Dear Momentum Options Subscriber,

The bulls failed to get a clean sweep on Monday, as the bears won the blue-chip battle. Volatility was also back in play heading into the end of the year. Overall, however, it was a bullish session and fresh records highs were still pushed.

The Dow slipped 15 points, or 0.1%, to close at 18,038 on Friday. The blue-chips traded down to 18,021 on the open before rebounding to 18,073. Support at 18,000 held, and backup at 17,900-17,800 wasn’t tested. Resistance is at 18,100-18,200 over the near term.

The S&P 500 added 2 points, or 0.1%, to settle at 2,090. The index traded to another all-time intraday high of 2,093 following a 3-point dip to 2,085 at the opening bell. The bulls are still shooting for 2,100 by year-end, with fluff to 2,125 into January before a possible pullback. Short-term support is at 2,080-2,075.

The Nasdaq gained a fraction of a point to end at 4,806 for the second-straight session. Tech tested 4,798 at the start of trading and then shaky support at 4,800. The index managed a run to 4,813 but fell a point shy of Friday’s 52-week high. Hopefully, this is not a short-term “double-top,” but the possibility is there. Resistance is at 4,850. Additional support is at 4,750-4,700 on a harder break below 4,800.

The Russell 2000 advanced 4 points, or 0.3%, to settle at 1,219. The small-caps continue to show strength, which is a nice, bullish sign given the lackluster action. A run to 1,225 is still in the works, with fluff up to 1,250. Near-term support is at 1,200-1,190.

The S&P Volatility Index ($VIX, 15.06, up 0.56) traded past resistance at 15 to 16.14 during the morning chaos but drifted back towards 15 into the close. The VIX went out at its session low, but there is risk to 17.50, and possibly 20, on continued nervousness. The bulls came close to holding their poker face and need to get back below and hold 15 going into next year.

From desk to press, futures are shaping up like this: Dow (-17); S&P 500 (-3); Nasdaq 100 (-2).

Two of our trades tripped their stop limits just before Monday’s close, so let’s go check the action.

Momentum Options Play List

Closed Momentum Options Trades for 2014: 99-63 (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.

 

AT&T (T, $34.11, down $0.06)

T February 35 calls (T150220C00035000, $0.33, down $0.03)

Entry Price: $0.35 (12/26/2014)

Exit Target: $0.70

Return: -6%

Stop Target: None

Action: Shares traded down to $34.02 on Monday, and near-term support at $34-$33.75 held. Resistance is at $34.50-$34.75. I have a near-term target of $35-$36 for the stock.

Support is at $33.75, and a drop back below this level would suggest momentum is fading. Given the recent market volatility, I like the trade as long as $33 holds.

 

Juniper Networks (JNPR, $22.59, down $0.14)

JNPR January 23 calls (JNPR150117C00023000, $0.38, down $0.07)

Entry Price: $0.36 (12/19/2014)

Exit Target: $0.75

Return: 6%

Stop Target: $0.37 (Stop Limit)

 

JNPR April 24 calls (JNPR150417C00024000, $0.85, down $0.05)

Entry Price: $0.81 (12/19/2014)

Exit Target: $1.60 (Stop Limit of $0.82 triggered on 12/29/2014)

Return: 1%

Stop Target: $0.82 (Stop Limit)

Action: The JNPR April 24 calls traded down to $0.82 just before the close, so this position was closed when the Stop Limit was tripped. The Stop Limit on the JNPR January 23 calls held, as the low was $0.38.

Resistance remains at $23.25 and the 200-day moving average. I would like to see a close above this level this week. Yesterday’s high was $22.85.

Support is fresh at $22 and the 100-day moving average. There could be another early exit if $22.50-$22.25 fails to hold. Monday’s low reached $22.58.

 

Boston Scientific (BSX, $13.23, up $0.06)

BSX February 14 calls (BSX150220C00014000, $0.40, flat)

Entry Price: $0.45 (12/19/2014)

Exit Target: $0.90

Return: -11%

Stop Target: None

Action: Resistance is at $13.25-$13.40. Yesterday’s peak reached $13.24 on the stock. Support is at $13 and the 50-day moving average. A close below $12.75 and the 200-day moving average would be bearish.

These options have 51 days before they expire. I will likely continue to hold this trade into 2015, as there is plenty of time to wait for a possible run past $14.

