NextOptions.com Market Update for 1/2/2020

Bulls Close 2019 on a High Note

8:00am (EST)

The market traded on both sides of the ledger before finishing higher to wrap up the last trading day for 2019. News that President Trump will be signing the phase one trade deal with China on January 15th helped sentiment along with better-than-expected housing numbers.

The small-caps showed the most intraday strength as the dollar fell to a 6-month low with volatility easing going into the end of the week and to start 2020. The official Santa Claus rally that typically happens over the last 5 trading days of the year (and the first 2 of the new year) remains in play following Tuesday’s gains.

The Nasdaq was up for the 1st time in 3 sessions after adding 0.3% with the late session peak reaching 8,975. Lower resistance at 8,950-9,000 was cleared and held with a close above the latter signaling momentum towards 9,050-9,100 and fresh all-time highs.

The Russell 2000 snapped a 3-session slide after gaining 0.3% while trading to an afternoon high of 1,673. Prior and lower resistance at 1,670-1,685 was cleared and held with a close above the latter and the 52-week peak of 1,681 getting the 1,700 level back in focus.

The S&P 500 rebounded after advancing 0.3% and tapping an intraday high of 3,231. Near-term and lower resistance at 3,225-3,250 was cleared and held with a close above the latter and the all-time high of 3,247 getting 3,275-3,300 in focus.

The Dow was also up 0.3% after testing a second half high of 28,547. Current and lower resistance at 28,500-28,750 was cleared and held with a close above the latter and the lifetime high of 28,701 signaling a run towards the 29,000 level.

For 2019, the Nasdaq jumped 35% and the Russell 2000 soared 24%. The S&P 500 surged 28% and the Dow rallied 23%.

Materials and Real Estate were sector standouts after rising 0.7%. Industrials were the only sector laggard after slipping 0.1%. For 2019, all 11 of the S&P 500 sectors closed the year higher for the first time since 2010.

Bulls Wrap up Solid Month Despite Black Friday Pullback

NextOptions.com Index and Earnings Options Play List for 12/2/2019

Bulls Wrap up Solid Month Despite Black Friday Pullback

8:00am (EST)

The market traded lower throughout Friday’s shortened session despite indications of a strong kick-off to the critical holiday selling season for the retail sector. Worries over president Trump’s signing of the Hong Kong Human Rights and Democracy Act of 2019 led to the overall weakness and could be a sticking point to locking up a phase one trade deal.

China responded by saying trade negotiations are still on track as long as the President doesn’t implement any of the law’s measures. The limited action and slight pullback snapped 4-session winning streaks but wrapped up a solid month of November as the major indexes had their best showing since June.

The Russell 2000 fell 0.6% following the intraday backtest to 1,624. Current and upper support at 1,625-1,610 was breached and failed to hold by a half-point with risk towards 1,600-1,585 on a move below the latter.

The Nasdaq gave back 0.5% after trading to a late day low of 8,664. Current and upper support at 8,650-8,600 held with a move below the former signaling risk towards 8,550-8,500.

The S&P 500 was lower by 0.4% with the low reaching 3,139 ahead of the closing bell. Near-term and upper support at 3,125-3,100 easily held with a move below the latter opening up risk towards 3,075-3,050.

The Dow was also down 0.4% following the pullback to 28,042. Near-term and upper support at 28,000-27,800 held with a close below the former getting 27,600-27,400 in focus.

For the week, the Russell 2000 gained 2.3% and Nasdaq jumped 1.7%. The S&P 500 rose 1% and the Dow was up 0.6%. For November, the Nasdaq zoomed 4.5% and the Russell 2000 soared 3.8%. The Dow surged 3.7% and the S&P rallied 3.4%.

Energy was the weakest sector on Friday after falling 1% while Consumer Discretionary was down 0.7%. There was no sector strength.

For the week, the best performing sectors were Consumer Discretionary (2.6%), Healthcare (2.2%) and Communication Services (1.7%). Energy (-1.6%) and Utilities (-0.8%) were the only sector laggards.

TWTR Calls Up 81%

Twitter (TWTR, $30.91, down $0.26)

TWTR January 30 calls (TWTR200117C00030000, $1.90, down $0.20)

Entry Price: $1.05 (11/15/2019)

Exit Target: $2.10

Return: 81%

Stop Target: $1.80 (Stop Limit)

Action: Upper support at $30.75-$30.50 held on Friday’s fade to $30.78. Resistance is at $31-$31.25.

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Quick Market Outlook for 10-14-19

The bulls will need to show continued strength today to confirm higher highs and a possible near-term bottom for the major indexes. The 3-day momentum helped level out the downtrending 50-day moving averages for the major indexes and this was a bullish development.

Although the small-caps remain a slight concern, they could show the most strength on continued overall market strength. Of course, a deceleration of the VIX and close below the 15 level this week will also be needed to confirm near-term bottoms and continued momentum.

We could have fresh New Trades today, depending on the action, so stay locked-and-loaded.

Percentage Ratios Look Bullish

3 Month – $261

 

The percentage of S&P 500 stocks trading above the 200-day moving average closed at 62.57% on Friday, up 4.56%, with the session peak reaching 64.75%. Lower resistance from late September at 62.5%-65% was cleared and held. A close above the latter would signal additional strength towards 67.5%-70% and prior support to start the month. Current support is at 62.5%-60%. A move below the latter would signal caution and additional weakness towards 57.5%-55% with the prior session high reached 54.36%.

The percentage of Nasdaq 100 stocks trading above the 50-day moving average settled at 63.10%, up 12.62%, and the intraday high hitting 67.96%. Mid-September and lower resistance at 65%-67.5% was cleared but held. The 67.96% peak was also reached in back-to-back sessions in mid-September. A move above this level would be an ongoing bullish signal for strength towards 70%-72.5%. Current support is at 62.5%-60%. A close below the latter would be a slightly bearish signal with weakness towards 55.5%-52.5%.

Utilities Select Spider (XLU) in a Trading Range…

The Utilities Select Spider (XLU) settled lower for the 4th time in 5 sessions following the intraday pullback to $63.70. Upper support at $63.50-$63 held. A close below the latter would be an ongoing bearish signal with downside risk towards $62.50-$62 and the 50-day moving average.

6 Month – $462

Lowered resistance at $64-$64.50. A close back above the latter would signal a return of strength for a retest towards $65 and fresh all-time highs.

RSI is in a slight downtrend with support at 50. A move below this level would signal additional weakness towards 45-40 with the latter representing the early August low. Resistance is at 55-60.

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