MomentumOptions.com Pre-Market Update for 7/19/2018
Bulls Keep Momentum as Blue-Chips Extend Streak/ Trade Alert (XLI)
8:00am (EST)
The market was slightly weak on Wednesday’s open and ahead of Fed Chairman Jerome Powell’s second day of testimony before the House Financial Services Committee. The major indexes showed strength following his comments on monetary policy but were choppy afterwards while holding tight trading ranges.
Trade tariff spats could be improving and helped ease concerns on this front while earnings continued to impress. Volatility remained subdued after pushing a fresh monthly low and is signaling continued market strength.
The Dow extended its winning streak to 5-straight after advancing 0.3% while trading to a high of 25,215. Lower resistance from mid-June at 25,250-25,300 held following the 4th-straight close above the 25,000 level.
The Russell 2000 was up 0.3% despite the morning backtest to 1,679. The small-caps have been in a mini trading range for 6 sessions with a close above 1,700 or below 1,680 signaling the next possible trend.
The S&P 500 rose 0.2% following the push to 2,816. January resistance at 2,825 held for a second-straight session with the index holding the 2,800 level for the 3rd time in 4 sessions.
The Nasdaq slipped 2 points, or 0.01%, after testing a high of 7,863 shortly after the opening bell. Resistance at 7,950-8,000 remains in play as long as 7,800 holds on any near-term pullbacks.
Financials and Industrials led sector strength after soaring 1.6% and 1.1%, respectively. Health Care and Materials were up 0.1%.
Consumer Staples were the weakest sector after falling 0.8%. Utilities and Real Estate were down 0.5% and 0.4%, respectively.
The S&P 500 Volatility Index ($VIX) tested a high of 12.47 on the market’s opening weakness with fresh and lowered resistance at 12.50-13 holding. A move above 13.50 – or a close above 13.75-14.25 and 50/200-day moving averages – are multiple warnings signs to prepare for a possible pullback off the recent market highs.
The low of 11.44 afterwards was a fresh monthly low with upper support at 12-11.50 holding. Continued closes below the latter would be a bullish development for additional weakness towards the 10.50-10 area.
The Spider Small-Cap 600 ETF (SLY) have been in a mini trading range between $74-$75 over the past 6 sessions. The late day run and close at $74.82 cleared lower resistance at $74.75-$75 with continued closes above the latter being a more bullish development.
Support is at $74.25-$74 with a move below the latter likely confirming the short-term top of $75.31 from earlier this month.
RSI is back in a slight uptrend after clearing lower resistance at 60-65. A close above the latter would signaling additional strength and a possible run towards 70-75 and June highs. Support is at 55-50.
The Technology Select Sector Spiders (XLK) traded in negative territory throughout the session with the low tapping $72.53. Fresh support at $72.50-$72 held with a close below the latter likely leading to a continued backtest towards $70.50 and the 50-day moving average.
Blue-sky resistance is at $73-$73.25 following Tuesday’s trip to $73.03 and fresh all-time high. Continued closes above $73.25 could lead to a push towards $74.50-$75.
RSI has been flatlining with current resistance at 65-70. A close above the latter and early June highs would signal additional strength towards 75-80 and late January peaks. Support is at 60-55 with a move below the latter signaling additional weakness.
I have set an initial Stop Limit for XLI following Wednesday’s nice pin action.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 28-13 (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 “Hard Stops” entered to close any trades or “Exit 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 Daily updates.
Viavi Systems (VIAV, $10.40, down $0.08)
VIAV September 11 calls (VIAV180921C00011000, $0.35, down $0.05)
Entry Price: $0.40 (7/16/2018)
Exit Target: $0.80
Return: -13%
Stop Target: None
Action: Support at $10.40-$10.35 held with the latter representing Wednesday’s bottom. Lowered resistance is at $10.50-$10.60.
Industrials Select Sector Spider (XLI, $74.55, up $0.81)
XLI August 75 calls (XLI180817C00075000, $1.05, up $0.25)
Entry Price: $0.65 (7/12/2018)
Exit Target: $1.30
Return: 47%
Stop Target: 80 cents (Stop Limit)
Action: Set an initial Stop Limit at 80 cents to start protecting profits.
Fresh resistance is at $74.75-$75 following yesterday’s surge to $74.76. Rising support is at $74.25-$74 and the 50/200-day moving averages.
Progenics Pharmaceuticals (PGNX, $8.29, up $0.07)
PGNX August 10 calls (PGNX180817C00010000, $0.70, flat)
Entry Price: $0.75 (7/5/2018)
Exit Target: $1.50-$2.00
Return: -7%
Stop Target: None
Action: Resistance at $8.35-$8.40 held on yesterday’s push to $8.31. Support remains at $8.25-$8 and the 50-day moving average.