Dear Momentum Options Subscriber,
The bulls registered back-to-back wins for the first time this month following Wednesday’s surge past resistance. The slicking-talking pros were betting against the financial stocks coming into first-quarter earnings season, but I had a more favorable view. The group has let the market down in the past, but the two-day rally has been a relief following a tight trading range.
The Dow galloped higher by 187 points, or 1.1%, to settle at 17,908. The blue-chips opened at 17,741 and held 17,800 throughout the session. This level is now fresh support, followed by 17,700-17,600. The bulls pushed a high of 17,918 and are within spitting distance of hitting 18,000. A move above this level could lead to a push towards 18,200-18,350.
The S&P 500 jumped 20 points, or 1%, to finish at 2,082. The index traded in positive territory throughout the session, with the high reaching 2,083. I mentioned that additional hurdles were at 2,075-2,080, and the close above the latter was a beautiful thing. This clears the way for a run at 2,100-2,125.
The Nasdaq surged 75 points, or 1.6%, to end at 4,947. Tech blasted past the 4,900 level after opening at 4,904. The run to 4,951 and close above 4,900 were very bullish developments that should get 4,975-5,025 back in the picture. Support has moved up to 4,900-4,875.
The Russell 2000 roared higher by 24 points, or 2.2%, to close at 1,129. The small-caps led Wednesday’s rally and went out at their peak. The index opened at 1,106, and I said that a move past 1,110 would likely get 1,120-1,125 in motion. The close above the latter was a very bullish sign that could lead to 1,140-1,150.
The S&P 500 Volatility Index ($VIX, 13.84, down 1.01) stayed flat as a pancake following its dip to 13.60. The bulls are approaching my near-term target of 13.50-12.50 and, from there, I will reassess the situation. Resistance is at 14.50-15. Yesterday’s high was 14.53.
I have a lot more to talk about this morning, so let’s get to our current trades.
From desk to press, futures look like this: Dow (-4); S&P 500 (-1); Nasdaq 100 (-1.5); Russell (-1.5).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 39-7 (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.
Energous (WATT, $10.31, up $0.13)
WATT May 12.50 calls (WATT160520C00012500, $0.73, up $0.23)
Entry Price: $0.50 (4/13/2016)
Exit Target: $1.00
Stop Target: None
Action: Resistance is at $10.50-$10.75. A move above the latter could lead to $11 or higher. The 52-week high is at $11.44. Support is at $10-$9.75.
Our last trade in WATT from March made us 50% before we were stopped out on a backtest to $9.
Here is my original write-up from the March 16 Pre-Market Update.
“Apple (AAPL) does a lot of deals with companies that are hard to track. When it partners with a company, it’s for good reason. I mentioned that I would be working on a more detailed write-up for WATT and, to a degree, I still am. However, the main point is that Apple may be partnering with the company because it loves its technology, WattUp.
With Apple expected to officially announce the iPhone 7 this month or next, WattUp is expected to be an integral component that will allow the device to be recharged wirelessly from distances of up to 15 feet.
The 52-week high for the stock is at $11.18, and I hope this level comes into play over the next 2 months.”
No deal was announced with Apple when the company introduced it latest iPhone “SE” update, but I’m hoping that Apple adapts the technology for the iPhone 7. In the meantime, WATT has signed a partnership deal to produce products, so its technology is the real deal.
I also wrote a more detailed report on WATT in the March 17 Mid-Market Update. I encourage new subscribers to read this update and long-term members to reread for a refresher as to why I remain bullish on WATT.
Nucor (NUE, $49.09, up $1.00)
NUE May 52.50 calls (NUE160520C00052500, $0.45, up $0.19)
Entry Price: $0.43 (4/13/2016)
Exit Target: $0.90
Stop Target: None
Action: Wednesday’s peak reached $49.50. Short-term resistance is at $50, and the 52-week high is at $50.70. Support has moved up to $48-$47.50.
Inovio Pharmaceuticals (INO, $9.28, down $0.02)
INO May 10 calls (INO160520C00010000, $0.63, up $0.04)
Entry Price: $0.60 (4/13/2016)
Exit Target: $1.20
Stop Target: None
Action: Short-term resistance is at $9.50-$9.75. Support is at $9-$8.75.
You can read my extended write-up on INO in the April 4 Pre-Market Update.
Wal-Mart Stores (WMT, $69.15, up $0.35)
WMT May 65 puts (WMT160520P00065000, $0.50, down $0.05)
Entry Price: $0.73 (4/12/2016)
Exit Target: $1.50
Stop Target: None
Action: Retail sales came in lower than expected on Wednesday, but the market blew off the 0.3% decline even though it was only expecting a 0.1% drop.
Resistance is at $69.50-$70. Support is at $68-$67.50. I still like this trade into mid-May for “protection” for when a possible market top is reached. Yesterday’s high on WMT reached $69.42.
Oracle (ORCL, $41.31, up $0.89)
ORCL May 42 calls (ORCL160520C00042000, $0.55, up $0.26)
Entry Price: $0.55 (3/29/2016)
Exit Target: $1.10
Stop Target: None
Action: We finally got a breakout from the mini trading range that shares have been stuck in over the past few weeks. These options zoomed 90% yesterday, and this illustrates why I don’t carry 50% Stop Limits on “cheap” options. This trade was down over 50%, and the trading range was a distraction. However, the chart remains bullish, and I am still bullish on the trade.
Shares got stronger throughout the session and reached a late-day peak of $41.39. The move above prior resistance at $41-$41.25 paves the way for possible run to $42.50-$43. The 52-week high is north of $45. Support has moved up to $40.75-$40.50.
Editor and Chief Options Strategist