MomentumOptions.com Pre-Market Update for 12/4/2023
Dow Tags Another 52-Week Peak
8:00am (EST)
Video – RSI levels still overbought. SNAP, FL, T, CSCO. Watching 1,900 on the Russell. VIX closes below 12.50 bullish…
https://us06web.zoom.us/rec/share/gxZ2fdo1MLlFAVIIFxr5DgtdTzAGyP20btxbfNhwWkea5SuDtjxa8gjCdjKUWrNd.Rrzy0WpD-VCxt2bW
Passcode: V5@mDC1=
Commentary
The stock market closed out another bullish week with Friday’s gains extending the Dow and S&P’s winning streak to five-straight. Meanwhile, the Nasdaq was up for the fourth-straight week despite remaining in an eight-session trading range.
The Nasdaq snapped a two-session slide after tagging a high of 14,311 while finishing at 14,305 (+0.6%). Current and lower resistance from mid-July at 14,300-14,450 was cleared and held. Continued closes above the latter and the 52-week peak at 14,446 would imply strength towards 14,600-14,750. Support remains at 14,150-14,000.
The S&P 500 went out at 4,594 (+0.6%) with the high at 4,599. Mid-July and lower resistance at 4,575-4,600 was reclaimed. A close above the latter and the 52-week high at 4,607 would suggest a breakout to 4,650-4,700. Support is at 4,550-4,500.
The Dow traded to a 52-week high of 36,264 before settling at 36,245 (+0.8%). Fresh and lower resistance at 36,250-36,500 was cleared but held. A pop above the latter would imply further upside towards 36,750-37,000. Rising support is at 36,000-35,750.
Volatility Index
The Volatility Index (VIX) bottomed out at 12.48 with key support at 12.50 getting tripped but holding for the fourth time in five sessions. Continued closes below this level would indicate weakness towards 12.25-12. Resistance is at 13-13.25 with backup at 14-14.25.
Monday’s earnings announcements:
Market Thoughts
The rally off of the October lows continues to impress with the technical outlook doing a complete turnaround. For November, the Nasdaq zoomed 10.7% while the S&P and Dow soared 8.9% and 8.7%, respectively.
This week’s follow thru on the Dow and slight consolidation patterns in the Nasdaq and the S&P were much anticipated with RSI (relative strength index) levels pushing and above 70 coming into last week. We mentioned overbought (and oversold) levels can take days and weeks to play out so no surprise here, either.
The Dow, however, has become extremely overbought with RSI now above 80. The S&P is at 73 and could max out at 75. The Nasdaq is at 68 and has struggled in clearing and holding 70 for three weeks.
December is typically a bullish month for the overall market with the small-caps outperforming mid-month and something we have been highlighting. On Friday alone, the Russell 2000 soared nearly 3% while recovering mid-September resistance at 1,850.
The more important hurdle to watch going forward is at 1,900. If the small-caps can’t clear this level over the next few weeks, there might not be a Santa Claus rally to close out 2023.
As far as this week, trading could be rangebound ahead of Friday’s November jobs report. The results could confirm to Wall Street that the Fed is done hiking rates. Economists are expecting a print of 190,000 payrolls. The Fed’s next meeting and last for 2023 is next week.
As a reminder, key support levels to watch over the near-term: Nasdaq 14,200-14,050; S&P 4,525-4,475; and Dow 35,000-34,750. As far as the VIX, a close above 14.50-15 would be a warning sign the market is topping out.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 32-9 (78%). 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.
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AT&T (T, $16.76, up $0.19)
T January 16 calls (T240119C00016000, $0.95, up $0.15)
Entry Price: $0.40 (11/15/2023)
Exit Target: $1.20
Return: 138%
Stop Target: 60 cents, raise to 80 cents (Stop Limit)
Action: Raise the Stop Limit at 60 cents to 80 cents to ensure a triple-digit profit.
Fresh and lower resistance at $16.75-$17 was cleared but held with the peak reaching $16.33. Support remains at $16-$15.75 and the 200-day moving average.
Petróleo Brasileiro (PBR, $15.21, down $0.06)
PBR December 16 calls (PBR231215C00016000, $0.15, unchanged)
Entry Price: $0.40 (11/2/2023)
Exit Target: $0.80
Return: -63%
Stop Target: None
Action: Friday’s low kissed $15.11 with upper support at $15.25-$15 failing to hold. A close below the latter and the 50-day moving average would force us out of the trade. Resistance is at $15.75-$16.