MomentumOptions.com Pre-Market Update for 7/31/2023
Bulls Bounce Back/ Post Weekly Win
8:00am (EST)
Commentary
The stock market rebounded on Friday to keep the current uptrend intact and new 52-week highs in site as Wall Street prepares for the height of earnings season. The gains gave the bulls the weekly win as volatility continues to flirt with a possible fresh 52-week low.
The Nasdaq topped out at 14,344 before settling at 14,316 (+1.9%). Lower resistance at 14,200-14,350 was recovered. A move above the latter and the July 19th 52-week high at 14,446 would suggest strength to 14,500-14,650. Support is at 14,000-13,850.
The S&P 500 ended at 4,582 (+1%) with the intraday high hitting 4,590. Lower resistance at 4,550-4,600 was cleared and held. A close above the latter and last Thursday’s 52-week peak at 4,607 would imply a run towards 4,650-4,700. Support is at 4,525-4,475.
The Dow made a trip to 35,565 while finishing at 35,459 (+0.5%). Near-term and lower resistance at 35,500-35,750 was cleared but held. A push above the latter would indicate upside action towards 36,000-36,250. Support is at 35,250-35,000.
Volatility Index
The Volatility Index (VIX) had an inside session with the low at 13.27. Upper support at 13.25-12.75 was challenged and held. A fade below the latter and the June 22nd 52-week low at 12.73 would signal weakness to 12.25-11.75. Resistance is at 14.50-15 and the 50-day moving average.
Monday’s earnings announcements:
Before the open: Alexanders (ALX), CNA Financial (CNA), ImmunoGen (IMGN), Onsemi (ON), SoFi (SOFI)
After the close: Avis Budget Group (CAR), Diamondback Energy (FANG), Lattice Semiconductor (LSCC), PetMed Express (PETS), Rambus (RMBS), Sonoco (SON), Transocean (RIG), Western Digital (WDC)
Economic News
Chicago Business Barometer – 8:30am
Market Thoughts
For the week, the Dow was up 0.7%; the S&P 500 rose 1%; and the Nasdaq rallied 2%. Communications Services surged 5% for the week while Utilities lagged at 2.1%.
As for the small-caps, the Russell 2000 closed 1% higher last week but continues to fail key resistance at 2,000. Last Thursday’s top was at 1,994 and we have shown in our videos the double-top from February 2nd and 3rd at 2,007 and 2,005, respectively.
This will be the biggest storyline we will be watching this week as a breakout in the small-caps would be an ongoing bullish development. There are a number of companies that could help the other major indexes breakout to fresh 52-week highs as Apple (AAPL) and Amazon (AMZN) spotlight this week’s lineup.
Shopify (SHOP), Coinbase (COIN), Airbnb (ABNB), DraftKings (DKNG), and Yelp (YELP) are also due out and will impact a number of sectors based on their results, as well.
The next big and ongoing bullish development for the market would be if the VIX sets new 52-week lows coming into August. If so, we could see weakness to 11.50-11 and support levels from January 2020.
On the flip side, if the VIX closes above 15 and the 50-day moving average, it would be a slightly bearish signal. The previous trading range from 20-16 lasted 46 sessions and covered a time period from late March into the end of May. This could be the case on continues closes above 16 and would indicate choppiness heading into August and September.
Of course, if the VIX closes above 20 and the 200-day moving average, we would expect a bear market to occur at some point over the six months following. This is much too early to forecast on when this will occur again but these are the warning signs to watch for a near-term market top.
We will have a much clearer picture on if the bulls will keep momentum, or if the bears take control, by week’s end as we wind down the height of earnings season. However, earnings season will continue into early September so they will still play a key role going forward.
For instance, Nvidia (NVDA) will announce their numbers on August 23rd and was THE stock that started the Artificial Intelligence (AI) stock boom. We would not be surprised to see another monster, or $100, once the news breaks.
We will likely have new trades this week so stay locked and loaded.
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, $13.93, up $0.24)
PBR September 15 calls (PBR230915C00015000, $0.30, up $0.05)
Entry Price: $0.35 (7/24/2023)
Exit Target: $0.70
Return: -14%
Stop Target: None
Action: Lower resistance at $14-$14.25 was cleared but held on the rebound to $14.03. Support is at $13.75-$13.50.
Iovance Biotherapeutics (IOVA, $7.20, up $0.17)
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: Friday’s high touched $7.26 with lower resistance at $7.25-$7.50 and the 200-day moving average getting topped but holding. Support is at $7-$6.75.
For new subscribers, please read the writeup from 7/13 or 7/20 on why we are bullish on the stock.