Dear Momentum Options Subscriber,
Futures were forecasting a slightly higher open throughout the night and into the morning as the bulls tried to regain last week’s lost momentum. The action has been choppy, however, and the major indices have traded on both sides of the ledger so far today as we head into the second half of the session.
The bulls are trying to extend a three-week Monday win streak, while the bears are relying on history and some potential late-March weakness. A positive close on the Dow would be another bullish development, but a slightly lower finish won’t be a rally-killer as long as near-term support holds.
My trigger finger is still itchy, as I have a number of bullish and bearish trades on my watch list. Part of me wants to buy short-term puts this week to play possible weakness, while the other half of me wants to buy call options on a possible pullback.
The Dow is currently adding 16 points to 17,531, while the S&P 500 is up a point to 2,037. The Nasdaq is lower by 3 points to 4,769, and the Russell 2000 is down 4 points to 1,075.
Given the circumstances, I don’t want to force the action, but I do want to start building out our next batch of trades into May and June. Perhaps we will get clearer signs this afternoon and on Tuesday as to how this week’s action will play out. However, volume has been light recently, and this week is full of economic news.
Friday’s unemployment report will likely carry the most weight, so we still need to be cautious and nimble with our trading strategy. Stay locked and loaded into the close, however, in case I start nibbling on New Trades.
Additionally, I encourage new (and old) subscribers to sign up to receive SMS text message alerts so that you know exactly when we go to press with New Trades or Trade Alerts.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 34-6 (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 12:05 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.
Nucor (NUE, $46.92, up $0.44)
NUE April 48 calls (NUE160415C00048000, $0.45, up $0.05)
Entry Price: $0.55 (3/17/2016)
Exit Target: $1.10
Stop Target: None
Action: Resistance is at $46.50-$47. A move above the latter should get multi-month highs in play. The 52-week peak is at $50.70. Support is at $46, with backup help at $45.50-$45.
You can read my extended write-up on NUE in this morning’s Pre-Market Update.
Editor and Chief Options Strategist