Dear Momentum Options Subscriber,

It remains to be seen if Thursday’s pop was a dead cat bounce or the forming of a potential bottom. The bears have returned to the scene of the crime and are wrapping up the week on a low note.

I had talked about some early December weakness coming into the month. While I have been surprised by the severity of the pullback, I have also said that next week is when the year-end rally should resume.

The second (and third) waves of support I have covered all week are holding heading into the second half of trading, but I would like to see a decent bounce off of the lows into the close.

If that doesn’t happen and next Monday turns out to be bearish, it could be time to shop for put options. I would rather wait for the dust to settle before adding more new positions, as there is the possibility of a trend change, but we aren’t at that point yet.

The Dow is down 163 points to 17,432, while the S&P 500 is declining 11 points to 2,024. The Nasdaq lower by 8 points to 4,699, and the Russell 2000 is backpedaling 7 points to 1,159.

I have updated our current trades, including one profit alert, as we head into the weekend. I will be back Monday morning with a full update and a shopping list for new potential trades. Until then, have a great weekend everyone!

Momentum Options Play List

Closed Momentum Options Trades for 2014: 97-59 (62%). 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 1:25 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.

 

Marvell Technology (MRVL, $14.22, down $0.18)

MRVL January 15 calls (MRVL150117C00015000, $0.30, down $0.03)

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

Exit Target: $0.70

Return: -14%

Stop Target: None

 

MRVL February 15 calls (MRVL150220C00015000, $0.50, down $0.05)

Entry Price: $0.55 (12/11/2014)

Exit Target: $1.10

Return: -9%

Stop Target: None

Action: Support is at $14 on a break below the 200-day moving average, or $14.25. Resistance is at $14.75-$15. A close above $15.25 should lead to a run to prior 52-week highs north of $16. If $16 clears, both options would be $1.00 in the money.

 

Pfizer (PFE, $31.06, down $0.59)

PFE February 33 calls (PFE150220C00033000, $0.40, down $0.15)

Entry Price: $0.57 (12/8/2014)

Exit Target: $1.15

Return: -30%

Stop Target: None

 

PFE March 33 calls (PFE150320C00033000, $0.50, down $0.15)

Entry Price: $0.68 (12/8/2014)

Exit Target: $1.40

Return: -26%

Stop Target: None

Action: Support at $31.50 has been breached, which opens the door for a backtest to $30. A close above $32 should lead to a continued breakout to $33-$35. The 52-week high is at $32.96.

You can view the chart work on PFE in the Dec. 9 Pre-Market Update. You can also read about PFE’s fundamentals in the Dec. 9 Mid-Market Update.

 

iShares Russell 2000 (IWM, $115.35, down $0.77)

IWM January 121 calls (IWM150117C00121000, $0.65, down $0.05)

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

Exit Target: $1.80

Return: -28%

Stop Target: None

Action: Support is at $115, with risk to $114-$113.50. Resistance is at $117.50-$118.

 

PowerShares QQQ (QQQ, $103.36, down $0.44)

QQQ January 107 calls (QQQ150117C00107000, $0.65, down $0.05)

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

Exit Target: $2.00

Return: -34%

Stop Target: None

Action: There is risk to $103-$102.50. Short-term resistance is at $105. I have talked about the QQQs making a run to $110 on continued closes above $105, and the recent 52-week high is north of $106.

 

JDS Uniphase (JDSU, $13.89, up $0.14)

JDSU January 13 calls (JDSU150117C00013000, $1.15, up $0.05)

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

Exit Target: $1.30 (closed at $0.80 on 12/12/2014)

Return: 23%

Stop Target: $0.80 (Stop Limit)

 

JDSU March 14 calls (JDSU150320C00014000, $1.05, up $0.05)

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

Exit Target: $1.40

Return: 50%

Stop Target: $0.80 (Stop Limit)

Action: The Stop Limit of $0.80 triggered on the JDSU January 13 calls, as they traded down to $0.78 on the open. The JDSU March 14 calls tested $0.90, so I’m still in. Both options have since recovered, which is frustrating.

Resistance is at $14, and a close above this level would be bullish. The 52-week high is at $14.99. Support is at $13.50.

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

 

Flextronics (FLEX, $10.77, down $0.08)

January 11 calls (FLEX150117C00011000, $0.30, flat)

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

Exit Target: $1.25

Return: -55%

Stop Target: None

Action: Resistance is at $11.25. Support is at $10.75, and a close below this level might force me out of the trade.

 

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.

Fortinet December 29 calls (from September 2014) — Continue to hold. You can read more about my thoughts on FTNT in the Dec. 11 Pre-Market Update.

International Business Machines January 170 calls (from November) — Continue to hold.

 

Holiday Savings Event: The local stores have their holiday decorations up and I’m beginning to think about gifts, so today I wanted to invite you to join me for a special Holiday Savings Event that I’m throwing for a limited time only. Renew your Momentum Options service today and save $200. It doesn’t matter when your subscription expires because I’ll just extend your current membership. Click here now to take advantage of this savings opportunity!

 

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options