MomentumOptions.com Pre-Market Update for 1/18/2024
Key Support Levels in Play as VIX Clears 15
8:00am (EST)
Video:
Here is yesterday’s video update we made on earnings and the current technical setup for the major indexes.
https://screenpal.com/watch/cZVbraVJF3M
Commentary
The stock market showed weakness for the second-straight session as the rise in yields has pushed professional traders and Wall Street to the sidelines. Specifically, the 10-year Treasury yield cleared 4.1% and appears to be headed higher with the fourth-quarter earnings season just getting started.
The Nasdaq traded down to 14,706 while settling at 14,855 (-0.6%). Key support at 14,800 was tripped but held. Continued closes below this level would suggest an ongoing fade towards 14,650-14,500. Resistance is at 15,000-15,150.
The S&P 500 went out at 4,739 (-0.6%) with the low at 4,714. Key support at 4,700 easily held. A drop below this level would be a slightly bearish signal for additional weakness to 4,650-4,600 and the 50-day moving average. Lowered resistance is at 4,750-4,800.
The Dow bottomed at 37,132 before finishing at 37,266 (-0.3%). Key support at 37,000 held. A drop below this level would imply a further slide towards 36,750-36,500 and the 50-day moving average. Resistance is at 37,500-37,750.
Volatility Index
The Volatility Index (VIX) was up for the third-straight session with the peak reaching 15.40. Lower resistance at 15-15.50 was cleared but held. A close above the latter and the 50-day moving average would be a very bearish development for the market. Fresh support is at 14-13.50.
Thursday’s earnings announcements:
Before the open: Fastenal (FAST), KeyCorp (KEY), Taiwan Semiconductor Manufacturing (TSM), Truist Financial Corporation (TFC)
After the close: J.B. Hunt Transport Services (JBHT), PPG Industries (PPG)
Economic news:
Initial Jobless Claims – 8:30am
Philadelphia Fed Manufacturing Survey – 8:30am
Building Permits – 8:30am
Housing Starts- 8:30am
Market Thoughts
The Dow and S&P remain in one-month plus trading ranges with both near the bottom and holding key support at 37,000 and 4,700, respectively. Both indexes were pushing all-time highs just last week so a breather was due and comes just ahead of the heart of earnings season. A close below these levels, however, would be a concern.
The Nasdaq is also in a fragile state after failing to reclaim 15,000 for three-straight sessions and backing away from this level on Wednesday. The Russell struggled to regain footing above 1,950 coming into the week and nearly closed below 1,900 yesterday.
If the Nasdaq closes below 14,800 and the Russell fails to hold 1,900 it will likely pull the Dow and S&P below their aforementioned key support levels. We mentioned the Russell would likely give us a great clue on when the bears are starting to make their move so let’s see if they remain aggressive. If the bulls make a stand and hold the line, continued trading ranges could last into month end.
Checking in on the RSI (relative strength index) levels for the major indexes, all of them are just above 50 and holding key support. A close below this level across the board would be another bearish signal for the market. A rebound would let us know the bulls intend to keep the trading ranges intact.
Before going, we have talked about a close above 13.50 for a couple of weeks on the VIX being a yellow light with wiggle room up to 14.50. We said on Monday if the bears recover 15-15.50 it would be time to look for more bearish setups and why we have stayed on the sidelines this week.
If a trading range continues, we can still be patient and wait for February to roll in and when the fireworks will likely begin. If the bears remain aggressive, we could have New Trade alerts so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2024: 1-0 (100%). 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 we list one. We will send out a “Profit Alert” or “New Trade” if we 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.
AT&T (T, $16.41, down $0.03)
T February 18 calls (T240216C00018000, $0.08, unchanged)
Entry Price: $0.26 (1/5/2024)
Exit Target: $0.75
Return: -69%
Stop Target: None
Action: Lower resistance at $16.50-$16.75 was cleared but held on the pop to $16.63. Support is at $16.25-$16 and the 50-day moving average.
Earnings are due out next Wednesday before the open.
ProShares UltraPro Short QQQ (SQQQ, $13.72, up $0.23)
SQQQ February 16 calls (SQQQ240216C00016000, $0.30, up $0.05)
Entry Price: $0.60 (1/3/2024)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: Prior and lower resistance from late December at $14-$14.25 was cleared but held following the push to $14.15. Rising support is at $13.50-$13.25.