Dear Momentum Options Subscriber,
The bulls made a “follow-through” statement on Wednesday as they pushed towards the market’s upper resistance levels. The bears made a dent in the gains, and the major indices finished off of their intraday highs, but they are now dealing with fresh support and higher highs.
Today’s action could be tight ahead of the latest unemployment numbers that are due out ahead of Friday’s open, but the bulls clearly have the March momentum going for them.
The Dow flew higher by 83 points, or 0.5%, to close at 17,716. The blue-chips traded to a high of 17,790 within the opening minutes to push near-term resistance at 17,800-18,000. Support has moved up to 17,650-17,600.
The S&P 500 gained roughly 9 points, or 0.4%, to settle at 2,063. The index tested fresh resistance at 2,070-2,075 following a run to 2,072 during the first half of the action. Support is at 2,050-2,040 on a pullback.
The Nasdaq advanced 22 points, or 0.5%, to finish at 4,869. Tech soared to 4,899 shortly after the open to fall a point shy of clearing upper resistance at 4,875-4,900. Support is trying to rise to 4,850-4,825, but a close below 4,800 could signal a possible short-term top.
The Russell 2000 added a point, or 0.1%, to end at 1,110. The small-caps stayed within a 10-point range after trading to a high of 1,117 on the opening surge. Upper resistance at 1,120-1,125 continues to be in play. The bulls will be trying to hold fresh support at 1,100 today for the third-straight session. If they are successful, Friday could be bullish with another huge follow-through rally.
The S&P 500 Volatility Index ($VIX, 13.56, down 0.26) traded in negative territory throughout the session after kissing 13.06 intraday. The bears held the 13.50 level, but the bulls are still trying to get below 12.50. However, a close back above resistance and the 15 level will likely put the indices back into their prior trading range.
I have an update on our position in Nucor (NUE) listed below with a new Exit Target and a raised Stop Limit. Be sure to set your Stop Limit ahead of the open to protect profits on any potential pullback.
I could also have a New Trade for us this morning ahead of the Mid-Market Update, so stay close to your email inboxes in case I take action.
From desk to press, futures look like this: Dow (+7); S&P 500 (+0.75); Nasdaq 100 (+0); Russell (+0.1).
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 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.
Nucor (NUE, $48.31, up $1.07)
NUE April 48 calls (NUE160415C00048000, $1.08, up $0.46)
Entry Price: $0.55 (3/17/2016)
Exit Target: $0.80, raise to $2.00 (closed first half at $0.80 on 3/30/16)
Stop Target: $0.57, raise to $0.90 (Stop Limit)
Action: I am raising the Exit Target from $0.80 to $2.00, but it is not a Limit Order at this time. Also, raise the Stop Limit from $0.57 to $0.90 on the second half of the trade. Yesterday’s low in the calls tapped $0.60.
Multi-month highs are in play, and the 52-week high is north of $50. If reached over the next couple of weeks, these call options will technically be worth $2.00, which is why I decided to raise the Exit Target.
Hopefully we can stay in the second half of the position for further gains — and possibly make a triple-digit profit — before getting stopped out.
You can read my extended write-up on NUE in the March 28 Pre-Market Update.
Oracle (ORCL, $40.97, up $0.27)
ORCL May 42 calls (ORCL160520C00042000, $0.58, up $0.07)
Entry Price: $0.55 (3/29/2016)
Exit Target: $1.10
Stop Target: None
Action: Wednesday’s peak reached $41.11. Resistance is at $41-$41.25. Support is at $40.
Rambus (RMBS, $13.83, down $0.04)
RMBS May 14 calls (RMBS160520C00014000, $0.61, down $0.03)
Entry Price: $0.45 (3/28/2016)
Exit Target: $0.90
Stop Target: None
Action: Support is at $13.75-$13.50. Resistance is at $14.
You can read my full write-up on RMBS in the March 29 Pre-Market Update.
Editor and Chief Options Strategist