Dear Momentum Options 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 (-262); S&P 500 (-31); Nasdaq 100 (-74); Russell (-14).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 17-2 (89%). 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.

 

Bank of America (BAC, $11.98, down $0.22)

BAC March 13 calls (BAC160318C00013000, $0.27, down $0.11)

Entry Price: $0.40 (2/9/2016)

Exit Target: $0.80

Return: -33%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.21, down $0.08)

Entry Price: $0.30 (2/9/2016)

Exit Target: $0.60

Return: -30%

Stop Target: None

Action: Shares traded to a low of $11.91 on Wednesday. Support is at $11.75 on continued weakness. Short-term resistance is at $12-$12.25.

 

Rambus (RMBS, $11.74, down $0.02)

RMBS March 13 calls (RMBS160318C00013000, $0.21, up $0.02)

Entry Price: $0.35 (2/2/2016)

Exit Target: $0.70

Return: -40%

Stop Target: None

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.

You can read my extended write-up in the Feb. 2 Pre-Market Update.

 

Opko Health (OPK, $7.85, up $0.09)

OPK March 7 puts (OPK160318P00007000, $0.35, down $0.03)

Entry Price: $0.35 (1/25/2016)

Exit Target: $0.70

Return: 0%

Stop Target: None

Action: Resistance is at $8-$8.25. Support is at $7.50.

You can read my earlier write-up in the Jan. 26 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.

Garmin (GRMN) February 30 puts — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options