MomentumOptions.com Pre-Market Update for 3/30/2023
Trading Ranges Continue
8:00am (EST)
The stock market rebounded on Wednesday to keep the major indexes in mini trading ranges as Wall Street awaits another update on inflation. Friday’s PCE and Consumer Sentiment reports ahead of the opening bell will likely have the biggest impacts on market action this week.
The S&P 500 tested an intraday high of 4,030 while settling at 4,027 (+1.4%). Lower resistance at 4,000-4,050 and the 50-day moving average
were cleared and held. A pop above the latter would indicate another possible run to 4,100-4,150.
The Dow closed at 32,717 (+1%) with the afternoon peak reaching 32,728. Current and lower resistance at 32,500-32,750 was reclaimed. A close above the latter would suggest ongoing strength towards 33,000-33,250 and the 50-day moving average. Slightly rising support is at 32,250-32,000 and the 200-day moving average.
The Nasdaq traded up to 11,941 before ending at 11,926 (+1.8%). Lower resistance at 11,800-11,950 was recovered. A move above the latter would imply additional gains towards 12,000-12,150. Support is at 11,750-11,600 and the 50-day moving average.
Volatility Index
The Volatility Index (VIX) fell for the fourth-straight session with the low at 19.09. Upper support from the start of the month at 19.50-19 was breached and held. A close below the latter would signal ongoing weakness to 18-17.50.
Resistance is at 20-20.50 and the 50-day moving average.
Thursday’s earnings announcements:
Before the open: AngioDynamics (ANGO), Bioventus (BVS), EVgo (EVGO), Hudson Global (HSON), MarketWise (MKTW), Renalytix (RNLX), SmithMidland (SMID)
After the close: Aehr Test Systems (AEHR), BlackBerry (BB), Eyenovia (EYEN), GSE Systems (GVP), Kingstone Companies (KINS), Pioneer Power Solutions (PPSI), Rumble (RUM), Spark Networks (LOV), voxeljet (VJET)
Economic news:
Initial Jobless Claims – 8:30am
GDP – 8:30am
Market Thoughts
The major indexes have remained choppy throughout the month and this week but the push to higher highs is now favoring the bulls with two trading sessions to go. The Dow was on pace to end March in the red but that outlook changed with yesterday’s gains. The blue-chips are now up 61 points and need to hold 32,656 into Friday’s close to get the win.
The Nasdaq was up 3% coming into the week and should hold onto positive territory. Specifically, the index needs to hold 11,455 and is up 471 points for the month. The S&P came into March at 3,970 and is currently up 57 points.
Yesterday’s strength across the board pushed the Dow and S&P towards the top of their current 10-session trading ranges and the Nasdaq’s to the top of its 9-session trading range. Key resistance the bulls need to clear and hold ahead of the weekend and heading into April are at: Dow 33,000; S&P 4,100; and Nasdaq 12,000.
The RSI (relative strength index) levels for the major indexes are in the 50’s and have turned bullish over the near-term. A move back below 50-45 would indicate nervousness is coming back into focus.
This week’s Senate panel hearings have weighed on the Financial sector after the Federal Reserve’s top banking regulator stated the obvious. He said Silicon Valley Bank did a terrible job of managing risk before its collapse.
While some of the Wall Street talking heads have started pounding the table to buy some of the more popular banking stocks, we think headwinds remain in the sector and would wait for lower lows. However, we can use put options or short the Financials if this month’s lows are taken out.
Perhaps the biggest takeaway from yesterday’s action was the fact volatility closed below the 20 level for the second-straight session. We mentioned coming into this week a close below 20, or above 24, could signal the next short-term trend.
For new subscribers, a lower or falling VIX is typically bullish for the market while a rising VIX is bearish for the major indexes. If there is a bullish breakout today or tomorrow, stay locked-and-loaded for possible new trades.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 9-2 (82%). 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 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 Otherwise, follow instructions at all times in the updates on Monday’s and Thursday’s along with the Text Alerts throughout the week.
Intel (INTC, $31.52, up $2.23)
INTC April 27.50 puts (INTC230421P00027500, $0.15, down $0.32)
Entry Price: $0.45 (3/27/2023)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: Shares surged nearly 8% and likely benefitted from Micron’s (MU) 7% pop on lousy earnings. Wednesday’s high touched $31.89 with fresh and lower resistance at $31.75-$32 getting cleared but holding. New support is at $31.25-$31.
We would like to see a close back below $29.50 ahead of the weekend.
Transocean (RIG, $6.74, up $0.06)
RIG April 8 calls (RIG230421C00008000, $0.09, up $0.01)
Entry Price: $0.45 (3/3/2023)
Exit Target: $0.90
Return: -80%
Stop Target: None
Action: RIG jumped 9% on Monday and nearly 8% on Tuesday. Yesterday’s high hit $6.90 with lower resistance at $6.75-$7 getting topped but holding. Support is at $6.50-$6.25.
This trade still has a long way to go before having a shot at being profitable. The calls have doubled this week but we need shares to clear $7 by Friday’s close and $7.50 next week to have a realistic chance.