Dear Momentum Options Subscriber,

The bulls pushed the next layers of resistance on Thursday’s open, but they had to deal with the intraday drama over Greece, which slowed their momentum. Reports that the International Monetary Fund (IMF) halted bailout talks with the country caused a slight pullback before the market made another push towards all-time highs.

The Dow advanced 52 points, or 0.3%, to end at 18,039. The blue-chips kissed a high of 18,109 on the open to test resistance at 18,100-18,200. Support at 18,000-17,900 held on the early-morning fade, as the bulls held positive territory throughout the session. A close above 18,200 or below 17,800 will be the next market clue that a possible trend is developing.

The S&P 500 added 4 points, or 0.2%, to settle at 2,108. The index traded into the next waves of resistance at 2,115-2,125 following a run to 2,115 yesterday. Support at 2,100 is looking good, with backup at 2,090-2,085 and the 50-day moving average waiting in the wings.

The Nasdaq gained 8 points, or 0.2%, to close at 5,082. Tech cleared resistance at 5,100 and tapped 5,101 on the open before fading to 5,075 intraday. Support at 5,075-5,050 held, but a close below the latter today would be bearish for next week.

The Russell 2000 climbed 2 points, or 0.2%, to finish a shade below 1,269. The small-caps also tested resistance at 1,270-1,275 following a pop past 1,270 shortly after the opening bell. The bears pushed a low of 1,266 intraday, but the one-point loss failed to hold. Support at 1,250-1,240 is still in play on a move back below 1,260.

The S&P 500 Volatility Index ($VIX, 12.85, down 0.37) fell another 3% after testing a low of 12.56, while holding the 13.50 level. I mentioned that closes below 12.50-11.50 would be bullish clues for a continued rally and another run at record highs.

I have updated our latest trades in United Parcel Service (UPS) with a chart and my thoughts, so let’s take a look.

From desk to press, futures look like this: Dow (-56); S&P 500 (-7); Nasdaq 100 (-20).

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.

 

United Parcel Service (UPS, $101.00, up $0.54)

UPS July 105 calls (UPS150717C00105000, $0.54, up $0.07)

Entry Price: $0.53 (6/11/2015)

Exit Target: $1.05

Return: 2%

Stop Target: None

 

UPS October 110 calls (UPS151016C00110000, $0.72, up $0.05)

Entry Price: $0.70 (6/11/2015)

Exit Target: $1.40

Return: 3%

Stop Target: None

Action: Near-term risk is at $100-$99 and the 50- and 100-day moving averages on a pullback. The close back above $101 and the 200-day moving average was slightly bullish, but there are additional hurdles at $102-$104. A close above the latter would be bullish for a run to $105-$110.

UPS

With FedEx (FDX, $184.98, up $2.66) setting fresh 52-week highs, I’m hoping that Wall Street sees the disparity between the two stocks. UPS traded to a 52-week high of $114.40 in late January and is roughly 15% off its high. The stock also sports a yield of nearly 3% and recently paid a quarterly dividend of $0.73 in mid-May.

Fund managers looking for safety could start building positions at current levels to play a 10-15% upside move over the next three to six months.

 

Rambus (RMBS, $15.41, up $0.19)

RMBS July 16 calls (RMBS150717C00016000, $0.46, up $0.08)

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

Exit Target: $0.60-$0.90

Return: 53%

Stop Target: None

 

RMBS August 16 calls (RMBS150821C00016000, $0.81, up $0.16)

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

Exit Target: $1.20

Return: 35%

Stop Target: None

Action: Shares traded to a 52-week high of $15.49 on Thursday. Multi-year resistance is at $15.75-$16. Support is at $15-$14.75, with risk to $14.50.

 

Rite Aid (RAD, $8.96, up $0.32)

RAD July 8 calls (RAD150717C00008000, $1.00, up $0.20)

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

Exit Target: $1.30 (closed 1/3 @ $1.00 on 6/11/15)

Return: 54%

Stop Target: $0.80 (Stop Limit)

 

RAD October 9 calls (RAD151016C00009000, $0.80, up $0.10)

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

Exit Target: $1.10 (closed 1/3 @ $0.80 on 6/11/15)

Return: 45%

Stop Target: $0.60 (Stop Limit)

Action: Resistance is at $9. Shares closed at their session high and a move past $9 could lead to $9.25-$9.50 over the near term. Support has moved up to $8.75-$8.50.

You can read my detailed write-up on RAD in the June 10 Pre-Market Update. We closed a third of both positions on June 11.

 

Wells Fargo (WFC, $57.26, up $0.05)

WFC July 60 calls (WFC150717C00060000, $0.24, down $0.01)

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

Exit Target: $0.50

Return: 20%

Stop Target: None

Action: Shares have traded to 52-week and all-time highs of $57.57 in back-to-back sessions. 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, $3.51, down $0.15)

September 5 calls (RIGL150918C00005000, $0.45, down $0.05)

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

Exit Target: $0.80

Return: 13%

Stop Target: None

Action: Support is at $3.50, followed by $3.30-$3.25 and the 100-day moving average. Resistance is at $3.75-$4.

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

 

Sony (SNE, $30.51, up $0.53)

SNE July 33 calls (SNE150717C00033000, $0.25, up $0.05)

Entry Price: $0.45 (6/1/2015)

Exit Target: $0.90

Return: -44%

Stop Target: None

Action: This is not a new trade, but one that was on “hold” for a short period of time.

Shares cleared $30 again and reached a peak of $30.69 yesterday. Near-term resistance is at $30.75-$31 and the 50-day moving average. Support is at $29-$28 and the 100-day moving average on another drop below $30. I’m not suggesting new positions at this time, but I do like the rebound this week.

 

Dot Hill Systems (HILL, $7.40, 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: Resistance is at $7.50-$7.75. Thursday’s high reached $7.50, which was followed by a low of $7.39 going into the close. 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, $126.31, up $0.32)

IWM June 128 calls (IWM150619C00128000, $0.36, up $0.02)

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

Exit Target: $0.90 (Limit Order)

Return: -49%

Stop Target: None

Action: Resistance is at $126-$127. Short-term support is at $124 and the 50-day moving average.

I have mentioned that I would like to be out of this trade by today. If the small-caps continue to show some strength, I may close half of the trade today and let the rest run into next week.

I’m not sure if I can get us back to even, but, with the Fed speaking next week, the chance for a breakout is in the mix. This trade is running out of time, but I would hate to pull the plug too soon. These options expire next Friday.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options