MomentumOptions.com Pre-Market Update for 11/9/2023
Nasdaq, S&P Extend Winning Streaks
8:00am (EST)
Commentary
The stock market was mostly higher on Wednesday as Wall Street absorbed another round of corporate earnings amid a quiet week concerning economic news. The Dow had its seven-session winning streak snapped while the S&P and Nasdaq extended theirs to eight and nine, respectively.
The Nasdaq went out at 13,650 (+0.1%) after trading up to 13,684. Current and lower resistance at 13,700-13,850 easily held. A move above the latter would signal strength towards 13,950-14,100. Support is at 13,500-13,350 and the 50-day moving average.
The S&P 500 tapped a high of 4,391 while settling at 4,382 (+0.1%). Lower resistance at 4,400-4,450 was challenged and held. A pop above the latter would imply further upside towards 4,500-4,550. Key support is at 4,350 and the 50-day moving average.
The Dow closed at 34,112 (-0.1%) with the intraday low hitting 33,996. Upper support at 34,000-33,750 was breached but held. A close below the latter and the 50/ 200-day moving averages would suggest a retest to 33,500-33,250. Resistance is at 34,250-34,500.
Volatility Index
The Volatility Index (VIX) extended its losing streak to eight-straight sessions after kissing a low of 14.30. Mid-September and upper support at 14.50-14 was reclaimed. A drop below the latter would indicate ongoing weakness towards 13.50-13. Lowered resistance is at 15-15.50.
Thursday’s earnings announcements:
Before the open: Fiverr International (FVRR), Sony (SONY), Utz Brands (UTZ), Valvoline (VVV), Yeti (YETI)
After the close: Doximity (DOCS), Petroleo Brasileiro (PBR), Plug Power (PLUG), Trade Desk (TTD), Vuzix (VUZI), Wynn Resorts (WYNN)
Economic news:
Initial Jobless Claims – 8:30am
Market Thoughts
We knew there would be some consolidation this week given last week’s 6% surge for the overall market. The fact higher highs have been made is even more bullish as a base of support is being built. Of course, the technical outlook can change on a dime but the action is what we have anticipated.
The biggest development this week has been the continued closes below 15 on the VIX. Its trading range has mirrored that of the major indexes. Continued closes below 14-13.50 this month could lead to a retest towards 13.25-12.75 at some point in December.
As far as warning signals for a market top, continued closes back above 17-17.50 and the major moving averages on the VIX would be a bearish development. There will be plenty of warning signs in advance so this will also help with taking profits when we can.
The RSI (relative strength index) levels for the major indexes have flattened out and are hovering around 60 across the board. This is a neutral reading after being oversold at 30 in late October. A continued run to 70 and overbought levels could come into play at a later date and we have talked about weakness to 50 on a market pullback.
Key resistance levels the bulls need to clear and hold into Friday’s close are at: Dow 34,250; S&P 4,400; and Nasdaq 13,700. Granted, these are within spitting distance and levels that were challenged and breached yesterday, but these small wins would be bullish for next week.
A continued trade range would also be slightly bullish as long as near-term support levels hold and lower lows aren’t made. We will have a better idea on how the back half of the month unfolds once this week’s dust settles along with better setups on some of the other trades we are watching. For now, let’s go check on our current positions.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 27-9 (75%). 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.
Petróleo Brasileiro (PBR, $14.96, down $0.47)
PBR December 16 calls (PBR231215C00016000, $0.20, down $0.15)
Entry Price: $0.40 (11/2/2023)
Exit Target: $0.80
Return: -50%
Stop Target: None
Action: Yesterday’s low touched $14.85 with upper support at $15-$14.75 and the 50-day moving average failing to hold. Resistance is at $15.25-$15.50.
Snap (SNAP, $11.23, up $0.27)
SNAP December 11 calls (SNAP231215C00011000, $0.80, up $0.14)
Entry Price: $0.35 (10/31/2023)
Exit Target: $1.05
Return: 129%
Stop Target: 42 cents, raise to 65 cents (Stop Limit)
Action: Raise the Stop Limit at 42 cents to 65 cents to further protect profits.
Shares traded to a high of $11.25 with late July and lower resistance at $11.25-$11.50 getting kissed and holding. New support is at $11-$10.75. There is a huge gap up to fill from $11.50 to $12.50 that could come quick on continued closes above the former.