Dear Momentum Options Subscriber,

The bullish momentum the market has seen lately slowed on Wednesday, as the bears made an appearance during the overall lackluster day of trading. The good news is that volatility dropped below another key level of support, confirming possible higher highs.

The Dow gained 24 points, or 0.1%, to settle at 18,372. The blue-chips traded to another all-time intraday high of 18,390, with upper resistance at 18,500-18,600 coming into play on a close above 18,400. The midday fade to 18,315 held rising support at 18,200-18,100.

The S&P 500 added a fraction of a point, or 0.01%, to close at 2,152. The index tested a record high of 2,156 on the open, with resistance at 2,175 easily holding. The 4-point run evaporated into a 6-point loss to 2,146 by halftime before the recovery into the closing bell. Support is at 2,125-2,115 on a close below 2,150.

The Nasdaq slipped 17 points, or 0.3%, to end at 5,005. Tech tried to hold positive territory throughout the first half of trading after making a push to 5,036, but resistance at 5,025-5,050 held before the second-half fade to 5,002. Shaky support at 5,000-4,975 held, and the second-straight close above 5,000 was a slightly bullish signal.

The Russell 2000 gave back 4 points, or 0.4%, to finish at 1,201. The small-caps followed tech’s lead after reaching a peak of 1,210 on the open. Continued closes above 1,210 should get 1,220-1,225 in play. The backtest to 1,197 held fresh support at 1,190-1,185, and the close above 1,200 keeps the bulls in control.

The S&P 500 Volatility Index ($VIX, 13.04, down 0.51) closed below 13.50 after trading up to 13.79 during the morning action. Resistance at 14.50-15 was never challenged and will now serve as backup. The low of 12.92 gets 12.50 in the mix, which is a level I would like to see the bulls clear ahead of the weekend.

From desk to press, futures look like this: Dow (+150); S&P 500 (+17); Nasdaq 100 (+31); Russell (+11).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 56-18 (76%). 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).

 

Rambus (RMBS, $12.62, up $0.21)

RMBS August 13 calls (RMBS160819C00013000, $0.46, up $0.11)

Entry Price: $0.46 (7/13/2016)

Exit Target: $1.00

Return: 0%

Stop Target: None

Action: Shares traded to a high of $12.73 yesterday. After the close, the company announced a partnership with Boeing (BA). Short-term resistance is at $12.75-$13. Support is at $12.25-$12.

 

Cisco Systems (CSCO, $29.75, up $0.14)

CSCO August 30 calls (CSCO160819C00030000, $0.72, up $0.11)

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

Exit Target: $1.25

Return: 16%

Stop Target: None

Action: Resistance is at $29.75-$30. Yesterday’s high reached $29.82. Support is at $29.25-$29.

 

Green Dot (GDOT, $23.97, up $0.09)

GDOT August 25 calls (GDOT160819C00025000, $0.83, down $0.07)

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

Exit Target: $1.60

Return: 4%

Stop Target: None

Action: Resistance is at $24-$24.50. Support is at $23.50-$23.

 

Energous (WATT, $12.48, down $0.48)

WATT August 12.50 calls (WATT160819C00012500, $1.15, down $0.43)

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

Exit Target: $3.15

Return: -27%

Stop Target: $0.75

Action: Wednesday’s low reached $12.28. Support is at $12.50-$12.25. Resistance is at $13-$13.25.

 

Morgan Stanley (MS, $27.16, down $0.21)

MS August 28 calls (MS160819C00028000, $0.54, down $0.19)

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

Exit Target: $1.50

Return: -32%

Stop Target: None

Action: Support is at $27-$26.75. Resistance is at $27.50.

 

Viavi Solutions (VIAV, $6.94, down $0.06)

VIAV September 7 calls (VIAV160916C00007000, $0.36, down $0.06)

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

Exit Target: $1.10

Return: -35%

Stop Target: None

Action: Support is at $6.65-$6.60. Resistance is at $7.15-$7.25.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options