In This Issue:

Dear Momentum Stocks Weekly Subscriber,

The bulls tried to end their four-session slide and push near-term resistance on Wednesday, but the bears won the second half of the session to keep pressure on the market’s key support levels. Volatility remains elevated, but the VIX closed at a neutral level despite the mixed session.

The Dow fell 99 points, or 0.6%, to close at 15,914. The blue-chips made a push past resistance at 16,200 to reach a peak of 16,201 shortly after the open. The 302-point pullback to 15,889 held near-term support at 15,900-15,800. There is risk to 15,600-15,550 on a move below the latter.

The S&P 500 slipped less than a point, or 0.02%, to end at 1,851. The index held positive territory for much of the session following a run to 1,881 during the opening hour. Resistance at 1,870-1,875 held before the fade to 1,850 and negative territory. Support at 1,850-1,840 held, but a close below the latter would be a bearish development.

The Nasdaq climbed nearly 15 points, or 0.4%, to settle at 4,283. Tech held in the green from start to finish, with the intraday high reaching 4,369. Upper resistance at 4,350-4,375 held, but the close below 4,300 was a bummer. This keeps risk open to 4,250-4,225. A close below 4,200 could lead to additional selling pressure.

The Russell 2000 dropped by half of a point, or 0.04%, to finish at 963. The small-caps reached a peak of 983 during the first half of the action, but they failed to hold resistance at 970-975. The index closed near its session low, with support at 960-950 holding.

The S&P 500 Volatility Index ($VIX, 26.29, down 0.25) dropped below support at 25 following the morning low of 24.47. The rebound to 26.60 held resistance at 27.50. A close above 27.50 or below 25 should determine the next short-term trend. However, the market remains extremely choppy, so we still need to be very selective with our trades.

From desk to press, futures look like this: Dow (-264); S&P 500 (-31); Nasdaq 100 (-71); Russell (-17).

Chapter 1. Momentum Stocks Weekly Play List

All prices given in this update are current as of Feb. 10, 2016. I hereby disclose that I will be participating in the following trade(s).

The Momentum Stocks Weekly Closed Trade Track Record is 0-1, for a 0% win rate for 2016 (144-26, or 85% win rate, overall since the start of 2011).

View the entire list of open and closed trades by clicking here.

 

Whole Foods Market (WFM, $28.87, down $0.19)

WFM February 32 calls (WFM160219C00032000, $0.43, down $0.05)

Entry Price: $0.50 (2/10/2016)

Exit Target: $1.00 (Limit Order)

Return: -14%

Stop Target: None

Action: Set a Limit Order to close the WFM February 32 calls at $1.00.

The company beat Wall Street expectations for earnings of $0.40 a share on revenue of $4.81 billion after reporting $0.46 a share on sales of $4.83 billion.

Shares surged past $31 in after-hours trading on Wednesday, and they finished last night’s session at $29.75. I’m hoping that momentum pushes shares towards $32 today.

 

Hansen Medical (HNSN, $2.20, down $0.20)

Original Entry Price: $4.50 (2/2/2016)

Lowered Price from Selling Options: N/A

Exit Target: $6.00

Return: -51%

Stop Target: $2.00

Action: Support is at $2. Resistance is at $2.50 and the 50-day moving average.

 

Twitter (TWTR, $14.98, up $0.58)

Wrote the TWTR February 15 call (TWTR160219C00015000, $1.60, up $0.40)

Original Entry Price: $17.90 (1/22/2016)

Lowered Price from Selling Options: $14.40

Exit Target: $15.00

Return: 4%

Stop Target: $14.00

Action: TWTR also reported earnings following Wednesday’s closing bell. Twitter topped estimates and reported earnings of $0.16 a share on revenue of $710.5 million. Analysts had expected $0.12 a share on revenue of $709.9 million.

Support is at $14.50. A close below this level will likely lead to $14-$13.75. Resistance is at $15.50-$16.

