Dear Momentum Stocks Weekly Subscriber,

Fear swept through Wall Street on Wednesday as the bears made their most significant move of the year. The technical damage caused from yesterday’s pullback was severe, but the bounce off of the lows might be telling another story.

The Dow dipped just a fraction of a point to close at 17,402. The blue-chips traded to a low of 17,125 shortly after the open, with backup support at 17,200-17,000 holding. A move below the latter could lead to 16,800-16,600. The close above 17,350-17,400 keeps short-term resistance at 17,600 in play.

The S&P 500 gained 2 points, or 0.1%, to settle 2,086. The index tested backup support at 2,050 following the drop to 2,052. There is additional risk to 2,025-2,000 on a move below 2,050. The close above 2,075-2,080 and the 200-day moving average was a plus and keeps 2,095-2,100 in the mix.

The Nasdaq added over 7 points, or 0.2%, to end at 5,044. Tech opened below the 5,000 level at 4,994 before tumbling to a low of 4,945. There is additional risk to 4,900-4,875 and the 200-day moving average on a close below 4,950. Resistance at 5,050 and the 100-day moving average held following a trip to 5,055 into the close. Additional hurdles remain at 5,075-5,100 and the 50-day moving average.

The Russell 2000 slipped 2 points, or 0.2%, to finish at 1,209. The small-caps opened at 1,203 and quickly retreated to a low of 1,189. I talked about risk to 1,190 and possibly 1,175 on a close below 1,200. The bulls held this level by the end of the session but failed to crack positive territory. Overhead resistance remains at 1,215, followed by 1,225.

The S&P 500 Volatility Index ($VIX, 13.61, down 0.10) soared past 15 and reached an intraday peak of 16.28 before closing lower. The 15 level has held for 12-straight sessions and for 22 of the past 23 sessions. A close above 15 keeps risk open to 17.50-20. A move below 12.50 ahead of the weekend could be a bullish clue that points to an end-of-summer rally.

From desk to press, futures look like this: Dow (+57); S&P 500 (+6); Nasdaq 100 (+18); Russell (+6).

Chapter 1. Momentum Stocks Weekly Play List

All prices given in this update are current as of Aug. 12, 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, $2.39, up $0.02)

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

Lowered Price from Selling Options: N/A

Exit Target: $6.00+

Return: -24%

Stop Target: $1.00

Action: There is risk to $2.25-$2.00 on continued weakness. Resistance is at $2.50-$2.75 and the 50-day moving average.

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

 

Limelight Networks (LLNW, $3.26, up $0.01)

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

Lowered Price from Selling Options: None

Exit Target: $5.00-$6.00

Return: -19%

Stop Target: $3.00

Action: Support is at $3.00 on continued closes below $3.20, which was Wednesday’s low. Resistance is at $3.40 and the 200-day moving average.

 

Rave Restaurant Group (RAVE, $11.80, up $0.75)

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

Lowered Price from Selling Options: N/A

Exit Target: $20.00

Return: -15%

Stop Target: $10.00

Action: Support is at $11.25 and the 200-day moving average on continued closes below $11.50. Resistance is at $12.

The company is opening four new stores this month and remains on track for 500 pie shops over the next five years.

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

 

Rigel Pharmaceuticals (RIGL, $2.86, up $0.20)

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

Lowered Price from Selling Options: N/A

Exit Target: $4.00-$5.00

Return: -19%

Stop Target: $2.00

Action: Short-term support at $2.60-$2.50 has held this week following yesterday’s trip to $2.61 and the rebound off of the lows. Resistance is at $3.00 and the 200-day moving average.

You can read my detailed write-up on RIGL in the June 8 Issue.

 

Dot Hill Systems (HILL, $5.59, up $0.26)

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

Lowered Price from Selling Options: N/A

Exit Target: $14.00-$15.00

Return: -21%

Stop Target: $4.50 (Stop Limit)

Action: Support is at $5.40 and the 200-day moving average. There is still risk to $5.25-$5.00 on another move below this level. Resistance is at $5.75-$6.00.

New subscribers should wait for $6.00 to clear before initiating new positions. Our first trade in Dot Hill netted longer-term subscribers 48% on the move from $4.25 to $6.30.

 

Flex (FLEX, $11.14, up $0.08)

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 $11.40-$11.55 and the 50- and 200-day moving averages. Support is at $11.00-$10.75.

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

 

Psychemedics (PMD, $11.72, flat)

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

Lowered Price from dividends: $15.52

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, and there is resistance at $12.00-$12.50. Support is at $11.50-$11.00.

 

Huttig Building Products (HBP, $3.16, up $0.03)

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

Lowered Price from Selling Options: N/A

Exit Target: $6.00+

Return: -21%

Stop Target: $2.00 (Stop Limit)

Action: Support is at $3.10-$3.00. Resistance is at $3.15-$3.25 and the 50-, 100- and 200-day moving averages. A move above $3.40 would be bullish.

 

Rambus (RMBS, $13.51, down $0.09)

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

Lowered Price from Selling Options: $16.38

Exit Target: $15.00+

Return: -18%

Stop Target: $9.00

Action: Resistance is at $14.00 and the 50- and 100-day moving averages. Support is at $13.25-$13.00, followed by $12.75 and the 200-day moving average.

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