MomentumOptions.com Pre-Market Update for 5/24/2019
Bears Push Lower Lows/ Profit Alert (T)
8:00am (EST)
The market showed continued weakness on Thursday despite signs the job market remains strong as rhetoric on both sides of the China/ U.S. trade fight heated up and remained the focal point. Treasury Secretary Mnuchin said that proposed tariffs on a further $300 billion worth of Chinese imports could be a month away once the impact on U.S. consumers had been studied.
Meanwhile, China’s Commerce Ministry reportedly said that the U.S. needs to correct its wrong actions if it wants to continue negotiations. Volatility jumped 14% while holder prior resistance levels from earlier this month.
The Russell 2000 tanked 2% after tapping an afternoon low of 1,593. Major upper support from February, March and earlier this month at 1,500-1,485 was breached and failed to hold with risk towards 1,475-1,460 on a close below the latter.
The Nasdaq plummeted 1.6% following the intraday backtest to 7,585. Prior support from March and earlier this month at 7,600 was breached but held with a close below the latter opening up risk towards 7,550-7,500 and the 200-day moving average.
The S&P 500 sank 1.2% with the late session low tapping 2,805. Prior and major support from last week and late March at 2,800 held with a close below below this level getting 2,775-2,750 and the 200-day moving average back in play.
The Dow also dropped 1.1%, after trading to a midday low of 25,328. Prior and upper support from late March at 25,500-25,250 was breached and failed to hold with a close below the latter and the 200-day moving average being an ongoing bearish development.
Utilities and Real Estate were the only sectors that showed strength after rising 0.9% and 0.5%, respectively.
Energy was the weakest sector for the 2nd-straight session after stumbling 3.4%. Technology tumbled 1.7% while Financials, Industrials and Materials dropped 1.5%.
The S&P 500 Volatility Index ($VIX) stayed elevated throughout the session after opening at 15.93 while tapping an intraday peak of 18.05. Prior and upper resistance at 17.50-18 was breached but held on the close just above the 200-day moving average. A close above the latter opens up risk towards 19.50-20.
Fresh support is at 17-16.50 with a move back below 15-14.50 and the 50-day moving average signaling some relief from the current market selling pressure.
The Invesco QQQ Trust (QQQ) fell for the 4th time in 5 sessions following the intraday pullback to $177.14. Near-term and upper support from late March at $177.50-$177 was breached but held. A close below the latter would be a continuing bearish signal with additional weakness towards $174-$173.50 and the 200-day moving average.
Current and lowered resistance is at $178.50-$179. A close back above the $180 level would be a more bullish signal near-term selling pressure has abated.
RSI is in a downtrend with support at 35-30 and the latter representing the month low. A move below 30 would signal additional weakness towards 25 and the December low while also signaling oversold levels. Resistance is at 40.
The Real Estate Select Sector Spider (XLRE) was up for the 3rd-straight session following the 2nd half run to $36.74. Prior and lower resistance from mid-Month at $36.50-$36.75 was cleared and held. Continued closes above the latter could lead towards a run to $37-$37.25 with the current and 52-week peak from last week at $36.84.
Rising support is at $36.50-$36.25. A close back below $36 and the 50-day moving average would be a slightly bearish development and signal a possible near-term top.
RSI is in an uptrend with resistance at 60. A move above this level would signal additional strength towards 65-70 and mid-April highs. Support is at 55-50 with a close below the latter being a bearish development for additional weakness.
Momentum Options Play List
Closed Momentum Options Trades for 2019: 19-8 (70%). 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 I list one. I will send out a “Profit Alert” or “NewTrade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the Daily updates.
AT&T (T, $32.14, down $0.14)
T July 32 calls (T190719C00032000, $0.90, down $0.10)
Entry Price: $0.47 (5/15/2019)
Exit Target: $1.75
Return: 106%
Stop Target: 95 cents (Stop Limit)
Action: The Stop Limit at 95 cents tripped on yesterday’s pullback to $31.93 ahead of the closing bell. If shares can hold $32 today, we may get back into a fresh bullish position next week.
Cypress Semiconductor (CY, $15.50, up $0.09)
CY September 17 calls (CY190920C00017000, $0.60, flat)
Entry Price: $0.75 (5/16/2019)
Exit Target: $1.50
Return: -20%
Stop Target: None
Action: Shares reached a peak of $15.56 with lower resistance at $15.50-$15.75 holding into the close. Support is at $15.25-$15.
Marvell Technology (MRVL, $22.12, down $0.48)
MRVL June 25 calls (MRVL190621C00025000, $0.25, down $0.10)
Entry Price: $0.47 (5/16/2019)
Exit Target: $1.00
Return: -56%
Stop Target: None
Action: Shares traded to a low of $21.77 with lower support at $22.25-$22 getting breached but holding. Resistance is at $22.50-$22.75 and the 50-day moving average.