Dear Momentum Options Subscriber,

The market opened higher and stayed strong throughout Wednesday’s session, as the bulls recovered several layers of resistance that held into the close. The small-caps led the surge higher, but the rally was broad-based and got all-time highs back in play.

The Dow jumped 236 points, or 1.3%, to finish at 18,000. The blue-chips traded past 17,900-18,000 and the 50- and 100-day moving averages during the first half of action but closed between them. The bulls pushed a high of 18,045, and they face additional hurdles at 18,100-18,200. A close above the latter could get 18,350-18,500 and historic highs in play.

The S&P 500 soared 25 points, or 1.2%, to end at 2,105. The index tested a high of 2,108 intraday and held 2,100 into the closing bell. The next waves of resistance are at 2,115-2,125, with a shot at 2,135-2,150 if the latter is cleared. Support is at 2,090-2,085 on dips below 2,100 and the 50-day moving average.

The Nasdaq zoomed 63 points, or 1.25%, to settle at 5,076. Tech opened above the 5,025 level at 5,029 before surging to a high of 5,086. Resistance at 5,100 was challenging, but the close above 5,075 indicated that the bulls are trying to clear this level once again. Short-term support is at 5,050-5,000 and the 50-day moving average.

The Russell 2000 rocketed 17 points, or 1.4%, to close just below 1,267. The small-caps opened at 1,254 and reached a peak of 1,269.77 while holding 1,260. I have talked about closes above 1,270-1,275 leading to fresh all-time highs north of 1,280 and a run at 1,300. This assumes support at 1,250-1,240 holds on another backtest.

The S&P 500 Volatility Index ($VIX, 13.22, down 1.25) tanked nearly 9% after pushing a low of 12.96. I mentioned that the bulls needed to get under 13.50 this week, and they answered my call in less than 24 hours. I feel greedy asking for closes below 12.50-11.50 so soon, but that is where the VIX needs to be over the next week or so for the rally to continue. Resistance is at 15, with “stretch” to 17-17.50.

From desk to press, futures look like this: Dow (+4); S&P 500 (-1); Nasdaq 100 (+1).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 59-19-1 (75%). 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 8:00 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.

 

Rambus (RMBS, $15.22, up $0.31)

RMBS July 16 calls (RMBS150717C00016000, $0.33, up $0.09)

Entry Price: $0.30 (6/10/2015)

Exit Target: $0.60-$0.90

Return: 10%

Stop Target: None

 

RMBS August 16 calls (RMBS150821C00016000, $0.65, up $0.10)

Entry Price: $0.60 (6/10/2015)

Exit Target: $1.20

Return: 8%

Stop Target: None

Action: I wanted to get us back into RMBS, as I don’t want to miss the pending breakout that could be coming.

Shares traded to a high of $15.26 on Wednesday. The 52-week high is at $15.34 and was set at the beginning of the month. Support is at $15-$14.75, with risk to $14.50.

 

Rite Aid (RAD, $8.64, up $0.19)

RAD July 8 calls (RAD150717C00008000, $0.80, up $0.05)

Entry Price: $0.65 (6/9/2015)

Exit Target: $1.30

Return: 23%

Stop Target: None

 

RAD October 9 calls (RAD151016C00009000, $0.65, up $0.05)

Entry Price: $0.55 (6/9/2015)

Exit Target: $1.10

Return: 18%

Stop Target: None

Action: Wednesday’s high reached $8.69. Resistance is at $8.75. Support is at $8.50-$8.25.

You can read my detailed write-up on RAD in the June 10 Pre-Market Update.

 

Wells Fargo (WFC, $57.21, up $0.51)

WFC July 60 calls (WFC150717C00060000, $0.25, up $0.04)

Entry Price: $0.20 (6/5/2015)

Exit Target: $0.50

Return: 25%

Stop Target: None

Action: Shares traded to a fresh 52-week high of $57.57 on Wednesday. The breakout into blue-sky territory is showing that a run to $60 could be coming once $58 clears. Fresh support has moved up to $57-$56.50.

 

Rigel Pharmaceuticals (RIGL, $3.66, up $0.12)

RIGL September 5 calls (RIGL150918C00005000, $0.50, up $0.05)

Entry Price: $0.40 (6/4/2015)

Exit Target: $0.80

Return: 25%

Stop Target: None

Action: Shares raced to a high of $3.78 yesterday. Resistance remains at $3.75-$4. Support is at $3.50, followed by $3.30-$3.25 and the 100-day moving average.

You can read my detailed write-up on RIGL in the June 5 Pre-Market Update.

 

Dot Hill Systems (HILL, $7.41, down $0.01)

HILL September 7.50 calls (HILL150918C00007500, $0.80, flat)

Entry Price: $0.55 (5/21/2015)

Exit Target: $1.10

Return: 45%

Stop Target: $0.57 (Stop Limit)

 

HILL December 7.50 calls (HILL151218C00007500, $1.20, flat)

Entry Price: $0.80 (5/21/2015)

Exit Target: $1.60

Return: 50%

Stop Target: $0.85 (Stop Limit)

Action: Shares traded to a fresh 52-week high of $7.55 on Wednesday. Resistance is at $7.50-$7.75. Support is at $7.25-$7.

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, $125.99, up $1.55)

IWM June 128 calls (IWM150619C00128000, $0.34, up $0.19)

Entry Price: $0.70 (5/20/2015)

Exit Target: $0.90 (Limit Order)

Return: -51%

Stop Target: None

Action: Resistance is at $126-$127. Wednesday’s peak reached $126.48. The 52-week high is at $127.13. Short-term support is at $124 and the 50-day moving average.

 

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.

Sony (SNE) July 33 calls (from June 2015) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options