MomentumOptions.com Pre-Market Update for 12/28/2023
Bulls Closing December on a Strong Note
8:00am (EST)
Video
Quick Five-Minute Market Video (this will help you learn technical analysis):
https://screenpal.com/watch/c0luexVHOSI
Commentary
The stock market showed ongoing strength Wednesday with the major indexes pushing another round of 52-week and all-time highs. Earnings and economic news remain light as well as overall volume as the holiday season and 2023 start to wind down.
The Nasdaq tagged a high of 15,114 before settling at 15,099 (+0.2%). Fresh and lower resistance at 15,100-15,250 was cleared but held by a point. A move above the latter would signal ongoing strength towards 15,350-15,500. Support is at 15,000-14,850.
The S&P 500 went out at 4,781 (+0.1%) with the intraday peak at 4,785. Key resistance at 4,800 easily held. Continued closes above this level and the all-time high at 4,819 from January 4th, 2022 would suggest momentum to 4,850-4,900. Support is at 4,750-4,700.
The Dow traded to an all-time high of 37,683 while closing at 37,656 (+0.3%). Undefined and lower resistance at 37,750-38,000 was challenged but held. A close above the latter would indicate further upside towards 38,250-38,500. Support is at 37,500-37,250.
Volatility Index
The Volatility Index (VIX) kissed a low of 12.37 with upper support at 12.50-12 failing to hold. A drop below the latter would imply weakness to 11.75 with the recent 52-week low at 11.81. Resistance is at 13-13.50.
Thursday’s earnings announcements:
Before the open: None
After the close: None
Economic news:
Initial Jobless Claims – 8:30am
Pending Home Sales Index – 10:00am
Market Thoughts
The major indexes continue to trade at and above our near-term market targets from the beginning of the month: Nasdaq 14,850-15,000; Dow 37,000-37,500; and S&P 4,750-4,800. While many talking heads have credited this month’s gains to the typical Santa Claus rally, this time period doesn’t start until the last five days of the year and includes the first two in January.
The average gain over the years for this bullish time period is just above 1% with the bulls off to a good start. If there are overall losses for the major indexes during this time period, it can signal an upcoming pullback, or sometimes even a bear market.
If we add another 1%-2% to our prior price targets for the major indexes, we could see Nasdaq 15,150-15,300; Dow 38,000-38,250; and S&P 4,850-4,900 at some point to close out 2023 or in January.
As far as the Russell, it closed the prior Wednesday below 2,000 but recovered this level the following session. The higher highs this week has the index pushing 2,100 with the all-time high north of 2,300 from June 2021.
The aforementioned numbers represent another 10% gain by the small-caps from current levels if they are going to make a run towards 2,300. Going forwards, continued closes back below 2,000 would likely confirm a near-term top.
As for the other major indexes, key support levels to watch into yearend are at: Nasdaq 14,800; S&P 4,700; Dow 37,000. If these levels fail to hold, there is a good chance the ongoing two-month rally has topped out.
The market will be closed again this Monday so we will not be publishing as we also wind down a much needed break. We are pleased to say 2023 has been one of our best years ever and we are thankful for your patronage. We are going to strive to be even better in 2024 and one that promises to be filled with fresh volatility.
We will be back next Thursday with our next scheduled market update. However, stay locked-and-loaded over the next couple of days in case we take a new trade or two to get a head start going into 2024.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 34-10 (77%). 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, $16.58, up $0.01)
T February 17 calls (T240216C00017000, $0.35, up $0.01)
Entry Price: $0.35 (12/27/2023)
Exit Target: $0.70
Return: 0%
Stop Target: None
Action: Lower resistance at $16.75-$17 easily held with yesterday’s peak at $16.62. Support is at $16.50-$16.25 with backup help at $16 and the 50-day moving average.
A golden cross formed mid-month with the 50-day moving average closing above the 200-day moving average. This is typically a bullish signal for higher highs. We are looking for a retest towards $17-$17.25 over the near-term with a possible breakout towards $20 on earnings that are due out in late January.
Transocean (RIG $6.56, down $0.18)
RIG January 5.50 puts (RIG240119P00005500, $0.05, up $0.01)
Entry Price: $0.20 (12/6/2023)
Exit Target: $0.40
Return: -75%
Stop Target: None
Action: Close the trade this morning to save the remaining premium. We only lost 15 cents so let’s move on. There are too may layers of support to overcome by expiration for this trade to possibly make a profit.