MomentumOptions.com Pre-Market Update for 9/26/2024
Fresh Support Levels in Focus
8:00am (EST)
Commentary
The market was mostly lower on Wednesday with Tech eking out a small gain to buck the trend. A dip in new home sales weighed on sentiment with the bulls trying to build new bases of support following the ongoing run to record highs.
The Nasdaq closed at 18,082 (+0.04) after testing a high of 18,155. Mid-July and lower resistance at 18,150-18,300 was topped but held. A close above the latter would indicate strength to 18,450-18,600. Support is at 18,000-17,850.
The S&P 500 tapped a low of 5,712 while going out at 5,722 (-0.2%). New and key support at 5,700 held. A close below this level would suggest a retest towards 5,650-5,600. Undefined resistance remains at 5,750-5,800 with yesterday’s all-time peak at 5,741.
The Dow clipped an all-time and intraday peak of 42,299 before going out lower at 41,914 (-0.7%). Current and lower resistance at 42,250-42,500 was cleared but held. A close above the latter would imply upside towards 42,750-43,000. Support remains at 41,750-41,500.
Volatility Index
The Volatility Index (VIX) traded down to 15.17 while ending at 15.41. Key support at 15 held. A drop below this level and the 200-day moving average would signal weakness to 14-13.50. Resistance remains at 17.50-18 and the 50-day moving average.
Thursday’s earnings announcements:
Before the open: Accenture (ACN), CarMax (KMX), Jabil (JBL)
After the close: Costco Wholesale (COST), Scholastic (SCHL), Vail Resorts (MTN)
Economic news:
Initial Jobless Claims – 8:30am
Durable Goods Orders – 8:30am
GDP – 8:30am
Market Thoughts
For the three days this week, the Dow is down 149; the S&P is up 20; the Nasdaq is higher by 134; and the Russell is off 30 points after falling 1.2% yesterday.
So let’s start with the small-caps first as they closed back below 2,200. This was the first close under this level in seven trading sessions, or since September 16th. In addition to opening up another trip towards 2,175, the 50-day moving average (at 2,167) is also showing signs of rolling over. A near-term top would be likely be confirmed on a close back below these levels with risk towards 2,135.
The Nasdaq cleared 18,000 on Monday and has been holding this level the past two sessions. Continued keeps above 18k keeps the July 17th high at 18,223 in focus. If the bulls take this number out, a run to the all-time peak at 18,671 could come into play next month.
The S&P has closed north of 5,700 over the past five sessions while the Dow closed below 42,000 for the first time in the same time period. We mentioned on Monday another 3%-5% upside could led to 5,850-6,000 for the S&P and 43,500-44,250 for the Dow.
The last time the VIX closed below 15 was on August 19th at 14.65 with the August 30th close right on this level. The last time the index closed below 13.50 was July 16th. These are the next two crucial levels of support the bulls likely need to crack to keep higher market highs in play.
As a reminder, key support levels going forward are at Nasdaq 17,500; S&P 5,500; Dow 40,000; and Russell 2,175.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 54-9 (86%). 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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Snap (SNAP, $10.59, up $0.02)
SNAP October 11 calls (SNAP241018C00011000, $0.40, flat)
Entry Price: $0.30 (9/19/2024)
Exit Target: $0.60
Return: 33%
Stop Target: 31 cents (Stop Limit)
SNAP January 13 calls (SNAP250117C00013000, $0.75, flat)
Entry Price: $0.60 (9/19/2024)
Exit Target: $1.20
Return: 25%
Stop Target: 62 cents (Stop Limit)
Action: Set Stop Limits at 31 cents and 62 cents, respectively.
Shares traded to a high of $10.80 with fresh and lower resistance at $10.75-$11 getting cleared but holding. Support is at $10.50-$10.25 and the 50-day moving average.
The takeout of the August 2nd high at $10.42 and continued closes above $10.50 and the 50-day moving average are bullish developments. Our near-term target is at $11.00-$11.50 with a possible short-covering rally up to $12.50.
Cisco Systems (CSCO, $52.65, up $0.13)
CSCO October 52.50 calls (CSCO241018C00052500, $0.80, up $0.05)
Entry Price: $0.40 (9/17/2024)
Exit Target: $1.20 (closed half at $0.80 on 9/20/24)
Return: 100%
Stop Target: 40 cents, raise to 60 cents (Stop Limit)
Action: Raise the Stop Limit at 40 cents to 60 cents on the remaining half position. RSI is above 71 and typically indicates overbought levels.
Yesterday’s peak touched $52.73 with last November and lower resistance at $52.75-$53.25 getting challenged and holding. The January 26th high at $52.62 was also cleared and held. Continued close above these levels would be a bullish setup for strength towards $53.50-$54. Support is at $52-$51.50.
Ford (F, $10.42, down $0.45)
F October 10 puts (F241018P00010000, $0.14, up $0.08)
Entry Price: $0.20 (9/6/2024)
Exit Target: $0.60
Return: -30%
Stop Target: None
Action: Prior and upper support at $10.50-$10.25 failed to hold with the at $10.32. Lowered resistance is at $10.75-$11 and the 50-day moving average.
Goodyear Tire & Rubber (GT, $8.02, down $0.20)
GT January 10 calls (GT250117C00010000, $0.35, down $0.05)
Entry Price: $0.60 (8/29/2024)
Exit Target: $1.20
Return: -42%
Stop Target: None
Action: Key support at $8 held with the low hitting $8.01 yesterday. Resistance is at $8.25-$8.50.
