The bears did some damage on Monday despite the blue-chips trading higher, as the next waves of support came into play. The bulls did their best and held the attack while trying to regain some momentum, but yesterday’s fight was over shortly after it began.

The Dow gained 43 points, or 0.3%, close at 17,031. The blue-chips traded down to 16,951 shortly after the open but spent the majority of the session in positive territory. The index reached a peak of 17,051 but fell short of challenging resistance at 17,100. Near-term support is at 16,800.

The S&P 500 slipped a little more than a point, or 0.1%, to end at 1,984. The bears pushed a low of 1,978 during the first half of trading before the bulls made a brief trip into positive territory to 1,987. The next baker’s dozen could determine the next short-term trend and how the rest of September plays out. A move above 2,000 would be bullish, while a close below 1,974 spells trouble.

The Nasdaq gave back 48 points, or 1.1%, to finish at 4,518. I often talk about the bulls taking the stairs while bears prefer the elevator. Well, Tech was in a free-fall for the first 30 minutes of trading and stayed in a steady decline until late in the day. The bulls held the 4,500 level after the bears clawed at 4,506. I talked about continued risk to 4,450-4,400 on a close below 4,500, so stay cautious until 4,550 clears again.

The Russell 2000 tanked 14 points, or 1.2%, to settle at 1,146. The small-caps closed below support at 1,150, which will now serve as resistance followed by 1,160. There is wiggle room down to 1,140, but any dips below this level could lead to 1,125-1,100.

The S&P 500 Volatility Index ($VIX, 14.13, up 0.82) jumped 6% and closed above 13.50. This was a slightly bearish signal, but the bulls held 15 as the high checked-in at 14.19. A close back below 13.50 would calm the waters.

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Ahead of the open, futures look like this: Dow (-16); S&P 500 (-1.50); Nasdaq 100 (-5.25).


Momentum Options Play List

Closed Momentum Options Trades for 2014: 69-41 (63%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.

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 9 a.m. and 12 p.m. — 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.

 All prices given in this update are current as of 9:00 a.m. EST.

Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.


Sony (SNE, $19.87, up $0.05)

SNE October 20 calls (SNE141018C00020000, $0.45, up $0.05)

Entry Price: $0.40 (9/15/2014)

Exit Target: $0.80-$1.20

Return: 13%

Stop Target: None


SNE January 20 calls (SNE150117C00020000, $1.05, flat)

Entry Price: $1.05 (9/15/2014)

Exit Target: $2.10

Return: 0%

Stop Target: None

Action: Shares were in a steady uptrend following a back test to $19.73 mid-day. There is further risk to $19.50-$19, but I didn’t want to miss the possible move past $20 that could come this week. If cleared, a run to $22 could be in the cards, which is where I’m looking to close at least half of each position.


World Wrestling Federation (WWE, $15.01, down $0.18)

WWE October 16 calls (WWE141018C00016000, $0.45, down $0.05)

Entry Price: $0.45 (9/11/2014)

Exit Target: $0.90

Return: 0%

Stop Target: None

Action: Prior resistance at $15 will now try to serve as support followed by the major moving averages. The next level of resistance is at $17.


MGM Resorts International (MGM, $23.21, down $0.56)

MGM October 24 puts (MGM141018P00024000, $1.20, up $0.35)

Entry Price: $0.65 (9/10/2014)

Exit Target: $1-$1.30 (closed half at $1.25 on 9/15/2014)

Return: 88%

Stop Target: 80 cents (Stop Limit)


MGM November 22 puts (MGM141122P00022000, $0.60, up $0.15)

Entry Price: $0.40 (9/10/2014)

Exit Target: $0.60-$0.80 (closed half at $0.60 on 9/15/2014)

Return: 50%

Stop Target: 40 cents (Stop Limit)

Action: The MGM October 24 puts traded to a high of $1.42 and the MGM November 22 puts reached 70 cents when shares kissed a low of $22.84 on Monday.

I have set Stop Limits of 80 cents on the October 24 puts and 40 cents on the November 22 puts.

Resistance is at $24, and I’d like to see $23.25-$23.50 hold on any backtest. My near-term downside target for MGM is $22.


Flextronics (FLEX, $10.88, down $0.14)

FLEX October 12 calls (FLEX141018C00012000, $0.03, down $0.02)

Entry Price: $0.07 (9/5/2014)

Exit Target: $0.15-$0.25

Return: -43%

Stop Target: None


FLEX January 11 calls (FLEX150117C00011000, $0.65, down $0.05)

Entry Price: $0.68 (9/5/2014)

Exit Target: $1.50+

Return: -3%

Stop Target: None

Action: Support is at $10.75. Near-term resistance is at $11.25. If cleared, shares could make another run at $11.75 and fresh 52-week peaks again.

I believe shares are going to make a strong move past $12 in the coming weeks and $14 by year-end.


Fortinet (FTNT, $25.67, down $0.75)

FTNT December 29 calls (FTNT141220C00029000, $0.85, down $0.15)

Entry Price: $0.95 (9/2/2014)

Exit Target: $1.90

Return: -11%

Stop Target: None

Action: The drop below $26 was discouraging, as there is now risk to $25 and the 50-day moving average. I have initiated coverage of this stock since June, and the trading range since then has been equally frustrating. While the FTNT bandwagon has been building, there hasn’t been a “breakout” to fresh highs in three months.

However, the good news is that the longer trading ranges last, the bigger the breakout (or breakdown) might be. I have said this could be a $30 stock by year-end and a possible takeover candidate.


Rubicon (RBCN, $5.62, down $0.32)

RBCN December 8 calls (RBCN141220C00008000, $0.25, flat)

Entry Price: $0.35 (8/25/2014)

Exit Target: $0.70

Return: -29%

Stop Target: None

Action: Support at $5.75 was penetrated, and shares could test $5.50-$5 on continued weakness. I still like the trade, as open interest is massive in these call options.


Trades on Hold — other 2014 Portfolio Open positions (3): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the Open Trades and Closed Trades pages to see all open and closed positions.

S&P 500 Spiders September 180 puts (from August 2014) — Continue to hold.

AKS Steel Holding October 12 calls (from August 2014) and the January 13 calls (from August 2014) — Continue to hold as long as shares stay above $8.50.

Pool October 50 puts (from July 2014) — The break-even point for the trade is at $48.90, technically, by mid-October. These options have nearly a month before they expire.