Dear Momentum Options Subscriber,

The Dow and S&P 500 are garnering headlines this week following their moves to record highs, but the strength of the small-caps can’t be ignored. The Russell 2000 cleared major resistance, as did the Nasdaq, to give the bulls their third-straight win on Tuesday. However, volatility stayed slightly elevated for the second-straight session.

The Dow jumped 120 points, or 0.7%, to finish at 18,347. The blue-chips’ print at 18,371.95 was an intraday record high, and the close was just two points off of the prior intraday high. Blue-sky resistance is now at 18,500-18,600. Support remains at 18,200, followed by 18,100-18,000.

The S&P 500 surged 15 points, or 0.7%, to settle at 2,152. The index traded to an all-time high of 2,155.40 while testing my near-term “fluff” targets of 2,150-2,175. Support has moved up to 2,125-2,115.

The Nasdaq soared 34 points higher, or 0.7%, to close at 5,022. Tech made a push to resistance at 5,025-5,050 as it tapped 5,032 intraday. A close above the latter would be bullish for a run to 5,075-5,100.  Support is at 5,000-4,975.

The Russell 2000 jumped nearly 16 points, or 1.3%, to end at 1,205. The small-caps led Tuesday’s charge after trading to a high of 1,211. I’ve talked about upper resistance at 1,200-1,210, and a close above the latter should get 1,125 in play. Shaky support is at 1,190-1,185.

The S&P 500 Volatility Index ($VIX, 13.55, up 0.01) stayed mellow after testing a low of 12.75 on the open. The bulls came close to clearing support at 12.50 before the bears pushed a high of 13.93. Resistance at 14.50-15 easily held, but it still needs to be watched.

From desk to press, futures look like this: Dow (+5); S&P 500 (+1); Nasdaq 100 (+7); Russell (+4).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 55-18 (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).

 

Cisco Systems (CSCO, $29.61, up $0.18)

CSCO August 30 calls (CSCO160819C00030000, $0.61, up $0.03)

Entry Price: $0.62 (7/11/2016)

Exit Target: $1.25

Return: -2%

Stop Target: None

Action: Resistance is at $29.75-$30. Tuesday’s 52-week high tapped $29.74. Support is at $29.25-$29.

 

Achillion Pharmaceuticals (ACHN, $9.24, up $0.03)

ACHN August 10 calls (ACHN160819C00010000, $0.59, down $0.05)

Entry Price: $0.45 (7/8/2016)

Exit Target: $0.90-$1.35

Return: 31%

Stop Target: $0.50 (Stop Limit)

Action: Shares tested $9.36 yesterday. Near-term resistance is at $9.25-$9.50, with a move above the latter likely leading to $10 or higher. Support is at $9-$8.75.

 

Green Dot (GDOT, $23.88, up $0.04)

GDOT August 25 calls (GDOT160819C00025000, $0.90, up $0.11)

Entry Price: $0.80 (7/7/2016)

Exit Target: $1.60

Return: 13%

Stop Target: None

Action: GDOT traded to a 52-week high of $24.23 before finishing basically flat. Resistance is at $24-$24.50. Support is at $23.50-$23.

 

Energous (WATT, $12.96, up $0.22)

WATT August 12.50 calls (WATT160819C00012500, $1.58, up $0.13)

Entry Price: $1.57 (6/28/2016)

Exit Target: $3.15

Return: 1%

Stop Target: $0.75

Action: Shares cleared resistance at $13 and kissed $13.20 yesterday before finishing below this level. New resistance is at $13-$13.25. Support has moved up to $12.50-$12.25.

 

Morgan Stanley (MS, $27.31, up $0.91)

MS August 28 calls (MS160819C00028000, $0.63, up $0.25)

Entry Price: $0.79 (6/23/2016)

Exit Target: $1.50

Return: -20%

Stop Target: None

Action: Resistance at $27.50 was tested following Tuesday’s push to $27.44. Support will try to hold at $27-$26.75 on a pullback.

 

Viavi Solutions (VIAV, $7.00, up $0.12)

VIAV September 7 calls (VIAV160916C00007000, $0.42, up $0.06)

Entry Price: $0.55 (6/23/2016)

Exit Target: $1.10

Return: -24%

Stop Target: None

Action: We got a close at $7 following yesterday’s hike to $7.06. Resistance is at $7.15-$7.25. Support is at $6.65-$6.60.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options