MomentumOptions.com Pre-Market Update for 9/25/2023
Nasdaq Holds August Lows
8:00am (EST)
Commentary
The stock market was weak for the fourth-straight session with Friday’s losses pushing fresh monthly lows. The broader market and the blue-chips also took out their August intraday lows while Tech avoided this outcome, for the time being.
The Nasdaq went out at 13,211 (-0.1%) after trading down to 13,200. Key support at 13,200 was kissed and held. A close below this level and the August 18th low at 13,161 would signal weakness towards 13,000-12,850. Resistance is at 13,350-13,500.
The S&P 500 tagged a low of 4,316 while settling at 4,320 (-0.2%). Key support from mid-June at 4,325 failed to hold. Continued closes below this level would imply a further slide towards 4,300-4,250. Resistance is at 4,350-4,400.
The Dow closed at 33,963 (-0.3%) with the late day low hitting 33,947. Key support from late August at 34,000 failed to hold. Continued closes below this level would suggest a further retest to 33,750-33,500 and the 200-day moving average. Lowered resistance is at 34,250-34,500.
Volatility Index
The Volatility Index (VIX) fell for the first time in six-sessions following the opening pullback to 15.93. New and upper support at 16-15.50 was tripped but held. A move back below 15 and the 50-day moving average would be a more bullish development for the market. Resistance is at 17.50-18 and the 200-day moving average.
Monday’s earnings announcements:
Before the open: None
After the close: Puyi (PUYI), THOR Industries (THO)
Economic News
None
Market Thoughts
For the week, the Nasdaq dropped 3.5%; the S&P fell 3%; the Dow declined 2%. So far this month, the S&P 500 has sank 4.2%; the Nasdaq has tanked 5.9%; and the Dow is down 2.2%.
The technical damage is more of a concern as the major indexes are at, or just below our September 11th support targets. For new subscribers, here were our comments:
“As far as key support / resistance levels to watch going forward: Dow 34,000-35,000; Nasdaq 13,200-14,200; and S&P 4,350-4,550. These are nice round numbers to remember and ALSO highlight a trading we mentioned could be developing into earnings season.
Continued closes below or above the aforementioned levels will likely lead to a double-digit pullback of at least 10% by late October, or a retest to fresh 52-week highs, over the next month or two.”
This week will be crucial on if there will be the start of a possible 10% pullback by the end of October with earnings season just a couple of weeks away. We often talk about stretch (to the upside and downside) so it will be interesting to see how the Dow and S&P respond by Monday’s close as both settled below our aforementioned support targets on Friday.
The Nasdaq held its key support level at 13,200 to the point on Friday with lower closes across the board on Monday being an ongoing bearish development.
On Thursday, we talked about RSI levels for the major indexes testing 35-30 and the August lows. All of them closed below 35 and held 30 on Friday so a rebound this week is a good possibility. However, it is important to note, RSI levels for the major indexes did fall below 30 last year in late September so we wouldn’t be surprised to see history repeat itself.
As far as the VIX, we are expecting another test towards 20 on a break above the 200-day moving average if the market does test lower lows to start the week. Continued closes back below 15 and the 50-day moving average would signal a possible near-term market bottom.
There will be a lot of chatter this week about the looming government shutdown as the current spending laws are due to expire on September 30th. House Republicans on Thursday sent the chamber into recess, delaying further developments in the negotiations.
We wouldn’t read to much into this as the market has done well during brief government shutdowns as agreements are always reached.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 21-9 (70%). 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, $8.69, up $0.06)
SNAP October 9 puts (SNAP231020P00009000, $0.68, down $0.04)
Entry Price: $0.65 (9/19/2023)
Exit Target: $1.30
Return: 5%
Stop Target: None
Action: Lower resistance at $8.75-$9 was cleared but held with the high at $8.89. Support is at $8.50-$8.25. There is risk to $8-$7.75 if the latter fails to hold.
Petróleo Brasileiro (PBR, $15.08, up $0.10)
PBR October 16 calls (PBR231020C00016000, $0.22, up $0.02)
Entry Price: $0.35 (9/14/2023)
Exit Target: $0.70
Return: -37%
Stop Target: None
Action: Friday’s peak reached $15.27 with lower resistance at $15.25-$15.50 getting topped but holding. Support is at $15-$14.75.
The 52-week high is at $16.32 and we believe a push to $16.50-$17 could come on a breakout above $15.50.
Barrick Gold (GOLD, $15.79, down $0.24)
GOLD October 17 calls (GOLD231020C00017000, $0.15, down $0.05)
Entry Price: $0.45 (8/29/2023)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: Upper support at $16-$15.75 failed to hold following the pullback to $15.78. Resistance is at $16.25-$16.50 and the 50-day moving average.