Dear Momentum Options Subscriber,
The blue-chips were going for their fifth-straight win on Wednesday but failed at accomplishing this feat for the first time in 2015. The Fed minutes released yesterday provided a little afternoon drama, with the tight trading ranges holding and tech and the small-caps showing strength afterwards. The slight pullback in the overall market wasn’t much of a threat, as fresh support continued to hold.
The Dow fell 27 points, or 0.15%, to settle at 18,285. The blue-chips traded to a high of 18,350 shortly after the Fed minutes but struggled with resistance at 18,350 for the third-straight session. The rest of the day was weak, as the bears pushed a low of 18,272. Support at 18,200 held for the fourth-straight session.
The S&P 500 slipped 2 points, or 0.1%, to close at 2,125. The index fell below near-term support at 2,125 following a test to 2,122 on the open. The rebound to 2,134 intraday cleared Tuesday’s all-time high of 2,133. There is fluff to 2,135-2,150 on continued strength. Backup support is at 2,115-2,110.
The Nasdaq gained 2 points, or 0.03%, to finish at 5,071. The bears were aggressive on the open and managed to push support at 5,050. This level stuck like Chuck as the bulls rebounded to reach a peak of 5,097. Resistance at 5,075-5,100 continues to be troublesome, but a close above the latter would be bullish. Backup support is at 5,025-5,000 on a close below 5,050.
The Russell 2000 climbed 2 points, or 0.2%, to end at 1,257. The small-caps tested a high of 1,257 and a low of 1,252 within the first 30 minutes of trading. The rest of the day was range-bound before a burst past resistance at 1,260 on the Fed minutes. A close above this level would be bullish for a possible test to 1,270-1,275. Support is at 1,250-1,245. A close below 1,240 would be bearish, and that is one of the first signs I’ll be watching for to indicate that a possible short-term top is in.
The S&P 500 Volatility Index ($VIX, 12.88, up 0.03) tested a high of 13.27 on the opening weakness, but the bulls held 13.50 for the fifth-straight trading session. The VIX kissed 12.67 late in the day but failed at taking out 12.50. A close below 12.50-11.50 keeps all-time highs in play.
I could have New Trades or Profits Alerts shortly after the open, so stay close to your email inboxes or cell phone. If you haven’t signed up to receive SMS text message alerts, I suggest that you do so, as they will let you know immediately when I’m taking action.
From desk to press, futures look like this: Dow (-14); S&P 500 (-2); Nasdaq 100 (-10).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 52-15-1 (76%). 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.
I hereby disclose that I will be participating in the following trade(s). 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.
iShares Russell 2000 (IWM, $125.11, up $0.23)
IWM June 128 calls (IWM150619C00128000, $0.65, down $0.05)
Entry Price: $0.70 (5/19/2015)
Exit Target: $1.05 (Limit Order on first half), $1.40 (Limit Order on second half)
Stop Target: None
Action: Set Limit Orders to close the first half of the trade at $1.05 and the second half at $1.40.
The move above 1,260 on the small-caps was encouraging, which is why I wanted to get into these call options. I would like to close the first half of the trade into strength by tomorrow’s close and ahead of a three-day weekend.
Resistance is at $126-$127. A close above the latter could lead to short-covering to $128-$130. Support is at $125-$124.50.
Opko Health (OPK, $18.02, up $0.67)
OPK June 16 calls (OPK150619C00016000, $2.20, up $0.60)
Entry Price: $0.50 (4/27/2015)
Exit Target: $2.50, raise to $3.00 (Limit Order on second half) (closed first half at $0.60 on 5/13/15)
Stop Target: $1.55, raise to $1.75 (Stop Limit)
Action: Raise the Exit Target from $2.50 to $3.00 and make it a Limit Order. Also, raise the Stop Limit from $1.55 to $1.75.
I have been wanting to “piggy-back” this trade on a pullback, but shares continue to set fresh 52-week and all-time highs. Wednesday’s peak reached $18.15, which represented the stock’s seventh-straight up session. If our Limit Order triggers, I could add additional options.
Momentum could carry shares to $20. Near-term support has moved up to $17.
JetBlue Airways (JBLU, $20.24, down $1.51)
JBLU June 22 calls (JBLU150619C00022000, $0.25, down $0.45)
Entry Price: $0.80 (5/19/2015)
Exit Target: $1.60
Stop Target: None
Action: Shares traded to a low of $20.03 yesterday and tried to stabilize above $20.50 afterwards. This level failed to hold, which wasn’t a good sign. A close below $20 will likely cause an early exit for us, but I’m hoping shares can rebound for the rest of the week.
United Parcel Service (UPS, $101.96, down $0.12)
UPS June 105 calls (UPS150619C00105000, $0.65, down $0.12)
Entry Price: $0.57 (5/18/2015)
Exit Target: $1.20
Stop Target: $0.60 (Stop Limit)
UPS July 105 calls (UPS150717C00105000, $1.15, down $0.15)
Entry Price: $1.08 (5/18/2015)
Exit Target: $2.25
Stop Target: $1.10 (Stop Limit)
Action: The UPS June 105 calls traded to a low of $0.61, while UPS July 105 calls traded down to $1.13 yesterday. I am leaving the Stop Limits in place, but they will likely trigger on a weak open.
Near-term resistance is at $104. A close above this level would be bullish for a possible push towards $108-$110. Support is at $101-$100.
Limelight Networks (LLNW, $4.27, down $0.04)
LLNW September 4 calls (LLNW150918C00004000, $0.60, down $0.05)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.80 (Limit Order on half)
Stop Target: $0.45 (Stop Limit)
Action: Shares had traded higher for six-straight sessions before Wednesday’s pullback. Support is at $4.20, followed by $4. Multi-year resistance is at $4.50.
Trades on Hold — other 2015 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.
SunPower (SPWR) June 38 calls (from April 2015) — Resistance is at $32.75 and the 50-day moving average. Support is at $31 and the 200-day moving average — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade from early March on BBRY receiving a takeover offer of $14 or better by mid-June — Continue to hold.
Editor and Chief Options Strategist