Dear Momentum Options Subscriber,
Futures were positive throughout the morning and improved ahead of the opening bell. However, the hoopla soon wore off, and they weakened before Wall Street started trading. This gave me a good feeling that the action would be choppy, and that’s just how today’s session has played out so far.
Today’s action has centered on the European Central Bank (ECB)’s decision to cut interest rates. I could write a book about interest rates and their effects on different currencies, but I’ll skip the boredom and sum it up in a few words: Negative interest rates are not good.
The bulls still have some work to do if they want to win the week, and today’s session looked slightly encouraging before the pullback. There is yet another half of trading to go, however, so it’s still uncertain how Friday and next week might play out.
The mini-pullback and tight trading range this week have reminded me what it’s like to watch grass grow, but next week could bring green sprouts and a run to higher highs. I’m hoping to see green throughout next week and for the current rally, which I have been calling for since the February lows, to last into mid-March. The week of St. Patrick’s Day usually brings good vibes to the market as well.
For 2016, our game plan has been solid and nearly flawless, although I also talked about possible weakness by late March. If you are a new subscriber, please check out my 10-year charts for the major indices in the Feb. 29 Pre-Market Update. The charts review my upside targets and possible downside targets, both of which could come into play at some point in 2016.
For now, the short-term outlook remains bullish as long as support holds, and I continue to favor call options over put options. However, I have already started setting up bearish trades into April and May that we may use once a potential top is reached. If the rally continues past next week, we will continue to roll with the trend and our current trades. If this is it, however, then the portfolio will be light to take advantage of a possible short-term top.
Turning to the market, the Dow is down 73 points to 16,927, while the S&P 500 is lower by 6 points to 1,982. The Nasdaq is declining 21 points to 4,652, and the Russell 2000 is sinking 11 points to 1,061.
My trigger finger is itching, but we may need to wait another day to open New Trades. However, if the action improves into the close, I’ll be on it like grass on dirt. In the meantime, I have updated our current trades below, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 27-4 (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 12:05 p.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.
Rambus (RMBS, $13.19, up $0.12)
RMBS April 13 calls (RMBS160415C00013000, $0.55, up $0.03)
Entry Price: $0.40 (3/7/2016)
Exit Target: $0.80
Stop Target: $0.45 (Stop Limit)
Action: Resistance is at $13.25-$13.50. Support is at $12.75-$12.60 and the 200-day moving average if $13 fails to hold.
You can view a chart for RMBS and read my write-up in the March 7 New Trade Alert.
Intel (INTC, $30.84, down $0.03)
INTC April 29 puts (INTC160415P00029000, $0.41, up $0.02)
Entry Price: $0.38 (3/7/2016)
Exit Target: $0.80
Stop Target: None
Action: Short-term resistance is at $31-$31.50. Support is at $30.50-$30.
You can view a chart for INTC and read my write-up in the March 7 New Trade Alert.
Green Dot (GDOT, $21.90, down $0.02)
GDOT June 22.50 calls (GDOT160617C00022500, $1.70, flat)
Entry Price: $0.70 (2/24/2016)
Exit Target: $2.10 (Limit Order on first half)
Stop Target: $1.40 (Stop Limit)
Action: Support is at $21.75-$21.50. Multi-year resistance is at $22-$24.
Editor and Chief Options Strategist