MomentumOptions.com Pre-Market Update for 6/12/2023
Weekly Winning Streaks Remain Intact
8:00am (EST)
Commentary
The stock market showed continued strength on Friday with the win getting new and prior 52-week highs in play and back in focus. The bull market in the Nasdaq has carried over into the S&P 500 as it wrapped up its fourth-week of gains and is now up over 20% from last October’s lows.
The Nasdaq finished at 13,259 (+0.2%) after kissing a fresh one-year intraday high of 13,385. Current and key resistance at 13,350 was cleared but held. Continued closes above this level would imply strength to 13,500-13,650 and levels from March 2022. Support remains at 13,150-13,000.
The S&P 500 traded to a high of 4,322 before settling at 4,298 (+0.1%). Key resistance at 4,300 was finally cleared but held for the fifth-straight session. A close above this level and the 52-week high at 4,325 from last August would suggest ongoing strength to 4,375-4,425. Support is at 4,250-4,200.
The Dow closed at 33,876 (+0.1%) with the session high at 33,975. Lower resistance at 34,000-34,250 was challenged and held. A close above the latter would suggest a breakout towards 34,500-34,750 with the current 52-week peak at 34,712. Support is at 33,750-33,500 and the 50-day moving average.
Volatility Index
The Volatility Index (VIX) was up for the first time in four sessions with the high hitting 14.14. Fresh and lower resistance at 14-14.50 was topped but held. Support is at 13.50-13.
Monday’s earnings announcements:
Before the open: Optical Cable (OCC)
After the close: Oracle (ORCL), Streamline Health Solutions (STRM), Zedge (ZDGE)
Economic News
Treasury Budget – 2:00pm
Market Thoughts
For the week, the S&P 500 gained 0.4%; the Dow rose 0.3%; and the Nasdaq edged up 0.1% – its 7th-straight positive week. As far as sector strength, Utilities jumped 3.7% while Consumer Staples led the laggards after falling 0.7%.
The biggest test for the market from last week was volatility and how the action in the VIX would unfold. We said a close below 14 would be an ongoing bullish development and lower lows were made throughout the week as this level also held into Friday’s close.
The VIX is now testing levels from February 2020. We have talked about a test towards 13-12.50, and this could this week and how the market reacts to the Fed new. If not this month, then likely during the next earnings cycle that starts in early July.
Given the likely impact the current quarter will have on the overall market, there could be a test towards 10 on the VIX, or a close back above 16 and a run towards 20-22.50 – depending on the earnings numbers. This is still a cloudy and summer crystal ball but we always try to forecast market moves in advance.
As far as the Fed decision on interest rates, Wall Street is anticipating a more than 70% probability the central bank will pause on rate hikes. The unknown curveball will be the comments from Chairman Powell but it seems like pullbacks occur after he gives his two cents.
The one disappointing takeaway from Friday was the action in the small-caps as the Russell 2000 fell 0.8% with longer-term resistance at 1,900 holding. The index was still up nearly 1% for the week but a lower close today by the small-caps, and specifically the 1,800 level, would suggest a near-term top.
It feels like the bears are capitulating with the Nasdaq breaking out to new 52-week peaks throughout last week and the S&P on the verge of doing the same. The collapse in the VIX has confirmed the next leg higher but the bears will be back.
We often say the bulls like to take the stairs higher while the bears prefer the elevator. We ride with both sides as we are neither bullish or bearish on the market. We focus on the trend and trade what the market gives us to take emotion out of the equation.
We hit a massive home-run on Friday with the Petróleo Brasileiro PBR July 12 calls banking us a 243% return, our second biggest winner for 2023. We knew once a breakout from the trading range occurred, we were going to get paid. This pushed the Track Record for 2023 to 15-5 for a 75% win rate.
On that note, we could have 1-2 new trades as early as today so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2023: 15-5 (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 I list one. I will send out a “Profit Alert” or “New Trade” if I 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.
Ford (F, $13.74, up $0.16)
F July 13 calls (F230721C00013000, $1.08, up $0.11)
Entry Price: $0.45 (6/6/2023)
Exit Target: $1.75
Return: 140%
Stop Target: $1, lower to 90 cents (Stop Limit)
Action: Lower the Stop Limit at $1 to 90 cents to give the trade some wiggle room on the open. If tripped, we will still make a triple-digit profit.
Shares tapped a high of $14.03 with fresh and lower resistance at $14-$14.25 getting cleared but holding. Rising support is at $13.50-$13.25.
Verizon (VZ, $35.47, up $0.04)
VZ July 38 calls (VZ230721C00038000, $0.14, unchanged)
Entry Price: $0.40 (5/19/2023)
Exit Target: $0.80
Return: -65%
Stop Target: None
Action: Prior and lower resistance at $35.50-$35.75 was tripped but held with the high at $35.62. Support is at $35.25-$35.