Dear Momentum Options Subscriber,
The Federal Reserve left interest rates unchanged on Wednesday, and Fed officials made sure they pleased Wall Street with their rhetoric. The news pushed the market to fresh session highs, as the bullish clues that were left ahead of the announcement played out as planned. More importantly, the VIX closed below 15 for the first time this year.
The Dow jumped 74 points, or 0.4%, to end at 17,325. The blue-chips traded down to 17,204 shortly after the open, with rising support at 17,200 holding. Backup help is at 17,000-16,900. The run to 17,379 late in the day tested upper resistance at 17,350-17,400, and I have been mentioning that a close above the latter would get 17,600 in the mix.
The S&P 500 added 11 points, or 0.6%, to close at 2,027. The index opened at 2,014, with the bears pushing a low of 2,010 ahead of the Fed announcement. The bulls defended support at 2,010-2,000 before making the rebound to 2,032 ahead of the closing bell. Resistance at 2,025-2,050 was breached, and the close above the former was a bullish signal.
The Nasdaq advanced 35 points, or 0.8%, to settle at 4,763. Tech gave back a 12-pack and fell to 4,716 intraday, with support at 4,725-4,700 holding. Upper resistance at 4,775-4,800 came into play following the move to 4,774 late in the day. A close above 4,800 would be a very bullish signal.
The Russell 2000 climbed nearly 8 points, or 0.7%, to finish at 1,074. The small-caps held support at 1,060 following the opening dip to 1,063. The index mostly held positive territory into the Fed update before powering to a high of 1,076 afterwards. The rebound into the 1,070-1,075 zone looked bullish, but it will be wasted if there is no follow-through past 1,080 today.
The S&P 500 Volatility Index ($VIX, 14.99, down 1.85) fell 11% after trading to a low of 14.89. While this move was of major significance, I also realize that a market peak could be near if the VIX fails to hold at this level for several sessions. If it can, a test to 13.50-12.50 could be in store. Fresh resistance is at 16.50-17.50.
I could have another New Trade or two shortly after the open or ahead of today’s Mid-Market Update, so stay locked and loaded.
From desk to press, futures look like this: Dow (-71); S&P 500 (-9); Nasdaq 100 (-25); Russell (-6).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 30-4 (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.
Energous (WATT, $8.41, up $0.41)
WATT May 10 calls (WATT160520C00010000, $1.50, up $0.39)
Entry Price: $0.80 (3/15/2016)
Exit Target: $1.60-$2.40
Stop Target: $1.05 (Stop Limit)
Action: Set a Stop Limit at $1.05 to protect profits.
Shares traded to a high of $8.74 into Wednesday’s close, with the options peaking at $1.70. Resistance is at $8.50-$9 on continued momentum. Rising support is at $8.25-$8.
I will have a featured article for WATT in today’s Mid-Market Update.
American Express (AXP, $59.70, up $0.47)
AXP April 62.50 calls (AXP160415C00062500, $0.45, up $0.05)
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.
You can read my original write-up and view a chart in the March 14 Pre-Market Update.
Intel (INTC, $31.69, up $0.04)
INTC April 29 puts (INTC160415P00029000, $0.25, down $0.01)
Entry Price: $0.38 (3/7/2016)
Exit Target: $0.80
Stop Target: None
Action: Resistance is at $32 and the 100-day moving average. Support is at $31.50-$31.25.
You can view a chart for INTC and read my write-up in the March 7 New Trade Alert.
Editor and Chief Options Strategist