Dear Momentum Options Subscriber,

The market fell for the fifth-straight session on Thursday, establishing lower highs and lower lows in the process. Although the bulls made a slight recovery off of the lows yesterday, the technical picture remains bearish ahead of the three-day weekend. As a reminder, U.S. markets are closed on Monday, Feb. 15, in observance of Presidents’ Day.

The Dow declined 254 points, or 1.6%, to end at 15,660. The blue-chips traded in negative territory throughout the session and reached a low of 15,503. Support at 15,600 was stretched, and there is risk to 15,350-15,300 on a close below this level. Resistance is at 15,800-15,900.

The S&P 500 dropped 22 points, or 1.2%, to settle at 1,829. The index tested a fresh 52-week low of 1,810, but support at 1,825-1,800 held. A move below the latter will likely get 1,780-1,775 in play. Resistance is at 1,850-1,860.

The Nasdaq fell 16 points, or 0.4%, to finish at 4,266. Tech tumbled to an intraday low of 4,209, but backup support at 4,200 held. The close above 4,250 was slightly bullish following the late-day run to 4,293. The 10-point gain failed to clear resistance at 4,300, which is a level the bulls need to recover ahead of the weekend.

The Russell 2000 gave back 9 points, or 1%, to close at 953. The small-caps stumbled to a 52-week low of 943 before holding the 950 level into the closing bell. There is additional risk to 925 if 940 fails to hold. Resistance remains at 970-975.

The S&P 500 Volatility Index ($VIX, 28.14, up 1.85) added 7% and reached an intraday peak of 30.90. The bulls held the 30 level, but there is risk to 35-40 if this level fails to hold. The close above 27.50 was slightly bearish, and it is now acting as short-term support, followed by 25.

From desk to press, futures look like this: Dow (+165); S&P 500 (+22); Nasdaq 100 (+44); Russell (+12).

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, $11.16, down $0.82)

BAC March 13 calls (BAC160318C00013000, $0.19, down $0.08)

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

Exit Target: $0.80

Return: -53%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.19, down $0.02)

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

Exit Target: $0.60

Return: -37%

Stop Target: None

Action: Thursday’s low reached $10.99. Fresh support is at $11-$10.75. Short-term resistance is at $11.25.

 

Rambus (RMBS, $11.87, up $0.13)

RMBS March 13 calls (RMBS160318C00013000, $0.20, up $0.04)

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

Exit Target: $0.70

Return: -43%

Stop Target: None

Action: Resistance is at $12. Support is at $11.65-$11.50 and the 50- and 100-day moving averages. Yesterday’s low touched $11.45.

 

Opko Health (OPK, $8.00, up $0.15)

OPK March 7 puts (OPK160318P00007000, $0.35, flat)

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.

 

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