MomentumOptions.com Pre-Market Update for 12/30/2024
Bulls Push Prior Resistance
8:00am (EST)
Technical Outlook (video)
https://go.screenpal.com/watch/cZlveHneop2
The stock market pulled back on Friday but the losses didn’t prevent the bulls from having a positive week. Some of the nervousness was attributed to the rise in the 10-year Treasury yield which is pushing 4.6% and a multi-month high.
The Nasdaq traded down to 19,553 before settling at 19,722 (-1.5%). Upper support at 19,650-19,500 was tripped but held. Key resistance is at 20,000.
The S&P 500 closed at 5,970 (-1.1%) with the low kissing 5,932. Key support at 6,000 failed to hold. Resistance is at 6,050-6,100.
The Dow bottomed at 42,761 while finishing at 42,992 (-0.8%). Fresh support at 43,000 failed to hold. Key resistance is at 43,250.
Earnings and Economic News
Before the open: None
After the close: None
Economic News
Chicago PMI – 9:45am
Pending Home Sales Index – 10:00am
Technical Outlook and Market Thoughts
Every year the talking heads chime-in about a possible Santa Claus rally BEFORE Christmas but in reality the time frame involves the last five trading days in December and the first two trading days in January. For 2024, that time period started on Christmas Eve and the shortened session provided a much need relief rally following the prior week pullback.
Last Tuesday’s gains averaged around 1% and helped pushed the Dow and S&P back near their current uptrend channels. The Nasdaq briefly fell out of its uptrend channel after the Fed news the prior week but continues to maintain its bullish thesis.
The follow through on Thursday to higher highs looked bullish but volatility ticked higher on the session and was likely a prelude to Friday’s action. The bounce off the intraday lows helped in keeping the technical outlook slightly bullish but it remains shaky.
The Russell continues to be the wild card as the index typically leads any December and into January gains versus the other major indexes. Key support from October at 2,225 was tripped but held on Monday’s fade to 2,219 with Friday’s low at 2,227. The next waves of support are 2,175-2,135 with the 200-day moving average at 2,159 sandwiched in between.
We mentioned a recovery of the 2,300 level is needed to regain a bullish thesis with a close above 2,325 and the 50-day moving average likely confirming a near-term bottom. Last Thursday’s peak was at 2,281.
The bottom of the uptrend channel for the Nasdaq is at 19,500 with wiggle room down to 19,250 and the 50-day moving average (currently at 19,160). There is also some support at 19,000 with a close below this level confirming a near-term top and downside pressure towards 18,600.
We said last Monday morning continued closes back above 19,750 would be bullish and this level was cleared and held to start the week. Friday’s close was just below this level so let’s consider it “stretch”. Tuesday’s and Thursday’s closes were just north of 20,000. The all-time high from December 16th is at 20,204.
The S&P tested the middle of its prior trading range on Thursday trip to 6,049 before Friday’s backtest to the the 50-day moving average. The December 6th all-time high reached 6,099.97 with multiple closes above this level getting 6,350 in play on a readjusted uptrend channel.
Friday’s low kissed 5,932 with wiggle room down to 5,850. A close below this level could lead to a swift selloff towards 5,700.
The Dow cleared and held key resistance at 43,250 on Tuesday with light follow thru on Thursday. We mentioned coming into last week a recovery of the 44,000 level would alleviate some selling pressure. Same deal again this week.
Key support remains at 42,500 and the bottom of a readjusted uptrend channel with wiggle room down to 42,000. A move below this level would imply risk down to 41,000-40,750 and the 200-day moving average.
The Volatility Index (VIX) breached both its 200-day and 50-day moving averages with Friday’s peak at 18.45. Key resistance at 17.50 was triggered but held. A close back above 20 would be a slightly bearish development. Key support is at 15.
Going forward, we clearly have key support levels to watch going into 2025 for the major indexes. The bulls have had an incredible year with the major indexes pushing high double-digit gains and something we will talk about next week.
