Dear Momentum Options Subscriber,

The Retail sector has been in focus lately, along with Homebuilding stocks, and both sectors have shown some strength this week.

Fossil (FOSL) and Macy’s (M) spanked Wall Street’s earnings estimates, with both stocks soaring on the news earlier this week. J.C. Penney (JPC) reported mixed results, as they beat earnings but missed revenue numbers. Meanwhile, Wal-Mart (WMT) impressed the suit-and-ties this morning with a three-cent beat. The pie in the face came from Kohl’s (KSS), as they missed Wall Street’s estimates by four cents.

Beazer Homes (BZH) topped Wall Street’s numbers, as the outlook for housing in 2015 is improving. Toll Brothers (TOL) was so excited that they pre-announced their numbers early instead of waiting until next month.

The Financial stocks have been a little rocky this week but have held up well and held support. I am still watching JPMorgan Chase (JPM) following yesterday’s test to support and have a New Trade waiting in the wings. I could take action as early as today, but I wanted to get the current updates out to you and do a little more research.

These were some of the bullish clues I said to watch for this week, so I wanted to keep everyone on the same page and update the homework for those of you trying to learn more about how the market works.

Heading into the second half of trading, the Dow is up 19 points to 17,61, while the S&P 500 is lower by 2 points to 2,036. The Nasdaq is gaining 5 points to 4,680, and the Russell 2000 is down 6 points to 1,180.

Stay close to your email inboxes during the second half of today’s action, or sign up to receive text alerts delivered to your mobile device to stay on top of any actions to take during the trading day. Register for text alerts here.

Momentum Options Play List

Closed Momentum Options Trades for 2014: 85-54 (61%). 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 1:40 p.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.


IMAX (IMAX, $30.74, up $0.14)

IMAX December 32 calls (IMAX1220C00032000, $0.45, flat)

Entry Price: $0.35 (11/12/2014)

Exit Target: $0.70

Return: 29%

Stop Target: None

Action: A push to $33-$35 could come if shares can clear $31.25. Support is at $30-$29.50. The all-time high is at $38.


International Business Machines (IBM, $162.00, up $0.08)

IBM January 170 calls (IBM150117C00170000, $1.20, flat)

Entry Price: $1.75 (11/10/2014)

Exit Target: $3.50

Return: -31%

Stop Target: $0.90

Action: Short-term support is at $160. Near-term resistance is at $165.

You can read more about why I like this trade and its risk/reward setup in the Nov. 11 Pre-Market Update.


Starbucks (SBUX, $77.49, down $0.36)

SBUX December 80 calls (SBUX141220C00080000, $0.65, down $0.10)

Entry Price: $0.70 (11/6/2014)

Exit Target: $1.40

Return: -7%

Stop Target: None


SBUX December 77.50 calls (SBUX141220C00077500, $1.65, down $0.15)

Entry Price: $1.05 (11/3/2014)

Exit Target: $2.50 (closed half at $1.80 on 11/7/2014)

Return: 64%

Stop Target: $1.50 (Stop Limit)

Action: Shares have reached a peak of $78.48 but are breaking down like a rented mule heading into the second half of trading. Short-term support is at $77 and may trigger the Stop Limit.

You can read my previous comments on SBUX in the Nov. 5 Pre-Market Update.


PowerShares QQQ (QQQ, $102.68, up $0.22)

QQQ December 5th expiration 103 calls (QQQ141205C00103000, $1.05, up $0.15)

Entry Price: $0.85 (11/4/2014)

Exit Target: $1.70

Return: 24%

Stop Target: None

Action: Close half of the trade at current levels.

A run to $104-$105 is now in the works as long as $102 holds on a pullback.


Flextronics (FLEX, $10.88, down $0.16)

FLEX January 11 calls (FLEX150117C00011000, $0.50, flat)

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

Exit Target: $1.25

Return: -25%

Stop Target: None

Action: Resistance is at $11.25-$11.50. The 52-week high is at $11.83. Support is at $10.75.


Fortinet (FTNT, $27.00, down $0.16)

FTNT December 29 calls (FTNT141220C00029000, $0.45, flat)

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

Exit Target: $1.00+

Return: -53%

Stop Target: None

Action: Shares remain on track for a run at $30. Support is at $27-$26.50 on a pullback.


Staples (SPLS, $13.35, down $0.02)

SPLS December 14 calls (SPLS141220C00014000, $0.45, flat)

Entry Price: $0.45 (9/18/2014)

Exit Target: $0.70 (Limit Order on Half)

Return: 0%

Stop Target: None

Action: A breakout to $14-$15 could occur on continued strength. The first clue would be on a close above $13.75. Support will try to hold at $13, with $12.80 serving backup.

Earnings are due out next week, and I will provide a preview with the chart work on Monday.


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.

AKS Steel Holding January 13 calls (from August 2014) — Continue to hold.

Rubicon December 8 calls (From August 2014) — Continue to hold.

Twitter January 67.50 calls (from October 2014) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options