Dear Momentum Options Subscriber,
Futures were forecasting a slightly weaker open this morning, which was in line with the action that has been playing out in recent weeks. The opening weakness has been backed up by rising support, with higher highs and higher lows being set in afternoon trading.
I profiled a number of other bullish signs in this morning’s Pre-Market Update, but there are a few more I want to cover this afternoon, especially in the financial and transportation sectors.
I will cover them in more depth over the coming weekend, but both sectors made strong moves to end last week. The Dow Jones Transportation Average ($TRAN, 8,077, up 2) cleared its 200-day moving average, and I have mentioned that the Dow Jones could follow suit if the transports continue to show strength.
Meanwhile, the Financial Select Sector SPDR (XLF, $22.67, down $0.06) cleared and held its 100-day moving average on Friday. The index looks poised to challenge $23-$23.25 and the 200-day moving average on continued strength. Support is at $22.25-$22 if $22.50 fails to hold on a pullback.
Turning to the market, the Dow is currently up 12 points to 17,614, while the S&P 500 is popping a point to 2,050. The Nasdaq is higher by a nickel to 4,801, and the Russell 2000 is down 2 points to 1,099.
I have updated our current trades below, including today’s new trades in Krispy Kreme (KKD) and Rambus (RMBS), so let’s go check the action. I also have another Profit Alert listed for our position in Energous (WATT).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 32-5 (86%). 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 2:10 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.
Energous (WATT, $8.80, down $0.40)
WATT May 10 calls (WATT160520C00010000, $1.20, down $0.40)
Entry Price: $0.80 (3/15/2016)
Exit Target: $2.40
Stop Target: $1.20 (Stop Limit)
Action: The Stop Limit at $1.20 triggered earlier today, and we are now out of the position.
Shares traded to a high of $9.73, but they have since slipped to a low of $8.51, which triggered our Stop Limit. The call options reached a peak of $1.85 before slipping to a low of $1.05.
Apple (AAPL) is having an event today, but no word yet on WATT’s wireless charging technology. I will keep WATT on my watch list for a possible re-entry point, as I do see shares clearing $10 down the road.
Rambus (RMBS, $13.49, up $0.05)
RMBS May 14 calls (RMBS160520C00014000, $0.50, up $0.03)
Entry Price: $0.47 (3/21/2016)
Exit Target: $1.00
Stop Target: None
Action: Near-term resistance is at $13.75-$14. Rising support is at $13.25-$13. A “golden cross” is in the process of forming, with the 50-day moving average on track to clear the 200-day moving average. This is a bullish setup that should get $14-$15 in play.
If shares trade to $15 by mid-May, these options will easily double from current levels, as they would be $1 “in the money.”
Krispy Kreme (KKD, $15.44, down $0.40)
KKD April 16 calls (KKD160415C00016000, $0.69, down $0.08)
Entry Price: $0.60 (3/21/2016)
Exit Target: $1.20
Stop Target: None
Action: Support is at $15.50-$15.25 on continued weakness. Resistance is at $15.75-$16. There is a gap to fill past $16.50, which could be cleared on better-than-expected numbers and a sweet outlook. If cleared, shares could trade north of $17 on short-covering.
The 50- and 100-day moving averages are curling higher, and the 200-day moving average is trying to level out. This trade is based more on technicals than it is on fundamentals, but I’m hoping that the bottom line impresses the suits-and-ties.
You can read my thoughts on KKD’s numbers from earlier this month in the March 11 Mid-Market Update.
Nucor (NUE, $46.35, down $0.35)
NUE April 48 calls (NUE160415C00048000, $0.42, down $0.19)
Entry Price: $0.55 (3/17/2016)
Exit Target: $1.10
Stop Target: None
Action: Support is at $46.25-$46. Resistance is at $47.50-$48.
Sony (SNE, $26.34, up $0.07)
SNE April 26 calls (SNE160415C00026000, $0.96, up $0.01)
Entry Price: $0.72 (3/17/2016)
Exit Target: $1.45
Stop Target: $0.75 (Stop Limit)
Action: Continued closes above $26 and the 200-day moving average would be bullish signal for a possible push towards $28. Short-term support is at $26-$25.75.
The 50-day moving average is starting to curl higher following a three-month downtrend. The next hurdles are at $26.50-$27.
You can read my thoughts on SNE in this morning’s Pre-Market Update.
Editor and Chief Options Strategist