MomentumOptions.com Pre-Market Update for 10/14/2024
Financial Earnings Fuel Fresh Highs
8:00am (EST)
Video
https://go.screenpal.com/watch/cZ62ntVWxlC
Commentary
Wall Street showed ongoing strength to close out the week with Friday’s gains being fueled by solid earnings from the Financial sector. The news helped the bulls extended their weekly win streak to five with another round of fresh highs for the broader market and the blue-chips.
The Nasdaq made a trip to 18,375 while finishing at 18,342 (+0.3%) . Key resistance at 18,300 was cleared and held. Continued closes above this level and the September 26th peak at 18,327 keeps strength to 18,450-18,600 in play with the July 11th all-time top at 18,671. Support is at 18,150-18,000.
The S&P 500 closed at 5,815 (+0.6%) after tagging a record high of 5,822. Undefined and lower resistance at 5,800-5,850 was cleared and held. A move above the latter would suggest strength towards 5,900-5,950. Support is at 5,750-5,700.
The Dow traded up to an all-time peak of 42,899 before ending at 42,863 (+1%). New and lower resistance at 42,750-43,000 was cleared and held. A pop above the latter would imply further upside to 43,250-43,500. Rising support is at 42,500-42,250.
Volatility Index
The Volatility S&P 500 Index (VIX) tested a low of 20.14 with upper support at 20.50-20 getting tripped and failing to hold. A close below the latter would signal weakness to 19-18.50 and the 50-day moving average. Resistance remains at 22-24.
Monday’s earnings announcements:
Before the open: None
After the close: None
Economic News
None – Bond Market Closed
Market Thoughts
The Nasdaq is less than 2% from setting fresh record highs and we mentioned last Thursday to watch the intraday peak at 18,327 from September 26th. Friday’s close above this area was bullish but 18,500 is more important. This level represents the July 16th close at 18,509 before a 2.8% pounding the following session.
A revised uptrend channel off the August 5th low for the Nasdaq shows the potential for a run towards 19,000. While this may seem lofty, on February 23rd with the Nasdaq closing at 15,996, we forecasted Nasdaq 20,000 which represented another 25% upside at the time.
A drop below 18,000 on the Nasdaq in the coming weeks would be a slightly bearish signal with wiggle room down to 17,750. The 50-day moving average near crucial support at 17,500 is starting to curl back higher so this is also a bullish signal.
The 5,700 level on the S&P has basically been holding since September 19th, or for 17 sessions, and confirmed the triple-top breakout. More importantly, a revised uptrend channel also shows 5,700 as crucial support and the bottom of the channel off the August 5th low. Obviously, a close below 5,700 would be a warning sign of a possible near-term top for the index.
As for near-term upside, the channel is showing 5,900 and a close above this level that would automatically get 6,000 in focus as traders like nice, round numbers.
The Dow fell out of its uptrend channel on Monday but regained traction by Wednesday’s close. The current trajectory is showing momentum towards 43,750 and is just 2% away. As for support, the 42,000 level has also been holding since September 19th with wiggle room down to 41,500.
Our February 23rd our targets for the Dow and S&P were at 50,000 and 6,500, respectively, after the indexes closed at 39,131 and 5,088.
Looking at the small-caps, the Russell closed at 2,234 and back above the 2,200 level after soaring 2.1% on Friday. The index tested a low of 2,170 last Thursday after we highlighted the action between 2,175-2,225 over the previous 12 sessions.
Our possible breakout target at 2,260 is back in focus for the small-caps and resistance we have highlighted from July and September. The July 31st peak is just south of 2,300 with the all-time high at 2,444. In February, we listed a Price Target of 2,500 for the Russell, this year, or next.
As a reminder, a close back below 2,175 on the Russell would be a bearish setup with retest potential down to 2,135. This level also represents the exact breakouts from mid-July, mid-August, and mid-September.
The Volatility Index (VIX) spiked 18% on Monday after closing at 22.64 with the intraday high reaching 23.03. Tuesday’s peak reached 23.14 with Friday;s fade keeping the index between 20-24.
As a reminder, closes below 20-19 and the 50-day moving average are bullish for the market. Closes above 24 would be a bearish development.
The third-quarter earnings season got off to a good start and we will hear more from the Financial sector throughout this week. One of our favorite companies to do credit spreads on, Netflix (NFLX), will report numbers after the close on Thursday and will likely have a big impact on Friday’s action.
Shares of Netflix traded to an all-time high of $736 on Friday and could move $75, or 10%, based on their results. Wall Street is looking for a profit of $5.09 a share on revenue of $9.765 billion. A beat and rosy outlook could send shares north of $800 while a miss could get $650-$600 in focus.
We will be on the sidelines until after the results are released but there may be a setup on NFLX afterwards. On that note, we will likely enter fresh bearish setups if the VIX does clear 24. On closes below 19, we could add new bullish trades.
We are closing our Ford (F) trade this morning that will also snap a 23-trade winning streak.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 57-9 (86%, 27 triple-digit winners). 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.
Snap (SNAP, $11.12, up $0.47)
SNAP November 13 calls (SNAP241115C00013000, $0.70, up $0.20)
Entry Price: $0.60 (10/11/2024)
Exit Target: $1.20
Return: 17%
Stop Target: None
Action: Shares jumped 4.4% on Friday with the afternoon high hitting $11.19. Fresh and lower resistance at $11-$11.25 was cleared and held. A close above the latter would indicate upside to $11.50-$12 and levels from mid-April. Key support remains at $10.50 and a level that has basically been holding the past 13 sessions.
Newell Brands (NWL, $7.60, up $0.09)
NWL November 8 calls (NWL241115C00008000, $0.35, flat)
Entry Price: $0.40 (9/27/2024)
Exit Target: $0.80
Return: -13%
Stop Target: None
Action: Lower resistance at $7.50-$7.75 was recovered after the intraday trip to $7.62. Closes above $7.75-$8 would suggest a bullish breakout of a descending triangle. Support is at $7.25-$7 and the 50-day moving average.
Ford Motor (F, $10.72, up $0.04)
F October 10 puts (F241018P00010000, $0.05, down $0.01)
Entry Price: $0.20 (9/6/2024)
Exit Target: $0.60
Return: -75%
Stop Target: None
Action: Close the trade this morning to save the remaining premium. We could reenter a new position in F puts when shares fall back below $10.50.
Goodyear Tire & Rubber (GT, $8.58, down $0.07)
GT January 10 calls (GT250117C00010000, $0.55, flat)
Entry Price: $0.60 (8/29/2024)
Exit Target: $1.20
Return: -8%
Stop Target: None
Action: Lower resistance at $8.75-$9 was topped but held with the first half high at $8.90. Continued closes above the latter could lead a short-covering rally to $10-$10.50. Support is at $8.25-$8.
