Dear Momentum Options Subscriber,
The bears recorded their third-straight win on Tuesday following a tight and choppy session. The bulls showed a little life after testing resistance, but the late-day fade opened fresh wounds.
The Dow tanked 47 points, or 0.3%, to settle at 17,550. The blue-chips cleared resistance at 17,600 on the open following a run to 17,635. The gains quickly evaporated after the first few hours of trading, and the index traded in the red for the remainder of the session. The bears pushed a low of 17,505 and are eyeing the next levels of support at 17,400-17,350. The July bottom of 17,399 could be in danger of triggering on further weakness.
The S&P 500 sank 4 points, or 0.2%, to end 2,093. The index cleared fresh resistance at 2,100 and the 50-day moving average before falling to a low of 2,088. I mentioned that a close below 2,090 and the 100-day moving average could lead to a retest of 2,075-2,070 and the 200-day moving average. If the latter fails to hold, I’m expecting a trip to 2,050.
The Nasdaq declined nearly 10 points, or 0.2%, to finish at 5,105. Tech tested a high of 5,125 shortly after Tuesday’s open but struggled with resistance at 5,125-5,150. The close above 5,100 was slightly bullish, but the low of 5,092 keeps 5,075-5,050 in play.
The Russell 2000 fell 3 points, or 0.2%, to close at 1,228. The small-caps showed the most strength yesterday after reaching a peak of 1,237, with resistance at 1,240 holding for the second-straight session. The bears clawed their way to 1,226, but the bulls held near-term support at 1,230-1,225. A move below 1,225-1,215 and the 200-moving average could lead to 1,200.
The S&P 500 Volatility Index ($VIX, 13.00, up 0.44) stayed below the 13.50 level after reaching a peak of 13.22 intraday. The VIX did trade in the red to a low of 12.29, but it closed above 12.50 for the second session in a row.
From desk to press, futures look like this: Dow (+69); S&P 500 (+14); Nasdaq 100 (+31); Russell (+7).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 76-25-2 (74%). 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 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.
SPDR S&P 500 ETF (SPY, $209.38, down $0.41)
SPY August 205 puts (SPY150821P00205000, $0.90, up $0.10)
Entry Price: $0.90 (8/3/2015)
Exit Target: $1.35-$1.80 (Limit Orders on half)
Stop Target: None
Action: Resistance at $210 was stretched following yesterday’s pop to $210.25. Support at $208 came into play following the test to $208.80. A close below $208 should get the profits rolling in.
PowerShares QQQ Trust (QQQ, $111.39, down $0.21)
QQQ August 110 puts (QQQ150821P00110000, $0.88, up $0.14)
Entry Price: $0.72 (7/30/2015)
Exit Target: $1.45
Stop Target: None
Action: Support is at $110. Near-term resistance is at $112. A move below $110 should get $108 in play.
SPDR Gold Trust ETF (GLD, $104.31, up $0.21)
GLD September 98 puts (GLD150918P00098000, $0.63, down $0.07)
Entry Price: $0.82 (7/28/2015)
Exit Target: $1.65
Stop Target: None
Action: Resistance is at $106. A move below $104-$103.50 should get $100 and below in play. The major moving averages are still sloping lower and show no signs of leveling out.
United Parcel Service (UPS, $102.64, down $0.11)
UPS October 110 calls (UPS151018C00110000, $0.40, down $0.04)
Entry Price: $0.70 (6/11/2015)
Exit Target: $0.70+
Stop Target: $0.20 (Stop Limit)
Action: Resistance is at $103-$105. A move above the latter should get the trade back to even or better. Support is at $102-$101 and the 200-day moving average. A close below the latter will likely trip our Stop Limit.
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.
Rigel Pharmaceuticals (RIGL) September 5 calls (from 6/4/15) — Continue to hold.
Editor and Chief Options Strategist