Dear Momentum Options Subscriber,

The broader market cleared major resistance on Thursday to set up a Friday showdown and a fight for market direction into next week and March. Tech and the small-caps are also close to clearing their 50-day moving averages, as the current rally is becoming more broad-based. However, fresh support is still shaky and will need to hold on any pullback.

The Dow jumped 212 points, or 1.3%, to settle at 16,697. The blue-chips held support at 16,400-16,350 following the morning weakness that took the index to 16,458. The steady climb to resistance at 16,800 was halted by the final bell, as the index went out at its high. A move above this level will likely lead to a push towards 17,000.

The S&P 500 surged roughly 22 points, or 1.1%, to finish at 1,951. The index made a backtest to support at 1,925 and traded mostly flat into the second half of the action. The surge past the 50-day moving average was impressive, and that should get upper resistance at 1,970-1,975 in focus.

The Nasdaq added 39 points, or 0.9%, to close at 4,582. Tech fell 26 points to 4,516 shortly after the open, with support at 4,525-4,500 standing strong. The rebound to resistance at 4,575-4,600 and close at the high looked bullish. A move above the latter should get 4,650-4,700 and the 50-day moving average in play.

The Russell 2000 gained 9 points, or 0.9%, to end at 1,031. The small-caps tested the 1,020 level throughout the first half of trading, with new support at 1,025-1,020 trying to form. The 2-point loss was erased following the run to session highs into the closing bell. Upper resistance is at 1,040-1,050 and the 50-day moving average.

The S&P 500 Volatility Index ($VIX, 19.11, down 1.61) traded to a high of 21.26, with near-term resistance at 21.50-22.50 and the 50-day moving average holding. The late-day fade to 19.10 and close below 20 and the 100-day moving average were bullish developments. Additional support is at 18.50-17.50 and the 200-day moving average.

From desk to press, futures look like this: Dow (+113); S&P 500 (+12.5); Nasdaq 100 (+32); Russell (+7).

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, $20.70, up $1.48)

GDOT June 22.50 calls (GDOT160617C00022500, $1.05, up $0.16)

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

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

Return: 50%

Stop Target: $0.80 (Stop Limit)

Action: Set a Stop Limit at $0.80 to protect profits.

Resistance is at $21 and the 52-week high of $21.62. A move above these levels could lead to a breakout towards $22-$24. Support has moved up to $20.25-$20.

 

Oracle (ORCL, $37.29, up $0.66)

ORCL April 40 calls (ORCL160415C00040000, $0.38, up $0.10)

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

Exit Target: $0.80

Return: -5%

Stop Target: None

Action: Resistance is at $37.50-$38. A close above the latter should get $40 in play. Fresh support is at $37-$36.50.

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

 

Bank of America (BAC, $12.32, up $0.19)

BAC March 13 calls (BAC160318C00013000, $0.17, up $0.01)

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

Exit Target: $0.80

Return: -58%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.13, flat)

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

Exit Target: $0.60

Return: -57%

Stop Target: None

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

 

Rambus (RMBS, $12.97, up $0.16)

RMBS March 13 calls (RMBS160318C00013000, $0.39, up $0.05)

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

Exit Target: $0.70

Return: 11%

Stop Target: None

Action: Thursday’s high touched $13. Resistance is at $13-$13.25. Support is at $12.75-$12.50.

 

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. Save 60% Today. The sale is officially over, but I’m going to give you another chance to lock in these deep savings. Some of the best trading opportunities are dead ahead, and we’re going to capture plenty of profits. Renew today and 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.