MomentumOptions.com Pre-Market for 2/23/2018
Near-Term Resistance Levels Continue to Hold
8:00am (EST)
The market continued this week’s pattern of trading higher into the afternoon before experiencing final hour weakness to settle mixed on Thursday. Traders continue to watch the action in the 10-year note as it inches closer to a 3% yield before deciding to commit new money or bail on a possible market pullback, if triggered.
The Dow gained 0.6% after holding positive territory throughout the session while testing a high of 25,156. Resistance at 25,000 held for the third-straight session.
The S&P 500 climbed 0.1% after reaching an intraday peak of 2,731 before sliding below 2,700 late in the day. The index held this level for the fifth-straight session despite the final hour fade.
The Nasdaq gave back 0.1% to extend its losing streak to 4-straight sessions and its longest since November 2016. The index held the 7,200 level for the 5th-straight session following a backtest to 7,194.
The Russell 2000 also slipped 0.1% after testing 1,548 while failing its 50-day moving average for a 4th-straight session.
Real Estate and Energy rebounded from prior session losses to led sector strength after rising 1.1%. Financials and Health Care were the only sector laggards after falling 0.8% and 0.2%, respectively.
The VelocityShares Daily Inverse VIX (ZIV) made a run to 69.62 while holding green throughout the day. Resistance at 70.50-71 held for the 5th-straight session. Support remains at 68-67.50.
The Spiders Dow Jones Industrial Average ETF (DIA) traded higher for the 7th time in 9 sessions following today’s push to $251.36. Near-term resistance at $251-$251.50 and the 50-day moving average held with a close back above the latter being a continued bullish development. Support is at $248.50-$248 with a move below the latter being a bearish signal with risk to $245.
RSI is trying to clear and hold near-term resistance at 50 with continued closes above this level being a bullish signal for a possible push towards 60 and prior November support levels. There is risk to 40 on a pullback.
The Consumer Discretionary Select Spiders (XLY) has been in a tight range over the past five sessions following the recent close back above its 50-day moving average earlier this month. Resistance is at $105-$105.50 with a close above $106 being a bullish signal. Near-term support at $104.25-$103.75 with a move below the latter signaling additional weakness.
RSI has been holding near-term support at 50 with a close below this level leading to a possible backtest to 40. Resistance is at 60 that represented October and early November support levels.
The portfolio is once again light after closing another winning trade yesterday and making 57 cents in premium with INTC call options. We also made 50 cents in premium on ORCL call options. This gives us a little wiggle room with our current call option trades as the premiums for both trades were 50 cents or less.
I still like these trades going forward but the regular March call options expire in 3 weeks from today. I refer to this time period as the danger zone for option trades as time decay will start having a much more impact on premiums.
We can hold them into next week to see how things go although I could close half positions to save some premium if there is continued weakness in the names today. If I take action, I will send out a Trade Alert.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 8-5 (62%). 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.
Bank of America (BAC, $31.69, down $0.18)
BAC March 33 calls (BAC180316C00033000, $0.20, down $0.05)
Entry Price: $0.50 (2/15/2018)
Exit Target: $1.00
Return: -60%
Stop Target: None
Action: Upper support at $31.75-$31.50 was breached with yesterday’s,low tapping $31.59. Resistance is at $32.
Viavi Systems (VIAV, $9.66, down $0.15)
VIAV March 10 calls (VIAV180316C00010000, $0.20, down $0.05)
Entry Price: $0.45 (2/6/2018)
Exit Target: $0.90
Return: -55%
Stop Target: None
Action: Upper support at $9.75-$9.50 failed on Thursday’s backtest to $9.61 and is now resistance.
