MomentumOptions.com Pre-Market Update for 7/27/2023
Fed Raises Rates, Again
8:00am (EST)
Commentary
The stock market was mixed on Wednesday after the Fed hiked interest rates by another quarter-point and Wall Street digesting another round of earnings. Fed Chairman Powell stated after the news that the central bank had not made a decision on whether to hike rates at its next meeting in September.
The Nasdaq went out at 14,127 (-0.1%) after trading to a morning low of 14,041. Current and upper support at 14,000-13,850 was challenged and held for the fifth-straight session. A fade below the latter would imply weakness to 13,750-13,600. Resistance is at 14,200-14,350 with the recent 52-week high at 14,446.
The S&P 500 finished slightly lower at 4,566 (-0.02%) despite tagging a 52-week peak of 4,582. Lower resistance at 4,575-4,625 was cleared but held. A close above the latter would indicate upside towards 4,650-4,700. Support is at 4,525-4,475.
The Dow hit a fresh 52-week high of 35,633 before ending at 35,520 (+0.2%). Lower resistance at 35,500-35,750 was cleared and held. A pop above the latter would suggest momentum towards 36,000-36,250. Support is at 35,250-35,000.
Volatility Index
The Volatility Index (VIX) remains in a 10-session trading range with the low at 13.15. Upper support at 13.25-12.75 was breached and failed to hold. A drop below the latter and the June 22nd 52-week low at 12.73 would indicate weakness to 12.25-11.75. Resistance remains at 14-14.50.
Thursday’s earnings announcements:
Before the open: Bristol-Myers Squibb (BMY), Crocs (CROX), Mastercard (MA), McDonalds (MCD), Honeywell International (HON), Royal Caribbean Cruises (RCL), Shell (SHEL),
After the close: First Solar (FSLR), Ford (F), Intel (INTC), Roku (ROKU), Texas Roadhouse (TXRH), Weyerhaeuser (WY)
Economic news:
Initial Jobless Claims – 8:30am
GDP – 8:30am
Pending Home Sales Index – 10:00am
Market Thoughts
The Dow and S&P tagged fresh 52-week peaks on Wednesday with the blue-chips extending its winning streak to 13-straight sessions. The drop in the VIX below 13.50 was also an ongoing bullish signal.
Following yesterday’s close, Meta Platforms (META) was up nearly 7% and above $319 after topping earnings forecasts. The company reported a profit of $2.98 a share versus estimates for a print of $2.89 a share.
Revenue was just a tad shy of $32 billion, and nearly $1 billion above what analysts had penciled-in. The company also gave current quarter guidance of $32.5-$34 billion versus forecasts of $31.2 billion.
The stock’s all-time peak is around $380 back in August 2021.
We highlighted some of today’s earnings but it is an extremely busy session with dozens of other high profile names reporting. This morning’s GDP and initial claims numbers could also weigh on the open and it will be interesting to see how the action unfolds throughout the day.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 17-8 (68%). 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.
Petróleo Brasileiro (PBR, $14.54, down $0.02)
PBR September 15 calls (PBR230915C00015000, $0.45, unchanged)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: 29%
Stop Target: None
Action: Lower resistance at $14.75-$15 easily held with yesterday’s high at $14.65. Support is at $14.25-$14.
Shares broke out of a downtrend channel last Friday while closing back above $14 on Monday. The technical setup could get the June 21st peak at $15 in play with the 52-week high at $16.32. We wanted to give the trade plenty of time to play out with the regular August options expiring in just over three weeks. These options have over seven weeks before expiration.
Iovance Biotherapeutics (IOVA, $7.05, down $0.04)
IOVA December 12.50 calls (IOVA231215C00012500, $0.50, down $0.05)
Entry Price: $0.80 (7/10/2023)
Exit Target: $1.60
Return: -38%
Stop Target: None
Action: Yesterday’s low kissed $6.99 with upper support at $7-$6.75 getting tripped but holding. Resistance is at $7.25-$7.50 and the 200-day moving average.
For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.