Dear Momentum Options Subscriber,

The back-and-forth action continued on Wednesday, as the market closed lower following a backtest to support. Volatility picked up slightly during Fed Chair Janet Yellen’s speech yesterday, and Wall Street seemed to be a little nervous ahead of tomorrow’s nonfarm payrolls report.

The Dow fell 158 points, or 0.9%, to settle at 17,729. The blue-chips tested resistance at 17,900-18,000 following the morning pop to 17,901. The majority of the session was spent underwater, however, with the bears pushing a low of 17,708. Support at 17,800-17,700 held, but there is risk to 17,600-17,500 on a move below the latter.

The S&P 500 sank 23 points, or 1.1%, to finish at 2,079. The index made a 2-point run to 2,104 shortly after the open but fell well shy of resistance at 2,120-2,125. Support at 2,090-2,085 was breached following the late-day dip to 2,077. Backup support at 2,075-2,070 held, but a close below the latter would be a bearish development.

The Nasdaq tanked 33 points, or 0.6%, to close at 5,123. Tech held positive territory throughout the first half of the session, with the bulls pushing a high of 5,176. Short-term resistance at 5,175-5,200 was challenged before the second-half fade to 5,117. Support at 5,125-5,100 held, and there is backup at 5,050 if 5,100 fails.

The Russell 2000 dropped a 12-pack, or 1%, to end at 1,191. The small-caps showed a little life after making a push to 1,205 on the open. Resistance at 1,215 easily held before the late-day fade to 1,190. Support at 1,190-1,185 held, but there is risk to 1,175-1,170 on continued weakness.

The S&P 500 Volatility Index ($VIX, 15.91, up 1.24) opened above the 15 level at 15.04, with the high checking in at 16.49. Resistance at 16.50-17.50 held, but the close above 15 keeps these levels in play. Support is at 15-14.50, and a close below the latter would be a bullish signal.

I have updated our current trades below, including the three new recommendations from yesterday, so let’s go check them out. I also have a Profit Alert for our position in Jabil Circuit (JBL) and a Trade Alert for our position in Hilton Worldwide Holdings (HLT) that has been on “hold.”

From desk to press, futures look like this:  Dow (+49); S&P 500 (+7); Nasdaq 100 (+21); Russell (+2).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 94-38-2 (70%). 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.

 

Jabil Circuit (JBL, $25.19, down $0.66)

JBL December 25 calls (JBL151218C00025000, $1.40, down $0.30)

Entry Price: $0.65 (11/10/2015)

Exit Target: $2.00

Return: 114%

Stop Target: $1.45 (Stop Limit)

Action: The Stop Limit of $1.45 triggered late in the day following the backtest to $25, and we are now out of the trade.

If this level holds over the next few days, I could get back into JBL using January call options. However, I could also wait until $26 clears before getting back in. Either way, I will keep shares of JBL on my watch list.

 

SPDR Gold Shares (GLD, $100.69, down $1.59)

GLD January 95 puts (GLD160115P00095000, $0.56, up $0.19)

Entry Price: $0.51 (12/2/2015)

Exit Target: $1.05

Return: 10%

Stop Target: None

Action: Near-term support is at $100. A close below this level should get $97-$95 in play. Resistance is at $102.

You can read my detailed write-up on Gold and GLD in the Nov. 30 Pre-Market Update.

 

Medtronic (MDT, $76.11, down $0.40)

MDT January 77.50 calls (MDT160115C00077500, $1.15, down $0.13)

Entry Price: $1.09 (12/2/2015)

Exit Target: $2.20

Return: 6%

Stop Target: None

Action: Earnings are due to be released this morning. If shares pull back and fall below $73.50 and the major moving averages, I will likely close the trade. I would like to see a run towards $80 and fresh 52-week peaks on better-than-expected numbers.

You can read my detailed write-up on MDT in the Dec. 2 Mid-Market Update.

 

MGM Resorts International (MGM, $23.43, up $0.15)

MGM January 25 calls (MGM160115C00025000, $0.47, up $0.07)

Entry Price: $0.53 (12/2/2015)

Exit Target: $1.05

Return: -11%

Stop Target: None

Action: Near-term resistance is at $23.75-$24. The 52-week high is at $24.41. Support is at $23-$22.50 if $23.25 fails.

The major moving averages are in a bullish pattern, with the 50- and 100-day moving averages in a strong uptrend. A “golden cross” formed in late September and into October, with the 50-day moving crossing and holding above the 200-day moving average.

 

Corning (GLW, $18.74, down $0.08)

GLW January 20 calls (GLW160115C00020000, $0.21, down $0.01)

Entry Price: $0.44 (11/23/2015)

Exit Target: $1.00

Return: -52%

Stop Target: None

Action: Support is at $18.75-$18.50. Resistance is at $19.

You can read my detailed write-up from the Nov. 23 Mid-Market Update.

 

Harris (HRS, $83.74, down $0.25)

HRS December 85 calls (HRS151218C00085000, $1.05, down$0.02)

Entry Price: $1.25 (11/19/2015)

Exit Target: $2.50

Return: -16%

Stop Target: None

Action: Shares traded to $84.58 yesterday before fading. A close above the 52-week high of $84.78 should lead to a blue-sky breakout towards $90. Support is at $83.50-$83.

 

Wells Fargo (WFC, $55.35, down $0.36)

WFC December 57.50 calls (WFC151218C00057500, $0.11, down $0.04)

Entry Price: $0.38 (11/18/2015)

Exit Target: $0.80

Return: -71%

Stop Target: None

Action: Support is at $55-$54.50 and the 100- and 200-day moving averages. Near-term resistance is at $55.75-$56.

You can read my write-up on WFC in the Nov. 19 Pre-Market Update.

 

PowerShares QQQ Trust (QQQ, $114.45, down $0.71)

QQQ December 117 calls (QQQ151218C00117000, $0.43, down $0.09)

Entry Price: $0.63 (11/10/2015)

Exit Target: $1.30

Return: -32%

Stop Target: None

Action: Shares traded to an all-time high of $115.75 on Wednesday before fading into the close. A run to $116-$117.50 is possible on continued closes above $115. Support is at $113-$112.50.

 

iShares Russell 2000 (IWM, $118.60, down $1.29)

IWM December 124 calls (IWM151218C00124000, $0.08, down $0.08)

Entry Price: $0.58 (11/5/2015)

Exit Target: $1.20

Return: -86%

Stop Target: None

Action: Short-term resistance is at $120 and the 200-day moving average. Support is at $118, followed by $117.50-$17 and the 100-day moving average.

 

Comcast (CMCSA, $60.48, down $1.27)

CMCSA December 65 calls (CMCSA151218C00065000, $0.05, down $0.06)

Entry Price: $0.74 (11/3/2015)

Exit Target: $1.50

Return: -93%

Stop Target: None

Action: Support is at $60.50-$60 and the 50-day moving average. A close below the latter this week will likely force us out of the trade. Resistance is at $62.

You can read my detailed write-up on CMCSA in the Nov. 4 Pre-Market Update.

 

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.

Hilton Worldwide Holdings (HLT) December 27 calls — Sell to close the HLT December 27 calls at current levels.

Shares look unlikely to make a run at $27 in two weeks, as there are major resistance levels ahead. I have had success with HLT in the past, but this time I got the chart wrong, as shares never recovered following the move below their major support levels.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options