Dear Momentum Options Subscriber,

Futures were slightly lower ahead of the overseas market opening and worsened into this morning’s open here in the United States. While this may sound strange, I was hoping for a lower open with a gradual rally into the close and, more importantly, a Monday win.

I covered a lot of information this morning and, while there were a lot of charts included, please take the time to read and study them. The comments and price targets are important to keep in mind as you make a game plan for 2015. I spent a dozen hours on Sunday and another half dozen on Saturday to bring you all of the information and get the next leg up on Wall Street. I really wanted to get this important information to you today, and I hope everyone enjoyed reading it.

As far as the market, there are a few story stocks I am watching that have hindered today’s action.

Apple (AAPL, $113.57, down $1.43) shares are slightly lower despite getting an analyst upgrade. I was on Apple’s website over the weekend and absolutely fell in love with their new Apple Watch. There were no price tags or pricing information on the upcoming launch, but they will appeal to those from all walks of life — from stylish to sporty.

Apple currently trades at 15x earnings and offers a dividend yield of 1.6%. I would love to see shares come down to $110, which is where I would possibly consider a bullish trade, but I might not get that lucky.

Elsewhere, shares of McDonald’s (MCD, $92.82, down $3.49) are down nearly 4% following disappointing sales numbers. The company said same-store sales tanked 4.6% in November, as consumers looked for healthier (and tastier) choices. Global sales fell 2.2% versus the expected decline of 1.7% put forth by the company’s research department.

The decline in Mickey D’s has shaved 23 points from the Dow and has clearly weighed on the index.

Crude is down another 4% today and is weighing on shares of Chevron (CVX, $107.05, down $3.82) and Exxon Mobile (XOM, $91.91, down $1.91), which is accounting for losses of 25 and 12 Dow points, respectively. Along with MCD, these names have impacted the index negatively by 60 points.

Despite the pullback in the three blue-chippers, the Dow has held up well. The index is down 62 points heading into the second half of trading and is currently sitting at 17,896. A rebound in these names into the close and down the road will help in the surge past 18,000. The S&P 500 is lower by 9 points to 2,065 but has traded in positive territory. The Nasdaq is declining 28 points to 4,752, while Russell 2000 is flat at 1,182.

I have updated the current trades, as we are close to booking another triple-digit winner. I could have a New Trade by the close, so stay locked and loaded.

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 12:30 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.


iShares Russell 2000 (IWM, $117.53, down $0.16)

IWM January 121 calls (IWM150117C00121000, $0.80, down $0.14)

Entry Price: $0.90 (12/5/2014)

Exit Target: $1.80

Return: -11%

Stop Target: None

Action: Resistance is at $118. If cleared, a run past $120 could be in the works. The 52-week high is just south of $121. Near-term support is at $115.


PowerShares QQQ (QQQ, $105.28, down $0.10)

QQQ January 107 calls (QQQ150117C00107000, $0.70, down $0.20)

Entry Price: $0.98 (12/5/2014)

Exit Target: $2.00

Return: -29%

Stop Target: None

Action: I have talked about the QQQs making a run to $110, and the recent 52-week high is north of $106. Support is at $105, with $103 serving as backup.


American Express (AXP, $93.70, up $1.05)

AXP January 95 calls (AXP150117C00095000, $1.40, up $0.30)

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

Exit Target: $1.50

Return: 87%

Stop Target: $0.85 (Stop Limit)

Action: Close half of the trade at current levels.

Resistance is at $95. The 52-week high is at $96.24. Support has moved up to $92.50, with $90 serving as backup. I will adjust the Stop Limit in tomorrow’s Pre-Market Update.


JDS Uniphase (JDSU, $13.23, down $0.09)

JDSU January 13 calls (JDSU150117C00013000, $0.80, flat)

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

Exit Target: $1.30

Return: 23%

Stop Target: None


JDSU March 14 calls (JDSU150320C00014000, $0.80, flat)

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

Exit Target: $1.40

Return: 14%

Stop Target: None

Action: Resistance is at $13.50-$13.75. If cleared, a run to $14-$15 should be in the works. Support is at $13 and the 50-day moving average. There is additional risk to $12.50 and the 100/200-day moving averages on a close below $12.75.

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


Diamond Foods (DMND, $29.62, up $0.39)

DMND December 32 calls (DMND141220C00032000, $0.50, down $0.10)

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

Exit Target: $1.75

Return: -43%

Stop Target: None

Action: Shares have traded to a high of $30.08 today. This is either a good sign that resistance will be cleared and a run to $32-$33 is possible or a bad omen that a test to $27 could come.

Earnings are due out after the close today, and this will likely be an all-or-nothing trade at this point. An earnings miss or lowered guidance will crush the premium left in the options if shares fall below $29. A run to $33, technically, by Dec. 20, is needed for the trade to break even. Shares need to move 10% higher on Tuesday’s open or I may exit the trade to save any premium that might be left.

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


IMAX (IMAX, $30.27, down $0.19)

IMAX December 32 calls (IMAX1220C00032000, $0.25, flat)

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

Exit Target: $0.70 (Limit Order on Half)

Return: -29%

Stop Target: None

Action: Shares need to make a move this week, as the trade is running out of time. These December options expire next Friday. Support at $30 has been solid, but I would like to see resistance at $31.50-$32 cleared by this Friday.


International Business Machines (IBM, $162.51, down $0.76)

IBM January 170 calls (IBM150117C00170000, $0.60, down $0.20)

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

Exit Target: $3.50

Return: -66%

Stop Target: $0.50

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

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


Flextronics (FLEX, $11.29, up $0.02)

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: Shares have traded to a high of $11.37 today. 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