Dear Momentum Options Subscriber,

The bulls rebounded on Tuesday to push the resistance levels that had served as prior support, and today’s Fed meeting concerning interest rates could provide the spark for higher highs or lower lows. The party starts at 2 p.m. ET, so the action could get tight going into today’s announcement.

The Dow gained 113 points, or 0.6%, to finish at 17,904. The blue-chips dipped to a low of 17,774 on the open but rebounded to reach a high of 17,919 intraday. The index is sandwiched between its 100- and 200-day moving averages, with the next 200 points, up or down, possibly setting a new trend.

The S&P 500 added nearly a dozen points, or 0.6%, to end at 2,096. The index tested support at 2,080-2,075 following a trip to 2,082 at the start of trading. The steady climb to 2,097 afterwards nearly cleared 2,100 and the 50-day moving average, but the index ultimately fell shy of those levels. The bulls held the 100-day moving average, but there is still risk to 2,075-2,070 on a pullback. There is additional risk to 2,050 and the 200-day moving average on a close below 2,070.

The Nasdaq jumped 25 points, or 0.5%, to settle just below 5,055. Tech tested 5,022 during the first 30 minutes of trading before bouncing back to push a high of 5,063. The close above 5,050 was bullish, but further hurdles remain at 5,075-5,100. Support is at 5,025-5,000, with risk to 4,975-4,950 on a close below the latter.

The Russell 2000 advanced 8 points, or 0.7%, to close at 1,269. The small-caps fell below support at 1,260 following the dip to 1,258, but the 3-point loss quickly evaporated. The run to 1,271 pushed the 1,270-1,275 resistance zone, but the bulls just missed holding that level. There could be a blue-sky breakout to 1,300 or higher on a close above the all-time high of 1,278. A close below 1,260-1,250 today would be a bearish development.

The S&P 500 Volatility Index ($VIX, 14.81, down 0.58) traded up to 15.62 on the opening weakness but easily held the 17.50 level. The VIX ended at its session low, and the close below 15 was slightly bullish. I would love to see a close under 13.50 after today’s Fed meeting.

I could have a Trade Update on Rite Aid (RAD) shortly after the open if any action needs to be taken or if our Stop Limits trigger. The company is announcing earnings as we go to press. I may also have a couple of possible New Trades that I have been researching this week. One is a familiar name, while the other is on a stock that exploded to fresh 52-week peaks yesterday.

From desk to press, futures look like this: Dow (+25); S&P 500 (+2); Nasdaq 100 (+1).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 63-20-1 (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 portfolio.

 

United Parcel Service (UPS, $100.35, up $0.39)

UPS July 105 calls (UPS150717C00105000, $0.40, up $0.05)

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

Exit Target: $1.05

Return: -25%

Stop Target: None

 

UPS October 110 calls (UPS151016C00110000, $0.58, up $0.01)

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

Exit Target: $1.40

Return: -17%

Stop Target: None

Action: Resistance is at $101 and the 200-day moving average. Yesterday’s high reached $100.47. Support is at $100-$99 and the 100- and 50-day moving averages. FedEx (FDX) is reporting earnings this morning, so shares of UPS could trade in tandem depending on the results.

You can read my extended write-up on UPS in the June 12 Pre-Market Update.

 

Rite Aid (RAD, $8.95, up $0.13)

RAD July 8 calls (RAD150717C00008000, $1.05, up $0.10)

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

Exit Target: $1.30 (closed 1/3 @ $1.00 on 6/11/15, closed 1/3 @ $1.00 on 6/16/15)

Return: 59%

Stop Target: $0.80 (Stop Limit)

 

RAD October 9 calls (RAD151016C00009000, $0.85, up $0.10)

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

Exit Target: $1.10 (closed 1/3 @ $0.80 on 6/11/15, closed 1/3 @ $0.80 on 6/16/15)

Return: 52%

Stop Target: $0.60 (Stop Limit)

Action: Earnings are due out this morning. Resistance is $9-$9.25. Support is at $8.75, followed by $8.50 and the 50-day moving average.

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. We closed another third of both positions on June 16.

 

Wells Fargo (WFC, $57.22, up $0.24)

WFC July 60 calls (WFC150717C00060000, $0.22, up $0.01)

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

Exit Target: $0.50

Return: 10%

Stop Target: None

Action: Resistance is at $57.50 and the recent all-time of $57.57. Support is at $56.50-$56.

 

Rigel Pharmaceuticals (RIGL, $3.29, down $0.25)

RIGL September 5 calls (RIGL150918C00005000, $0.35, down $0.10)

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

Exit Target: $0.80

Return: -13%

Stop Target: None

Action: Support is at $3.25-$3 on the close below $3.40. Resistance is at $3.50.

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

 

Sony (SNE, $30.44, down $0.24)

SNE July 33 calls (SNE150717C00033000, $0.20, down $0.10)

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

Exit Target: $0.90

Return: -56%

Stop Target: None

Action: Near-term resistance is at $30.75-$31 and the 50-day moving average. Support is at $29-$28.50 and the 100-day moving average on a fade below $30.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options