MomentumOptions.com Pre-Market Update for 5/8/2023
Apple (AAPL) Saves the Day
8:00am (EST)
Commentary
Wall Street snapped a four-session slide as the major indexes closed in positive territory on Friday while wrapping up a bearish week. Apple (AAPL) was the tide that that lifted all boats after the company reported earnings that topped forecasts by nine cents along with higher revenue.
The rebound averted a continued selloff with the bulls snapping a four-session slide after holding key support levels. The gains weren’t enough to erase a negative week for the overall market but they did help Tech flip the script as it eked out a small win.
The Nasdaq went out at 12,235 (+2.3%) after hitting a high of 12,264. Key resistance at 12,250 was topped but held. Continued closes above this level would indicate a possible breakout towards 12,350-12,500 and levels from last August. Support is at 12,000-11,850 and the 50-day moving average.
The S&P 500 closed at 4,136 (+1.9%) with the high at 4,147. Lower resistance at 4,150-4,200 was challenged and held. A close above the latter and the February peak at 4,195 would indicate a breakout towards 4,250-4,300. Support is at 4,100-4,050 and the 50-day moving average.
The Dow tested an intraday high of 33,748 while ending at 33,674 (+1.7%). New and lower resistance at 33,500-33,750 was cleared and held. A pop above the latter would suggest a retest to 34,000-34,250. Support is at 33,250-33,000 and the 50-day moving average.
Volatility Index
The Volatility Index (VIX) fell for the first time in five sessions after testing an intraday low of 16.69. Upper support at 17.50-17 was breached and held. A close below the latter would likely signal a return trip towards 16-15.50. Lowered resistance is at 19.50-20 and the 50-day moving average.
Monday’s earnings announcements:
Before the open: BioNTech (BNTX), DISH Network (DISH), Freshpet (FRPT), Lumber Liquidators (LL), Six Flags (SIX), Tyson Foods (TSN), Viatris (VTRS)
After the close: 3D Systems (DDD), Devon Energy (DVN), Fabrinet (FN), Kforce (KFRC), Lucid Group (LCID), McKesson (MCK), PayPal (PYPL), Skyworks Solutions (SWKS), Trex (TREX), Veeco Instruments (VECO), Western Digital (WDC)
Economic News
Wholesale Inventories – 10:00am
Market Thoughts
For the week, the Dow was down 1.2%; the S&P fell 0.8%; and the Nasdaq edged up 0.1%. As far as sector action, Technology showed the most strength with a gain of 0.3% for the week while Energy paced the laggards after tanking 5.8%.
Although the bears got the overall weekly win, the rebound on Friday kept the major indexes in an overall trading range as both key support and resistance levels held. Although some were stretched, the flat action was somewhat of a surprise as last week’s earnings and Fed news typically helps or hinders a bullish or bearish trend.
On Monday, the Dow stalled at 34,250; the S&P failed 4,200; and the Nasdaq fell shy of clearing key resistance from February at 12,250. On Thursday, the Dow held 33,000; the S&P held 4,050; and the Nasdaq was stretched below 12,000 on the close at 11,966.
We have talked about more serious levels of support throughout April at: Dow 32,500; S&P 4,000; and Nasdaq 11,800. This still remains the case before we would get aggressively short. In the meantime, we still remain cautiously bullish for a run towards the prior February and December peaks for the major indexes.
The close above 20 at 20.09 on Thursday for the VIX was a frustrating sign for the bears as they were unable to hold this level on Friday. Although there was stretch to 22.50-23 and the 200-day moving average, the close back below 17.50 was a slightly bullish signal heading into this week.
RSI (relative strength index) levels for the major indexes are in the 50’s and are back in an uptrend after falling below 50 on Thursday. The prior Friday (and last Monday) highs topped 60 when the major indexes were pushing key resistance levels.
Continued RSI closes above 60 this week and a run to 70 would confirm a possible breakout on the Nasdaq and another push towards key resistance levels for the Dow and the S&P. A return to weakness and closes back below 50 would be frustrating for the bulls and likely suggest another choppy week.
We closed out another winning trade last week with the Track Record rising to 14-4 for a 78% win rate. There are several setups we are watching so stay locked-and-loaded for a possible New Trade as soon as this morning.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 14-4 (78%). 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 “New Trade” if I 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.
No current trades.