Consumer Staples Select Spiders (XLP) Worth a Look

Consumer Staples Select Spiders (XLP, $64.85, up $0.55)

XLP September 65 calls (XLP200918C00065000, $0.80, up $0.15)

Entry Price: $0.70 (8/17/2020)

Exit Target: $1.40

Return: 14%

Stop Target: None

Action: Lower resistance at $64.50-$65 was recovered with shares closing on the session high of $64.85. Support remains at $64-$63.50.

sc.png Index and Earnings Options Play List for 8/17/2020

Bulls Get Weekly Win Despite Friday’s Flat Action

The market lost ground on Friday following a flood of economic news and inaction from Congress on developments for a coronavirus relief package. No deal was announced on that front as lawmakers have broken for recess until Labor Day.

Despite the flat session, the major indexes posted another winning week and remain on track to test old and new higher highs after advancing their winning streaks to 3 and 4 weeks.

The Nasdaq tested a low of 10,972 before finishing at 11,019 (-0.2%). Current support at 11,000 was breached but held with a close below this level indicating additional downside weakness towards the 10,750 area.


The Dow settled slightly higher despite tapping an intraday low of 27,759 while finishing 27,931 (+0.1%). Key support at 27,750 was challenged but held for the 3rd-straight session with a move below this level getting 27,250 back in focus.


The S&P 500 traded to a low of 3,361 before ending at 3,372 (-0.02%). Near-term support at 3,350 was challenged but held with a move below this level suggesting further weakness towards the 3,300 area.


The Russell 2000 closed at 1,577 (-0.1%) after tagging a morning low of 1,567. Crucial resistance at 1,575 was tripped but held with a close below this level suggesting a further pullback towards the 1,550 level. Below is a chart of the IWM.


Monday’s (8/17/2020) earnings announcements (JD, CWCO, BEST…)

Monday’s (8/17/2020) earnings announcements:

Before the open: Consolidated Water (CWCO), Eagle Point Credit (ECC), Gulf Resources (GURE), (JD), Milestone Scientific (MLSS), Niu Technologies (NIU), SWK Holdings (SWKH)

After the close: Americas CarMart (CRMT), Best (BEST), China Biologic Products (CBPO), Dolphin Entertainment (DLPN), Edison Nation (EDNT), Fabrinet (FN), Progressive Care (RXMD), Social Reality (SRAX)

Economic News:

NAHB Housing Market Index – 10:00am

Analyst Upgrades/ Downgrades

Analyst Upgrades/ Downgrades
Estee Lauder (EL) upgraded to Outperform from Perform at Oppenheimer
Halliburton (HAL) upgraded to Conviction Buy from Buy at Goldman Sachs
Schlumberger (SLB) upgraded to Overweight from Equal Weight at Wells Fargo
Baker Hughes (BKR) downgraded to Buy from Conviction Buy at Goldman Sachs
BJ’s Wholesale (BJ) downgraded to Hold from Buy at Deutsche Bank
Deere (DE) was downgraded to Underweight from Neutral at JPMorgan

Consumer Discretionary Select Spiders (XLY) Stays Hot

The Consumer Discretionary Select Spiders (XLY) extended its winning streak to 4-straight sessions after tapping an intraday and fresh all-time high of $129.52. New and lower resistance at $129.50-$130 was cleared but held. A close above the latter would be an ongoing bullish signal for additional strength towards $131.50-$132, depending on momentum.

Current support is at $128.50-$128. A close below the $127.50 level would signal a possible near-term top with backtest potential towards $126-$125.50.

RSI remains in an uptrend after closing above lower resistance at 65-70 with the December peak at 75. Key support is at 60 with a move below this level signaling additional weakness towards 55-50.


Checking in on Volatility

The S&P 500 Volatility Index ($VIX) fell for the 3rd-straight session despite trading to a high of 16.32 shortly after the open. Lower resistance at 16.50-17 was challenged but held. A close back above the 17.50 level would be a bearish development with risk towards 19.50-20.

Upper support at 15.50-15 was recovered on the late day fade to 15.02 afterwards. A close below the latter and the 200-day moving average would be an ongoing bullish signal but with more important recovery levels at 14-13.50 and the 50-day moving average.