MomentumOptions.com Pre-Market Update for 7/7/2025
Market Stays Hot but is Overbought
* For the week, the Nasdaq rose 1.6% and the S&P added 1.7%. The Dow jumped 2.3% while the Russell surged 4%. Year-to-date, the S&P is up 6.8% followed by the Nasdaq at 6.7%. The Dow has gained 5.4% and the Russell is up 19 points, or roughly 1%.
* The Nasdaq and S&P 500 set another round of record highs on Thursday but remain in overbought territory with RSI levels of 72 and 75, respectively. A reading at 70 or above is typically a top for a stock or index. However, RSI readings can get stretched into the 80’s and in some instances the 90’s. They can also stay elevated above 70 for weeks and even months.
* The ongoing breakout to new highs over the past three months has also established key support levels on a pullback or consolidation period. These new battlegrounds will be played afterwards when the bulls are done peaking and the bears are ready to rumble.
The stock market pushed higher highs for Thursday’s shortened session as a stronger-than-expected jobs report fueled sentiment. The expected passage of the Big Beautiful Bill may have also encouraged buying as the failure to do so likely would have been a setback for the major indexes.
The Nasdaq tagged a record high of 20,624 while settling at 20,601 (+1%). New resistance at 20,500 was topped and held. Support is at 20,250.
The S&P 500 ended at 6,279 (+0.8%) with the intraday all-time peak at 6,284. Fresh resistance at 6,250 was cleared and held. Support is at 6,200.
The Dow traded up to 44,885 while finishing at 44,828 (+0.8%). Resistance at 44,750 was recovered. Fresh support is at 44,500.
Earnings and Economic News
Before the open: None
After the close: None
Economic News
None
Technical Outlook and Market Thoughts
For the week, the Nasdaq rose 1.6% and the S&P added 1.7%. The Dow jumped 2.3% while the Russell surged 4%. Year-to-date, the S&P is up 6.8% followed by the Nasdaq at 6.7%. The Dow has gained 5.4% and the Russell is up 19 points, or roughly 1%.
The Nasdaq and S&P 500 set another round of record highs on Thursday but remain in overbought territory with RSI levels of 72 and 75, respectively. A reading at 70 or above is typically a top for a stock or index. However, RSI readings can get stretched into the 80’s and in some instances the 90’s. They can also stay elevated above 70 for weeks and even months.
The Russell 2000 has again turned positive for the year and the Dow is within spitting distance of a fresh all-time high. The RSI readings for the two indexes are at 72 and 75, as well. We have talked about the small-caps possibly playing catch-up to the other major indexes and they have certainly outperformed over the past few weeks.
The Nasdaq gapped higher on Thursday and is on track to test the middle of an adjusted uptrend channel off the June 23rd intraday low. Our near-term target is at 21,500 and would represent another 4% of upside for the index. Fresh resistance is at 20,750-21,000. Our January 22nd target prediction for the Nasdaq is at 22,000 by yearend.
The bottom of the uptrend channel is right at 20,100 and a level we highlighted as key resistance ahead of fresh all-time highs. A close back below 20,000 would suggest a near-term top with further fade potential towards 19,750.
The S&P 500 also has an adjusted uptrend channel off the June 23rd low with the middle at 6,500. Our Price Targets for the index from February 23rd were at 6,350-6,500 with the former less than 2% away. The latter is also 4% away with the technical setup pretty much matching the Nasdaq’s. Closes above 6,300 likely gets a FOMO (fear-of-missing-out) push to these Price Targets.
A close back below 6,050 and the bottom of the uptrend channel would be a slightly bearish development and also signal a possible near-term top. A drop below 6,000 likely gets 5,900-5,850 and the major moving averages in play.
The Russell 2000 has cleared the middle of its adjusted uptrend channel off the June 23rd low with the top currently in the 2,375 area. This level is 4% away from Friday’s close with our February 23rd yearend Price Target for the index at 2,500 now 11% away.
The bottom of the uptrend channel is at 2,175 and the 200-day moving average. A move below this level gets 2,135 in focus followed by 2,075 and the 50-day moving average. A golden cross is 92 points away from happening for the small-caps.
The Dow has also cleared the middle of its adjusted uptrend channel and is 465 points away from triggering a fresh lifetime peak. Our February 23rd yearend Price Target for the index at 50,000 is 12% away and likely a reach this summer. However, the index could push 47,250 over the near-term which is just 5% away on continued closes above 45,000. A golden cross is 465 points away from forming for the blue-chips.
The first wave of support is at 44,000. Closes below this level likely gets 43,250 and the bottom of the uptrend channel back in the mix. If 43,250 fails, it would imply a near-term top with further downside risk to 43,000-42,750 and the 200-day moving average.
The Volatility Index (VIX) traded down to 16.14 with upper support at 16.50-16 failing to hold. A move below the latter gets 15 in focus. There has only been two closes below 15 this year and they were in January
The VIX has closed below 17.50 for eight-straight sessions with the 50-day moving average in a sharp downtrend. This level remains key resistance followed by 20 and the 200-day moving average. A close above 20 would imply a near-teem market peak.
