Dear Momentum Options Subscriber,
The bulls showed their muscle as Wall Street opened its coffers to buy stocks on St. Patrick’s Day. The Dow’s return to green for 2016 was a bullish sign, although the small-caps and tech slacked. Both indices still closed higher, as did the S&P 500, but they have a little more work to do before they can reclaim positive territory for the year.
The Dow advanced 155 points, or 0.9%, to close at 17,481. The blue-chips were a little slippery on the open following the retreat to 17,297. Short-term support at 17,400-17,350 was stretched before the surge to 17,529 late in the day. I mentioned that a run to 17,600 could be in the works for this week, and 17,800-18,000 is a possibility for next week or by the end of the month.
The S&P 500 added 13 points, or 0.7%, to settle at 2,040. The index traded down to 2,022 shortly after the open, with support at 2,025-2,020 holding. The rebound to 2,046 intraday pushed upper resistance at 2,050-2,060. A move above the latter could lead to 2,075-2,080.
The Nasdaq advanced 11 points, or 0.2%, to finish a hair under 4,775. Tech was wobbly during the first half of the action, with the low checking in at 4,737. Support at 4,725-4,700 held for the fifth-straight session, with the bulls building a nice base at these levels. Resistance remains at 4,800, but Thursday’s high tapped 4,788.
The Russell 2000 surged 16 points, or 1.6%, to end at 1,091. The small-caps tested a low of 1,069 at the start of trading before leading the charge to higher highs. The bulls held rising support at 1,075-1,070 before the late-day push to 1,094. I have been cheerleading that a run to 1,100 could come quickly if 1,080 was cleared, and this level is now in play. There is possible fluff to 1,110-1,120 on continued closes above this level.
The S&P 500 Volatility Index ($VIX, 14.44, down 0.55) confirmed higher highs after the bulls pushed a low of 13.82 intraday. I have been talking about a move to 13.50-12.50 as long as 15 held. From there, I will have to do additional analysis, but that’s where I’m expecting a possible short-term top. Resistance is at 14.50-15, which are levels that need to hold into the weekend to keep the current momentum going.
I have a lot to cover this morning, so let’s get to it.
From desk to press, futures look like this: Dow (+51); S&P 500 (+6.5); Nasdaq 100 (+11); Russell (+2).
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, $8.88, up $0.14)
WATT May 10 calls (WATT160520C00010000, $1.50, flat)
Entry Price: $0.80 (3/15/2016)
Exit Target: $2.40
Return: 88%
Stop Target: $1.05, raise to $1.20 (Stop Limit)
Action: I’m adjusting the Exit Target from $1.60-$2.40 to $2.40. Also, raise the Stop Limit order from $1.05 to $1.20.
Shares reached an intraday peak of $9.20 yesterday, with the options trading up to $1.75, so I have lifted the $1.60 Exit Target. I will continue to raise the Stop Limit to protect profits on further strength.
Resistance is at $9-$9.50 on continued momentum. Support is at $8.50-$8.25.
You can read my detailed write-up in the March 17 Mid-Market Update.
Intel (INTC, $31.98, up $0.29)
INTC April 29 puts (INTC160415P00029000, $0.17, down $0.07)
Entry Price: $0.38 (3/7/2016)
Exit Target: $0.80 (closed first half at $0.17 on 3/17/2016)
Return: -55%
Stop Target: $0.10 (Stop Limit)
Action: Set a Stop Limit at $0.10 on the second half of the trade.
I wanted to close the first half of the trade in case shares held $32 on Thursday. I still like this trade as protection going into mid-April, but I wanted to save some premium.
Resistance is at $32 and the 100-day moving average. Support is at $31.75-$31.50.
You can view a chart for INTC and read my write-up in the March 7 New Trade Alert.
Nucor (NUE, $46.65, up $1.16)
NUE April 48 calls (NUE160415C00048000, $0.65, up $0.29)
Entry Price: $0.55 (3/17/2016)
Exit Target: $1.10
Return: 18%
Stop Target: None
Action: NUE traded to a high of $46.76 yesterday. Shares look good for a run at $50 or higher, as the 50- and 100-day moving averages are curling higher. The close above $46.50 should lead to a run towards $48-$50. The 52-week high is at $50.70. Rising support is at $46-$45.50.
Sony (SNE, $26.09, up $0.59)
SNE April 26 calls (SNE160415C00026000, $0.91, up $0.31)
Entry Price: $0.72 (3/17/2016)
Exit Target: $1.45
Return: 26%
Stop Target: None
Action: Shares traded to a high of $26.14 on Thursday. The close above $26 and the 200-day moving average was a bullish signal for a possible push towards $28. Short-term support is at $26-$25.75.
American Express (AXP, $60.08, up $0.38)
AXP April 62.50 calls (AXP160415C00062500, $0.46, up $0.01)
Entry Price: $0.60 (3/11/2016)
Exit Target: $1.20
Return: -23%
Stop Target: None
Action: Near-term resistance is at $60-$62.50. Support is at $58.50-$58 and the 50-day moving average.
You can read my original write-up and view a chart in the March 14 Pre-Market Update.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options
