Dear Momentum Stocks Weekly Subscriber,

The bulls nearly got a clean sweep on Wednesday, but the blue-chips struggled to join the parade. For the most part, the bulls ended their three-session skid, but deeper concerns remain, as a number of high-profile companies continue to miss revenue expectations.

The Dow slipped 10 points, or 0.1%, to end at 17,540. The blue-chips made a strong run past resistance at 17,600 to 17,661 shortly after the open, but they started to lose momentum by mid-day. The late-day fade to 17,492 was a fresh low for the week and keeps risk open to 17,400-17,350.

The S&P 500 gained 6 points, or 0.3%, to finish 2,099. The index tested resistance at 2,115-2,125 during the first half of the action after reaching a peak of 2,112. The pullback to 2,095 held fresh support and the 50-day moving average. The 2,090 level has held for seven-straight sessions, and a break of that level will be our first clue that more damage may occur.

The Nasdaq jumped 34 points, or 0.7%, to close at 5,139. Tech was strong throughout the session and traded up to resistance at 5,175-5,100, but high end of that range failed to hold. However, the bears held the 5,150 level into the close and are still eyeing near-term support at 5,100-5,075.

The Russell 2000 added nearly 3 points, or 0.2%, to settle at 1,231. The small-caps cleared resistance at 1,240 and tapped a high of 1,243, but they failed to hold this level into the close. The bears pushed a low of 1,229 afterwards but failed at cracking support at 1,225-1,220.

The S&P 500 Volatility Index ($VIX, 12.51, down 0.49) traded to a low of 10.88, which is a number I had to confirm through a couple of different sources because it was hard to believe. I have mentioned that a drop below 12.50-11.50 would confirm that new highs are in store for the market, but the drop below 11 is hard to trust, and it might signal that a different story is developing. The VIX tested a high of 12.72 late in the day and closed above 12.50. This keeps risk open to 13.50-15.

VIX

From desk to press, futures look like this: Dow (+33); S&P 500 (+5); Nasdaq 100 (+14); Russell (+3).

Chapter 1. Momentum Stocks Weekly Play List

All prices given in this update are current as of Aug. 5, 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 25-1, for a 96% win rate (142-18, or 89% win rate, overall since the start of 2011).

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

 

Ohr Pharmaceutical (OHRP, $2.82, down $0.24)

Original Entry Price: $3.16 (7/28/2015)

Lowered Price from Selling Options: N/A

Exit Target: $6.00+

Return: -11%

Stop Target: $1.00

Action: Support at $2.80 and the 50-day moving average held following yesterday’s 8% pullback. A drop below $2.75 could lead to $2.50. Resistance is at $3.00.

Earnings are due out today, and a loss of $0.19 is expected. I would like to see a better-than-expected loss, but I will be more interested in the company’s conference call and an update on its drug pipeline.

You can read my detailed update on OHRP from the July 30 Issue.

 

Limelight Networks (LLNW, $3.51, down $0.36)

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

Lowered Price from Selling Options: None

Exit Target: $5.00-$6.00

Return: -13%

Stop Target: $3.00

Action: Shares surged to a high of $4.29 on Monday following the company’s earnings announcement. The company reported a loss of $0.04 a share, which matched expectations. Revenue of $43.8 million topped forecasts for $41.3 million.

Support is at $3.50, followed by $3.40-$3.35 and the 200-day moving average. Resistance is at $3.75.

 

Rave Restaurant Group (RAVE, $12.24, up $0.34)

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

Lowered Price from Selling Options: N/A

Exit Target: $20.00

Return: -12%

Stop Target: $10.00

Action: Resistance is at $12.50-$12.75 and the 50-day moving average. Support at $12-$11.75. Additional help is at $11.50-$11.25 and the 200-day moving average on a close below $11.75.

You can read my recent earnings update on RAVE and why it remains my No. 1 stock pick from the June 29 Issue.

 

Rigel Pharmaceuticals (RIGL, $3.21, up $0.05)

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

Lowered Price from Selling Options: N/A

Exit Target: $4.00-$5.00

Return: -9%

Stop Target: $2.00

Action: Shares regained the $3.00 level on Monday’s 3% pop to $3.07. The momentum continued with Wednesday’s push to $3.35 before a close just below the 50-day moving average. The next layers of resistance are at $3.50-$3.60 and the 100-day moving average. Support is at $3.00-$2.95 and the 200-moving average.

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

 

Dot Hill Systems (HILL, $6.17, up $0.01)

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: The company is set to announce earnings this morning, and I will cover the results in next Monday’s issue. Wall Street is looking for $0.06 a share on revenue of $60.6 million.

Resistance is at $6.35-$6.40 and the 50-day moving average. Support is at $6.00.

You can read my full write-up on HILL in the May 26 Issue.

 

Flex (FLEX, $11.23, up $0.33)

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

Lowered Price from Selling Options: N/A

Exit Target: $15.00+

Return: -11%

Stop Target: $10.00

Action: Resistance is at $11.50 and the 50- and 200-day moving averages. Support is at $11.00.

You can read my detailed write-up on Flex in the July 30 Issue.

 

Psychemedics (PMD, $11.70, up $0.21)

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

Lowered Price from Selling Options: N/A

Exit Target: $15.75 (Limit Order)

Return: -25%

Stop Target: $7.75 (Stop Limit)

Dividend Yield: 4.9%

Action: A mini trading range has formed, with resistance sitting at $12-$12.50. Support is at $11.50-$11.00.

The company reported a profit of $0.05 a share on revenue of $7 million last week. A dividend payment should be coming this month.

 

Huttig Building Products (HBP, $3.29, up $0.02)

Original Entry Price: $4 (8/13/2014)

Lowered Price from Selling Options: N/A

Exit Target: $6.00+

Return: -18%

Stop Target: $2.00 (Stop Limit)

Action: Resistance at $3.20-$3.25 and the 50-, 100- and 200-day moving averages has cleared this week. A move above $3.40 would be bullish. Support is at $3.20-$3.10.

 

Rambus (RMBS, $13.53, up $0.47)

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

Lowered Price from Selling Options: $16.38

Exit Target: $15.00+

Return: -17%

Stop Target: $9.00

Action: Resistance at $13.75 and the 100-day moving average. Support is at $13.25-$13.00 on a pullback.

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