MomentumOptions.com Pre-Market Update for 12/2/2024
Dow Clears 45,000
8:00am (EST)
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Market Overview
Video:
https://go.screenpal.com/watch/cZlnVZnncKL
The stock market closed higher during Friday’s shortened session after setting record highs throughout the week while taking Thursday off for the holiday. The bulls wrapped up a solid month after holding key support as volatility once again closed right at a key level of support.
The Nasdaq tagged a high of 19,245 before ending at 19,218 (+0.8%). Lower resistance at 19,250-19,400 was challenged and held. Support is at 19,000-18,850.
The S&P 500 went out at 6,032 (0.6%) with the intraday all-time peak reaching 6,044. Key resistance at 6,000 was reclaimed. Support is at 5,950-5,900.
The Dow hit another record high of 45,071 while settling at 44,910 (+0.4%). Key resistance at 45,000 was topped but held. New support is at 44,750-44,500.
Earnings and Economic News
Before the open: Hub Cyber Security (HUBC), Imperial Petroleum (IMPP)
After the close: Credo Technology Group (CRDO), Zscaler (ZS)
Economic News
PMI Manufacturing Index – 9:45am
Construction Spending – 10:00am
ISM Manufacturing Index – 10:00am
Technical Outlook and Market Thoughts
We mentioned coming into last week the technical setup for the major indexes had improved dramatically after the bulls held key support levels the prior week. The Dow, S&P, and the Russell set another round of record highs on Monday and throughout the week with the Nasdaq the only index failing to join the party.
November tends to be the most bullish month in election years and last month’s results were impressive. In fact, it was the best month of the year for the major indexes. The Nasdaq rallied 6.2%; the S&P jumped 5.7%, the Dow surged 7.5%; and the Russell zoomed over 10%.
The first trading day of December is typically bullish, as well as the month in an election year. Also adding to possible bullish sentiment would be the “Santa Clause rally” and the “January Effect”.
The Santa Clause rally, if there is one, takes place the last five trading days of the year and the first two in January. The average gain has been about 1.5% since the late 1960’s. If there is a pullback in the market over this time frame, it could be a slightly bearish signal for January as history has shown.
As for the January Effect, history also has shown the small-caps typically outperforming the big caps in January. In typical bullish years, the major indexes tend to outperform the Russell until October and when they start to wake up. In more recent years, the January Effect seems to be occurring in mid-December, and when the small-caps start to rise at a faster rate into next month.
Year-end dividends, payouts, and bonuses could be a reason for the outperformance of the small-caps. In any event, the breakout to all-time highs is already underway.
For the second-straight week, the Russell (up 1.5%) outpaced the other major indexes after soaring 4% the prior week and holding key support at 2,300. The current and recently adjusted uptrend channel shows ongoing strength towards 2,475-2,500 with the latter representing our 25% higher Price Target from February 23rd with the index at 2,016. Fresh support is at 2,425-2,400 with the middle of the channel at 2,375.
The Nasdaq remains in an uptrend channel with a close below 18,800 likely leading to a retest to 18,600. A close below this level and the 50-day moving average at 18,541 would be a bearish signal. Continued closes above 19,400 and the November 11th lifetime high at 19,366 would be a renewed bullish development with upside potential to 20,000 and our February 23rd Price Target when the Nasdaq was at 15,996.
The S&P traded above 6,000 eight times in November and has closed above this level three times, including Friday. We would like to see this act as a floor of support to start December with higher highs this week. The current action is in the middle of the uptrend channel with the top showing breakout potential towards 6,200. Our February price target for yearend was penciled-in at 6,500 when the index was at 5,088. This was slightly higher at 28% with 6,350 representing a 25% run. A close below 5,850 and the bottom of the uptrend channel would be a cautious development with the 50-day moving average at 5,838.
The Dow pushed the top of its uptrend channel throughout all of last week with the pop above 45,000 on Friday keeping us super bullish on the index. A readjustment to the top of the uptrend channel off the July peak pushes the near-term top to 46,000 with our February Price Target at 50,000. There are several layers of key support starting at 44,000; 43,250; and 42,500.
The Volatility Index (VIX) closed below 15 to start last week, a bullish signal. Friday’s low at 13.49 cracked, but didn’t hold, the second wave of crucial support at 13.50. This level held in mid-November with the intraday low at 13.59. The 13.50 area was also resistance in mid-July and there hasn’t been a close below this level since then. If so, it would be an ongoing bullish signal for the market with weakness towards 12.75-11.50. There is no need to lighten up on bullish positions until the VIX clears 17.50 or closes above 20.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 64-11 (85%, 31 triple-digit winners). 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.
Video
https://go.screenpal.com/watch/cZlneonnVew
Snap (SNAP, $11.81, up $0.20)
SNAP January 13 calls (SNAP250117C00013000, $0.48, up $0.07)
Entry Price: $0.40 (11/25/2024)
Exit Target: $0.80
Return: 20%
Stop Target: None
SNAP March 15 calls (SNAP250321C00015000, $0.65, up $0.0
Entry Price: $0.65 (11/25/2024)
Exit Target: $1.30
Return: 15%
Stop Target: None
Action: Shares traded up to $12.02 with lower resistance at $12-$12.25 getting cleared but holding. A close above $12.35 and the 200-day moving average would be a very bullish signal with upside towards $13.75. Key support is at $11.25-$11 and the 50-day moving average.
