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MomentumOptions.com Pre-Market Update for 10/31/2024

Nasdaq Showing Signs of a Double-Top Breakout

8:00am (EST)

Overview

The stock market pulled back on Wednesday after economic news showed GDP (gross domestic product) slowed last quarter to 2.8% on an annualized basis, and below expectations. Tech earnings after the close and into Thursday also played a role as investors took a wait-and-see approach.

The Nasdaq closed at 18,607 (-0.6%) despite tapping a record high of 18,785. Fresh and lower resistance at 18,750-18,900 was cleared but held for the second-straight day. The fade to 18,598 afterwards breached but held key support is at 18,600.

The S&P 500 reached a peak of 5,850 while settling slightly lower at 5,813 (-0.3%). Lower resistance at 5,850-5,900 was kissed but held. A close above the latter and the October 17th all-time high at 5,878 would suggest renewed strength to 5,950-6,000. Current support is at 5,800-5,750.

The Dow went out at 42,141 (-0.2%) and on the session low. Key support at 42,000 was approached and held. A close below this level would suggest weakness towards 41,750-41,500. Resistance remains at 42,500-42,750.

Thursday’s earnings announcements:

Before the open: Mastercard (MA), Merck (MRK), Uber (UBER)

After the close: Apple (AAPL), Amazon (AMZN), Intel (INTC)

Economic news:

Initial Jobless Claims – 8:30am

Technical Outlook and Market Thoughts

The Russell made a higher weekly high at 2,260 with key resistance holding on a dime. More important resistance is at 2,290 with the October 16th top at 2,289. The July 31st peak is at 2,299.9984. Closes above these levels could lead to a breakout rally up to 2,400-2,450 with the all-time record high at 2,444.

Key support is at 2,225 followed by 2,200-2,175 and the 50-day moving average. The uptrend line off the August 5th and September 10th low we talked coming into the week has moved up to 2,225.

The Dow continues to trade outside its uptrend channel with a close above 42,750-43,000 being a slightly renewed bullish signal.

We continue to highlight key support at 42,000 and a level that has been holding since mid-September. There is backup help at 41,500 on a move below this level and the 50-day moving average (at 41,893). If the 41,500 levels fail to hold, it would suggest a near-term peak for the blue-chips.

The Nasdaq is showing signs of another breakout in an uptrend channel after closing above 18,600 for the second-straight session. We have said continued closes above this level could lead to a run up to 18,750-19,000.

Key support remains at 18,400-18,350 and the bottom of the uptrend channel.

The S&P has been in a four-session range and is maintaining its current uptrend channel. A move above 5,875 and this month’s all-time intraday peak at 5,878 could indicate momentum to 5,900-6,000.

A drop below 5,750 would be a slightly bearish development with wiggle room down to 5,700 and a level that has been holding since September 19th.

The Volatility Index (VIX) continues to hover around 20 after trading up to 20.44. Continued closes above this level keeps 22-24 in play.

Support is 19-18.50 and the 50-day moving average. A close above 24 or move below 17.50 would confirm a near-term market top, or a continued bull market run.

We talked about Apple, Amazon, and Intel announcing numbers after the closing bell but there were some Tech names that could weigh on trading this morning.

Meta (META) shares were down 3% in extended trading on Wednesday despite topping estimates. Microsoft (MSFT) was down nearly 4% after beating on both the top and bottom lines.

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Closed Momentum Options Trades for 2024: 59-10 (86%, 28 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.

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ProShares Bitcoin Strategy ETF (BITO, $20.46, down $0.18)

BITO January 23 calls (BITO250117C00023000, $0.75, down $0.15)

Entry Price: $0.75 (10/29/2024)
Exit Target: $1.50
Return: 0%
Stop Target: None

Action: We wanted to get into this trade on Tuesday following the pop past $20 and on the move above the downtrend channel mid-month. The high hit $20.98. Shares failed to make a higher high on Wednesday to keep key resistance at $21. A close above this level and the August 2nd top at $21.37 would confirm a possible breakout forthcoming up to $23-$23.50 and the 200-day moving average.

Support is at $20-$19.50 followed by $19-$18.50 and the 50-day moving average which has leveled out this month. This is indicating a near-term bottom with the trade having nearly three months before expiration.

Snap (SNAP, $12.62, up $1.73)

SNAP November 13 calls (SNAP241115C00013000, $0.60, down $0.05)

Entry Price: $0.60 (10/11/2024)
Exit Target: $1.20
Return: 0%
Stop Target: None

Action: Shares were up 10% in after-hours and north of $12 during extended trading on Tuesday after earnings came in better-than-expected. The company still reported a loss but four cents better than forecasts along with a $14 million revenue beat.

Wednesday’s peak at $12.83 reached our higher target zone of $12.25-$13. We said there was a possibility of $13.75 coming into play and we will need follow thru this week to keep this trade open. If shares fall below $11.25 over the next week or two, we will likely exit the position.

Newell Brands (NWL, $8.97, down $0.02)

NWL November 8 calls (NWL241115C00008000, $1.10, unchanged)

Entry Price: $0.40 (9/27/2024)
Exit Target: $2.00 (closed half at $1.65)
Return: 244%
Stop Target: 95 cents (Stop Limit)

Action: We have a Stop Limit at 95 cents on the remaining half. If triggered, the average closing price will be $1.30 for an overall return of 225%.

The second-straight close below $9 kept support at $8.75-$8.50 in play with yesterday’s low at $8.80. Resistance is at $9.25-$9.50.

Goodyear Tire & Rubber (GT, $8.16, down $0.27)

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: Upper support at $8.25-$8 and the 50-day moving average failed to hold on the close on the session low. Resistance is at $8.50-$8.75.

Continued closes above $9 could lead a short-covering rally towards $10.50-$11.50 with earnings due out after Monday’s close. The three-month trading range between $7.75-$9 is suggesting a massive move based on the company’s results.

An earnings miss could send shares tumbling towards $7.50-$7.25 and possible fresh 52-week lows.