The index remains on track to form a death cross and is less than a third of a point from becoming official. This is when the 50-day moving average falls below the 200-day moving average. This technical indicator would indicate lower lows for the VIX and would be an ongoing bullish signal for the market.
All of the bullish indicators we were highlighting from mid-May in our notes on the major indexes has played out in spades. This includes uptrend channels and golden crosses that have formed and the ones that remain in play for the major indexes.
The ongoing breakout to higher highs over the past three months has also established key support levels on a pullback or consolidation period. These new battlegrounds will be played afterwards when the bulls are done peaking and the bears are ready to rumble.
This week’s wild card was going to Wednesday’s July 9th tariff deadline. However, that has now moved to August 1st according to Treasury Secretary Scott Bessent the news over the weekend. He added tariffs will reset to President’s original April levels if countries do not strike a deal by the new deadline.
The monthly August option chain will have 39 days until expiration on Monday’s opening bell while the regular July options have 11 days. We have a couple of older Alerts that are coming down to the wire as the premiums held up throughout last week.
Momentum Options Alerts Update
Closed Momentum Options Trades for 2025: 31-9 (78%, 11 triple-digit winners) / 2024: 77-17 (82%, 38 triple-digit winners). Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Stops” entered to close any alerts or “Limit Orders” in your brokerage account unless we list one. We will send out an “Alert” or “New Alert” if we want you to close a position or if a new position comes out. Otherwise, follow instructions at all times in the updates on Monday’s and Thursday’s along with Text Alerts and videos throughout the week.
Technical Outlook Video
Rocket Companies (RKT, $14.24, down $0.33)
Option: RKT August 18 calls
Expiration Date: August 15th
Entry Option Price: $0.50 (7/2/2025)
Current Option Price: $0.40
Exit Target: $1.00
Return: -20%
Stop Target: None
Action: Key support at $14 and the 200-day moving average held on the session low. Backup help is at $13.75-$13.50. Resistance is at $14.50-$14.75.
A close above the April 8th high at $15.26 should get $15.75-$16 in play. Short interest remains high and has moved up to 47% in the stock. This can cause for a volatile situation on good news as short sellers have to cover. Earnings are due out at the end of the month.
Alcoa (AA, $31.52, up $1.32)
Option: AA August 35 calls
Expiration Date: August 15th
Entry Option Price: $0.42 (6/30/2025)
Current Option Price: $0.80
Exit Target: $2
Return: 90%
Stop Target: 60 cents (Stop Limit)
Action: Fresh support at $31-$30.75 held on Thursday’s dip to $31.13. Resistance from mid-March is at $31.50-$31.75.
ProShares Bitcoin ETF (BITO, $21.07, down $0.06)
Option: BITO August 22 calls
Expiration Date: August 15th
Entry Option Price: $0.60 (6/25/2025)
Current Option Price: $0.70
Exit Target: $1.20
Return: 17%
Stop Target: None
Action: Lower resistance at $21.25-$21.50 was cleared and held with the high hitting $21.31. Support is at $21-$20.75.
A golden cross is a penny away from starting to form with the 50-day moving average tied up with the 200-day moving average. A close above $22 would be a bullish development for a quick trip to $23.50 and our near-term Price Target by mid-August. If reached, these calls will be $1.50 in-the-money. This would give the Alert a return of 150%.
AT&T (T, $28.36, up $0.05)
Option: T August 30 calls
Expiration Date: August 15th
Entry Option Price: $0.40 (6/20/2025)
Current Option Price: $0.35
Exit Target: $0.80
Return: -13%
Stop Target: None
Action: Key resistance is at $28.50 with last week’s fresh 52-week high at $29.19. Key support is at $28. A drop below $27.75 and the 50-day moving average would be a slightly bearish development.
A trading range has been in play from $27-$28.50 since late April with a little stretch to the downside and now to the upside. Typically, the longer the range, the bigger a breakout, or breakdown, can become. We have a near-term target of $30-$32 for the stock. A double would occur, technically, if shares are above $30.80 by mid-August as the call options will be 80 cents in-the-money.
Applied Digital (APLD, $10.45, down $0.11)
Option: APLD July 15 calls
Expiration Date: July 18th, 2025
Entry Option Price: $0.45 (6/16/2025)
Current Option Price: $0.10
Exit Target: $0.90
Return: -78%
Stop Target: None
Action: If shares breach $10 this week, exit the Alert to save the remaining premium. The chart remains bullish so maybe we can roll the remaining premium into a fresh position. If $11 cleared isn’t cleared by Wednesday afternoon, exit the Alert, as well.
Kinross Gold (KGC, $15.86, up $0.29)
Option: KGC July 17 calls
Expiration Date: July 18th, 2025
Entry Option Price: $0.40 (6/13/2025)
Current Option Price: $0.15
Exit Target: $0.80
Return: -63%
Stop Target: None
Action: We are still looking for a surge past $16 over the next 11 days and the premium added a nickel last week. An adjusted ascending triangle is still in play.
If shares fell below $15 and the 50-day moving average ahead of Wednesday’s close, exit the Alert.