MomentumOptions.com Pre-Market Update for 2/19/2024
Inflation Remains a Sticky Subject
8:00am (EST)
Video
https://screenpal.com/watch/cZnbfpVdsan
Commentary
The stock market pulled back on Friday following a hotter-than-expected update on inflation. Specifically, wholesale prices for January, the latest sign that some stickiness in the economy remain, rose 0.3%.
This dampened enthusiasm for a near-term rate cut and gave the bears the weekly win, just their second in the past 16. However, volatility remained somewhat subdued after spiking to its highest level of the year earlier in the week.
The Nasdaq ended at 15,775 (-0.8%) after tagging a low of 15,752. Upper support at 15,800-15,650 failed to hold. A fade below the latter would indicate a retest to 15,500-15,350. Resistance is at 16,000-16,150.
The S&P 500 bottomed at 4,999 while finishing at 5,005 (-0.5%). Support at 4,950-4,900 easily held. Continued closes above 5,000 would imply upside towards 5,050-5,100.
The Dow went out at 38,627 (-0.4%) with the low tagging 38,583. Upper support at 38,500-38,250 was approached and held. A drop below the latter would suggest weakness to 38,000-37,750 and the 50-day moving average. Resistance is at 38,750-39,000.
Volatility Index
The Volatility Index (VIX) traded down to 13.75 with upper support at 14-13.50 getting breached but holding. A close back below the latter would be a resumed bullish signal for the market. Key resistance is at 15 and the 200-day moving average.
Monday’s earnings announcements:
Market Closed
Market Thoughts
It was a super busy last week and the market is closed for Monday and President’s Day. We don’t have much to add as far as commentary except a couple of highlights from Thursday that are worth watching for the upcoming week:
“Key support levels are at Dow 37,750; S&P 4,900; Nasdaq 15,600; and Russell 1,950. If any of these levels fail to hold into the weekend, we expect to see lower lows next week.
We always say one day doesn’t make a trend so Tuesday’s selloff has been discounted, as of now. The spike on the VIX cleared and held 15 and the 200-day moving average…but no follow thru.”
The VIX needs a close back below 13.50 this week to keep the bulls in control and all-time highs in play. Continued closes above 15 could be a warning signal for a much needed consolidation period.
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Petróleo Brasileiro (PBR, $17.70, up $0.30)
PBR April 18 calls (PBR240419C00018000, $0.87, up $0.20)
Entry Price: $0.70 (2/12/2024)
Exit Target: $1.40
Return: 24%
Stop Target: None
Action: Key resistance at $17.75 was cleared but held with the 52-week peak kissing $17.80. New support is at $17.50-$17.25.
We remain bullish on PBR with a near-term price target of $20. If shares clear this level by April 19th, the calls will be worth at least $2-$2.10 for a 200% return. Earnings are due out March 7th with the current dividend yield just south of 17%.
Continue to hold:
Snap (SNAP)
SNAP March 20 calls (SNAP240315C00020000)
Ford Motor (F)
F March 11 puts (F240315P00011000)