EST)
Commentary
Wall Street was mostly lower on Wednesday following news of the potential for tighter restrictions on exports of semiconductor technology to China. Tech and the broader market fell while the blue-chips showed continued strength after rising for the sixth-straight session.
The Nasdaq ended at 17,996 (-2.8%) after kissing a low of 17,972. Key support at 18,000 failed to hold. Continued closes below this level would imply risk to 17,900-17,750. Resistance is at 18,100-18,250.
The S&P 500 tagged a low of 5,584 before settling at 5,588 (-1.4%). New and upper support at 5,600-5,550 was clipped and failed to hold. A drop below the latter would suggest a further fade to 5,500-5,450. Resistance is at 5,650-5,700 with Tuesday’s all-time intraday top at 5,669.
The Dow closed at 41,198 (+0.6%) after trading to an all-time high of 41,221. Fresh and lower resistance at 41,000-41,250 was cleared and held. A close above the latter would suggest momentum towards 41,500-41,750. Rising support is at 40,750-40,500.
Volatility Index
The Volatility Index (VIX) reached a peak of 14.88 with late May and lower resistance at 14.50-15 and the 200-day moving average getting cleared and holding. Continued closes above the latter would signal upside to 16-16.50. New support is at 14-13.50.
Thursday’s earnings announcements:
Market Thoughts
The main technical indicator we said to watch for going into last Thursday’s market opening were the RSI (relative strength index) levels for the Nasdaq and S&P. Both indexes backed off the 80 area that same day after we warned of extremely overbought conditions.
The RSI levels for the Nasdaq and S&P closed just above the 50 and 60 levels, respectively, with the former considered a neutral reading. However, both are in nasty downtrends and is hinting at further weakness.
On the other hand, the Dow’s RSI finished above 80 and is at last December levels. It is important to note the index stayed overbought the entire month and why we have said the market could stay elevated throughout the summer.
The Nasdaq and the S&P stayed overbought from mid-June until last week so we will have to see if the Dow does the same. The one problem might be the Russell as they also pulled back from extremely overbought levels on Wednesday after RSI pushed 80.
We said it might be possible the Dow and the Russell trade in tandem higher while the Nasdaq and the S&P pulled back. That happened from Thursday until yesterday but continued weakness in the small-caps and the other indexes will eventually weigh on the Dow.
The other important technical development was the action in the VIX as we warned a pop above 13.50 would be an early warning signal for a test towards 15. Remember, selling pressure can come quickly and continued closes above 15 would be a near-term bearish signal for the market.
We said there would be incredible trading opportunities this month so continue to stay locked-and-loaded as we expect to remain busy. On that note, we did close our 20th triple-digit winner yesterday so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 41-9 (82%). 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.
AT&T (T, $19.16, up $0.31)
T September 20 calls (T240920C00020000, $0.40, up $0.14)
Entry Price: $0.30 (7/17/2024)
Exit Target: $0.60
Return: 33%
Stop Target: None
Action: Wednesday 52-week peak touched $19.19 with lower resistance at $19-$19.25 getting cleared and holding. Support is at $18.75-$18.50.
Rocket Companies (RKT, $15.10, down $0.44)
RKT August 15 calls (RKT240816C00015000, $1.10, down $0.35)
Entry Price: $0.55 (7/11/2024)
Exit Target: $1.10, raise to $2.20
Return: 100%
Stop Target: $1.10 (Stop Limit)
Action: The Stop Limit at $1.10 tripped on the stock’s dip below $15.
We will most certainly be back in RKT at some point over the near-term.
ProShares Bitcoin Strategy ETF (BITO, $22.62, down $0.23)
BITO August 25 calls (BITO240816C00025000, $0.60, down $0.05)
Entry Price: $0.65 (6/25/2024)
Exit Target: $1.30
Return: -8%
Stop Target: None
Action: BITO made a nice breakout on Monday after surging nearly 10%. The 50-day moving average is in play with upper support at $22.50-$22 getting tripped but holding. Key resistance is at $23. Continued closes above this level would be an ongoing bullish signal.
