Dear Momentum Options Subscriber,
The market is once again trading in a tight range, but there is weakness to the downside as we wind down the final few hours of today’s session.
In the Momentum Q&A section of this morning’s Pre-Market Update, I mentioned that a trading range seems to be developing this week. I believe this action could last into next week and possibly into the first week of April, which is when first-quarter earnings season begins.
A consolidation phase usually follows big market rallies or selloffs, and that is what we are seeing after the rebound off of the mid-February lows. Trading ranges can be tricky to trade, but they also give investors time to build out a watch list of both bullish and bearish trades.
The technical indicators I follow will give us the next signals to either stay long or to reverse course and go “short.” We just need to be a little patient for the rest of the week and into next as we let the action come to us.
The Dow is currently down 18 points to 17,563, while the S&P 500 is falling 7 points to 2,042. The Nasdaq is lower by 34 points to 4,787, and the Russell 2000 is declining 12 points to 1,084.
I have updated our current trades below, so let’s go check the action.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 33-6 (85%). 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 1:40 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.
Krispy Kreme (KKD, $14.43, down $0.95)
KKD April 16 calls (KKD160415C00016000, $0.05, down $0.60)
Entry Price: $0.60 (3/21/2016)
Exit Target: $1.20
Stop Target: $0.05 (Stop Limit)
Action: The Stop Limit at $0.05 was filled this morning, and we are now out of this position.
Rambus (RMBS, $13.62, down $0.12)
RMBS May 14 calls (RMBS160520C00014000, $0.59, down $0.06)
Entry Price: $0.47 (3/21/2016)
Exit Target: $1.00
Stop Target: $0.50 (Stop Limit)
Action: Near-term resistance is at $13.75-$14. Support is at $13.25-$13.
You can read my thoughts on RMBS in the March 22 Pre-Market Update.
Nucor (NUE, $46.17, down $0.42)
NUE April 48 calls (NUE160415C00048000, $0.33, down $0.12)
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-$47.50.
Editor and Chief Options Strategist