MomentumOptions.com Pre-Market Update for 6/15/2023
Bulls Push Another Round of 52-Week Peaks
8:00am (EST)
Commentary
The stock market was mostly higher on Wednesday after the Fed left interest rates unchanged. This wasn’t much of a surprise after inflation data on Tuesday showed prices rose less than expected in May.
The Nasdaq traded to a 52-week high of 13,661 while ending at 13,626 (+0.4%). Current and key resistance at 13,650-13,800 was cleared but held. A close above the latter would suggest ongoing upside towards 13,850-14,000. Support is at 13,550-13,400.
The S&P 500 closed at 4,372 (+0.1%) with the fresh 52-week peak reaching 4,391. New and lower resistance at 4,375-4,425 was topped but held. A move above the latter would indicate additional strength to 4,450-4,500. Support is at 4,325-4,275.
The Dow tested an afternoon low of 33,783 before finishing at 33,979 (-0.7%). Upper support at 34,000-33,750 failed to hold. A close below the latter would signal another retest towards 33,500-33,250 and the 50-day moving average. Resistance is at 34,250-34,500.
Volatility Index
The Volatility Index (VIX) was down for the second-straight session following the intraday slide to 13.83. Current and upper support at 14-13.50 failed to hold. Resistance is at 14.50-15.
Thursday’s earnings announcements:
Before the open: Jabil (JBL), Kroger (KR)
After the close: Adobe (ADBE)
Economic news:
Initial Jobless Claims – 8:30am
Import and Export Prices – 8:30am
Empire State Manufacturing Survey – 8:30am
Philadelphia Fed Business Outlook Survey – 8:30am
Industrial Production – 9:15am
Business Inventories -10:00am
Market Thoughts
The first thing to discuss is the RSI (relative strength index) levels on the major indexes as we talked about the Nasdaq clearing 70 coming into the week. The S&P joined the club on Monday and closed above 72 yesterday. Obviously these are overbought conditions but that could continue for days and possibly weeks.
The Nasdaq pushed RSI up to 80 back in October 2021 and August 2020. The S&P did the same but actually topped 80 during the former month. As for the Dow, it has reversed course after settling below 60 yesterday. The blue-chips consists of 30 stocks and doesn’t carry the same impact as the broader market and Tech so this should override the bullish thesis.
Volatility spiked towards 15 on Monday and Tuesday but held this level, for the most part, with closes at 15.01 and 14.61. For the bears, continued closes above 15 would get a test towards 16.50-17 and the 50-day moving average in focus while signaling a near-term top for the market.
Last Friday’s 52-week low on the VIX kissed 13.50 with continued closes below this level implying ongoing market strength. It wouldn’t be too surprising to see a trading range develop between 13.50-15 but the back half of June is typically weak.
If there is a return to weakness, the first major support areas for the Nasdaq and the S&P are at 13,250 and 4,300, respectively. These round numbers represent prior breakout levels from the first week of the month. As for the Dow, the 50-day moving average has leveled out with the index likely on track to test this area ahead of the weekend.
We will have a better forecast of the back half of the month once this week concludes. If RSI levels on the S&P and the Nasdaq fall back below 70 into Friday’s close, a near-term top is likely playing out.
We have had a busy week with Profit Alerts and New Trades so let’s go check the tape as we have a lot to cover.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 15-5 (75%). 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.
Pfizer (PFE, $39.36, down $0.92)
PFE July 42.50 calls (PFE230721C00042500, $0.14, down $0.15)
Entry Price: $0.24 (6/13/2023)
Exit Target: $0.50
Return: -44%
Stop Target: None
Action: Yesterday’s low tapped $39.31 with upper support at $39.50-$39.25 failing to hold. Resistance is at $40-$40.25.
These were “cheap” options we wanted to get into after shares were flirting with and cleared $40. There is risk to $38 if the 50-day moving average fails to hold.
Ford (F, $14.20, up $0.07)
F July 13 calls (F230721C00013000, $1.44, up $0.07)
Entry Price: $0.45 (6/6/2023)
Exit Target: $1.75 (closed half at $1.34 on 6/13)
Return: 209%
Stop Target: $1.10, raise to $1.20 (Stop Limit)
Action: Raise the Stop Limit at $1.10 to $1.20. Yesterday’s low was $1.23.
Shares tested a high of $14.45 with new and lower resistance at $14.25-$14.50 getting cleared but holding. Rising support is at $14-$13.75.
Shares have become overbought with RSI above 75 but we would like to see a pop above $14.50 before a pullback. The calls peaked at $1.65 yesterday.
Verizon (VZ, $35.73, up $0.25)
VZ July 38 calls (VZ230721C00038000, $0.14, unchanged)
Entry Price: $0.40 (5/19/2023)
Exit Target: $0.80
Return: -65%
Stop Target: None
Action: Prior and lower resistance at $35.75-$36 was topped but held with the high hitting $35.98. Support is at $35.50-$35.25.