MomentumOptions.com Pre-Market for 1/30/2018
S&P 500 Suffers Worst Loss Since September
8:00am (EST)
U.S. markets were weak on Monday’s open while trading in negative territory throughout the session and ahead of a busy week for earnings along with Fed news on interest rates.
The Dow fell 0.7% after finishing 4 points off its low of 26,435 to snap a three-session winning streak. The S&P 500 also sank 0.7% while closing 2 points off its low of 2,851.
The Russell 2000 declined 0.6% after settling back below the 1,600 level for the first time in six trading days. The Nasdaq dropped 0.5% after testing a low of 7,455 ahead of the closing bell but has been holding the 7,400 level for 6-straight sessions.
Energy and Utilities showed the most weakness after tanking 1.5% and 1.3%, while Real Estate and Materials fell 1.2% and 1.1%, respectively. There were no sectors that finished in the green.
The FOMC meets today and Wednesday and I’ve mentioned it will be Chair Janet Yellen’s last meeting. No policy action is expected and there’s no press conference scheduled this time around. Additionally, there will not be any updates on the dot plot or economic projections.
Analysts believe the recent strength in GDP and inflation sets the stage for a 25 basis-point tightening at the March 20th, 21st meeting.
As a side note, there are four new voting presidents this year, including Williams, Mester, Bostic, and Barkin, who replaced Harker, Kaplan, Evans, and Kashkari. Additionally, Powell will take the helm in February after Yellen’s term expires on February 3rd. The Fed governor nominee is still waiting Senate confirmation.
Atlanta Fed’s Q1 GDPNow estimate was initiated at 4.2% and significantly higher from the 2.6% advance Q4 reading.
The VelocityShares Daily Inverse VIX (ZIV) sank 2% after testing a low of 87.29. Support at 88.50-88 was breached and now represents short-term resistance. We mentioned a move below 88 would open up risk to 86 and the 50-day moving average with a close below these levels being a bearish development.
The Spider S&P 500 ETF (SPY) traded to an all-time high of $286.63 on Friday with fresh resistance at $288.50-$290 on continued closes above $285. Today’s pullback to $284.50 held short-term support at $284.50-$284 with a close below $282.50 signaling a possible short-term top.
RSI had been extremely elevated with resistance at 90 holding before today’s weakness and levels not seen over the past 5 years. Support is at 75 and levels that have led throughout January. A move back below the latter would likely signal additional weakness towards 70-65.
The Dow Jones Transportation Average ($TRAN) has been holding near-term support at 11,000-10,975 over the past three sessions and an area that represents the early month breakout above these levels. A close below the latter would be a slightly bearish development with additional risk to 10,800.
Lowered resistance is at 11,200-11,250 on continued strength and closes above the 11,000 level. A move above the latter could lead to a retest of recent all-time highs north of 11,400.
RSI recently bottomed near the 50 area and November support. Resistance is at 70 on continued closes above 60 and would signal upcoming strength.
The rest of the week should be exciting and I have a number of bullish and bearish trades on my Watch List to take advantage of the possible volatility. If I take action, I will send out a Trade and Text Alert.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 5-1 (83%). 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.
CNX Resources (CNX, $13.84, down $0.61)
CNX February 15 calls (CNX180216C00015000, $0.20, down $0.15)
Entry Price: $0.50 (1/23/2018)
Exit Target: $1.00
Return: -60%
Stop Target: None
Action: Fresh support is at $13.75-$13.50 following Monday’s backtest to $13.82. Near-term resistance is at $14.50. Resistance is at $14-$14.25. The close below the 50-day moving average was a bearish development and why I have set a Stop Limit.
Cypress Semiconductor (CY, $17.52, up $0.25)
CY February 18 calls (CY180216C00018000, $0.55, up $0.15)
Entry Price: $0.60 (1/23/2018)
Exit Target: $1.20
Return: -9%
Stop Target: None
Action: Lowered resistance at $17.50-$17.75 was cleared on yesterday’s run to $17.61. Support is at $17.25-$17.
Blackberry (BB, $13.00, down $0.43)
BB March 15 calls (BB180316C00015000, $0.25, down $0.10)
Entry Price: $0.47 (1/16/2018)
Exit Target: $1.00
Return: -45%
Stop Target: None
Action: Fresh support is at $13-$12.75 with Monday’s low tapping $12.97. Lowered resistance is at $13.25-$13.50.
Apache (APA, $46.65, down $1.43)
APA February 50 calls (APA180216C00050000, $0.65, down $0.40)
Entry Price: $1.07 (1/16/2018)
Exit Target: $2.10
Return: -34%
Stop Target: None
Action: Support is at $46.50-$46.25. Resistance is at $46.75-$47.
Cadence Design Systems (CDNS, $44.56, down $1.24)
CDNS February 48 calls (CDNS180216C00048000, $0.65, down $0.05
Entry Price: $0.70 (1/16/2018)
Exit Target: $1.40
Return: -8%
Stop Target: None
Action: Support is at $44.25-$44. Resistance is at $44.75-$45. Earnings ate out after Wednesday’s close.