MomentumOptions.com Pre-Market Update for 12/16/2024
Dow Down Seven-Straight Sessions
8:00am (EST)
Video:
https://go.screenpal.com/watch/cZlDVxnnmRZ
The stock market was mostly lower on Friday with the blue-chips and small-caps remaining in a downtrend while Tech showed some strength. Volatility remained subdued after easily holding key resistance throughout the week.
The Nasdaq closed at 19,926 after tagging another all-time high of 20,061 (+0.1%). Lower resistance at 20,000-20,200 was cleared but held for the third-straight day. Support remains at 19,800-19,600.
The S&P 500 tapped a low of 6,035 before ending at 6,051 (-0.0%). Upper support at 6,050-6,000 was tripped but held. Key resistance is at 6,100.
The Dow went out at 43,828 (-0.2%) with the low at 43,790. Upper support at 43,750-43,250 was challenged and held. Lowered resistance is at 44,000-44,250.
Earnings and Economic News
Before the open: Zedge (ZDGE)
After the close: Mama’s Creations (MAMA), Red Cat Holdings (RCAT), RCI Hospitality Holdings (RICK)
Economic News
Empire State Manufacturing Survey – 8:30am
PMI Services Index – 9:45am
Technical Outlook and Market Thoughts
The major indexes showed mixed action for the week with Tech breaking out to all-time highs while the the broader market maintained a mini-trading range. Meanwhile, the blue-chips and the small-caps trended lower throughout the week while making another round of lower lows on Friday.
Let’s start with the Nasdaq following its run to an all-time high of 20,055 on Wednesday. This tripped our February 23rd Price Target of 20,000 when the index was at 15,996. Continued closes above these levels would signal strength towards 20,200-20,400 with the top of the current uptrend channel at 20,600.
Key support is at 19,600 that was established on the December 4th breakout and the December 10th backtest. A close below 19,400 and the bottom of the uptrend channel would be a bearish development.
The S&P topped out at 6,092 last Wednesday and fell shy of clearing key resistance at 6,100 and the December 6th all-time high of 6,099.97. The top of the current uptrend channel shows momentum to 6,300 with our February price target for yearend at 6,500 when the index was at 5,088. This was slightly higher than the other indexes at 28% with 6,350 representing a 25% run.
The 6,000 level has been holding since early November and represents the bottom of the current uptrend channel. There is stretch down to 5,950-5,900 and the 50-day moving average if 6,000 fails. A close below 5,850 would suggest a near-term top.
The Dow fell for the 7th-straight session with the close below 44,000 likely getting 43,500-43,250 and the 50-day moving average in play. The latter represents the bottom of our readjusted uptrend channel and could get buyers to start nibbling. If not, there is risk to 42,500 on continued weakness.
The blue-chips are down 3% from the the all-time high of 45,073. Continued closes back above 44,500 would suggest a near-term bottom. The middle of the uptrend channel is now at 45,000.
The Russell is down 5% from the November 25th all-time high at 2,466. Key resistance is now firmly at 2,400 following the December 5th close below this level. We want to wait for 2,425 to clear before we say new all-time highs are back on the board.
We mentioned last week there was major support at 2,300 and the bottom of the current uptrend channel on continued weakness. The 50-day moving average is at 2,314. Closes below both these levels would be an ongoing bearish development for the small-caps.
In our notes last Monday we said there was “no need to turn cautious on the overall market until the Nasdaq falls back below 19,250; the Dow slips under 44,000; and the S&P fails to hold 6,000.”
The Dow’s inability to hold 44,000 could be considered “stretch” if there is a recovery back above this level to start the week. If not, the Nasdaq and the S&P could test their key support areas at some point this month. We also said to watch 2,300 on the Russell with Friday’s low at 2,336.
The Volatility Index (VIX) closed back above 13.50 to start last week and a level that held. Friday’s low kissed 13.24 with the close at 13.81. More crucial support is at 12.75 with the prior Friday’s low at 12.70. We are still targeting a possible drop towards 11.50 on continued closes below 12.75. Key resistance is at 15 and a level that has been holding since November 25th. If cleared, we will start easing on bullish setups, and instead, start focusing on bearish plays.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 74-11 (87%, 35 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
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Fastly (FSLY, $10.48, down $0.12)
FSLY March 12.50 calls (FSLY250321C00012500, $1.20, up $0.10)
Entry Price: $1.15 (12/6/2024)
Exit Target: $2.30
Return: -4%
Stop Target: None
Action: Friday’s low tagged $10.38 with new and upper support at $10.50-$10.25 failing to hold. Resistance is at $10.75-$11 with last week’s peak at $11.62.
The chart remains bullish with the 50-day moving average on track to cross above the 200-day moving average. This would form a golden cross which is bullish for higher highs and our Price Target at $12.50.
AT&T (T, $23.63, up $0.27)
T January 24 calls (T250117C00024000, $0.40, up $0.08)
Entry Price: $0.40 (11/25/2024)
Exit Target: $0.80
Return: 0%
Stop Target: None
Action: Lower resistance at $23.75-$24 was challenged and held following the run to $23.67. A close above the latter and the December 3rd 52-week peak at $24.03 would be a renewed bullish signal. Support is at $23.25-$23. A close below the latter and the bottom of the uptrend channel could force us to exit early.
We have a 2025 Price Target of $28 for the stock which represents resistance from March 2020. The current yield on the stock is at 4.75%. Over the past two years, we are 5-0 profiling covered calls on AT&T and 12-1 with directional alerts.
Ford Motor (F, $10.39, unchanged)
F January 12 calls (F250117C00012000, $0.05, down $0.02)
Entry Price: $0.25 (11/25/2024)
Exit Target: $0.50
Return: -80%
Stop Target: None
Action: Key support at $10.25 and the bottom of the current range held throughout last week with Friday’s low at $10.32. There is risk towards $10-$9.75 if this level fails to hold. Resistance is at $10.50-$10.75 and the 50-day moving average. The current dividend yield is at 5.8%.
We are 7-2 profiling calls and puts on Ford over the past two years with our biggest winners at 1,200%, 622% and 257%. The current dividend yield is at 5.8%.
Newell Brands (NWL, $11.01, down $0.44)
NWL January 10 calls (NWL250117C00010000, $1.40, down $0.20)
Entry Price: $0.20 (11/25/2024)
Exit Target: $1.80 (closed half at $1.40 on 12/9)
Return: 600%
Stop Target: 90 cents (Stop Limit)
Action: Our late January Price Target at $11-$11.50 was cleared last week with Wednesday’s 52-week peak hitting $11.78. The July 31st 2023 at $11.61 was cleared with a close above $11.75 getting $12-$12.50 and levels from April 2023 in play. Fresh support is at $10.75-$10.50 following Friday’s intraday fade to $10.67.
RSI fell to 67 following overbought conditions and run to 80 to start the week. The dividend yield is currently at 2.45%.
Pfizer (PFE, $25.58, up $0.21)
PFE January 22.50 puts (PFE250117P00022500, $0.10, down $0.02)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -60%
Stop Target: None
PFE February 21 puts (PFE250221P00021000, $0.15, down $0.03)
Entry Price: $0.25 (11/19/2024)
Exit Target: $0.50
Return: -40%
Stop Target: None
Action: Shares have been rangebound the past 15 sessions with the high hitting $25.66. Lower resistance at $25.50-$25.75 was recovered. Key support is at $25.25.
The mid-November low is at $24.48 with a drop below this level likely inducing selling pressure towards $23-$22.50.