We like how the 200-day moving average leveled out last week along with backup support at $10.50 holding throughout the prior week. Both of these technical setups were a big reason we wanted to get back into the stock. Our 2025 Price Target is at $17.
AT&T (T, $23.16, down $0.11)
T January 24 calls (T250117C00024000, $0.35, down $0.02)
Entry Price: $0.40 (11/25/2024)
Exit Target: $0.80
Return: -13%
Stop Target: None
Action: Thursday’s fresh 52-week peak reached $23.38 with new and lower resistance at $23.25-$23.50 getting cleared and holding. A close above the latter gets $24-$24.50 and the top of the current uptrend channel in play. Support is $23-$22.75 with Friday’s close on the session low.
We have a 2025 Price Target of $28 for the stock which represents resistance from March 2020. The current yield on the stock is 4.8%. If shares can clear $24.80 by mid-January (or sooner) we will lock-in at least a 100% return.
Ford Motor (F, $11.13, up $0.03)
F January 12 calls (F250117C00012000, $0.20, unchanged)
Entry Price: $0.25 (11/25/2024)
Exit Target: $0.50
Return: -20%
Stop Target: None
Action: Shares have been in a 3-month trading range with Friday’s peak at $11.27. A close above $11.50 and the top of the range would be bullish. However, we want to see continued closes above $11.75 and the 200-day moving average to confirm a possible breakout.
We have traded both calls and puts on Ford throughout the year with some monster winners, the biggest being 1,200% with put options on an earnings miss. Although we can be short-term bearish at times on the stock, we do like Ford as a longer-term covered call trade. The current dividend yield is at 5.4%.
Newell Brands (NWL, $9.59, up $0.03)
NWL January 10 calls (NWL250117C00010000, $0.40, up $0.02)
Entry Price: $0.20 (11/25/2024)
Exit Target: $0.40, raise to 80 cents
Return: 100%
Stop Target: 25 cents (Stop Limit)
Action: Set a Stop Limit at 25 cents. We are raising the Exit Target from 40 cents to 80 cents.
New and lower resistance at $9.75-$10 was challenged and held with the 52-week peak matching Monday at $9.72. Shares have closed above $9.50 for three of the past four sessions which represents fresh support and previous support from September 2023.
We believe shares can make a run towards $11-$11.50 by late January on continued closes above $10. The dividend yield is currently at 2.9%.
Goodyear Tire & Rubber (GT, $10.74, up $0.13)
GT January 11 calls (GT250117C00011000, $0.65, up $0.05)
Entry Price: $0.25 (11/25/2024)
Exit Target: $0.75, raise to $1.00
Return: 160%
Stop Target: 50 cents (Stop Limit)
Action: Set a Stop Limit at 50 cents to lock in at least a 100% return. Raise the Exit Target to $1.
Mid-July and lower resistance at $10.75-$11 was topped and held following the push to $10.91. Fresh support is at $10.50 on the close back above the 200-day moving average, an ongoing bullish signal.
Shares rallied 5% on Wednesday after an analyst Price Target upgrade from $8.90 to $9.20. Yes, we did a double take on that headline, as well. Our near-term Price target has been at $11.50 after we predicted the breakout above $9 back in early November. This prediction is basically a retest to previous support ahead of the 16% plunge in August following a revenue miss.
The 50-day moving average is also trending higher and is on track to clear the 200-day moving average in the coming month or two. This is the early stages of possibly forming a golden cross which tends to lead to higher highs.
SoFi Technology (SOFI, $16.41, up $0.29)
SOFI January 17 calls (SOFI250117C00017000, $1.25, up $0.10)
Entry Price: $0.55 (11/19/2024)
Exit Target: $1.10
Return: 127%
Stop Target: 75 cents, raise to 95 cents (Stop Limit)
SOFI January 13 calls (SOFI250117C00013000, $3.80, up $0.25)
Entry Price: $0.65 (11/8/2024)
Exit Target: $4 (closed half at $3 on 11/21)
Return: 423%
Stop Target: $2.20, raise to $2.75 (Stop Limit)
Action: Raise the Stop Limit on the SOFI January 17 calls from 75 cents to 95 cents.
Raise the Stop Limit on the SOFI January 13 calls from $2.20 to $2.75. This will ensure a 323% return.
Shares were up 5% for the week with Friday’s 52-week peak at $16.61. Key resistance from January 2022 at $16.50 was cleared but held. Rising support at $16-$15.75.
We said if shares can clear and hold $15, there is a good chance a run towards $16-$17.50 could come quickly. The former represents resistance from late December 2021 with the latter being resistance from September 2021. At some point in 2025, shares could push $20-$25.
RSI closed at 83 on Friday. We have been saying overbought conditions can remain in play for weeks, and sometimes months, with the possibility of RSI pushing 85-90.
Pfizer (PFE, $26.21, up $0.38)
PFE January 22.50 puts (PFE250117P00022500, $0.10, down $0.05)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -60%
Stop Target: None
PFE February 21 puts (PFE250221P00021000, $0.15, down $0.05)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -40%
Stop Target: None
Action: Friday’s high reached $26.23 with key resistance at $26.25 holding. Support is at $25.75-$25.50.
There is still risk to $26.75-$27 on a close above $26.25 but we have plenty of time for the death-cross to play out. However, if shares clear $27 by yearend, we will likely exit the trades to save the remaining premium.