Dear Momentum Options Subscriber,

Futures were showing a higher open for Wall Street and held steady into the opening bell as the bulls got off to a great start. I didn’t want to see a start that was too fast and then a fade, but that is exactly what happened.

I covered a lot of indicators to look for on the fade to the lows last week, and I will be watching the same ones like a hawk into the close today and for rest of this week. The opening pop and drop was disappointing, but there has been a bounce off of the lows and there is still another half of the trading day to go.

This will be the last full week of trading for the rest of the year, as next week offers investors a Christmas break. The following week is shortened by the New Year’s Day market holiday. There are a few companies reporting earnings this week that could sway sentiment in certain sectors, and fourth-quarter earnings season starts the second week of January.

The action on Wall Street over the next three weeks will likely play out like a Hollywood blockbuster, with some traders crying, some cheering and some feeling empty. I’ve already covered the plot, and I’m looking for the suit-and-ties to play their roles in staying confused and flip-flopping right on cue.

Heading into the second half of trading, the Dow is declining 14 points to 17,266, while the S&P 500 is lower by a point to 2,001. The Nasdaq is down 16 points to 4,637, and the Russell 2000 is off a 6-pack to 1,174. The VIX is down 0.45 to 20.63.

I have a new trade today as I start to build out our next batch of recommendations. This is a bullish position in a stock that returned 60% on the previous call options I recommended.

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 1:10 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.


New Trade

American Express (AXP, $89.95, down $1.05)

Buy to open the AXP January 95 calls (AXP150117C00095000, $0.60, down $0.30)

Action: I would like to see $90 hold into the close following the test to the 50-day moving average near $89 this morning. A close below $88 would be bearish, but I like this trade at current levels.


Current Trades

Marvell Technology (MRVL, $14.10, down $0.09)

MRVL January 15 calls (MRVL150117C00015000, $0.25, down $0.05)

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

Exit Target: $0.70

Return: -29%

Stop Target: None


MRVL February 15 calls (MRVL150220C00015000, $0.50, flat)

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

Exit Target: $1.10

Return: -9%

Stop Target: None

Action: Support is at $14. Resistance is at $14.25-$14.50.


Pfizer (PFE, $30.94, down $0.01)

PFE February 33 calls (PFE150220C00033000, $0.35, flat)

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

Exit Target: $1.15

Return: -39%

Stop Target: None


PFE March 33 calls (PFE150320C00033000, $0.50, flat)

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

Exit Target: $1.40

Return: -26%

Stop Target: None

Action: Support is at $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, $114.20, down $0.51)

IWM January 121 calls (IWM150117C00121000, $0.40, down $0.05)

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

Exit Target: $1.80

Return: -56%

Stop Target: None

Action: Support is at $114-$113.50. Resistance is at $115.


PowerShares QQQ (QQQ, $102.09, down $0.58)

QQQ January 107 calls (QQQ150117C00107000, $0.40, down $0.10)

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

Exit Target: $2.00

Return: -59%

Stop Target: None

Action: There is risk to $101-$100 on a close below $102. Short-term resistance is at $103.50.


JDS Uniphase (JDSU, $13.76, down $0.05)

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

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


Flextronics (FLEX, $10.84, up $0.22)

FLEX January 11 calls (FLEX150117C00011000, $0.30, up $0.05)

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