MomentumOptions.com Pre-Market Update for 6/19/2023
Bulls Keep Momentum
8:00am (EST)
Commentary
The stock market wrapped up another bullish week despite Friday’s pullback off intraday yearly highs. Some late day selling pressure snapped an overall six-session winning streak for the market as investors took some chips off the table ahead of a three-day weekend.
The Nasdaq closed at 13,689 (-0.7%) after trading to an afternoon low of 13,680. Fresh and upper support at 13,650-13,500 held. A drop below the latter likely gets 13,400-13,250 in focus. New resistance is at 13,850-14,000 with Friday’s 52-week peak at 13,864.
The S&P 500 tapped a late day low of 4,407 while settling at 4,409 (-0.4%). New and upper support 4,400-4,350 held. A close below the later would signal a further fade to 4,300-4,250. Current resistance is at 4,450-4,500 with Friday’s one-year high hitting 4,448.
The Dow ended at 34,299 (-0.3%) with the low touching 34,285. Fresh and upper support at 34,250-34,000 held. A move below the latter would imply weakness to 33,750-33,500 and the 50-day moving average. Resistance is at 34,000-34,750 with the mid-December 52-week top at 34,712.
Volatility Index
The Volatility Index (VIX) was down for the third time in four sessions with the 52-week low reaching 13.48. Current and upper support at 14-13.50 failed to hold. Resistance is at 14.50-15.
Tuesday’s earnings announcements:
Before the open: Smart Share Global (EM)
After the close: Dynagas LNG Partners (DLNG), FedEx (FDX), La-Z-Boy (LZB)
Economic News:
Housing Starts – 8:30am
Market Thoughts
For the week, the Nasdaq jumped 3.3%; the S&P rallied 2.6%; and the Dow rose 1.3%. As far as sector strength, Technology surged 5.7% while Energy was the only laggard after dipping 0.6%.
The S&P 500 and Nasdaq are pushing resistance levels from April 2022 after pushing their weekly win streaks to five and eight, respectively. For the year, the Nasdaq (10,466 to 13,689) is up 31% while the S&P (3,839 to 4,409) has gained 15% and has zoomed 26% from its October bear market low.
The Dow came into the year at 33,147 and is up less than 1%. While the index has lagged year-to-date, the good news is that the Dow Transports broke out last week after making a run at the 15,000 level. Typically, the Dow follows the lead of the Transports and this was confirmed on the blue-chips close and breakout above 34,250 last Thursday.
It will be interesting to see if the Transports can keep their momentum with FedEx (FDX) announcing numbers on Tuesday. The stock can be volatile and will have an impact on the sector, depending on the numbers. Wall Street is expecting a profit of $4.90 a share on revenue of $22.77 billion.
The 52-week peak for FDX is north of $248 with shares also showing signs of breaking out last Thursday. There was decent volume in the FDX June 23rd weekly 260 and 265 call options on Friday so there are a few traders betting on a breakout.
The technical outlook remains very bullish for the major indexes with strong uptrend channels in play. The 50-day moving averages also remain in solid uptrends and there are several layers of new support the bears need to go through to change market sentiment.
The back half of June is historically prone to weakness and the RSI levels for the Nasdaq and S&P are still above 70. RSI backed off the intraday push past the mid-70’s and could be a preview of upcoming weakness.
A pullback this week and into next week will likely get the FOMO buyers back in the market and would be a possible setup for a July rally to higher highs – based on earnings. The market is closed for a holiday so there won’t be any New Trades today. However, we anticipate having a busy week so stay locked-and-loaded for when we take action.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 15-5 (75%). 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.
Pfizer (PFE, $40.06, up $0.31)
PFE July 42.50 calls (PFE230721C00042500, $0.23, up $0.06)
Entry Price: $0.24 (6/13/2023)
Exit Target: $0.50
Return: -4%
Stop Target: None
Action: Friday’s high tagged $40.36 with lower resistance at $40-$40.25 getting cleared but holding. Support at $39.75-$39.50.
Ford Motor (F, $14.42, down $0.03)
F July 13 calls (F230721C00013000, $1.60, down $0.02)
Entry Price: $0.45 (6/6/2023)
Exit Target: $1.80, raise to $2 (Limit Order) (closed half at $1.34 on 6/13)
Return: 227%
Stop Target: $1.40 (Stop Limit)
Action: Raise the Limit Order from $1.80 to $2. The Exit Target and Limit Order at $1.80 held with the calls trading up to $1.76 and the low at $1.50.
Shares touched a high of $14.61 with lower resistance at $14.50-$14.75 getting topped but holding. Support is at $14.25-$14.
Verizon (VZ, $36.46, up $0.02)
VZ July 38 calls (VZ230721C00038000, $0.18, down $0.02)
Entry Price: $0.40 (5/19/2023)
Exit Target: $0.80
Return: -55%
Stop Target: None
Action: Shares were up for the 8th time in 9 sessions with lower resistance at $36.50-$36.85 getting cleared but holding on the run to $36.69. Rising support is at $36.25-$36.
A close above the major moving averages will likely get this trade back to even. These options still have a month before expiration and we loved last week’s strength.