Dear Momentum Options Subscriber,

Futures have been showing higher opens after midnight, and the bulls have come out swinging on the opens this week. The problem is that the momentum is being used too early, and the major indexes have been fizzling into the close.

The bulls are once again pushing resistance into the second half of trading and are waiting on backup from the Fed later this afternoon.

Wall Street is expecting the Fed to stand pat with its plans on interest rates. However, the collapse in oil prices and the potential effect on inflation could have the Fed changing its language. If they change their stance on how long short-term interest rates will remain near zero from a “considerable time” to something different, the market will react.

The Fed could stay “patient” and say they are monitoring the situation. This kind of language could help or hurt today’s upside momentum.

I have said that this week would be important in determining the final two weeks of trading for the year. A continued rally past resistance and into the close could mean that the bearish storm is over and a possible bottoming is forming.

Another pullback into the close on lower lows would suggest that the bears are still in control.

With the Fed minutes a little over an hour away, the Dow is up 120 points to 17,189, while the S&P 500 is gaining 17 points to 1,990. The Nasdaq is higher by 33 points to 4,581, and the Russell 2000 is advancing 15 points to 1,154.

I could have a New Trade alert later this afternoon depending on the action, but, for now, let’s go check on our current trades.

Momentum Options Play List

Closed Momentum Options Trades for 2014: 97-60 (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 12:50 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.


American Express (AXP, $88.84, up $0.60)

AXP January 95 calls (AXP150117C00095000, $0.55, up $0.10)

Entry Price: $0.60 (12/15/2014)

Exit Target: $1.20

Return: -8%

Stop Target: None

Action: Resistance is at $89.50-$90. Support at $88.


Marvell Technology (MRVL, $14.05, up $0.26)

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

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

Exit Target: $0.70

Return: -29%

Stop Target: None


MRVL February 15 calls (MRVL150220C00015000, $0.45, up $0.05)

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

Exit Target: $1.10

Return: -18%

Stop Target: None

Action: I would like to see $14 hold today. There is a gap to fill down to $13.50 on a close below $13.75.


Pfizer (PFE, $31.05, up $0.38)

PFE February 33 calls (PFE150220C00033000, $0.40, up $0.05)

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

Exit Target: $1.15

Return: -30%

Stop Target: None


PFE March 33 calls (PFE150320C00033000, $0.50, up $0.05)

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. Yesterday’s peak reached $31.56. 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, $114.89, up $1.50)

IWM January 121 calls (IWM150117C00121000, $0.50, up $0.15)

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

Exit Target: $1.80

Return: -44%

Stop Target: None

Action: Support is at $112.50. Resistance is at $115.


JDS Uniphase (JDSU, $13.47, down $0.06)

JDSU March 14 calls (JDSU150320C00014000, $0.85, down $0.10)

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

Exit Target: $1.40

Return: 21%

Stop Target: $0.80 (Stop Limit)

Action: Support is at $13.50, and a close below this level could lead to $13.25-$13. The puts have traded to a low of $0.82 today, and the Stop Limit of $0.80 is in play on continued weakness. Resistance is at $14. The 52-week high is at $14.99.

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


Flextronics (FLEX, $10.68, down $0.09)

FLEX 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. Support is at $10.75, with risk to $10.50.


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) — Shares are holding $28, and I would like to see $29 clear by today. If not, I may try to save the rest of the premium, as the December options expire Friday — Continue to hold.

PowerShares QQQ January 107 calls (from December 2014) — As I mentioned in this morning’s Pre-Market Update, the close below $100 gets $99-$98 in play. Resistance is at $102 if the QQQs can recover $100. I plan to keep this trade open until the end of December regardless of whether the QQQs rebound or not. If I get it wrong, I can close the trade for a nickel or dime and write-it off against my winners this year. At this point, the trade is a lottery play and, while it is tempting to establish a new position with February or March options, I think it is best to wait until this trade turns around. I will bring back coverage once $102 clears — 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