MomentumOptions.com Pre-Market Update for 11/2/2023
Bulls Get Third-Straight Win
8:00am (EST)
Commentary
The stock market showed strength for the third-straight session following the Fed’s decision to keep interest rates unchanged. Chairman Powell did say he would not rule out a rate increase at the December meeting, but Wall Street ignored his hedge to start November on a positive note.
The Nasdaq traded up to 13,072 before settling at 13,061 (+1.6%). Key resistance at 13,000 was cleared and held. Continued closes above this level would imply further strength towards 13,100-13,250 with more important hurdles at 13,350-13,500 and the 50-day moving average. Rising support is at 12,850-12,600 and the 200-day moving average.
The S&P 500 closed at 4,237 (+1.1%) with the intraday peak reaching 4,245. Key resistance at 4,250 and the 200-day moving average held. Continued closes back above these levels would suggest a retest to 4,300-4,350 and the 50-day moving average. Support is at 4,200-4,150.
The Dow made a run to 33,337 before going out at 33,274 (+0.7%). Lower resistance at 33,250-33,500 was recovered. A close above 33,750-34,000 and the 200-day/ 50-day moving averages would be a more bullish development of a near-term bottom. Support is at 33,000-32,750.
Volatility Index
The Volatility Index (VIX) extended its losing streak to three-straight with the low kissing 16.63. Upper support at 17-16.50 was breached and held. A close below the latter and the 50-day moving average would indicate weakness to 15.50-15. Fresh resistance is at 18-18.50.
Thursday’s earnings announcements:
Before the open: Barrick Gold (GOLD), Crocs (CROX), Eli Lilly (LLY), Palantir Technologies (PLTR), Papa John’s International (PZZA), Shopify (SHOP), Starbucks (SBUX), Wendy’s (WEN)
After the close: Apple (AAPL), Block (SQ), CubeSmart (CUBE), Dropbox (DBX), DraftKings (DKNG), GoDaddy (GDDY), Redfin (RDFN), Skyworks Solutions (SWKS), Yelp (YELP), Viavi Solutions (VIAV)
Economic news:
Initial Jobless Claims – 8:30am
Factory Orders – 10:00am
Market Thoughts
The last time Apple (AAPL) reported earnings, it coincided with our timing for the market to peak in late July and early August. For new subscribers, on July 3rd we had this to say:
“As far as possible market tops during earnings season this month and next: Dow 35,250-35,500; S&P 4,550-4,600; and Nasdaq 14,350-14,500.”
The 52-weeks highs: Dow 35,679 on August 1st; S&P 4,607 on July 27th; and Nasdaq 14,444 on July 19th.
Apple will announce numbers after Thursday’s close and will have a major impact on Friday’s action. The company topped forecasts by a nickel in its prior quarter with analysts expecting a Q3 profit of $1.31 a share.
The high number is at $1.37 a share with the low at $1.27. This means a six-cent or four-cent beat or miss could come into play. As far as the technical setup, shares have rebounded off crucial May support at the $165 area and possible double-bottom and oversold conditions from last Friday.
The RSI (relative strength index) tagged 30 last Thursday before closing above 34. Shares were also at oversold conditions, and briefly below 30 in August, after earnings on the gap lower from $192.50-$190 towards the $182.50 level. Shares then made a perfect backtest to $190 by early September before gapping down to $182.50 afterwards.
The close above the 200-day moving average was a slightly bullish signal heading into earnings. Shares could stall at $175 today but we would expect a $10-$15 move on Friday once the dust settles from Thursday’s action in after-hours. A close below $165 would be a bearish development for the stock and the overall market.
It is possible Apple serves as a near-term top in early August and a possible near-term bottom if Wall Street is impressed by their overall numbers.
The recovery of prior support levels by the bulls this week, that served as new resistance, was a bullish development yesterday and levels that need to hold into the weekend. These support levels are at: Nasdaq 13,000; S&P 4,225; and Dow 33,000.
The October jobs report will come out on Friday along with Wall Street’s ongoing reaction to Apple’s earnings. How the week ends should give us a good clue on if a near-term bottom has been made, or if a return to lower lows will be back in play.
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.
Snap (SNAP, $9.99, down $0.02)
SNAP December 11 calls (SNAP231215C00011000, $0.35, down $0.05)
Entry Price: $0.35
Exit Target: $0.70
Return: 0%
Stop Target: None
Action: Yesterday’s low reached $9.81 with upper support at $9.75-$9.50 getting challenged but holding. Resistance is at $10.25-$10.50 and the 200-day moving average.