Dear Momentum Options Subscriber,

The bulls showed their resiliency on Wednesday following the opening onslaught by the bears. The late-day recovery was a beautiful sight, but upper resistance remains in the picture. Volatility also cooled into the closing bell, but it is still in the danger zone.

The Dow added 53 points, or 0.3%, to end at 16,484. The blue-chips tested a low of 16,165 on the opening weakness, with backup support at 16,200-16,100 holding. The rebound to 16,507 and close above 16,350-16,400 was a bullish sign, and that keeps 16,600-16,650 and the 50-day moving average in play. A move above this level could lead to a quick trip to 16,800-17,000.

The S&P 500 climbed 8 points, or 0.4%, to settle at 1,929. The index traded to a low of 1,891 shortly after the open, with support at 1,900-1,875 standing strong. The recovery to 1,932 and close above 1,925 was a bullish development, but resistance remains at 1,940-1,950 and the 50-day moving average.

The Nasdaq advanced 39 points, or 0.9%, to finish at 4,542. Tech split backup support at 4,450-4,400 with its trip to 4,425 during the morning pullback. The 122-point turnaround to 4,547 pushed near-term resistance at 4,550. Additional hurdles remain at 4,575-4,600 if that resistance is cleared.

The Russell 2000 climbed nearly 10 points, or 1%, to close at 1,022. The small-caps stumbled to a low of 996, with backup support at 990 shining like a penny. The surge to 1,023 afterwards and close between 1,020 and 1,025 keeps 1,035-1,040 in play. A move above the latter would be a strong signal that the rest of the week and the start of March could be bullish.

The S&P 500 Volatility Index ($VIX, 20.72, down 0.26) spiked to 22.87 after the start of trading, with the bulls defending near-term resistance at 22.50-23.50. The VIX stayed slightly elevated for the rest of the session before the final-hour fade to 20.26. We are looking for continued closes below 20 to keep the bears at bay.

I have a lot to talk about this morning, so let’s get to our current trades.

From desk to press, futures look like this: Dow (+30); S&P 500 (+3); Nasdaq 100 (+6.5); Russell (+2).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 20-3 (87%). 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.

 

Green Dot (GDOT, $19.22, down $0.18)

GDOT June 22.50 calls (GDOT160617C00022500, $0.89, $0.24)

Entry Price: $0.70 (2/24/2016)

Exit Target: $1.75-$2.10 (Limit Order on first half at $1.75)

Return: 27%

Stop Target: None

Action: Set a Limit Order to close the first half of the GDOT June 22.50 calls at $1.75.

Shares rebounded off their low of $18.90 yesterday to hold the $19 level. More importantly, the company topped Wall Street’s expectations by $0.03, and revenues also came in higher. Short-term resistance is at $20, but a move above this level could lead to a breakout towards $22-$24. Support is at $19-$18.75.

 

Oracle (ORCL, $36.63, up $0.08)

ORCL April 40 calls (ORCL160415C00040000, $0.28, up $0.03)

Entry Price: $0.40 (2/22/2016)

Exit Target: $0.80

Return: -30%

Stop Target: None

Action: Resistance is at $37-$37.50. Support is at $36.50-$36.

You can read my detailed write-up in the Feb. 23 Pre-Market Update.

 

Bank of America (BAC, $12.13, down $0.03)

BAC March 13 calls (BAC160318C00013000, $0.16, up $0.01)

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

Exit Target: $0.80

Return: -60%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.13, up $0.01)

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

Exit Target: $0.60

Return: -57%

Stop Target: None

Action: Resistance is at $12.25-$12.50. Support is at $12-$11.75.

 

Rambus (RMBS, $12.81, up $0.20)

RMBS March 13 calls (RMBS160318C00013000, $0.34, up $0.09)

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

Exit Target: $0.70

Return: -3%

Stop Target: None

Action: Resistance is at $13 following the close above the 200-day moving average. Support is at $12.75-$12.50.

The higher highs and lower lows this week are very bullish signs, and I could piggy-back this trade if shares clear $13. The RMBS May 14 calls (RMBS160520C00014000, $0.45, up $0.05) are on my radar to play a continued breakout. If I decide to add them, I will send out a New Trade alert.

 

Trades on Hold — other 2016 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.

Opko Health (OPK) March 7 puts (OPK160318P00007000) — Earnings are due to be released next week. Continue to hold the second half of the position.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options

P.S. Flash Sale — Save up to 60%. I’m committed to helping you build your wealth. That’s why yesterday you received an invitation to save up to 60% on your Momentum Options membership. Some of the best trading opportunities are dead ahead, and I’m expecting us to capture plenty of profits. By renewing today, you’ll not only save big but also receive the brand new special report: 2016 Roadmap: Top Catalysts for Huge Profits that I wrote with a few of my fellow InvestorPlace advisors. In it, you’ll discover where we think the market is heading and some of the hottest stocks and sectors you should get into. Don’t wait. Renew today and get immediate access to the 2016 Roadmap.