MomentumOptions.com Pre-Market for 1/25/2018
Dow Closes Slightly Higher
8:00am (EST)
The market continued its record run into blue-sky territory on Wednesday’s open but settled mostly lower after setting fresh intraday all-time highs.
The Dow closed in the green for the 3rd time over the past four sessions after rising 0.2% and trading to an intraday all-time peak of 26,392. The S&P 500 made a record run to 2,852 before slipping 0.1% into the closing bell to snap a three-session winning streak.
The Nasdaq gave back 0.6% after peaking at 7,486 but was able to hold the 7,400 into the close after falling below this level intraday. The Russell 2000 dropped 0.7% after tapping a record high of 1,615 before closing back below the 1,600 level.
Financials rose 0.7% to lead sector strength while Consumer Discretionary and Materials advanced 0.4%. Technology and Utilities lagged after giving back 0.8% and 0.6%, respectively.
The VelocityShares Daily Inverse VIX (ZIV) tested a low of 89.12 while holding the 90 level into the closing bell. Lower support at 90.25-90 held with a close below 88 being a bearish development. Resistance remains at 92.50-92.75.
The Russell 3000 Index ($RUA) made a run to an all-time high of 1,685 with fresh resistance at 1,690-1,700 coming into play. We mentioned earlier this month a run towards 1,660-1,675 could come on continued momentum with the former now serving as short-term support.
RSI is in a slight downtrend after peaking north of the 85 level and clearing 80 and October resistance. Support is at 70 on a move back below 80.
In Fed news, the Senate confirmed Jerome Powell as next Fed chair with the vote tally at 85 to 12. Powell has been a Fed governor since 2012, and Wall Street clearly hopes he will be a continuity chairman that extends the policy and approach of Fed Chairwoman Janet Yellen.
Powell was somewhat guarded during the confirmation process and gave few details. He said he expects interest rates to rise somewhat further and for the balance sheet to shrink over the next three or four years. Powell’s term will begin after February 3rd as Yellen will lead the Fed’s rate-policy committee meeting next week.
The Fed’s vice chairman job is also open and three other seats on the seven-member board need to be filled. The 12-member board permanently consists of the seven Fed board members in Washington and the New York Fed president. Four of the 11 remaining presidents of regional Fed banks also rotate onto the FOMC each year.
I have updated our current trades so let’s go check the action.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 5-1 (83%). 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 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send a Trade Alert outside of these time frames.
CNX Resources (CNX, $14.67, up $0.02)
CNX February 15 calls (CNX180216C00015000, $0.50, flat)
Entry Price: $0.50 (1/23/2018)
Exit Target: $1.00
Return: 0%
Stop Target: None
Action: Near-term resistance is at $15-$15.25 with yesterday’s high reaching $14.86. Support is at $14.50-$14.25.
Cypress Semiconductor (CY, $17.13, down $0.62)
CY February 18 calls (CY180216C00018000, $0.40, down $0.20)
Entry Price: $0.60 (1/23/2018)
Exit Target: $1.20
Return: -33%
Stop Target: None
Action: Fresh support is at $17-$16.75 following Wednesday’s backtest to $16.97. Lowered resistance is at $17.25-$17.50.
Blackberry (BB, $13.25, down$0.28)
BB March 15 calls (BB180316C00015000, $0.30, down $0.05)
Entry Price: $0.47 (1/16/2018)
Exit Target: $1.00
Return: -32%
Stop Target: None
Action: Support at $13.25-$13 was split with yesterday’s low tapping $13.13. Resistance is at $13.50-$13.75.
Apache (APA, $48.12, up $0.35)
APA February 50 calls (APA180216C00050000, $1.15, up $0.10)
Entry Price: $1.07 (1/16/2018)
Exit Target: $2.10
Return: 7%
Stop Target: None
Action: Lower resistance at $48-$48.25 held with Wednesday’s high tapping $48.80. Rising support at $47.75-$47.50.
Cadence Design Systems (CDNS, $45.37, down $0.37)
CDNS February 48 calls (CDNS180216C00048000, $0.60, down$0.05)
Entry Price: $0.70 (1/16/2018)
Exit Target: $1.40
Return: -14%
Stop Target: None
Action: Support is at $45.25-$45. Resistance is at $45.50-$45.75.