Dear Momentum Options Subscriber,
The market shrugged off some early morning weakness on Tuesday to push the market’s next layers of resistance. Although the major indices faded from their intraday highs into the closing bell, continued momentum is setting the market up for a run towards all-time highs.
The Dow added 89 points, or 0.5%, to close at 17,918. The blue-chips tested fresh support at 17,800 following the opening dip to 17,796. The rebound to 17,977 fell just shy of resistance at 18,000. A move above this level could lead towards a run at 18,351 and the all-time high.
The S&P 500 climbed 5 points, or 0.3%, to settle at 2,109. The index slipped below support at 2,100 after trading down to 2,097 on the open. There was wiggle room to 2,090, but the bulls didn’t need it following the push to 2,116. Resistance is at 2,125, followed by the all-time high at 2,134.
The Nasdaq advanced 18 points, or 0.4%, to end at 5,145. Tech traded to a low of 5,109 at the start of yesterday’s action, with support at 5,100 holding. The bounce into positive territory during the second half of the session reached a peak of 5,163, with resistance at 5,150 holding by a nickel. A move above this level should get 5,200 and the all-time high at 5,237 in play.
The Russell 2000 gained 5 points, or 0.5%, to finish at 1,191. The small-caps made a quick backtest to support at 1,180-1,175 at Tuesday’s open and struggled for the first half of trading. The bulls woke up during Wall Street’s lunch break and pushed a high of 1,196 ahead of the close. Resistance is at 1,200, and a move above this level could lead to a run at 1,220-1,225.
The S&P 500 Volatility Index ($VIX, 14.54, up 0.39) was choppy throughout the session, with the low checking in at 13.81. The bulls had trouble with the 13.50 level before the VIX exploded higher into the close. The bears failed to clear 15, but they did manage to make a run to 14.73. There is risk to 16.50-17.50 on a move above 15.
I have a number of trade updates this morning, so please pay close attention to the updated parameters.
From desk to press, futures look like this: Dow (+30); S&P 500 (+3); Nasdaq 100 (+11.5); Russell (+1.4).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 89-35-2 (71%). 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.
Comcast (CMCSA, $62.56, down $0.18)
CMCSA December 65 calls (CMCSA151218C00065000, $0.73, down $0.10)
Entry Price: $0.74 (11/3/2015)
Exit Target: $1.50
Stop Target: None
Action: Short-term resistance is at $63-$63.25. A move above the latter should get the all-time high of $64.99 from July in play. Near-term support is at $62, followed by $61-$60 and the 100-day moving average.
A “golden cross” is in the processing of forming, as the 50-day moving average is $0.06 away from the 200-day moving average.
The company recently reported earnings that matched Wall Street’s expectations for $0.80 a share. However, revenue was higher at $18.67 billion versus expectations for $18.03 billion.
NBC Universal Pictures is owned by Comcast and delivered impressive results from the movie department following the record-breaking box office success of “Jurassic World” and “Minions.” The film part of the business generated $1.9 billion in revenue following a 64% increase compared to last year’s third-quarter numbers from the division.
Its theme parks are also bustling following summer attendance that ranked as the highest in the company’s history. Overall, the company seems to be running smoothly across the board, and shares seemed poised for a blue-sky breakout.
Juniper Networks (JNPR, $32.23, up $0.49)
JNPR December 33 calls (JNPR151218C00033000, $0.73, up $0.17)
Entry Price: $0.48 (11/2/2015)
Exit Target: $1.00
Stop Target: $0.55 (Stop Limit)
Action: Set a Stop Limit at $0.55.
Shares traded to a 52-week high of $32.33 on Tuesday. The next layers of resistance are at $32.75-$33. Support has moved up to $32-$31.50.
You can read my detailed write-up on JNPR in yesterday’s Pre-Market Update.
iShares Russell 2000 (IWM, $118.35, up $0.61)
IWM November 119 calls (IWM151120C00119000, $1.30, up $0.15)
Entry Price: $0.58 (10/29/2015)
Exit Target: $1.60 (closed first half at $1.39 on 11/3/15)
Stop Target: $0.90, raise to $1.10 (Stop Limit)
Action: Raise the Stop Limit from $0.90 to $1.10. This will ensure that we lock in a triple-digit return.
Short-term resistance is at $118-$118.50 and the 100-day moving average. A close above the latter should lead to a run to $120. Support has moved up to $118-$117.50.
PayPal Holdings (PYPL, $37.90, up $0.91)
PYPL January (2016) 40 calls (PYPL160115C00040000, $1.36, up $0.26)
Entry Price: $1.05 (9/14/2015)
Exit Target: $2.10 (Limit Order on first half)
Stop Target: $1.10 (Stop Limit)
Action: Set a Stop Limit at $1.10 to start protecting profits.
The next layers of resistance are at $38.50, followed by $40, if shares can hold $38 this week. Support is at $36.
You can read my detailed write-up on PYPL in the Sept. 15 Pre-Market Update.
Motorola Solutions (MSI, $71.36, up $0.63)
MSI November 75 calls (MSI151120C00075000, $1.00, up $0.03)
Entry Price: $0.70 (10/22/2015)
Exit Target: $1.40
Stop Target: None
Action: Multi-year resistance is at $72.50. Support is at $69, followed by $68-$67.50 and the 50-day moving average. Earnings are scheduled to be released this morning.
Kohl’s (KSS, $47.37, up $0.66)
KSS November 42.50 puts (KSS151120P00042500, $0.45, down $0.15)
Entry Price: $0.95 (10/7/2015)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $47.50-$48 and the 50-day moving average. Support is at $46-$45.
You can read my detailed write-up in the Oct. 7 Mid-Market Update. Earnings are due out Nov. 12.
Corning (GLW, $18.83, up $0.01)
GLW November 19 calls (GLW151120C00019000, $0.28, down $0.01)
Entry Price: $0.60 (9/16/2015)
Exit Target: $1.20
Stop Target: None
Action: Tuesday’s peak reached $18.98. Resistance is at $19. Support is at $18.50-$18.25 and the 100-day moving average.
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.
Financial Select Sector SPDR (XLF) November 22 puts (from 9/24/2015) — Continue to hold.
Editor and Chief Options Strategist