NextOptions.com Market Update for 11/12/2018

U.S. markets showed continued weakness on Monday as a rise in the U.S. dollar and lingering worries about global trade weighed on sentiment. Oil price concerns also played a role after Saudi Arabia said it would cut its oil production, while the Organization of the Petroleum Exporting Countries said it is also considering a more sweeping reduction of output.

The major indexes hit their lows late in the day on reports the White House was circulating a draft report on auto tariffs. Volatility spiked nearly 18% while closing back above a key level of resistance.

The Nasdaq plunged 2.8% after trading to an intraday low of 7,193. Fresh and late October support at 7,200-7,150 held with the index giving back its gains for the month.

The S&P 500 sank 2% with the low reaching 2,722 on the close back below the 200-day moving average. Upper support at 2,725-2,700 held by a point with risk to 2,650-2,600 on a close below the latter.

The Dow tanked 2.3% following the pullback to 25,340 while closing back below its 50-day moving average. Fresh and upper support at 25,400-25,200 failed to hold into the close with a move below the latter being a continued bearish signal.

The Russell 2000 fell 2% after tapping a session low of 1,518. Lower support at 1,525-1,520 was breached and keeps further risk towards 1,500-1,490 in play.

Real Estate gained 0.2% and was the only sector that showed strength. 

Technology easily paced sector weakness after plummeting 3.5%. Energy was off 2.2% while Financials, Consumer Discretionary and Industrials were down 2.1%, respectively.

 

Analyst Upgrades/ Downgrades

Armstrong World (AWI) upgraded to Neutral from Underperform at BofA/Merrill

Crocs (CROX) upgraded to Neutral from Negative at Susquehanna

Starbucks (SBUX) upgraded to Buy from Hold at Argus

AB InBev (BUD) downgraded to Hold from Buy at Argus 

Cheesecake Factory (CAKE) downgraded to Underweight from Equal Weight at Barclays 

Skyworks Solutions (SWKS) downgraded to Neutral from Buy at Citi

 

Earnings announcements

Tuesday’s earnings announcements:

Before the open: Advance Auto Parts (AAP), Beazer Homes (BZH), Cae (CAE), Eyenovia (EYEN), Home Depot (HD), National Vision Holdings (EYE), Optinose (OPTN), Tyson Foods (TSN)

After the close: Boxlight (BOXL), Cardlytics (CDLX), Five Point Holdings (FPH), iCad (ICAD), PetIQ (PETQ), Resideo Technologies (REZI), Switch (SWCH), Tilray (TLRY), Wix.com (WIX)

 

Upcoming Economic News

Tuesday’s economic reports (EST): 

NFIB Small Business Optimism Index – 6:00am

Redbook – 8:55am

Treasury Budget – 2:00pm

 

Metals/ Oil

Gold closed at $1,203.50 an ounce, down $5.10

Silver settled at $14.01 an ounce, down $0.13

Copper finished at $2.68 a pound, unchanged

Crude Oil was at $58.86 a barrel, down $1.01

Bitcoin Investment Trust (GBTC) ended at $6.91, down $0.15

The Health Care Select Sector Spider (XLV) pulled back for the first time in 5 sessions after testing a low of $92.50. Fresh support at $92-$91.50 and the 50-day moving average held with a close below $91 signaling additional weakness and a possible short-term top.

Near-term resistance is at $93.50-$94. Continued closes above the latter would be a bullish development for a run towards $96 and fresh all-time highs.

RSI could be rolling over after failing resistance at 60 and early October support. Continued closes back above the latter would be a bullish development. Support is at 55-50 with a move below the latter signaling additional weakness.

The PowerShares QQQ (QQQ) was down for a 2nd-straight session after tapping a low of $170.16. Near-term support at $170-$169.50 held with the close back below the 200-day moving average being a slightly bearish signal. A move below $168 will likely signal a near-term top.

Lowered resistance is at $172.75-$173.25 with additional hurdles at $175-$175.50.

RSI is back in an downtrend with support at 45-40. A move below the latter would signal additional weakness with risk to 35-30. Resistance is at 50.

NextOptions.com Index and Earnings Options Play List for 4/16/2018

50-Day MA’s Back in Play

8:00am (EST)

The market started the week with strong gains as traders shrugged off the air strikes on Syria over the weekend and instead, focused on the earnings season, which will pick up in earnest this week. Volatility continues to subside with the major indexes making a strong run towards key resistance levels.

The Russell 2000 closed higher for the fifth-time in six sessions after rallying 0.9% while making a late session run to 1,566. The Dow also gained 0.9% after testing a high to 24,675 to clear its 50-day moving average but a level that failed to hold into the close.

The S&P 500 added 0.8% after trading to an intraday high of 2,686 while falling a half-point shy of clearing its 50-day moving average. The Nasdaq was higher by 0.7% after reaching an intraday peak of 7,178 but fell shy of challenging its 50-day moving average just south of the 7,200 level.

Utilities jumped 1.4% and Materials soared 1.3% to led sector strength. Consumer Staples were up 1.1% while Energy and Industrials rose 1%. There were no sectors that closed in the red.

