MomentumOptions.com Pre-Market for 2/8/2018
Market Mixed on Lowered Volatility
9:00am (EST)
The markets tried rebounding for the second-straight session following Wednesday’s run to higher highs but the gains faded throughout the session with the major indexes settling mixed. Volatility was slightly subdued compared to recent sessions but the whipsaw action remains in place and will likely continue for the foreseeable future.
The Dow slipped 0.1% after trading to a high of 25,293 while closing below the 25,000 level for the 3rd-straight session. The S&P 500 sagged 0.5% following a morning run to 2,727 but has failed to hold 2,700 all week.
The Nasdaq was lower by 0.9% after testing a high of 7,170 but hełd the 7,000 level for the 2nd-straight session following the second-half weakness. The Russell 2000 was up less than a point, or 0.05%, after peaking at 1,517 while holding the 1,500 level throughout the day.
Industrials and Financials showed some strength after rising 0.2% and 0.1%, respectively, but were the only sectors that closed in positive territory. Energy and Technology led to the downside with losses of 1.7% and 1.3% while Materials fell 0.9%.
Total Q4 results from just over half of the S&P 500 members combined have accounted for over 55% of the index’s total market capitalization. Total earnings for these companies are up 15.9% from the same period last year on 9.1% higher revenues, with 82% topping EPS estimates and 79.8% beating revenue estimates.
Total Q4 earnings for the Tech sector companies are up 28.4% from the same period last year on 8.7% higher revenues, with 90.9% beating EPS estimates and 97% topping revenue estimates.
The overall theme from Q4 earnings season is one of all around strength, with strong earnings and revenue growth and a very high proportion of companies beating estimates. More importantly, estimates for the current period have been notably going up.
The VelocityShares Daily Inverse VIX (ZIV) rebounded on the morning open to reach a peak of 70.94 with near-term resistance at 70.50-71 holding. Continued closes above 70 would be a slightly bullish development but the backtest to 67.71 and close below this level keeps shaky support at 67.50-65 in the mix.
The PowerShares QQQ (QQQ) traded up to $163.55 shortly after the opening bell with lowered resistance at $163.50-$164 holding. Continued closes above $162.50 would be a bullish signal a possible near-term bottom has been set. The close back below the 50-day moving average was slightly bearish with continued risk to backup support at $157.50-$155 if $160 fails.
RSI closed above shaky support at 40 with risk to 35-30 on another move below this łevel. Resistance is at 50 and prior December support levels.
The Energy Select Sector Spider (XLE) is trying to find a near-term bottom following yesterday’s continued backtest to $67.90. December support at $68 held with risk to $67.25-$67 and the 200-day moving average on a close below this level. The opening rebound to $71 this morning faded throughout the session with near-term resistance at $69.75-$70 getting stretched. Continued closes above the latter would be a slightly bullish signal.
RSI is trying to hold August support at 30 with a move below this level signaling additional weakness. Resistance is at 40 and prior November support levels.
I could have new trades today so stay locked-and-loaded. In the meantime, let’s go check on the current action.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 5-5 (50%). 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.
Viavi Systems (VIAV, $9.83, down $0.16)
VIAV March 10 calls (VIAV180316C00010000, $0.38, down $0.07)
Entry Price: $0.45 (2/6/2018)
Exit Target: $0.90
Return: -14%
Stop Target: None
Action: Support at $9.75-$9.50 was split on yesterday’s backtest to $9.68. Resistance is at $10.
Marvell Technology (MRVL, $21.33, down $0.37)
MRVL May 24 calls (MRVL180518C00024000, $0.75, down $0.08)
Entry Price: $0.83 (2/6/2018)
Exit Target: $1.70
Return: -11%
Stop Target: None
Action: Support is at $21.25-$21 with Wednesday’s low tapping $21.21. Resistance is at $21.50-$21.75.