Dear Momentum Options Subscriber,

The bulls are bucking the odds and are trying to end 2014 on a high note following Tuesday’s pullback. I mentioned that the last trading day of the year has been bearish over the past decade, but that the past two have been bullish.

While there could be a curveball on Friday, I believe the market can bank on a positive 2014.

Heading into the second half of trading, the Dow is up 17 points to 18,000, while the S&P 500 is lower by a point to 2,079. The Nasdaq is gaining 11 points to 4,788, and the Russell 2000 is advancing 7 points to 1,220. The VIX is also trading higher on an up day and is at 16.68, up 0.76.

The market will be closed tomorrow, Jan. 1, for New Year’s Day. I will be working, of course, and it will be a normal schedule on Friday with regular updates. I have already started my weekend research. Next Monday I will be bringing you a big issue packed with information and a ton of chart work.

January options expire two weeks from this Friday, so the time premiums will rapidly start to erode next week. This is why it’s best to use longer-term call or put options to start 2015, as they will provide more time for trades to play out.

I have updated the current positions, including two new sells, and I also have a new trade to share with you now.

Momentum Options Play List

Closed Momentum Options Trades for 2014: 102-64 (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 12:10 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

Brocade Communications Systems (BRCD, $11.98, up $0.04)

Buy to open the BRCD April 12 calls (BRCD150417C00012000, $0.80, flat).

Action: Shares made a fresh 52-week peak of $12.07 on Tuesday and look poised to test $13-$14. I like these call options at current levels.


Current Trades

AT&T (T, $33.93, down $0.15)

T February 35 calls (T150220C00035000, $0.30, down $0.03)

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

Exit Target: $0.70

Return: -9%

Stop Target: None

Action: Near-term support is at $34-$33.75. Resistance is at $34.50-$34.75. I have a near-term target of $35-$36 for the stock.


Boston Scientific (BSX, $13.35, down $0.02)

BSX February 14 calls (BSX150220C00014000, $0.45, flat)

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

Exit Target: $0.90

Return: 0%

Stop Target: None

Action: Resistance is at $13.25-$13.40. Yesterday’s high reached $13.39. Support is at $13 and the 50-day moving average. A close below $12.75 and the 200-day moving average would be bearish.


Marvell Technology (MRVL, $14.63, up $0.16)

MRVL January 15 calls (MRVL150117C00015000, $0.20, up $0.05)

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

Exit Target: $0.70

Return: -48%

Stop Target: None


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

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

Exit Target: $1.10

Return: -10%

Stop Target: None

Action:  Close the MRVL January 15 calls at current levels. I will leave the February calls open.

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.


JDS Uniphase (JDSU, $13.98, up $0.04)

JDSU March 14 calls (JDSU150320C00014000, $0.95, flat)

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

Exit Target: $1.40

Return: 36%

Stop Target: $0.80 (Stop Limit)

Action: Near-term support is at $13.75, and yesterday’s low reached $13.73. A close below this level could lead to $13.50-$13.25, which would likely trigger the Stop Limit.

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


Flextronics (FLEX, $11.37, up $0.02)

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: Close the trade at current levels. I could open a new position on Friday in the FLEX April 12 calls.


Holiday Savings Event: The local stores still 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