Dear Momentum Options Subscriber,
The market action on Monday left Wall Street doubting the current rally again, as the major indices finished with mixed results. Meanwhile, the VIX stayed elevated and the bulls held down resistance.
The positive Monday close by the blue-chips and the action in the VIX were our first good clues that higher highs could be in store. However, the small-caps slacked and traded in negative territory throughout the session, which caused some concern.
The Dow added nearly 16 points, or 0.1%, to settle at 17,229. The blue-chips traded down to 17,161 shortly after the open, with fresh support at 17,200-17,000 holding. The rebound to 17,275 was a higher high than Friday’s peak of 17,220, but it failed to clear upper resistance at 17,350-17,400. A move above the latter should get 17,600 in play.
The S&P 500 slipped 2 points, or 0.1%, to close at 2,019. The index tested a low of 2,012 on the opening weakness, but rising support at 2,010-2,000 stood strong. The late-day run to 2,024 pushed upper resistance at 2,025-2,050.
The Nasdaq gained close to 2 points, or 0.04%, to end at 4,750. Tech was sloppy throughout the first half of trading, with the bears pushing a bottom of 4,731. Support at 4,725-4,700 was tested but held. A close below the latter would be a slightly bearish development, but the test to 4,862 afterwards was bullish. The close at 4,750 keeps short-term resistance at 4,775-4,800 alive.
The Russell 2000 fell 3 points, or 0.3%, to finish at 1,084. The small-caps tested a morning low of 1,079, with support at 1,075-1,070 hanging tight. The close above 1,080 was slightly bullish and keeps resistance at 1,100 in play.
The S&P 500 Volatility Index ($VIX, 16.92, up 0.42) made a run past 17.50 to 17.67, but resistance held into the closing bell. There is wiggle room to 20, but that is a level I would rather not see tested this week. However, the portfolio is light, and we do have a couple of bearish positions open. I’m still hopeful that the bulls can crack 15, but we will roll with the punches either way.
While the zombies will be taking center stage for Super Tuesday, the battle between the bulls and bears could heat up today ahead of the Federal Open Market Committee (FOMC) announcement tomorrow. I could have a New Trade or two shortly after the open, depending on the action, so stay close to your email inboxes.
As a reminder, 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 firstname.lastname@example.org, 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 (-69); S&P 500 (-10); Nasdaq 100 (-12); Russell (-6).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 29-4 (88%). 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.
American Express (AXP, $59.57, up $0.11)
AXP April 62.50 calls (AXP160415C00062500, $0.60, down $0.03)
Entry Price: $0.60 (3/11/2016)
Exit Target: $1.20
Stop Target: None
Action: Support is at $58.50-$58 and the 50-day moving average. Near-term resistance is at $60- $62.50.
Mylan (MYL, $47.87, down $0.73)
MYL April 45 puts (MYL160415P00045000, $0.89, up $0.12)
Entry Price: $1.10 (3/10/2016)
Exit Target: $2.20
Stop Target: None
Action: Shares traded to a low of $46.36, and the put options reached a peak of $1.26.
Support is at $47-$46.50. Resistance is at $49-$49.25.
You can read my original write-up in the March 11 Pre-Market Update.
Intel (INTC, $31.43, down $0.33)
INTC April 29 puts (INTC160415P00029000, $0.26, up $0.01)
Entry Price: $0.38 (3/7/2016)
Exit Target: $0.80
Stop Target: None
Action: Support is at $31.50-$31.25. Short-term resistance is at $32 and the 100-day moving average.
You can view a chart for INTC and read my write-up in the March 7 New Trade Alert.
Editor and Chief Options Strategist