Dear Momentum Options Subscriber,
Futures were showing another bullish open this morning, and the subsequent action has played out much like it has for the past week. The opening rally faded again, but it happened much more quickly today than it has in prior sessions. Trading has been choppy since the open, but there are some important clues we need to watch into the closing bell.
The first clue will be the Nasdaq’s close. I have been mentioning that holding the 4,500 level is crucial, and today’s test to 4,470 could be the start of a bottoming process. However, it could also be a sign that a much more serious selloff is coming.
Friday will be packed with high-profile earnings from the financial sector, along with the latest retail sales numbers. The lower lows are hinting that more pain is ahead, and U.S. markets will be closed all day on Monday for Martin Luther King, Jr. Day. It’s hard to imagine that traders will be stepping up to the plate ahead of a three-day weekend.
On the flip side, if a bottoming process takes place today and tomorrow, then next week could be bullish. The same type of action we saw from August into September is possible, which was when the last major pullback leveled out.
The Dow is currently gaining 219 points to 16,370, while the S&P 500 is adding 25 points to 1,916. The Nasdaq is advancing 63 points to 4,589, and the Russell 2000 is higher by 7 points to 1,017.
I could have a New Trade ahead of today’s closing bell, depending on the action, so stay close to your email inboxes. For new subscribers, you can also sign up to receive SMS text message alerts by clicking here.
I have set a Stop Limit on our position in Garmin (GRMN), and the Stop Limit on our Wal-Mart Stores (WMT) trade was triggered earlier today, so let’s go check on the action.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 6-0 (100%). 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 12:45 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.
Garmin (GRMN, $32.52, up $0.06)
GRMN February 30 puts (GRMN160219P00030000, $0.95, up $0.03)
Entry Price: $0.70 (1/11/2016)
Exit Target: $1.40
Stop Target: $0.74 (Stop Limit)
Action: Set an initial Stop Limit at $0.74. Today’s low on the options has been $0.83.
Support is at $32-$31.50. The mid-October 52-week low reached $30.89. Resistance is at $33.50-$34.
You can read my detailed write-up on GRMN in the Jan. 12 Pre-Market Update.
Wal-Mart Stores (WMT, $62.86, up $0.94)
WMT February 60 puts (WMT160219P00060000, $0.90, down $0.25)
Entry Price: $0.73 (1/11/2016)
Exit Target: $1.45
Stop Target: $0.88 (Stop Limit)
Action: The Stop Limit at $0.88 cents was triggered on this morning’s pop past $63, and we are now out of the position.
I will keep WMT on my watch list for another possible re-entry point.
Intel (INTC, $32.24, up $0.33)
INTC February 30 puts (INTC160219P00030000, $0.54, down $0.11)
Entry Price: $0.60 (1/13/2016)
Exit Target: $1.20
Stop Target: None
Action: Short-term resistance is at $32.50-$33. Support is at $31-$30.
General Motors (GM, $29.93, down $0.56)
GM February 28 puts (GM160219P00028000, $0.69, up $0.15)
Entry Price: $0.69 (1/11/2016)
Exit Target: $1.30
Stop Target: None
Action: Support is at $30-$29.50. Resistance is at $31-$32.
You can read my detailed write-up on GM in the Jan. 12 Pre-Market Update.
Nike (NKE, $58.84, up $0.06)
NKE February 55 puts (NKE160219P00055000, $0.85, up $0.06)
Entry Price: $0.77 (1/11/2016)
Exit Target: $1.50
Stop Target: None
Action: Support is at $58. Resistance is at $60.
You can read my detailed write-up on NKE in the Jan. 12 Pre-Market Update.
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.
General Electric (GE) February 32 calls — Continue to hold.
3D Systems (DDD) February 11 calls — Continue to hold.
Editor and Chief Options Strategist