Dear Momentum Options Subscriber,

The battle between the bulls and the bears ended in a draw on Thursday, as the market seesawed within a tight trading range before ending pretty much flat. Although it was a boring session overall, the consolidation going into today’s session was a good sign following a strong week. With regular April monthly options expiring after the close today, there could be some movement in what has traditionally been a bullish day for the market.

The Dow gained 18 points, or 0.1%, to close at 17,926. The blue-chips traded to a low of 17,885 shortly after the open, but near-term support at 17,800 held. The run to 17,962 afterwards fell shy of resistance at 18,000.

The S&P 500 added a fraction of a point, or 0.02%, to end at 2,082. The index tested a low of 2,078 at the start of trading, but the bulls held fresh support at 2,075-2,070. The slight mid-day rebound to 2,087 fell shy of clearing upper resistance at 2,090-2,100.

The Nasdaq slipped a little over a point, or 0.03%, to settle at 4,945. Tech fell to a low of 4,931 during the morning stir, with support at 4,925-4,900 standing strong. The pop past resistance at 4,950 to 4,961 was a good signal that a run towards 4,975-5,000 could still be in play.

The Russell 2000 gave back a point, or 0.1%, to finish at 1,128. The small-caps opened higher at 1,130 and kissed 1,132 before they began to struggle. Short-term resistance at 1,135-1,140 held before the bears pushed 1,125. Fresh support at 1,125-1,120 held, and these are levels I would like to see stick on any pullback going into the weekend.

The S&P 500 Volatility Index ($VIX, 13.72, down 0.12) traded on both sides of the ledger in one of its tighter ranges for the year. The bulls held resistance at 15 after the bears tagged a high of 14.12. The low of 13.38 cracked near-term support at 13.50-12.50, but these levels failed to hold into the closing bell.

I have updated our current trades below, and I have also listed the parameters for our latest addition in Halozyme Therapeutics (HALO).

From desk to press, futures look like this: Dow (-25); S&P 500 (-4); Nasdaq 100 (-9); Russell (-3).

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.

 

Halozyme Therapeutics (HALO, $11.82, up $0.06)

HALO May 13 calls (HALO160520C00013000, $0.80, up $0.25)

Entry Price: $0.60 (4/14/2016)

Exit Target: $1.20-$1.80

Return: 33%

Stop Target: None

Action: The close above the 100-day moving average was a very bullish sign. The 50-day moving average is also curling higher, along with a lower-trending 200-day moving average. Near-term resistance is at $12.50-$13, and a move above the latter will likely lead to a gap higher to $14-$15.

Take a look at the “gap down” below $14 to start the year that had served as prior support from late October 2015. This was due to lowered revenue guidance that had been forecasted for 2016.

This trade is based more on a technical outlook than on fundamentals. However, I spent nearly a half-dozen hours after yesterday’s close researching the company late into the night. I will have the finishing touches of my write-up for you this afternoon, but I wanted to do some additional homework this morning. Like I always say, a dollar never sleeps.

 

Energous (WATT, $10.43, up $0.12)

WATT May 12.50 calls (WATT160520C00012500, $0.70, down $0.03)

Entry Price: $0.50 (4/13/2016)

Exit Target: $1.00

Return: 40%

Stop Target: $0.55 (Stop Limit)

Action: Set an initial Stop Limit at $0.55 to protect profits. Yesterday’s low reached $0.66.

Thursday’s high for the stock tapped $10.55. 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.

You can read my original write-up in the March 16 Pre-Market Update and a more extended review in the March 17 Mid-Market Update.

 

Nucor (NUE, $49.31, up $0.22)

NUE May 52.50 calls (NUE160520C00052500, $0.47, up $0.02)

Entry Price: $0.43 (4/13/2016)

Exit Target: $0.90

Return: 9%

Stop Target: None

Action: Short-term resistance is at $50, and the 52-week high is at $50.70. Yesterday’s high reached $49.37. Support has moved up to $48-$47.50.

 

Inovio Pharmaceuticals (INO, $9.53, up $0.25)

INO May 10 calls (INO160520C00010000, $0.70, up $0.07)

Entry Price: $0.60 (4/13/2016)

Exit Target: $1.20

Return: 17%

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, $68.80, down $0.35)

WMT May 65 puts (WMT160520P00065000, $0.59, up $0.09)

Entry Price: $0.73 (4/12/2016)

Exit Target: $1.50

Return: -19%

Stop Target: None

Action: Support is at $68-$67.50. Resistance is at $69.50-$70.

 

Oracle (ORCL, $41.24, down $0.07)

ORCL May 42 calls (ORCL160520C00042000, $0.46, down $0.09)

Entry Price: $0.55 (3/29/2016)

Exit Target: $1.10

Return: -16%

Stop Target: None

Action: Support is at $41, followed by $40.75-$40.50. Resistance is at $42.50-$43.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options