 

Fortinet (FTNT, $31.15, down $0.16)

FTNT March 32 calls (FTNT150320C00032000, $1.60, down $0.10)

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

Exit Target: $2.00 (Stop Limit of $1.45 triggered on 12/29/2014)

Return: 45%

Stop Target: $1.45 (Stop Limit)

Action: The calls traded to a low of $1.45 on some Nervous Nelly selling into the close, and this position was closed when that level was hit. The market makers got a great deal, and we got Charlie Browned. Shares traded to a low of $30.92 on Monday.

I can get back into this trade if shares clear $31.50-$31.75, as I believe a run to $35 is still in the works.

 

American Express (AXP, $94.27, down $0.02)

AXP January 95 calls (AXP150117C00095000, $1.15, down $0.05)

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

Exit Target: $2.00+ (closed half at $1.50 on 12/24/2014)

Return: 121%

Stop Target: $1.05 (Stop Limit)

Action: The calls traded to a low of $1.07 after AXP shares fell to a low of $94. I would like to see shares clear $95 by Wednesday, but another drop below $94 could force the Stop Limit of $1.05 to trigger on the remaining half of this position.

 

Marvell Technology (MRVL, $14.33, down $0.04)

MRVL January 15 calls (MRVL150117C00015000, $0.15, down $0.05)

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

Exit Target: $0.70

Return: -57%

Stop Target: None

 

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

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

Exit Target: $1.10

Return: -18%

Stop Target: None

Action: Fresh support is at $14.25 and the 200-day moving average. Backup support is at $14-$13.75. The next wave of resistance is at $14.50-$14.75, and a close above the latter would be super bullish. I could shed the January calls and keep the February calls if $14.50 isn’t cleared before Wednesday’s close.

 

iShares Russell 2000 (IWM, $121.05, up $0.51)

IWM January 121 calls (IWM150117C00121000, $1.80, up $0.20)

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

Exit Target: $2.20 (closed half at $1.80 on 12/29/2014)

Return: 100%

Stop Target: $1.40 (Stop Limit)

Action: The Limit Order to close half of the trade at $1.80 triggered after the calls traded to a high of $2.00 yesterday. Shares traded to a fresh 52-week peak of $121.38 on Monday.

The low on the calls was $1.61, and the Stop Limit is at $1.40 on the second half of the trade. A run to $122-$123 is possible into January, while a dip below $120 will likely trigger the Stop Limit.

 

PowerShares QQQ (QQQ, $105.02, down $0.02)

QQQ January 107 calls (QQQ150117C00107000, $0.45, down $0.05)

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

Exit Target: $2.00

Return: -54%

Stop Target: None

Action: The January options expire in 17 days. I label open option trades that have less than three weeks before expiration as being in the “danger zone” because time premium starts to erode more quickly on out-of-the-money options during this time.

I would like to see $106 clear ahead of Wednesday’s close. If not, I might drop this trade and reload with February or March options depending on the trend.

Resistance is at $105, which struggled to hold yesterday. This QQQs need to trip $108, technically, to make this trade profitable, and that’s another reason I may close it ahead of the New Year. Support is at $103.50-$102.

 

JDS Uniphase (JDSU, $13.81, down $0.11)

JDSU March 14 calls (JDSU150320C00014000, $0.90, down $0.05)

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

Exit Target: $1.40

Return: 29%

Stop Target: $0.80 (Stop Limit)

Action: These call options were active yesterday, as option traders stepped in and bought nearly 1,300 contracts.

Shares dipped to $13.78 and held near-term support at $13.75. A drop below this level could lead to $13.50-$13.25, which would trigger the Stop Limit.

A mini-trading range has formed with resistance at $14-$14.25. The 52-week peak is at $14.99.

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

 

Flextronics (FLEX, $11.32, flat)

FLEX January 11 calls (FLEX150117C00011000, $0.45, flat)

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

Exit Target: $1.25

Return: -33%

Stop Target: None

Action: Shares are holding $11.25, and the next wave of resistance is at $11.50. Support is at $11-$10.75.

This is the last remaining trade from September, and I would like to see a run past $11.50 by Wednesday. If not, I could close the trade and look at further-out options to buy more time for the trade.

The FLEX April 12 calls (FLEX150417C00012000, $0.45, flat) could replace our current position to buy more time for the trade, as they have 107 days before expiration. If I make the swap, I will send out a New Trade Alert. I may also elect to add them while rolling the dice with our current position in the FLEX January 11 calls into the New Year.

 

Holiday Savings Event: The local stores have their holiday decorations up and I’m still thinking 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