Dear Momentum Options Subscriber,

Futures were slightly lower after midnight and going into the opening of markets overseas, indicating that there would be a rather smooth transition here in the United States. However, an hour ahead of the open, weak economic news put the bulls behind the eight ball.

While today’s action has felt slightly bearish, I would rather see weakness during the first half of trading with a strong second-half finish. Friday’s rally began after the European markets closed, so let’s see how the rest of the session goes before thinking about Plan B. Plan A is to play a continued test to resistance and prior support levels.

I know that I covered a lot in this morning’s Pre-Market Update, but I also want to preview the upcoming earnings schedule, as a few of the usual suspects will be reporting their numbers this week.

Urban Outfitters (URBN) reports after today’s close, while Dick’s Sporting Goods (DKS), Home Depot (HD) and WalMart (WMT) will highlight the action ahead of Tuesday’s open.

Wednesday’s list includes Hormel Foods (HRL), L Brands (LB), Lowe’s (LOW), NetApp (NTAP), Popeye’s Louisiana Kitchen (PLKI), Staples (SPLS) and Target (TGT).

On Thursday, Fresh Market (TFM), Gap (GPS), Hewlett-Packard (HPQ), Intuit (INTU), Marvell Technology (MRVL), Nordson (NDSN), Ross Stores (ROST), (CRM), Sears Holdings (SHLD) and Toro (TTC) are scheduled to announce earnings. This could be a swing day or a make-or-break session for Tech going into Friday.

The week will wrap up with Deere (DE) and Foot Locker (FL) announcing their results.

Heading into afternoon trading, the Dow is higher by 48 points to 17,525, while the S&P 500 is gaining 5 points to 2,096. The Nasdaq is up 20 points to 5,068, and the Russell 2000 is advancing 2 points to 1,214.

I’m going to press a little early today, as I have two New Trades that I want to get us into. I have also updated our current trades below, so let’s go take a look.

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 11:20 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.


New Trades

Hertz Global Holdings (HTZ, $18.69, up $0.52)

Buy to open the HTZ September 19 calls (HTZ150918C00019000, $0.70, up $0.05) at current levels.

Shares have made a bullish breakout above their 50-day moving average, and a run past $20 looks to be in the cards.

These are the regular monthly options that expire on Sept. 18. I will provide the parameters of the trade in tomorrow’s Pre-Market Update.


Bank of America (BAC, $17.65, down $0.05)

Buy to open the BAC September 18 calls (BAC150918C00018000, $0.28, flat) at current levels.

I like these call options at current levels. Short-term resistance is at $18. The July and 52-week high is at $18.48. Support is at $17.50 and the 50-day moving average, with backup at $17.25-$17.

These are the regular monthly options that expire on Sept. 18. I will provide the parameters of the trade in tomorrow’s Pre-Market Update.

You can read my full write-up on BAC in this morning’s Pre-Market Update.


Current Trades

iShares Russell 2000 (IWM, $121.01, up $0.65)

IWM September 123 Weekly calls (IWM150904C00123000, $0.60, up $0.04)

Entry Price: $0.52 (8/14/2015)

Exit Target: $1.05

Return: 15%

Stop Target: None

Action: Near-term resistance is at $121 and the 200-day moving average. A close above this level would be bullish. If cleared, I’m looking for a quick run to $123-$124 over the next couple of weeks. Support is at $119-$118 if $120 fails to hold.


PowerShares QQQ Trust (QQQ, $111.01, up $0.50)

QQQ September 112 Weekly calls (QQQ150904C00112000, $0.90, up $0.08)

Entry Price: $0.95 (8/13/2015)

Exit Target: $1.90

Return: -5%

Stop Target: None

Action: The QQQs have traded up to $111.11 this morning. Resistance is at $112. Support is at $110 and the 50-day moving average. Backup support is at $109 and the 100-day moving average.


JPMorgan Chase (JPM, $67.92, up $0.03)

JPM September 70 calls (JPM150918C00070000, $0.54, flat)

Entry Price: $0.80 (8/10/2015)

Exit Target: $1.60

Return: -33%

Stop Target: None

Action: Shares have traded to a high of $68.05 today. Resistance is at $68 and the 50-day moving average holding. A move above this level will likely lead to a run towards $70. Support is at $66-$65.75 and the 100-day moving average.


KB Home (KBH, $15.99, up $0.33)

KBH October 16 calls (KBH151016C00016000, $0.90, up $0.10)

Entry Price: $0.52 (8/10/2015)

Exit Target: $1.05

Return: 73%

Stop Target: $0.65 (Stop Limit)

Action: Resistance at $15.75 and the 50-day moving average has been cleared. A close above this level should lead to a run past $16. Support is at $15.50-$15.25 and the 100- and 200-day moving averages.

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) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options