Dear Momentum Options Subscriber,
“I often mention that the suits-and-ties bash the VIX and say it’s broken. However, they do notice volatility when it pops above 20. I have been following the VIX for decades, and I still believe it is one of my most reliable market indicators. I will profile a possible VIX trade this afternoon, or at some point this week, for a New Trade, so stay locked and loaded. Right now, the bulls need to worry about holding the 100- and 200-day moving averages.”
These were my thoughts on the S&P 500 Volatility Index ($VIX, 21.36, up 0.39) from Monday morning’s Pre-Market Update. I also mentioned this morning that there was risk to 22-22.50 on continued market weakness, and this is where I expect the VIX to hold today.
Furthermore, I recently talked about the Fed coming into play today and tomorrow, concerns about a possible “Brexit,” the terror attack in Orlando and my thoughts as to how this week might play out. So far, so good.
While the suits-and-ties are still busy panicking and talking about the VIX, we are this close to opening a New Trade, although I’m not sure if I will be issuing one today, tomorrow morning or tomorrow afternoon.
I spent the majority of last night and this morning looking for potential New Trades, and I have 15 serious candidates on my watch list. Wal-Mart Stores (WMT), Best Buy (BBY), Microsoft (MSFT), Energous (WATT) and Caterpillar (CAT) are in the top five for possible trades that look to be in play. However, the last thing I want to do is risk money when I’m unsure of market direction. With the S&P still within a massive trading range, anything could happen following Wednesday’s FOMC update.
The Dow is currently down 56 points to 17,676, while the S&P 500 is off 5 points to 2,073. The Nasdaq is falling 10 points to 4,838, and the Russell 2000 is lower by 7 points to 1,143.
I have updated our current trades below, but stay focused throughout the second half of trading and into the close in case I decide to take action.
As a reminder, I will be including the Momentum Q&A section in tomorrow’s Pre-Market Update, which will give you the opportunity to ask me questions about the market and our current trades. To submit your questions, simply send your messages to firstname.lastname@example.org, and I will do my best to address them every Wednesday morning.
As a reminder, the SEC’s guidelines prohibit me from answering any questions about securities that are not currently on our Momentum Options buy list or from providing individualized trading advice or recommendations for any specific subscriber or portfolio.
I encourage you to send in any questions that I can help with, particularly those that may benefit the broad Momentum Options audience. If you have a question, chances are there are a handful of other subscribers who may have the same one! Thanks, and I look forward to hearing from you!
Additionally, if you have yet to sign up to receive SMS text message alerts, I encourage you do so today.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 48-16 (75%). All trades are dated 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 12:45 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
SPDR Gold Shares ETF (GLD, $122.41, down $0.23)
GLD July 125 calls (GLD160715C00125000, $1.90, down $0.12)
Entry Price: $1.25 (6/8/2016)
Exit Target: $2.50 (closed first half at $2.11 on 6/13/2016)
Stop Target: $1.85 (Stop Limit)
Action: Resistance is at $124. Support is at $120-$119.50 and the 50-day moving average.
Inovio Pharmaceuticals (INO, $10.13, down $0.07)
INO July 12 calls (INO160715C00012000, $0.25, down $0.04)
Entry Price: $0.80 (6/1/2016)
Exit Target: $1.60
Stop Target: None
Action: Support is at $10.25-$10 and the 50-day moving average. Resistance is at $11-$11.25.
Editor and Chief Options Strategist