Dear Momentum Options Subscriber,
The blue-chips got their third-straight Monday win yesterday, although the action was far from exciting. In any event, it was another bullish sign, as it shows that money is still moving into the market. Tech cleared a major psychological level as volatility stayed relaxed. And, while the small-caps slacked, they held support in an overall lackluster session.
The Dow added 21 points, or 0.1%, to finish at 17,623. The blue-chips tested a low of 17,551 and pegged a higher low than Friday’s trip to 17,481. The close above 17,600 for the second- straight session keeps 17,800-18,000 in play. Support remains at 17,400-17,350 on a move below 17,550.
The S&P 500 gained 2 points, or 0.1%, to end at 2,051. The index traded down to 2,043 shortly after the open, with fresh support at 2,040-2,035 holding. The late-day test to 2,053 keeps upper resistance at 2,075-2,080 in the mix if 2,060 is cleared.
The Nasdaq advanced a baker’s dozen, or 0.3%, to close at 4,808. Tech was a little slippery on the open, with the low checking-in at 4,785. Rising support at 4,775-4,750 held, and the close above 4,800 and the 100-day moving average looks super bullish for higher highs. Continued closes above these levels should lead to a push towards 4,850-4,875 and the 200-day moving average.
The Russell 2000 slipped 3 points, or 0.3%, to settle at 1,098. The small-caps showed a little strength after opening in negative territory, as they went on to reach a peak of 1,103 within 30 minutes of the start of trading. The bears kept the pressure on afterwards, as the index stayed underwater into the close. Backup support is at 1,095-1,090 following the intraday dip to 1,096. Resistance is at 1,110-1,120.
The S&P 500 Volatility Index ($VIX, 13.79, down 0.23) flirted with the 15 level following the morning run to 14.73. I’m not worried, however, as the bulls held this level. The close at the session low fell shy of testing support at 13.50-12.50.
It has been a busy week already, but I want to keep picking the low-hanging fruit while it’s ripe. I could have additional New Trades again this morning if the action remains favorable, so stay locked and loaded.
From desk to press, futures look like this: Dow (-41); S&P 500 (-7); Nasdaq 100 (-18); Russell (-6).
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 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.
Sony (SNE, $26.47, up $0.20)
SNE April 26 calls (SNE160415C00026000, $1.05, up $0.10)
Entry Price: $0.72 (3/17/2016)
Exit Target: $1.45
Stop Target: $0.75, raise to $0.85 (Stop Limit)
Action: Raise the Stop Limit from $0.75 to $0.85 to protect profits.
Shares traded to a high of $26.49 on Monday following the morning weakness to $26.16. The call options traded to a low of $0.94 on the pullback, so our prior Stop Limit at $0.75 held.
Continued closes above $26 and the 200-day moving average would be bullish signals for a possible push towards $28. Short-term support is at $26-$25.75.
You can read my thoughts on SNE in the March 21 Pre-Market Update.
Rambus (RMBS, $13.61, up $0.17)
RMBS May 14 calls (RMBS160520C00014000, $0.53, up $0.06)
Entry Price: $0.47 (3/21/2016)
Exit Target: $1.00
Stop Target: None
Action: Shares finished Monday’s session a penny off of their high of $13.62.
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. I went with the May call options to give the trade more time to play out.
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, $15.52, down $0.32)
KKD April 16 calls (KKD160415C00016000, $0.75, down $0.02)
Entry Price: $0.60 (3/21/2016)
Exit Target: $1.20
Stop Target: None
Action: Shares held $15.50 following yesterday’s trip to $15.40. I would like to see shares clear $16 into the closing bell today. Earnings are due out shortly after the close, and shares will likely see some action in after-hours trading.
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. A test to $14 could come on a miss or a lowered outlook.
You can read my thoughts on KKD’s numbers from earlier this month in the March 11 Mid-Market Update.
Nucor (NUE, $46.41, down $0.29)
NUE April 48 calls (NUE160415C00048000, $0.41, down $0.20)
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.
Editor and Chief Options Strategist