Dear Momentum Options Subscriber,
The bulls battled back on Tuesday to get a piece of the market pie, but the bears were greedy and got the overall win. The action in the small-caps was encouraging, but further gains are needed to clear major resistance across the board.
The Dow dipped 28 points, or 0.2%, to settle just below 18,012. The blue-chips traded down to 17,925 shortly after the open and held the 100-day moving average by 6 points. The close below the 50-day moving average was slightly bearish, as it keeps support at 17,900-17,800 in play. Resistance remains at 18,100-18,200.
The S&P 500 slipped 2 points, or 0.1%, to close at 2,109. The index tested support at 2,100 and the 50-day moving average on the opening drop to 2,099. There is additional risk to 2,075 and the 100-day moving average on a close below 2,090. The rebound to 2,117 late in the session pushed resistance at 2,115-2,125 before fading. A close above these levels would be bullish.
The Nasdaq declined 6 points, or 0.1%, to finish at 5,076. Tech opened at 5,063 but made another backtest to support at 5,050 shortly afterwards. The bears pushed a low of 5,047, but the bulls held the 5,050 level for the fifth-straight session. The rebound to resistance at 5,100 during the second half of trading was a tease, but it was good to see 5,075 hold into the close.
The Russell 2000 advanced 2 points, or 0.2%, to end at 1,251. The small-caps were weak at the start of trading after falling to a low of 1,243. Near-term support at 1,240 held before a mid-day run to 1,258. The 1,240 level has held up well since mid-May, and the close above the 50-day moving average was slightly bullish. However, resistance at 1,260 needs to clear before a run to new highs can be considered.
The S&P 500 Volatility Index ($VIX, 14.33, up 0.36) cleared 15 after pushing a high of 15.05, but this level failed to hold. There is additional risk to 17.50. The bulls managed to push a low of 13.59 intraday but also failed at getting the VIX below 13.50.
From desk to press, futures look like this: Dow (+74); S&P 500 (+9); Nasdaq 100 (+28).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 55-18-1 (74%). 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.
Opko Health (OPK, $18.62, up $0.31)
OPK July 20 calls (OPK150717C00020000, $0.60, up $0.10)
Entry Price: $0.60 (6/2/2015)
Exit Target: $1.20
Stop Target: None
Action: Shares traded to a fresh 52-week high peak of $18.88 yesterday. Resistance is at $19-$20. Near-term support is at $18.
Sony (SNE, $30.54, down $0.26)
SNE July 33 calls (SNE150717C00033000, $0.45, down $0.05)
Entry Price: $0.45 (6/1/2015)
Exit Target: $0.90
Stop Target: None
Action: Tuesday’s low touched $30.42. Shares are in the process of backtesting support at $30.50-$30 and the 50-day moving average. This level has held for much of 2015, but there is risk to $29-$28. A move above $31.50-$32 would be a bullish sign that the recent selling pressure is over.
Rambus (RMBS, $15.29, up $0.06)
RMBS July 15 calls (RMBS150717C00015000, $0.95, flat)
Entry Price: $0.50 (5/27/2015)
Exit Target: $1.30 (Limit Order on half)
Stop Target: $0.65 (Stop Limit)
RMBS August 16 calls (RMBS150821C00016000, $0.75, flat)
Entry Price: $0.43 (5/27/2015)
Exit Target: $0.90
Stop Target: $0.55 (Stop Limit)
Action: A close above $15.75-$16 could lead to a run at $17-$18. Near-term support is at $15, followed by $14.50. Yesterday’s low reached $15.02 before a late-day run to $15.35.
Dot Hill Systems (HILL, $7.06, up $0.03)
HILL September 7.50 calls (HILL150918C00007500, $0.65, flat)
Entry Price: $0.55 (5/21/2015)
Exit Target: $1.10
Stop Target: $0.57 (Stop Limit)
HILL December 7.50 calls (HILL151218C00007500, $0.95, flat)
Entry Price: $0.80 (5/21/2015)
Exit Target: $1.60
Stop Target: $0.85 (Stop Limit)
Action: Support is at $7, with $6.75 serving as backup. A close below $6.75 will likely trigger the Stop Limits. Resistance is at $7.20-$7.25.
You can read my full update on HILL and check out its 15-year chart in the May 22 Pre-Market Update.
iShares Russell 2000 (IWM, $124.52, up $0.24)
IWM June 128 calls (IWM150619C00128000, $0.27, up $0.03)
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: Resistance is at $125-$125.50. Short-term support is at $123 and the 50-day moving average, followed by $122 and the 100-day moving average.
Limelight Networks (LLNW, $4.29, down $0.01)
LLNW September 4 calls (LLNW150918C00004000, $0.65, flat)
Entry Price: $0.35 (4/29/2015)
Exit Target: $1.00 (Limit Order on half)
Stop Target: $0.45 (Stop Limit)
Action: A move above resistance at $4.50 could lead to a run to $4.75-$5. Support is at $4.25-$4.20.
Trades on Hold — other 2015 Portfolio Open positions (1): 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.
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. These options will carry some premium through the first week of June. I would like to be out of this trade by next Friday’s close. This gives the trade until June 10 for Blackberry to get a takeover offer — Continue to hold.
Editor and Chief Options Strategist