We will monitor the Santa Clause “time period” as it can typically shape how January might play out. The Nasdaq closed at 19,764 last Monday; the S&P at 5,974; the Dow at 42,906; and the Russell at 2,237. The former two indexes are down 42 and four points while the latter two are up 86 and seven points.
We mentioned fourth-quarter and yearend earning results will also have a major impact on market direction from mid-January and into February. The financial sector will get the action started on Thursday morning, January 16th.
The market will be closed on Wednesday and will reopen on Thursday. We won’t be publishing on Thursday due to how the holidays fell this year but we could have new alerts this week, depending on the action.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 76-12 (86%, 37 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.
Alerts Video:
https://go.screenpal.com/watch/cZlvflneoCp
Cisco Systems (CSCO, $59.61, down $0.37)
CSCO January 60 calls (CSCO250117C00060000, $0.65, down $0.15)
Entry Price: $0.60 (12/24/2024)
Exit Target: $1.20
Return: 8%
Stop Target: None
Action: Shares cleared key resistance at $60 for the second-straight session before the lower close. The recent 52-week peak from earlier this month is at $60.23 with breakout potential towards $64-$64.50 on closes above $60. The December 27th, 2021 intraday high is at $64.29 with the close at $63.37. Near-term support is at $59-$58.50.
If shares fall below $58 before Tuesday’s close, exit the trade for a scratch. We don’t want to have any negative trades going into the New Year.
SoFi Technology (SOFI, $15.98, down $0.62)
SOFI January 17 calls (SOFI250117C00017000, $0.65, down $0.20)
Entry Price: $0.50 (12/24/2024)
Exit Target: $1.00
Return: 30%
Stop Target: 55 cents (Stop Limit)
Action: Set a Stop Limit at 55 cents to avoid a loss in case shares fade from here into the New Year.
Key resistance at $16.50 was cleared and held on Thursday before the fade to $15.78 on Friday. The bottom of the five-week trading range and current uptrend channel is at $15. A close below this level gets $14 and the 50-day moving average in play.
Teva Pharmaceuticals (TEVA, $22.77, up $0.15)
TEVA March 24 calls (TEVA250321C00024000, $1.00, up $0.05)
Entry Price: $0.50 (12/17/2024)
Exit Target: $1.00
Return: 100%
Stop Target: 60 cents (Stop Limit)
Action: Set a Stop Limit at 60 cents to start protecting profit and to avoid a loss.
Friday’s fresh 52-week peak reached $22.80 with multi-year and lower resistance at $22.75-$23 getting cleared and holding. Rising support is at $21.25-$21.
We had a 2024 Price Target of $20 for the stock back in early January when shares were near $11. Our new three-month target is at $24-$25 and resistance from June 2018. We have a 2025 Price Target of $35 and resistance from February 2017.
Our first covered call alert came when shares were at $9.80. TEVA has been one of our favorite stocks this year as we are 9-0 with directional alerts, and 5-0 on covered calls.
Fastly (FSLY, $9.60, down $0.53)
FSLY March 12.50 calls (FSLY250321C00012500, $0.60, down $0.20)
Entry Price: $1.15 (12/6/2024)
Exit Target: $2.30
Return: -48%
Stop Target: None
Action: Key support at $9.50 held on Friday’s dip to $9.45. Resistance is at $10-$10.25. A close above $11 would be a more bullish signal for another possible retest to $12-$12.50.
With that said, we are going to exit this morning after we were stopped out of the March 10 calls on Friday for triple-digits. We will keep shares on our Watch List for another reentry point.
AT&T (T, $22.86, down $0.10)
T January 24 calls (T250117C00024000, $0.10, unchanged)
Entry Price: $0.40 (11/25/2024)
Exit Target: $0.80
Return: -75%
Stop Target: None
Action: Close the trade to save the remaining premium. Earnings aren’t due out until January 27th and after these calls expire.
Pfizer (PFE, $26.62, up $0.06)
PFE January 22.50 puts (PFE250117P00022500, $0.05, down $0.02)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -80%
Stop Target: None
PFE February 21 puts (PFE250221P00021000, $0.10, down $0.03)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -60%
Stop Target: None
Action: Close the trades to save the remaining premiums.
