MomentumOptions.com Pre-Market Update for 8/10/2023
50-Day MA’s in Play
8:00am (EST)
Commentary
The stock market tagged another round of monthly lows on Wednesday as sentiment remained sour following Moody’s downgrade of several regional banks. The action continues to suggest a near-term market top and comes ahead of this morning’s inflation numbers.
The Nasdaq ended at 13,722 (-1.2%) with the intraday low kissing 13,698. Key support at 13,750 and the 50-day moving average failed to hold. Continued closes below these levels would imply further weakness towards 13,650-13,500. Resistance is at 13,850-14,000.
The S&P 500 traded down to 4,461 before settling at 4,467 (-0.7%). Current and upper support at 4,500-4,450 failed to hold. A drop below the latter and the 50-day moving average would indicate a further fade towards 4,400-4,350. Resistance remains at 4,550-4,600 with last month’s 52-week peak at 4,607.
The Dow closed at 35,123 (-0.5%) after bottoming at 35,058. Key support at 35,000 was challenged but held for the third time in four sessions. A close below this level would signal ongoing weakness to 34,750-34,500 and the 50-day moving average. Resistance is at 35,250-35,500 with the beginning of the month’s 52-week high at 35,679.
Volatility Index
The Volatility Index (VIX) traded up to 16.87 before going out in the red. Lower resistance at 16.50-17 was topped but held. Another move above 17.50 keeps 19.50-20 and the 200-day moving average in focus with Tuesday’s peak at 18.14. Support at 15-14.50 and the 50-day moving average.
Thursday’s earnings announcements:
Before the open: Alibaba (BABA), Dillard’s (DDS), HanesBrands (HBI), Kelly Services (KELYA), Ralph Lauren (RL), Six Flags (SIX), Utz Brands (UTZ), Yeti (YETI)
After the close: Beyond Air (XAIR), Daré Bioscience (DARE), Joint (JYNT), Pulse Biosciences (PLSE), Safeguard Scientifics (SFE), Wheaton Precious Metals (WPM)
Economic news:
Initial Jobless Claims – 8:30am
Consumer Price Index – 8:30am
Treasury Budget – 2:00pm
Market Thoughts
The market pundits and talking heads are starting to call the current pullback expected given the overall market surge this year but they didn’t do the homework to call the near-term market top like we have.
Of course, higher highs could be made again, but we have prepared for a trading range and possible pullback to the 50-day moving averages (MA) since precisely last Thursday.
The Nasdaq and the S&P both came within 43 points of cracking their 50-day MA’s on Tuesday. The S&P’s second-straight close below 4,500 was not a good look for the bulls.
Wednesday’s close below the 50-day moving average for the Nasdaq and the 13,750 level was a slightly bearish development but there is a little wiggle room before a near-term top can be banked on.
Key support at 35,000 held on the Dow with the index currently in a six-session trading range. For new subscribers, here were our thoughts on July 2nd:
“The key support levels we said to watch for last month were at: Nasdaq 13,500; S&P 4,350; and Dow 33,750. These remain areas to watch going forward. As far as possible market tops during earnings season this month and next: Dow 35,250-35,500; S&P 4,550-4,600; and Nasdaq 14,350-14,500.”
The 52-weeks highs: Dow 35,679 on August 1st; S&P 4,607 on July 27th; and Nasdaq 14,444 on July 19th.
We talked about eyeballing key support and resistance levels to see if the near-term trend would remain bullish or turn neutral to bearish. This morning’s economic news and how the major indexes close ahead of the weekend will likely give us the clues on how the rest of August unfolds.
We often say we could care less which way the market is headed but we do like to follow the trend as it makes for better setups and probability rates.
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, $13.60, up $0.11)
PBR September 15 calls (PBR230915C00015000, $0.13, unchanged)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -63%
Stop Target: None
Action: Yesterday’s top was at $13.71 with lower resistance at $13.50-$13.75 and the 50-day moving average getting cleared and holding. Support is at $13.25-$13.
Iovance Biotherapeutics (IOVA, $7.60, up $0.46)
IOVA December 12.50 calls (IOVA231215C00012500, $0.60, up $0.15)
Entry Price: $0.80 (7/10/2023)
Exit Target: $1.60
Return: -25%
Stop Target: None
Action: Shares tagged a high of $7.93 with fresh and lower resistance at $7.75-$8 and the 50-day moving average getting cleared but levels that held. Support is at $7.25-$7 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.