Dear Momentum Options Subscriber,

The bulls had jaws dropping on Wall Street on Thursday, as the V-shaped recovery has caught traders off-guard, just like I was hoping for. Even better, the market rally got stronger as oil tanked below double-nickels ($55).

This may have been a strong sign that the market is decoupling itself from the continued free fall in oil as consumers put more of their gas savings to other uses.

The Dow zoomed 421 points, or 2.4%, to settle at 17,778. The blue-chips easily cleared 17,600 and went out at their session high, which is a level that will try to hold as short-term support. A close above 17,800-17,900 should lead to another run at 18,000 and fresh all-time highs.

The S&P 500 surged 48 points, or 2.4%, to close at 2,061. The index cleared another two layers of resistance at 2,025 and 2,050 and is poised to test 2,075. My year-end target of 2,100 is back in play if the bulls can clear and hold 2,075 for several sessions. Support is at 2,040-2,025 on a backtest.

The Nasdaq jumped 104 points, or 2.2%, to end at 4,748. Tech opened above 4,700 at 4,712 and also went out at its session high. The bulls fell shy of clearing 4,750 but look destined to test my year-end zone of 4,800-5,000 for the Nasdaq again. The bears would love to get back below 4,700 today, which is fresh support. I would like to see 4,725 hold on any dip, with a higher finish of at least 3 points into the closing bell to clear resistance.

The Russell 2000 raced higher by 17 points, or 1.5%, to finish at 1,192. The small-caps “lagged” the other indexes, but bulls were able to clear 1,175-1,180. This area will try to serve as short-term support into year-end. The index is less than 1% away from triggering 1,200 and 2% away from challenging its all-time high of 1,213.

The S&P Volatility Index ($VIX, 16.81, down 2.63) folded like a cheap lawn chair as the bulls pushed a low of 16.07. The close below 17.50 was super bullish, and a trip below 15 would confirm possible record highs into January. If the bears reclaim 17.50 ahead of the weekend, next week could be just as volatile.

From desk to press, futures are shaping up like this: Dow (+47); S&P 500 (+5); Nasdaq 100 (+17).

Momentum Options Play List

Closed Momentum Options Trades for 2014: 97-61 (61%). 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.


Fortinet (FTNT, $29.63, up $1.15)

FTNT March 32 calls (FTNT150320C00032000, $1.15, up $0.30)

Entry Price: $1.00 (12/18/2014)

Exit Target: $2.00

Return: 15%

Stop Target: None

Action: I added these options to give this trade three months to play out. I have been calling for a run to $28-$30 since early September for shares of Fortinet.

Shares went out at their session high, and my new price target is calling for shares to make a run at $33-$34 once $30 clears. Support is at $28-$27.50 on a pullback.


American Express (AXP, $93.17, up $2.73)

AXP January 95 calls (AXP150117C00095000, $1.20, up $0.50)

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

Exit Target: $1.20

Return: 100%

Stop Target: $0.80 (Stop Limit)

Action: Set a Stop Limit at $0.80 to protect profits. I will raise it if shares continue higher. At current levels, the Stop Limit locks in a 33% gain if shares suddenly reverse course.

AXP made a 3% push past $93, and shares are on track to tackle $95. I could close half of the trade today, hopefully into continued strength, to lock in triple-digit gains. If I do ahead of the Mid-Market Update, I will send out a Profit Alert. Otherwise, continue to hold the full position.


Marvell Technology (MRVL, $14.19, down $0.01)

MRVL January 15 calls (MRVL150117C00015000, $0.25, flat)

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

Exit Target: $0.70

Return: -29%

Stop Target: None


MRVL February 15 calls (MRVL150220C00015000, $0.45, flat)

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

Exit Target: $1.10

Return: -21%

Stop Target: None

Action: The next wave of resistance is at $14.50-$14.75, and a close above the latter would be super bullish. Support is at $14.


Pfizer (PFE, $31.97, up $0.85)

PFE February 33 calls (PFE150220C00033000, $0.50, up $0.15)

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

Exit Target: $1.15

Return: -12%

Stop Target: None


PFE March 33 calls (PFE150320C00033000, $0.65, up $0.20)

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

Exit Target: $1.40

Return: -4%

Stop Target: None

Action: A close above $32 and Thursday’s high should lead to a continued breakout to $33-$35. The 52-week high is at $32.96. Support is at $30.

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, $118.63, up $1.74)

IWM January 121 calls (IWM150117C00121000, $1.15, up $0.35)

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

Exit Target: $1.80

Return: 28%

Stop Target: None

Action: Resistance at $118 has been cleared, which sets up a run to $120. Support is fresh at $117.50.


PowerShares QQQ (QQQ, $104.25, up $2.45)

QQQ January 107 calls (QQQ150117C00107000, $0.60, up $0.25)

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

Exit Target: $2.00

Return: -39%

Stop Target: None

Action: This trade has made a nice comeback, but it is still not out of the woods. A close above $105 today and continued higher closes into next week would be bullish. Support is at $103.50-$102.


JDS Uniphase (JDSU, $14.01, up $0.32)

JDSU March 14 calls (JDSU150320C00014000, $1.05, up $0.10)

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

Exit Target: $1.40

Return: 50%

Stop Target: $0.80 (Stop Limit)

Action: Resistance at $14 was cleared following a run to $14.06 on Thursday. The 52-week high is at $14.99, which could be challenged if $14.25-$14.50 is taken out. Support is at $13.75-$13.50.

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


Flextronics (FLEX, $10.95, up $0.27)

FLEX January 11 calls (FLEX150117C00011000, $0.35, up $0.05)

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

Exit Target: $1.25

Return: -48%

Stop Target: None

Action: A close above $11 would be bullish heading into next week. Support is at $10.75-$10.50.


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