Small-Caps Nears 200-Day Moving Average

Small-Caps Nears 200-Day Moving Average

8:00am (EST)

The market was slightly sluggish to start the shortened week as trade talks with China continued in Washington on Tuesday, with higher level negotiations starting later in the week.

The tight trading ranges expanded in the second half and the higher closes were bullish signals as the week after February options expiration is typically bearish. Volatility stayed slightly elevated after holding resistance on the open while closing below the 15 level for the 2nd-straight session.

The Russell 2000 rose 0.3% while testing a high of 1,578 in the final hour of trading. Fresh and lower resistance at 1,570-1,580 was cleared and held with additional hurdles at 1,590-1,600 and the 200-day moving average.

The Nasdaq gained 0.2% after making a late session run to 7,507 Fresh and lower resistance at 7,500-7,575 was cleared but held on the 2nd-straight close above the 200-day moving average.

The S&P 500 also added 0.2% following the late day push to 2,787. Lower resistance at 2,775-2,800 was cleared and held with a move above the latter getting 2,825-2,850 in play.

The Dow was up 8 points, or 0.03% after trading in a 141-point range while testing a high of 25,961. Fresh and lower resistance at 26,000-26,250 held with a close above the former being a continuing bullish development.

Materials and Utilities led sector strength after rising 0.6%. Consumer Staples and Consumer Discretionary advanced 0.5% and 0.4%, respectively.

Healthcare and Industrials were the only sector laggards after falling 0.2% and 0.04%.

VIX Update 2-18-19

The S&P 500 Volatility Index ($VIX) traded to a fresh 2019 low following the late Friday fade to 14.79. Lower support at 15.50-15 was cleared and held. A close below 14.50 would be a continuing bullish development for the market with downside risk towards 13-12.50.
Resistance remains at 16-16.50 and the 200-day moving average. A close above 17.50 would be a slightly bearish signal. This level has been breached but has held 3 times this month.
RSI is back in a downtrend with near-term support at 35 and the longer-term bottom near 30 and representing the March 2016 low. Resistance is at 40-45 with a move above 50 being a bearish signal for the market and signaling a possible near-term top for the major indexes. The 50 level has held throughout 2019.

QQQ’s Close Below 200-day MA

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.

50-Day MA’s Back in Play 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. 


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)


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.


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.


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.


Upcoming Earnings


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)


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