Dear Momentum Options Subscriber,
The bulls snapped two streaks to start the week as they recovered the first layers of resistance. Monday’s market win not only snapped a seven-session losing streak for the Dow, but it also gave the blue-chips their first Monday win in three weeks.
The Dow jumped 241 points, or 1.4%, to close at 17,615. The blue-chips were strong throughout the day following a steady climb to 17,629 intraday. The close above prior resistance at 17,600 opens the doors for a retest to 17,800-17,900. Support is back at 17,400-17,350.
The S&P 500 soared 26 points, or 1.3%, to settle 2,104. The index opened at 2,080 and traded to an intraday high of 2,105. The close above resistance at 2,100 was bullish and gets 2,115-2,125 back in play. Near-term support is at 2,075-2,070 if 2,090 fails to hold on a backtest.
The Nasdaq zoomed 58 points, or 1.2%, to end at 5,101. Tech opened above 5,075 at 5,080 and reached a peak of 5,112 late in the day. The move back above 5,100 gets 5,150-5,200 back in the mix. Support is at 5,050-5,000 if 5,075 fails to hold.
The Russell 2000 surged 15 points, or 1.3%, to finish at 1,222. The small-caps opened at 1,212 and held on to the 200-day moving average into the closing bell. The next layers of resistance are at 1,225-1,230, followed by 1,240. Support is at 1,210-1,200 on another drop below 1,215.
The S&P 500 Volatility Index ($VIX, 12.23, down 1.16) fell 8% and closed back below the 12.50 level. The low checked in at 12.18. A move under 11.50 would confirm higher highs, while a pop back above 13.50 would signal continued trouble.
From desk to press, futures look like this: Dow (-106); S&P 500 (-12); Nasdaq 100 (-11); Russell (-6).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 79-26-2 (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.
JPMorgan Chase (JPM, $68.89, up $0.84)
JPM September 70 calls (JPM150918C00070000, $0.87, up $0.15)
Entry Price: $0.80 (8/10/2015)
Exit Target: $1.60
Stop Target: None
Action: Shares traded to a high of $69 on Monday. Resistance is at $70-$71, and the 52-high is at $70.61. A move above this level could lead to a quick run at $75. Support is at $68 and the 50-day moving average.
KB Home (KBH, $15.31, up $0.24)
KBH October 16 calls (KBH151016C00016000, $0.58, up $0.08)
Entry Price: $0.52 (8/10/2015)
Exit Target: $1.05
Stop Target: None
Action: Resistance is at $15.50-$15.75 and the 50- and 100-day moving averages. Support is at $15-$14.50.
SPDR Gold Trust ETF (GLD, $105.72, up $1.07)
GLD September 98 puts (GLD150918P00098000, $0.36, down $0.15)
Entry Price: $0.82 (7/28/2015)
Exit Target: $1.65
Stop Target: None
Action: Resistance at $106 was stretched following Monday’s push to $106.27. Additional resistance is at $108-$110. Support is at $104-$103.50 if $105 fails to hold.
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