Dear Momentum Stocks Weekly Subscriber,

Thank you and a big welcome to the overwhelming number of new subscribers that have come on board. Because we have a lot of new members in the midst of the current market volatility, I want to provide everyone with Momentum Stocks Weekly updates twice a week on Mondays and Thursdays.

The market’s recent volatility and wild price swings can also cause emotions to run high. This additional update will help to keep those emotions in check, and I hope it will give you a better feel for market direction and my thoughts on our current trades.

I will continue to send you profit and trade alerts at any time throughout the week when I see a new opportunity or if there is an action to take on an open trade. Remember, you can also sign up to receive text alerts to your mobile device for free (though carrier charges may apply). Register for text alerts here.

The market finished mixed on Wednesday, with support and resistance holding on both sides. The possibility of a continued trading range with upside potential for the bulls is still high, but further weakness could tilt those odds in favor of the bears.

The Dow fell 68 points, or 0.4%, to end at 17,851. The blue-chips traded in the red for the second consecutive session, with the bears pushing a low of 17,807. Support is at 17,800 held, but a close below this level could lead to 17,600. Resistance is at 17,900-18,000.

The S&P 500 slipped 5 points, or 0.2%, to settle at 2,114. The index also traded in negative territory throughout the session after bottoming at 2,110. The close below 2,115 was slightly bearish, but support at 2,100-2,090 held. Resistance at 2,125-2,135.

The Nasdaq declined 36 points, or 0.7%, to close at 5,171. Tech tested a low of 5,145 and fell below support at 5,150 at the open on Wednesday. The rebound to 5,184 fell shy of resistance at 5,200 and prior support. There is risk to 5,100-5,050 on a close below 5,150.

The Russell 2000 climbed almost 4 points, or 0.3%, to finish at 1,258. The small-caps tested a low of 1,248 at the start of trading before rebounding to push a high of 1,259. Resistance at 1,260 held for the second-straight session, but a close above this level gets 1,270-1,275 in play.

The S&P 500 Volatility Index ($VIX, 12.12, down 0.10) surged to 12.83 on the open, but the bulls held the 12.50 level for the fifth-straight session. A close above 13.50 would be bearish. A move below 12.50-11.50 should keep fresh all-time highs in play.

From desk to press, futures look like this: Dow (-10); S&P 500 (+0.75); Nasdaq 100 (+6); Russell (+1).

Momentum Stocks Weekly Play List

All prices given in this update are current as of July 22, 2015. I hereby disclose that I will be participating in the following trade(s).

The Momentum Stocks Weekly Closed Trade Track Record for 2015 is 24-0, for a 100% win rate (141-17, or 89% win rate, overall since the start of 2011)

View the entire list of open and closed trades by clicking here.

 

Chanticleer Holdings (HOTR, $2.69, up $0.29)

Original Entry Price: $2.55 (7/22/2015)

Lowered Price from Selling Options: None

Exit Target: $3.00 (Limit Order)

Return: 5%

Stop Target: $2.60 (Stop Limit)

Action: Set a Limit Order to close the trade at $3.00. Also, set a Stop Limit order at $2.60 in case yesterday’s breakout fades.

The company owns a number of Hooters restaurants and a few Burger Joints, but I’m more interested in their Just Fresh concept.

There are seven Just Fresh locations in Charlotte, NC, and the company just announced plans to franchise the units. However, this is a momentum trade only to play a run past $3.00. The company’s financials aren’t as strong as I would like to see, and they are still losing money on a somewhat-proven concept with Hooters.

Short-term resistance is at $2.75 and the 100-day moving average, followed by $3.00 and the 50-day moving average. Support is at $2.30 and the 200-day moving average on a drop back below $2.50.

 

Psychemedics (PMD, $10.83, up $0.17)

Original Entry Price: $15.67 (5/5/2015)

Lowered Price from Selling Options and dividends: No options available

Exit Target: $15.75 (Limit Order)

Return: -31%

Stop Target: $10.00, lower to $7.75 (Stop Limit)

Dividend Yield: 5.5%

Action: Lower the Stop Target from $10.00 to $7.75 and make it a Stop Limit.

Shares traded to a 52-week low of $9.82 on Tuesday. There is additional risk to $8.00 on a close below $10.00, which is why I lowered the Stop Target. However, it is now a $7.75 Stop Limit, and we will be forced out of the position if it is tripped. This would cap the loss at 51%. Resistance is at $12.50-$13.00.

Recent comments:

“The fundamentals haven’t changed, as earnings have matched or topped Wall Street’s expectations in the past four quarters.

This is a micro-cap company, so the price swings can be volatile, but I still like the stock at these discounted levels. The dividend yield is up to 5.5% and has been stable for years.”

 

Limelight Networks (LLNW, $4.03, down $0.04)

Original Entry Price: $4.03 (7/9/2015)

Lowered Price from Selling Options: None

Exit Target: $5.00-$6.00

Return: 0%

Stop Target: $3.00

Action: There is risk to $3.75-$3.60 on a close below $4-$3.90 and the 100-day moving average. Resistance is at $4.15-$4.20 and the 50-day moving average. A close above these levels would be bullish.