The S&P 500 Volatility Index ($VIX) fell for the fifth-straight session after testing a low of 16.38. Fresh support at 16.50-15 held with a close below the latter being a continued bullish development. Lowered resistance is at 17-17.50 followed by 19.50-20.

The Spiders Dow Jones Industrial Average ETF (DIA) traded to a high of $246.67 while clearing, but failing to hold, its 50-day moving average for the first time since early March. Near-term resistance is at $247-$247.50 with continued closes above the latter being a bullish development. Support is at $245-$244.50 following the slight breakout of last week’s mini-trading range. A close below $242.50 would signal a possible short-term top.

RSI is back in slight uptrend after clearing resistance at 50. Continued closes above this level could lead to a possible run towards 60 and late February highs. Support is at 45-40 on a close back below 50.

The Spider S&P Retail ETF (XRT) has traded in a tight range between $44.50-$45.25 following the strong move off the $43 level earlier this month. Today’s high tapped $45.15 with continued closes above $45.25-$45.50 being a bullish signal. Support is at $44.50-$44 with a move below the latter likely signaling additional weakness.

RSI is holding 50 with multi-month resistance at 55. A move above this level would be a bullish development for a possible run towards 60 and prior support from January. Current support is at 45-40 on a close back below 50.

Celanese (CE), First Defiance Financial (FDEF), Lakeland Industries (LAKE), Netflix (NFLX), Pinnacle Financial Partners (PNFP), SeaChange International (SEAC), Wintrust Financial (WTFC) reported earnings after Monday’s closing bell.

Comerica (CMA), Goldman Sachs (GS), Johnson & Johnson (JNJ), Mellanox Technologies (MLNX), Mercantile Bank (MBWM), Northern Trust (NTRS), Omnicom (OMC), Progressive (PGR), Prologis (PLD), UnitedHealth Group (UNH) are announcing numbers this morning. 

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Our top triple-digit winning option recommendations for 2018:

+400% Spider Dow Jones February 250 puts (February 2018)

+400% PowerShares QQQ February 162 puts (February 2018)

+300% Intel February 47 calls (January 2018)

+191% Sony February 48 calls (January 2018)

+133% Progenics Pharmaceuticals May 8 calls (March 2018)

+100% Spider Dow Jones February 258 puts (January 2018)

+100% Marvell Technology (March 2018)

Our top triple-digit winning option recommendations for 2017:

+900% Lumber Liquidators August 27.50 calls (August 2017)

+400% Limelight Networks December 4 calls (November 2017)

+300% JDcom June 37 calls (May 2017)

+300% Kate Spade March 20 calls (March 2017)

+300% Imax May 30 puts (May 2017)

+286% Fastenal May 49 puts (April 2017)

+246% Dick’s Sporting Goods June 45 puts (May 2017)

+244% Starbucks February 57.50 puts (February 2017)

+200% GameStop April 22.50 puts (March 2017)

+173% Alibaba February 100 calls (January 2017)    

+169% Amicus Therapeutics August 12 calls (July 2017)

+116% iShares Russell 2000 (November 2017)

+110% Amicus Therapeutics July 8 calls (June 2017)

+100% Cisco Systems October 32 calls (September 2017)

+100% Bank of America July 23 calls (June 2017)

+100% PowerShares QQQ ETF February 122 calls (January 2017)                        

+100% Array BioPharma January 8 calls (January 2017)

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Viavi Systems (VIAV, $10.04, down $0.31)

VIAV June 10 calls (VIAV180615C00010000, $0.55, down $0.20)

Entry Price: $0.50 (3/26/2018)

Exit Target: $1.00

Return: 10%

Stop Target: 55 cents (Stop Limit)

Action: The Stop Limit at 55 cents tripped on yesterday’s pullback.

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RadNet (RDNT, $14.35, up $0.25)

RDNT June 15 calls (RDNT180615C00015000, $0.60, up $0.10)

Entry Price: $0.45 (4/10/2018)

Exit Target: $0.90

Return: 33%

Stop Target: None

Action: Resistance is at $14.50. Support is at $14.

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Energous (WATT, $19.99, up $1.81)

WATT May 17.50 calls (WATT180518C00017500, $2.80, up $1.20)

Entry Price: $1.15 (4/10/2018)

Exit Target: $2.30

Return: 143%

Stop Target: $1.15 (Stop Limit)

Action: Fresh resistance is at $20.50-$21. Rising support is at $19.50-$19.

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Upcoming Earnings

Tuesday 

After the close: Adtran (ADTN), Badger Meter (BMI), CSX (CSX), Fulton Financial (FULT), Hancock Holding (HBHC), Interactive Brokers (IBKR), International Business Machines (IBM), Intuitive Surgical (ISRG), Lam Research (LRCX), United Continental (UAL), WesBanco (WSBC)

Wednesday

Before the open: Before the open: Abbott Laboratories (ABT), Fred’s (FRED), Morgan Stanley (MS), QCR Holdings (QCRH), Texteon (TXT)

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