Dear Momentum Options Subscriber,

The bulls lost their momentum during the second half of Monday’s session following another run to the market’s upper resistance levels. The bears mounted a brief attack at the open, but they saved their energy to push lower lows into the closing bell. As a result, the market finished the month of February in the red, minus the blue-chips, to set up what could be a maddening March.

The Dow dropped 123 points, or 0.7%, to end at 16,516. The blue-chips made a run to 16,726 intraday, with resistance at 16,800 easily holding. The move back below support at 16,600 and the 50-day moving average should get 16,400-16,350 back in play.

The S&P 500 fell 15 points, or 0.8%, to finish at 1,932. The index traded to a high of 1,958 ahead of Wall Street’s lunch break, but it failed to clear short-term resistance at 1,960. The drop below 1,940 and the 50-day moving average to 1,931 was a slightly bearish sign. Fresh support is at 1,925-1,920, which are levels that need to hold on a continued pullback.

The Nasdaq declined 32 points, or 0.7%, to settle at 4,557. Tech cleared the 4,600 level after reaching a peak of 4,619, but it failed to hold resistance. The late-day fade to 4,557 held shaky support at 4,550. There is additional risk to 4,500 if breached.

The Russell 2000 slipped 3 points, or 0.3%, to close at 1,033. The small-caps held positive territory throughout much of the session after trading to a high of 1,044. Resistance at 1,045-1,050 held tight before the breakdown to session lows. Support is at 1,025-1,020 on continued weakness.

The S&P 500 Volatility Index ($VIX, 20.55, up 0.74) closed above 20 after making a sharp spike to 18.38 during the first half of the action. Support at 18.50-17.50 held before the bears pushed a high of 20.81. I mentioned that there was risk to 22-22.50 and the 50-day moving average on a move back above 20, and these are the levels the bulls need to hold this week.

Yesterday’s action was slightly frustrating, but our current trades held up well. I’m still looking for a run to higher highs into mid-March. However, we need to be careful in case that move doesn’t materialize, and I have put options ready to go if the market’s support levels fail.

Once again, I will be including the Momentum Q&A section in tomorrow’s Pre-Market Update, which will give you the opportunity to ask me questions about the market and our current trades. To submit your questions, simply send your messages to, and I will do my best to address them every Wednesday morning.

As a reminder, the SEC’s guidelines prohibit me from answering any questions about securities that are not currently on our Momentum Options buy list or from providing individualized trading advice or recommendations for any specific subscriber or portfolio.

I encourage you to send in any questions that I can help with, particularly those that may benefit the broad Momentum Options audience.  If you have a question, chances are there are a handful of other subscribers who may have the same one! Thanks, and I look forward to hearing from you!

From desk to press, futures look like this: Dow (+126); S&P 500 (+16); Nasdaq 100 (+33); Russell (+10).

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, $20.66, down $0.21)

GDOT June 22.50 calls (GDOT160617C00022500, $1.00, down $0.20)

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

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

Return: 43%

Stop Target: $0.80, raise to $0.85 (Stop Limit)

Action: Raise the Stop Limit order from $0.80 to $0.85.

Support is at $20.50-$20. Resistance is at $21 and the 52-week high of $21.62.


Whole Foods Market (WFM, $31.31, up $0.21)

WFM April 33 calls (WFM160415C00033000, $0.62, up $0.04)

Entry Price: $0.54 (2/26/2016)

Exit Target: $1.10

Return: 15%

Stop Target: None

Action: Monday’s high tapped $31.57. Resistance is at $31.50-$32. Short-term support is at $30.50-$30.

You can read my detailed write-up in the Feb. 29 Pre-Market Update.


Oracle (ORCL, $36.78, down $0.18)

ORCL April 40 calls (ORCL160415C00040000, $0.27, down $0.07)

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

Exit Target: $0.80

Return: -33%

Stop Target: None

Action: Support is at $37-$36.50. Resistance is at $37.50-$38.

You can read my detailed write-up in the Feb. 23 Pre-Market Update. Earnings are due out in a few weeks.


Bank of America (BAC, $12.52, down $0.18)

BAC March 13 calls (BAC160318C00013000, $0.23, down $0.05)

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

Exit Target: $0.80

Return: -43%

Stop Target: None


BAC April 14 calls (BAC160415C00014000, $0.15, down $0.05)

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

Exit Target: $0.60

Return: -50%

Stop Target: None

Action: Support is at $12.50, followed by $12.25-$12. Resistance is at $13.


Rambus (RMBS, $13.03, up $0.05)

RMBS March 13 calls (RMBS160318C00013000, $0.37, up $0.01)

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

Exit Target: $0.70

Return: 5%

Stop Target: None

Action: Resistance is at $13-$13.25. Support is at $12.75-$12.50 and the 200-day moving average.


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) — The company missed earnings and revenue numbers after Monday’s close. I could take action today in the Mid-Market Update if shares clear $10. I’d like to see a freefall to $7, however, so let’s see how shares open — Continue to hold the second half.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options