Dear Momentum Options Subscriber,

The market sputtered from the start of trading on Monday until the closing bell, but the major indices were able to finish the session off of their intraday lows. There was some buying activity into the close, as support held on the pullback, but volatility stayed elevated. I mentioned that the whipsaw action could continue going into next week, but that could be the perfect opportunity to add new bullish or bearish trades.

The Dow declined 117 points, or 0.7%, to end at 17,730. The blue-chips opened two points lower at 17,845 before fading to an intraday low of 17,639. Support at 17,700-17,600 and the 200-day moving average held, and the close above 17,700 was slightly bullish. Resistance remains at 17,900-18,000.

The S&P 500 fell 14 points, or 0.7%, to settle at 2,077. The index tumbled to a low of 2,066 during the first half of the session, with support at 2,070-2,065 and the 200-day moving average holding. A close below 2,060 would be a bearish development. Resistance is at 2,090-2,100.

The Nasdaq gave back 40 points, or 0.8%, to finish at 5,101. Tech tested an intraday low of 5,082, with near-term support at 5,100-5,075 standing strong. The close above 5,100 keeps resistance at 5,150 in play.

The Russell 2000 dropped 19 points, or 1.6%, to close at 1,164. The small-caps led Monday’s decline following another backtest to support at 1,160 and the 50-day moving average. These levels held into the closing bell following a low of 1,161, but there is risk to 1,150 on a move below 1,160. Resistance is at 1,170-1,175 following the close back below 1,180.

The S&P 500 Volatility Index ($VIX, 15.84, up 1.03) jumped 7% following multiple attempts to clear resistance at 16.50-17.50 throughout the session. These levels are still in play following the high of 17.18 and close back above 15, which will now act as support. A move above 17.50 could get the 20 level in play again.

I could have one or more New Trades ahead of today’s Mid-Market Update. However, we are still inside of the trading ranges I highlighted in Monday morning’s Pre-Market Update, so I want to make sure we see the clues we are looking for before going long or short with our next round of trades. Stay locked and loaded shortly after the open in case I take action.

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From desk to press, futures look like this: Dow (-153); S&P 500 (-19); Nasdaq 100 (-47); Russell (-10).

Momentum Options Play List

Closed Momentum Options Trades for 2015: 95-41-2 (69%). 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.

 

SPDR Gold Shares (GLD, $102.67, down $1.35)

GLD January 95 puts (GLD160115P00095000, $0.24, up $0.06)

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

Exit Target: $1.05

Return: -53%

Stop Target: None

Action: Support is at $102. Resistance is at $104.

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

 

MGM Resorts International (MGM, $22.32, down $0.31)

MGM January 25 calls (MGM160115C00025000, $0.24, down $0.04)

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

Exit Target: $1.05

Return: -55%

Stop Target: None

Action: Support is at $22-$21.75 and the 50-day moving average. Near-term resistance is at $23.

 

Harris (HRS, $83.84, down $0.43)

HRS December 85 calls (HRS151218C00085000, $0.65, down $0.50)

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

Exit Target: $2.50

Return: -48%

Stop Target: None

Action: Near-term support is at $82. Resistance is at $84-$85.

 

Wells Fargo (WFC, $55.42, down $0.25)

WFC December 57.50 calls (WFC151218C00057500, $0.09, down $0.02)

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

Exit Target: $0.80

Return: -76%

Stop Target: None

Action: Support is at $55-$54.50 and the 200-day moving average. Resistance is at $56-$56.25.

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

 

PowerShares QQQ Trust (QQQ, $114.62, down $0.52)

QQQ December 117 calls (QQQ151218C00117000, $0.30, down $0.13)

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

Exit Target: $1.00 (Limit Order)

Return: -52%

Stop Target: None

Action: Support is at $113.50-$112.50. Resistance is at $115.50-$115.75 and the all-time high.

 

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.

Corning (GLW) January 20 calls — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options