Dear Momentum Options Subscriber,

Futures were strong throughout the night and into this morning’s open, which led to a nice gap higher, but the major indices are now off of their highs. The bulls need to show continued strength into the close today and hold the market’s near-term resistance levels.

One stock that is not participating in today’s upside move is Twitter (TWTR, $22.13, down $0.86). Shares are down 2% and could be headed for a retest of the late-August low of $21.01. The major moving averages are still trending lower, with shares making lower highs and lower lows over the past seven sessions.

 

The company has been in the spotlight for much of 2015 due to its ineptitude about turning around its business model. Twitter remains a “valuable” brand name with a market-cap north of $15 billion, but it is not a user-friendly site.

Although steps have been made to improve the user experience, the pace has been slow, and other social media sites like Facebook, Instagram and SnapChat have been taking market share. Perhaps this will get fixed in 2016 now that the company has a permanent CEO.

The hiring of Jack Dorsey back in late October was a good move towards improving Twitter’s services and repairing its business model. This came on the heels of an earnings announcement that showed better-than-expected results.

Twitter reported a profit of $0.10 a share on revenue of $569 million. Analysts were looking for $0.05 a share on revenue of $559 million. The company also topped estimates during the previous three quarters by $0.03 (twice) and $0.06, respectively. However, during its recent conference call, the company lowered current-quarter revenue guidance to $695-$710 million. Wall Street had been looking for revenues just south of $740 million.

The lowered outlook has caused some concern, as a number of analysts have since lowered their ratings and price targets on the stock.

I’m not sure if shares will retest $21, but I’m looking shorter-term put options to play continued weakness. I’m also tracking longer-term call options for a possible rebound if shares hold $22 this week.

The TWTR January 21 puts (TWTR160115P00021000, $0.66, up $0.14) have been active today and could be targeted by bearish traders if shares fall below $22-$21.75.

Bullish traders could target the TWTR January 25 calls (TWTR160115C00025000, $0.33, down $0.28) if shares can recover $24. I also like the TWTR March 29 calls (TWTR160318C00029000, $0.66, down $0.23) as a possible trade if shares can rebound and clear $24-$25.

As far as the market goes today, the Dow is up 51 points to 17,179, while the S&P 500 is advancing 7 points to 2,013. The Nasdaq is climbing 29 points to 4,952, and the Russell 2000 is gaining a point to 1,122.

I have updated our current trades below, so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2015: 98-44-2 (68%). 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 1:05 p.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.

 

General Electric (GE, $30.31, up $0.03)

GE January 31 calls (GE160115C00031000, $0.28, down $0.05)

Entry Price: $0.47 (12/16/2015)

Exit Target: $1.00

Return: -40%

Stop Target: None

 

GE February 32 calls (GE160219C00032000, $0.29, down $0.01)

Entry Price: $0.40 (12/16/2015)

Exit Target: $0.80

Return: -28%

Stop Target: None

Action: Support is at $30-$29.50 and the 50-day moving average. Resistance is at $30.75-$31.

You can read my detailed write-up on GE in the Dec. 17 Pre-Market Update.

 

Intel (INTC, $34.02, up $0.15)

INTC January 36 calls (INTC160115C00036000, $0.23, down $0.05)

Entry Price: $0.60 (12/9/2015)

Exit Target: $1.20

Return: -62%

Stop Target: None

Action: Resistance is at $35. Support is at $33.75 and the 50-day moving average.

You can read a more about my thoughts on INTC in the Dec. 10 Pre-Market Update.

 

Medtronic (MDT, $76.51, up $0.20)

MDT January 80 calls (MDT160115C00080000, $0.22, down $0.13)

Entry Price: $0.72 (12/8/2015)

Exit Target: $1.45

Return: -69%

Stop Target: None

Action: Resistance is at $77-$78. Support is at $76-$75.50 and the 50-day moving average.

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

 

SPDR Gold Shares (GLD, $103.45, up $1.41)

GLD January 95 puts (GLD160115P00095000, $0.09, down $0.08)

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

Exit Target: $1.05

Return: -82%

Stop Target: None

Action: Resistance is at $103.50-$104. Support is at $100.

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

 

Trades on Hold — other 2015 Portfolio Open positions (3): 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.

Halliburton (HAL) January 40 calls — Continue to hold.

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

MGM Resorts International (MGM) January 25 calls — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options