I have a Price Target of $5.00-$6.00 over the next six to 12 months. The company received a takeover offer north of $6.00 last summer. I’m expecting another takeover attempt at some point this year or next, as the content-delivery market (CDN) remains hot.

 

Rave Restaurant Group (RAVE, $12.90, down $0.84)

Original Entry Price: $13.92 (7/9/2015)

Lowered Price from Selling Options: None

Exit Target: $20.00

Return: -8%

Stop Target: $10.00

Action: Shares recovered $13 to start the week before fading to a low of $12.40 during Wednesday’s action. There is further risk to $12-$11.50 on another drop below $12.50. Resistance is at $13 and the 50-day moving average.

You can read my recent earnings update on RAVE and why it remains my number one stock pick from the June 29 Issue.

 

Rigel Pharmaceuticals (RIGL, $3.17, down $0.03)

Original Entry Price: $3.51 (6/2/2015)

Lowered Price from Selling Options: None

Exit Target: $4.00-$5.00

Return: -9%

Stop Target: $2.00

Action: Resistance is at $3.25, followed by $3.45-$3.50 and the 50-day moving average. Support is at $3.00. Another close back below $3.00 keeps $2.90-$2.75 and the 200-day moving average in play.

You can read my detailed write-up from the June 8 Issue here.

 

Dot Hill Systems (HILL, $6.16 down $0.16)

Original Entry Price: $7.10 (5/21/2015)

Lowered Price from Selling Options: N/A

Exit Target: $14.00-$15.00

Return: -13%

Stop Target: $5.00

Action: Shares closed back below their 100-day moving average on Wednesday after testing support at $6. A close below these levels could lead to a backtest to $5.75-$5.50. Resistance is at $6.25-$6.50.

Earnings are due out August 3, and I will cover Dot Hill’s numbers next week. In the meantime, you can read my full write-up on HILL in the May 26 Issue.

 

Flextronics (FLEX, $10.77, down $0.12)

Original Entry Price: $12.55 (5/19/2015)

Lowered Price from Selling Options: None

Exit Target: $15.00+

Return: -14%

Stop Target: $10.00

Action: There is additional risk to $10.50-$10.00 on continued drops below $10.75. Resistance is at $11.00, followed by $11.40-$11.50 and the 200-day moving average.

 

Huttig Building Products (HBP, $3.23, up $0.08)

Original Entry Price: $4.00 (8/13/2014)

Lowered Price from Selling Options: No options available

Exit Target: $6.00+

Return: -19%

Stop Target: $2.00 (Stop Limit)

Action: Resistance at $3.20-$3.25, and the 50-, 100- and 200-day moving averages are in the process of being tested and cleared. A move above the latter would be bullish.

HBP has been in business for 130 years. They have been my bet on a “housing recovery” since last August. I still like the stock, but I would wait for a possible backtest to complete or for $3.25 to clear before adding new positions.

 

Rambus (RMBS, $13.21, up $0.32)

Original Entry Price: $17.83 (11/14/2011)

Lowered Price from Selling Options: $16.38

Exit Target: $15.00+

Return: -19%

Stop Target: $9.00

Action: The company reported in-line earnings on Monday but offered a weak outlook, and shares fell towards $12. The 200-day moving average held, which is one reason why I still like the stock.

Wednesday’s close back above $13 was bullish, but additional hurdles remain at $13.50-$13.75 and the 100-day moving average. I also believe RMBS is a strong takeover target.

We previously sold to open (wrote) the RMBS December 20 calls for $1.45 on Nov. 14, 2011 to reduce the cost basis to $16.38.

 

Trades on Hold (7):  These are trades that are still open in the portfolio but are down from the original recommended price.  These trades are on “hold” and are not a buy until I bring back coverage of the stock.  This means I would not open any new positions.  I’m still keeping track of the trades and will record the results accordingly when a trade closes. I do not recommend adding to these positions or opening new positions.

Discovery Laboratories (DSCO, March 2015) — Continue to hold.

AKS Steel Holding (AKS, May 2011) — We sold to open (wrote) the AKS September 6 calls (AKS150918C00006000) on 4/30/2015 for 40 cents. Continue to hold.

DryShips (DRYS, January 2011) — We sold to open (wrote) the DRYS September 1 calls (DRYS150918C00001000) on 4/30/2015 for 5 cents. Continue to hold.

Bebe Stores (BEBE, February 2012) — We sold to open (wrote) the BEBE September 4 calls (BEBE150918C00004000) on 4/30/2015 for 35 cents. Continue to hold.

Vivus (VVUS, July 2012) — We sold to open (wrote) the VVUS September 4 calls (VVUS150918C00004000) on 4/30/2015 for 10 cents. Continue to hold.

Zynga (ZNGA, March 2014) — We sold to open (wrote) the ZNGA September 3 calls (ZNGA150918C00003000) on 4/30/2015 for 16 cents. Continue to hold.

Galena Biopharma (GALE, February 2014) — We sold to open (wrote) the GALE October 2 calls (GALE151016C00002000) on 4/30/2015 for 15 cents. Continue to hold.

Trade on!

Signed

Rick Rouse
Editor
Momentum Stocks Weekly