Dear Momentum Options Subscriber,
The bulls made a run at resistance on Thursday following a slow and sluggish start to the day. Trading was tight and choppy throughout the session, but a late-day fade gave the bears the overall win.
The Dow added 5 points, or 0.03%, to settle at 17,408. The blue-chips were slightly weak on the open after trading to a low 17,341. Support at 17,400-17,350 held firm before the rebound to 17,481. Resistance at 17,600 remains in place, and a close above this level would be bullish.
The S&P 500 slipped almost 3 points, or 0.1%, to end 2,083. The index opened higher before an early-morning fade to 2,078 and support at 2,075. The run to 2,092 afterwards failed to clear resistance at 2,095-2,100. A move above 2,100 will likely confirm that continued upside is in store.
The Nasdaq fell nearly 11 points, or 0.2%, to finish at 5,033. Tech made a little noise at the start of trading before sinking to a low of 5,029. Support at 5,025-5,000 stuck like Chuck before the intraday push to 5,071. Near-term resistance at 5,075-5,100 held strong before the close below 5,050. I would at least like to see this level cleared ahead of the weekend.
The Russell 2000 gave back 4 points, or 0.3%, to close at 1,204. The small-caps traded to a low of 1,203 shortly after the opening bell, but they held support at 1,200-1,190. The run to 1,213 failed to clear resistance at 1,215-1,225, but the higher low and higher high versus the previous day were slightly bullish signs.
The S&P 500 Volatility Index ($VIX, 13.54, down 0.07) finished flat as a pancake following the pop to 14.33 shortly after the open. Resistance at 15 held strong again. The bulls pushed a low of 13.06 afterwards, but they failed to crack 12.50. A move above 15 or below 12.50 should set the next short-term trend.
From desk to press, futures look like this: Dow (-34); S&P 500 (-5); Nasdaq 100 (-12); Russell (3).
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.
PowerShares QQQ Trust (QQQ, $110.34, down $0.18)
QQQ September 112 Weekly calls (QQQ150904C00112000, $0.77, down $0.13)
Entry Price: $0.95 (8/13/2015)
Exit Target: $1.90
Stop Target: None
Action: Support is at $110 and the 50-day average on a continued pullback. Backup support is at $108. Resistance is at $112.
JPMorgan Chase (JPM, $67.55, up $0.31)
JPM September 70 calls (JPM150918C00070000, $0.57, up $0.09)
Entry Price: $0.80 (8/10/2015)
Exit Target: $1.60
Stop Target: None
Action: Resistance is at $68 and the 50-day moving average. Support is at $66 and the 100-day moving average.
KB Home (KBH, $15.53, up $0.27)
KBH October 16 calls (KBH151016C00016000, $0.75, up $0.15)
Entry Price: $0.52 (8/10/2015)
Exit Target: $1.05
Stop Target: $0.55 (Stop Limit)
Action: Set a Stop Limit at $0.55.
I will raise the Stop Limit if shares continue their run higher, but I want to protect profits on a pullback in case they don’t.
Resistance is at $15.50-$15.75 and the 50- and 100-day moving averages. Support is at $15-$14.75.
You can read my detailed write-up on KBH in the Aug. 12 Pre-Market Update.
Trades on Hold — other 2015 Portfolio Open positions (2): 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.
SPDR Gold Trust ETF (GLD) September 98 puts (from 7/28/15) — I will be covering the technical picture for gold and silver on Monday morning — Continue to hold.
Editor and Chief Options Strategist