Dear Momentum Options Subscriber,

The bears enjoyed their best session of the year on Thursday, as the market’s losses left Wall Street speechless. The bulls are looking to end the three-day losing streak, and they have their sights set on prior support. However, another loss today will likely lead to continued weakness into next week.

The Dow dropped 358 points, or 2.1%, to close at 16,990. The blue-chips traded in negative territory throughout the session and went out at their session low. The close below the 17,000 level opens up risk to 16,800. Resistance is at 17,200.

The S&P 500 stumbled 44 points, or 2.1%, to finish at 2,035. The index opened at 2,076 and above prior support at 2,075 while holding 2,050 throughout the first half of trading. The drop below this level and then 2,040 were bearish developments. The next layers of support are at 2,025-2,000. Resistance is at 2,050-2,060.

The Nasdaq sank 141 points, or 2.8%, to end at 4,877. Tech opened below the 5,000 level, which was an immediate sign that the 200-day moving average and 4,900 might come into play. The close below this level was a negative, as it could get 4,850-4,800 in play. Resistance is at 4,900-4,925.

The Russell 2000 declined 30 points, or 2.5%, to settle at 1,172. The small-caps started the session below the 1,200 level at 1,193, and I talked about risk to 1,175 on a drop below 1,190. The close below this level opens the door for a test 1,160-1,150 on continued weakness. Resistance is at 1,175-1,180.

The S&P 500 Volatility Index ($VIX, 19.14, up 3.89) zoomed 25% and made a strong run at 20. The bears pushed a high of 19.24, and a close above 20 could lead to 22.50-25. The bulls could offer some hope for next week if they can recover 17.50 ahead of the weekend.

From desk to press, futures look like this: Dow (-94); S&P 500 (-7); Nasdaq 100 (-28); Russell (-6).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 82-26-2 (75%). 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.


Krispy Kreme Doughnuts (KKD, $17.56, down $0.44)

KKD November 17 puts (KKD151120P00017000, $1.15, up $0.20)

Entry Price: $0.95 (8/19/2015)

Exit Target: $1.90

Return: 21%

Stop Target: None

Action: Support is at $17.50. A close below this level gets $17 in play. Resistance is at $18.

The company is scheduled to report earnings on Sept. 9, after the close.


iShares Russell 2000 (IWM, $116.39, down $3.02)

IWM September 123 calls (IWM150918C00123000, $0.28, down $0.43)

Entry Price: $0.78 (8/19/2015)

Exit Target: $1.60

Return: -64%

Stop Target: None

Action: Support is at $116, followed by $115. Resistance is at $117.50-$118.


Bank of America (BAC, $16.72, down $0.74)

BAC September 18 calls (BAC150918C00018000, $0.08, down $0.13)

Entry Price: $0.28 (8/17/2015)

Exit Target: $0.60-$0.90

Return: -71%

Stop Target: None

Action: Shares closed at the session low, with the 200-day moving average holding. There is risk to $16.50-$16.25 if $16.65 fails to hold. Resistance is at $17.

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


PowerShares QQQ Trust (QQQ, $107.08, down $3.05)

QQQ September 112 Weekly calls (QQQ150904C00112000, $0.12, down $0.35)

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

Exit Target: $1.90

Return: -87%

Stop Target: $0.35

Action: Support is at $106.50 and the 200-day moving average. Resistance is at $108.


JPMorgan Chase (JPM, $65.94, down $1.66)

JPM September 70 calls (JPM150918C00070000, $0.30, down $0.20)

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

Exit Target: $1.60

Return: -63%

Stop Target: None

Action: Support is at $66-$65.75 and the 100-day moving average. Resistance is at $67-$68.


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