Dear Momentum Options Subscriber,

The bears returned on Wednesday and held down the market on the open, as headlines about Greece ignited new fears of a possible default. These types of helter-skelter market moves will likely continue for the rest of the week and into next until Greece or the European zombies pull the country out of its current debt misery.

The Dow dropped 178 points, or 1%, to settle at 17,966. The blue-chip index traded in negative territory throughout the day and went out at its session low. Support at 17,900 held, but the close below 18,000 and the 50- and 100-day moving averages was slightly bearish. There is additional risk to 17,800 on further weakness, and a close below this level could lead to 17,600. Resistance remains at 18,100-18,200.

The S&P 500 sank 15 points, or 0.7%, to close at 2,108. The index tested resistance at 2,125 shortly after the open, but it was all downhill afterwards. The bears pushed a low of 2,108, with support at 2,100 and the 50-day moving average holding. This was a slightly bullish sign. Additional help is at 2,090-2,085 on a drop below 2,100.

The Nasdaq tanked 37 points, or 0.7%, to finish at 5,122. Tech also traded briefly in the green after testing a high of 5,164 an hour into the start of trading. The 4-point gain quickly turned south, with the index closing a point off of its session low. The close back below 5,125 was a bummer, but support at 5,100 held. A drop under this level could lead to 5,075-5,050 and the 50-day moving average over the near term.

The Russell 2000 declined nearly 12 points, or 0.9%, to end at 1,283. The small-caps tried making a run past 1,300 on Wednesday’s open but could only muster a push to 1,295. The bears made a run at cracking support at 1,280-1,275, but then they ran out of time. A close below 1,270 might signal that a short-term top is in.

The S&P 500 Volatility Index ($VIX, 13.26, up 1.15) gained nearly 10% following a run to 13.33. The bulls pushed a low of 12.01 shortly after the open and held the 13.50 level into the close. A move back above this level could lead to a test to 15. The bulls will be looking to recover 12.50 ahead of the weekend.

From desk to press, futures look like this: Dow (+66); S&P 500 (+7); Nasdaq 100 (+16).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 65-20-1 (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 8:00 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.

 

US Steel (X, $22.41, down $0.50)

X July 21 puts (X150717P00021000, $0.35, up $0.07)

Entry Price: $0.28 (6/23/2015)

Exit Target: $0.60

Return: 25%

Stop Target: None

Action: A move below $22.50-$22 could open the door for a test to $21-$20. Short-term resistance is at $23.50.

You can read my full report on X in the June 24 Pre-Market Update.

 

S&P 500 SPDR ETF (SPY, $210.54, down $1.54)

SPY July 200 weekly puts (SPY150710P00200000, $0.28, up $0.10)

Entry Price: $0.45 (6/19/2015)

Exit Target: $0.90-$1.20 (Limit Order at $0.90 on first half)

Return: -38%

Stop Target: None

Action: A close below $210 and the 50-day moving average would be bearish. Additional help is at $208 and the 100-day moving average. Resistance is at $213.

You can read my full update on SPY and view the chart work in the June 22 Pre-Market Update.

 

Rambus (RMBS, $14.85, down $0.09)

RMBS August 16 calls (RMBS150821C00016000, $0.42, down $0.02)

Entry Price: $0.55 (6/19/2015)

Exit Target: $1.40

Return: -24%

Stop Target: None

Action: Support is at $14.50 and the 50-day moving average on a drop below $14.75 and Wednesday’s low. Resistance is at $15-$15.25.

You can read my full update on RMBS and view the chart work in the June 22 Pre-Market Update.

 

Microsoft (MSFT, $45.63, down $0.28)

MSFT July 47 calls (MSFT150717C00047000, $0.35, down $0.05)

Entry Price: $0.73 (6/18/2015)

Exit Target: $1.50

Return: -53%

Stop Target: None

Action: Support is at $45.50-$45 and the 50-day moving average. Resistance is at $47.

 

United Parcel Service (UPS, $99.39, down $1.36)

UPS July 105 calls (UPS150717C00105000, $0.15, down $0.08)

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

Exit Target: $1.05

Return: -72%

Stop Target: None

 

UPS October 110 calls (UPS151016C00110000, $0.31, down $0.15)

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

Exit Target: $1.40

Return: -56%

Stop Target: None

Action: I’m a little disappointed in the stock’s drop back below $100. I’m placing these trades on hold until I do some additional chart work over the weekend, and they will appear in the “Trades on Hold” section of subsequent updates. The Transport sector tanked 2% and dragged UPS down with it. Support is at $99 and the 100- and 50-day moving averages. Resistance is at $101.

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

 

Wells Fargo (WFC, $57.54, down $0.35)

WFC July 60 calls (WFC150717C00060000, $0.15, down $0.03)

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

Exit Target: $0.50

Return: -25%

Stop Target: None

Action: These are “cheap” options to play a possible move above $60 by mid-July. The breakeven point is north of $60.20, and I still like the risk/reward this trade offers. Resistance is at $58-$58.50 and Tuesday’s all-time high of $58.26. Support is at $57.

 

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.

Sony (SNE) July 33 calls (from 6/1/2015) — Shares are trying to build a fresh floor of support above $30 — Continue to hold.

Rigel Pharmaceuticals (RIGL) September 5 calls (from 6/4/2015) — A move above $3.55 and the 100-day moving average would be bullish — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options