Dear Momentum Options Subscriber,

The market finished slightly lower on Thursday as Wall Street was waited for this morning’s Nonfarm Payrolls report. The indexes are mixed for the week heading into today’s session, with the weekly win still up for grabs. The bulls will be looking for a blowout number to signal further strength in the economy, while the bears are hoping for a number south of 200,000 jobs added.

The Dow dropped a dozen points, or 0.1%, to close at 17,900. The blue-chips held negative territory for the first half of trading and reached a low of 17,814 before bouncing mid-day to a high of 17,937. It was another all-time intraday high, and the close landed right at 17,900. Support at 17,800 held for the eighth time in the past nine sessions, and the index is still less than 1% away from triggering 18,000.

The S&P 500 slipped 2 points, or 0.1%, to settle at 2,071. The index tested support at 2,060-2,050 after kissing 2,062 shortly after the opening bell and then bounced to another all-time intraday high of 2,077. A close above 2,075 today, or next week, keeps my year-end target of 2,100 in play.

The Nasdaq gave back 5 points, or 0.1%, to finish at 4,769. Tech made a run past 4,775 at the start of trading and reached a peak of 4,785 mid-day. The bulls are still targeting a run past 4,800 ahead of the weekend, while the bears will be trying to get the action back below 4,750-4,725. Thursday’s low reached 4,753.

The Russell 2000 declined a 6-pack, or 0.5%, to finish at 1,173. The small-caps traded down to 1,169 on the open and just under support at 1,175-1,170. There is additional risk to 1,160-1,150 over the near-term, while a close above 1,180 would be bullish for next week. Remember, I have trades ready once this level clears.

The S&P Volatility Index ($VIX, 12.38, down 0.09) stayed below 12.50 following a pop to 13.23. The bulls held 13.50 again, and continued closes below 12.50 would signal single-digits are still in play.

I could have a New Trade shortly after the open, depending on the action. I have mentioned that there would be additional trades into next week, but I don’t want to put more chips into the pot until we got through today’s numbers.

From desk to press, futures are shaping up like this: Dow (+24); S&P 500 (+1.5); Nasdaq 100 (+4.75).

Momentum Options Play List

Closed Momentum Options Trades for 2014: 95-56 (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 8:30 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.


American Express (AXP, $91.83, up $0.58)

AXP January 95 calls (AXP150117C00095000, $0.83, up $0.06)

Entry Price: $0.75 (12/3/2014)

Exit Target: $1.50

Return: 11%

Stop Target: None

Action: Shares traded to a high of $91.85 on Thursday and went out strong. Resistance is at $92.50. Support is at $90.


JDS Uniphase (JDSU, $13.02, down $0.10)

JDSU January 13 calls (JDSU150117C00013000, $0.65, flat)

Entry Price: $0.65 (12/3/2014)

Exit Target: $1.30

Return: 0%

Stop Target: None


JDSU March 14 calls (JDSU150320C00014000, $0.70, flat)

Entry Price: $0.70 (12/3/2014)

Exit Target: $1.40

Return: 0%

Stop Target: None

Action: Support is at $12.75 and the 50-day moving average. There is additional risk to $12.50 and the 100/200-day moving averages. Resistance is at $13.50-$13.75.

You can read my full update on JDSU in the Dec. 3 Alert.


Diamond Foods (DMND, $29.53, down $0.12)

DMND December 32 calls (DMND141220C00032000, $0.60, flat)

Entry Price: $0.87 (11/18/2014)

Exit Target: $1.75

Return: -31%

Stop Target: None

Action: I would like to see shares clear $30 today. Near-term resistance is at $30.50. Earnings are due out on Monday, Dec. 8, after the close.

You can read my detailed write-up on DMND in the Nov. 19 Mid-Market Update.


IMAX (IMAX, $30.31, down $0.52)

IMAX December 32 calls (IMAX1220C00032000, $0.25, down $0.10)

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

Exit Target: $0.70 (Limit Order on Half)

Return: -29%

Stop Target: None

Action: Support is at $30. Resistance is at $31.50-$32.


International Business Machines (IBM, $164.05, down $0.47)

IBM January 170 calls (IBM150117C00170000, $1.05, down $0.05)

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

Exit Target: $3.50

Return: -40%

Stop Target: $0.50

Action: Resistance is at $165, and a close above this level will likely lead to some short-covering and a possible push towards $170. Support is at $163.50-$162.50.

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


Flextronics (FLEX, $11.30, up $0.06)

FLEX January 11 calls (FLEX150117C00011000, $0.55, flat)

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

Exit Target: $1.25

Return: -18%

Stop Target: None

Action: Share traded to a high of $11.32 on Thursday and held $11.25 into the close. Resistance is at $11.50, and a close above this level should get the 52-week high of $11.83 in play. Support is at $11, with backup at $10.75 and the 100-day moving average.


Trades on Hold — other 2014 Portfolio Open positions (2): 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.

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

Fortinet December 29 calls (from September 2014) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options