Dear Momentum Options Subscriber,
The bulls were on the mat for much of Thursday’s action but were saved by the small-caps and the Financial stocks ahead of the closing bell. The bears are trying to hold a rising tide of support but are facing a possible high tide that could put them away for a few more weeks.
The Dow added 44 points, or 0.3%, to close at 16,943. The blue-chips were weak into the second half of trading with near-term support at 16,800 holding following the dip to 16,820. The rebound to 16,944 afterwards challenged upper resistance at 17,000-17,200. A close above 17,000 ahead of the weekend would be a bullish sign for next week.
The S&P 500 gained nearly 7 points, or 0.4%, to end at 1,993. The index held support at 1,975 after kissing 1,977 on the first half pullback. The 9-point loss was recovered following the run to session highs into the closing bell. Resistance is at 2,000-2,010 with a shot a 2,020-2,025, if cleared.
The Nasdaq climbed 4 points, or 0.1%, to finish at 4,707. Tech was a mess for much of the session but the backtest to 4,674 held rising support at 4,675-4,650. The last 15 minutes of trading was enough to give the bulls the win as the index also went out at its high. Resistance is at 4,750-4,800.
The Russell 2000 jumped 10 points, or 1%, to settle at 1,076. The small-caps slipped a point to 1,064 in the opening pullback before easily recovering and holding fresh support at 1,060. I mentioned yesterday morning that a move above 1,080 would be a very bullish signal that should get 1,100 in the mix.
The S&P 500 Volatility Index ($VIX, 16.70, down 0.39) tested a high of 17.56 at the start of trading with resistance at 17.50 slightly stretched. The late day low tapped 16.32 with the bulls nearly holding the 16.50 level into the close. The bulls are still trying to get below 15 to confirm higher highs into mid-March.
The bulls are on the verge of another major breakout if all goes well today (and Monday). We have been extremely successful playing the “V-shape” recovery and I still like a few more bullish trades over the next few weeks. However, I mentioned there could be some end of month weakness so we still need to be very nimble with our positions.
With that said, I have a New Trade I want to get us into this morning which you can find out more about here.
From desk to press, futures look like this: Dow (+34); S&P 500 (+3.5); Nasdaq 100 (+15); Russell (+2).
Momentum Options Play List
Closed Trades for 2016: Daily 23-4 (85%) All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out each and every day.
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.
Hertz Global Holdings (HTZ, $10.01, up $0.08)
HTZ April 11 calls (HTZ160415C00011000, $0.52, up $0.02)
Entry Price: $0.55 (2/26/2016)
Exit Target: $1.10
Stop Target: None
Action: Shares traded to a high of $10.25 on Thursday with the puts reaching a peak of $0.60 cents. A close above $10.25 and the 50-day moving average should lead to a run $12-$13 on continued short covering. The 100-day moving average is just north of $13.50. Support is at $9.50-$9.
You can read my detailed write-up, in the March 3 Mid-Market Update. Earnings are due out in a few weeks.
Green Dot (GDOT, $21.54, up $0.32)
June 22.50 calls (GDOT160617C00022500, $1.30, flat)
Entry Price: $0.70 (2/24/2016)
Exit Target: $1.75-$2.10 (Limit Order on half at $1.75)
Stop Target: $1.05 (Stop Limit)
Action: Resistance is at $21.50 and the 52-week high of $21.62 that was tested on Thursday. A move above $21.75 could lead to a quick run to $22-$24. Support is at $20.50-$20.
Oracle (ORCL, $37.89, up $0.13)
ORCL April 40 calls (ORCL160415C00040000, $0.40, flat)
Entry Price: $0.40 (2/22/2016)
Exit Target: $0.80
Stop Target: None
Action: Resistance is at $38.25 and the 200-day moving average. Support is at $37.50-$37.
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, $13.50, up $0.09)
BAC April 14 calls (BAC160415C00014000, $0.38, up $0.02)
Entry Price: $0.30 (2/9/2016)
Exit Target: $0.60
Stop Target: None
Action: Resistance is at $13.50. Continued closes above this level should lead to $13.75 over the short-term. A close above $13.75 could lead to a run towards $14-$14.25 and the 50-day moving average. Support is at $13.25-$13.
Editor and Chief Options Strategist
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