MomentumOptions.com Pre-Market for 2/12/2018
Whipsaw Action Continues
9:30am (EST)
The market showed continued weakness throughout Friday’s session while setting fresh 2018 lows before surging into positive territory ahead of the closing bell. The whipsaw action in the final hour of trading wrapped up a volatile week with heavy weekly losses not seen in two years.
The Dow jumped 1.4% to after testing a low of 23,360 while closing back above the 24,000 level. The S&P 500 soared 1.5% to reclaim the 2,600 level after tumbling to an intraday low of 2,532 and breaching its 200-day moving average. For the week, both indexes fell 5.2% to post their worst losses since January 2016.
The Nasdaq was higher by 1.4% after trading down to 6,630 and within 1% of its 200-day moving average. The rebound past 6,900 and close just below this level was slightly bullish but the lower highs and lower lows throughout the week remain a bearish signal.
The Russell 2000 gained 1% after tapping an intraday low of 1,436 and September support. The index fell below its 200-day moving average for the first time since August before holding this level into the closing bell.
The Nasdaq finished the week 5.1% lower, representing its worst week since early February of 2016, while the small-caps gave back 4.5%.
Technology was up 2.5% while Real Estate and Utilities added 2.4% and 2.1%, respectively. Energy was the only sector laggard after slipping 0.2%.
For the week, Financials and Technology sank 9.5% while Industrials and Health Care dropped 8.3% and 8.2%. Utilities were down 2.7% and was the least damaged as there were no sectors that closed higher for the week.
The VelocityShares Daily Inverse VIX (ZIV) tested a late session low of 61 with March 2017 support at 60 holding. A close below this level would be a continued bearish development for the market. The rebound to 67.27 cleared lower resistance at 65-67.50 with continued closes above the latter signaling a possible short-term bottom.
RSI is trying to hold near-term support at 20 with risk to 15-10 on another close below this level. Resistance is at 30.
The Russell 3000 Index ($RUA) fell just south of 1,500 and its 200-day moving average before holding both levels into the closing bell. This area also represents the late September breakout above 1,500 and will try to hold on another backtest. Near-term resistance is at 1,550-1,560 with continued closes back above the latter signaling a possible short-term bottom.
RSI is trying to hold November 2016 support at 30 with a close back below this level being a warning sign for lower lows. Resistance is at 35-40.
The Materials Select Sector (XLB) traded down to $56.62 with September support at $56.50-$56 and the 200-day moving average holding. A close below the latter would be a continued bearish development. Lowered resistance is at $58.75-$59 following the late day bounce to $58.87. XLB is roughly 10% off its January high just north of $64.
RSI is at 2-year lows with resistance at 40. Support is at 30-25.
I could have New Trades today so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 5-5 (50%). 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 “Hard Stops” entered to close any trades or “Exit 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 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send a Trade Alert outside of these time frames.
Viavi Systems (VIAV, $9.70, down $0.07)
VIAV March 10 calls (VIAV180316C00010000, $0.35, down $0.03)
Entry Price: $0.45 (2/6/2018)
Exit Target: $0.90
Return: -22%
Stop Target: None
Action: Upper support at $9.75-$9.50 failed hold into Friday’s close. Resistance remains at $10.
Marvell Technology (MRVL, $21.30, up $0.56)
MRVL May 24 calls (MRVL180518C00024000, $0.75, up $0.10)
Entry Price: $0.83 (2/6/2018)
Exit Target: $1.70
Return: -12%
Stop Target: None
Action: Resistance is at $21.50-$21.75. Support is at $21.