Dear Momentum Options Subscriber,
The bears tried to extend their winning streak to two-straight sessions, but they ran out of gas mid-day. On the other hand, the bulls pushed and cleared resistance into the close, with volatility falling below 15 again.
The Dow advanced 78 points, or 0.4%, to finish at 17,918. The blue-chips tested a low of 17,713 shortly after the open, with support at 17,800-17,700 holding. The close above 17,900 keeps upper resistance at 18,000-18,100 in play.
The S&P 500 gained 11 points, or 0.5%, to settle at 2,099. The index made another backtest to support at 2,075-2,070 after tapping a low of 2,074 in the morning. The bulls recovered positive territory mid-day to push lower resistance at 2,100-2,110. A move above the latter should get 2,120-2,125 back in the mix.
The Nasdaq jumped 36 points, or 0.8%, to close at 4,859. Tech traded down to 4,786, with backup support at 4,800-4,775 holding. The rebound to 4,861 and close above 4,850 were bullish signals. Resistance is at 4,875-4,900.
The Russell 2000 climbed 7 points, or 0.7%, to end at 1,147. The small-caps kissed a low of 1,131 on the open to test support at 1,125-1,120. The run to session highs into the closing bell fell shy of resistance at 1,150. Additional hurdles are at 1,160, followed by 1,170-1,175.
The S&P 500 Volatility Index ($VIX, 14.96, down 0.62) pushed resistance at 16.50-17.50 and peaked at 17.04 an hour into the session. The close back below 15 at the low of the day was also a slightly bullish signal.
I could have a New Trade this morning on a name that is on the verge of a blue-sky breakout. We traded the name in late February/early March for a 100% win by using call options, but I’m still doing the math and chart work to find the best way to play the breakout. Stay close to your email inboxes or listen for an SMS text alert in case I take action.
From desk to press, futures look like this: Dow (-14); S&P 500 (-2); Nasdaq 100 (-3); Russell (-0.2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 54-18 (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 8:00 a.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Altria Group (MO, $69.72, up $0.11)
MO August 70 calls (MO160819C00070000, $1.48, up $0.07)
Entry Price: $1.15 (7/5/2016)
Exit Target: $2.30
Stop Target: $1.20, raise to $1.25 (Stop Limit)
Action: Raise the Stop Limit from $1.20 to $1.25.
Yesterday’s high reached $70. The 52-week peak is at $70.15. Shares look poised to clear $70-$72 on a blue-sky breakout. Support is at $68.
Energous (WATT, $12.15, down $0.18)
WATT August 12.50 calls (WATT160819C00012500, $1.20, down $0.20)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.75
Action: Support is at $11 and the 50-day moving average if $12 fails to hold. Resistance is at $12.75-$13.
Morgan Stanley (MS, $25.15, up $0.15)
MS August 28 calls (MS160819C00028000, $0.21, down $0.02)
Entry Price: $0.79 (6/23/2016)
Exit Target: $1.50
Stop Target: None
Action: Resistance is at $25.75-$26. Support is at $25-$24.75.
Viavi Solutions (VIAV, $6.48, up $0.04)
VIAV September 7 calls (VIAV160916C00007000, $0.22, flat)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Support is at $6.50-$6.40. Near-term resistance is at $6.75-$7.
Editor and Chief Options Strategist