The TWTR February 15 calls expire next Friday. Our gains are capped at 5% if the trade is “called away” at the call’s $15 strike price on Feb. 19.

 

Lattice Semiconductor (LSCC, $4.39, flat)

Original Entry Price: $6.77 (12/29/2015)

Lowered Price from Selling Options: N/A

Exit Target: $9.00

Return: -35%

Stop Target: $3.50 (Stop Limit)

Action: Support is at $4.25-$4. Resistance is at $4.75-$5 and the 100-day moving average.

 

Relypsa (RLYP, $15.79, down $0.57)

Original Entry Price: $28.29 (12/28/2015)

Lowered Price from Selling Options: $26.14

Exit Target: $30.00+

Return: -40%

Stop Target: $14.00

Action: Support is at $16-$15.75, with risk to $14 on a close below the latter. Resistance is at $17.50-$18.

You can read my detailed write-up in the Jan. 4 Issue.

 

Planet Fitness (PLNT, $13.86, down $0.11)

Entry Price: $17.85 (9/16/2015)

Lowered Price from Selling Options: N/A

Exit Target: $22.00

Return: -22%

Stop Target: $12.00

Action: Resistance is at $14-$14.50. Support is at $13.75-$13.50.

You can read my latest write-up on PLNT in the Nov. 16 Issue.

 

Rave Restaurant Group (RAVE, $5.39, up $0.11)

Original Entry Price (First Position): $13.92 (7/9/2015)

Lowered Price from Selling Options: N/A

Exit Target: $20.00

Return: -61%

Stop Target: $5.00

 

Original Entry Price (Second Position): $11.70 (8/17/2015)

Lowered Price from Selling Options: N/A

Exit Target: $13.00+

Return: -54%

Stop Target: $5.00

Action: Support is at $5.25, with risk to $5 on a close below this level. Resistance is at $5.75-$6.

You can read my most recent write-up on the company in the Dec. 24 Issue. 

 

Rigel Pharmaceuticals (RIGL, $2.34, down $0.02)

Original Entry Price: $3.51 (6/2/2015)

Lowered Price from Selling Options: N/A

Exit Target: $4.00-$5.00

Return: -33%

Stop Target: $2.00 (Stop Limit)

Action: Support is at $2.50, with risk to $2.40-$2.35 on a close below this level. Resistance is at $2.75, followed by $3 and the 15- and 100-day moving averages.

 

Psychemedics (PMD, $10.81, up $0.09)

Original Entry Price: $15.67 (5/5/2015)

Lowered Price from dividends: $15.22

Exit Target: $15.75 (Limit Order)

Return: -30%

Stop Target: $7.75 (Stop Limit)

Dividend Yield: 5.6%

Action: Resistance is at $11. Support is $10.50-$10.

 

Huttig Building Products (HBP, $3.12, down $0.08)

Original Entry Price: $4.00 (8/13/2014)

Lowered Price from Selling Options: N/A

Exit Target: $6.00+

Return: -22%

Stop Target: $2.00 (Stop Limit)

Action: Support is at $3.10-$3. Resistance is at $3.30-$3.35 and the 200-day moving average.

 

Rambus (RMBS, $11.74, down $0.02)

Original Entry Price: $17.83 (11/14/2011)

Lowered Price from Selling Options: $16.38

Exit Target: $15.00+

Return: -28%

Stop Target: $9.00

Action: Support is at $11.75, followed by $11.65-$11.50 and the 50- and 100-day moving averages. Resistance is at $12-$12.25.

 

Trades on Hold (1): These are trades that are still open in the portfolio but are down from the original recommended price. These trades are on “hold” and are not a buy until I bring back coverage of the stock. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when a trade closes. I do not recommend adding to these positions or opening new positions.

Zynga (ZNGA, March 2014) — Continue to hold.

Trade on!

Signed

Rick Rouse
Editor
Momentum Stocks Weekly