Dear Momentum Options Subscriber,
The bulls are enjoying today’s rebound, but one area of the market that is flashing a warning sign is the transportation sector. I have been mentioning the Dow Jones Transportation Average ($TRAN, 7,740, down 32) in recent weeks, and I’ve explained how the blue-chips in the Dow Jones tend to mirror the transports.
The drop below the 7,800 level and the 200-day moving average for the transports this week has caused the talking heads to chime in, as they have finally noticed the backtest to support. The 50-day moving average is still in a strong uptrend, but a move below 7,600 would weaken the bullish setup.
Volatility has been subdued today, as the VIX has fallen back below 15. The financial stocks are showing a little strength as well.
The Dow is currently gaining 73 points to 17,676, while the S&P 500 is bouncing 13 points to 2,058. The Nasdaq is higher by 38 points to 4,892, and the Russell 2000 is up 7 points to 1,103.
I’m working on a couple of New Trades, and I may recommend one or more ahead of the closing bell. One of the potential trades is on a familiar name that I’m trying to get us back into, while the other is on a stock that is in a strong uptrend as well. Stay locked and loaded into the close in case I take action. In the meantime, let’s go check on our current positions.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 37-6 (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 12:55 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.
Merck (MRK, $55.19, up $1.15)
MRK May 57.50 calls (MRK160520C00057500, $0.50, up $0.20)
Entry Price: $0.33 (4/5/2016)
Exit Target: $0.70
Stop Target: None
Action: Resistance is at $54.50-$55. A move above the latter would be bullish for an assault towards the $60 level. Support is at $54-$53.50.
Hertz Global Holdings (HTZ, $9.96, up $0.41)
HTZ May 11 calls (HTZ160520C00011000, $0.45, up $0.05)
Entry Price: $0.60 (4/1/2016)
Exit Target: $1.20
Stop Target: None
Action: Resistance is at $10-$10.25. Support is at $9.50.
You can read my extended write-up on HTZ in the April 4 Pre-Market Update.
Oracle (ORCL, $40.60, up $0.07)
ORCL May 42 calls (ORCL160520C00042000, $0.37, down $0.01)
Entry Price: $0.55 (3/29/2016)
Exit Target: $1.10
Stop Target: None
Action: Support is at $40. Resistance is at $41-$41.25.
Editor and Chief Options Strategist