Dear Momentum Options Subscriber,

The earnings parade will pick up steam this week, as nearly 20% of S&P 500 companies, along with a number of Dow components, will be reporting earnings. After today’s close, International Business Machines (IBM, $159.85, up $0.07) and Netflix (NFLX, $99.93, up $0.94) will announce their quarterly results, while Goldman Sachs (GS, $172.98, up $0.34) will step up to the podium ahead of Tuesday’s open.

IBM and GS carry major weight among the blue-chip stocks, and better-than-expected numbers from both should get my upper “fluff” targets for the Dow in play. IBM has posted three years of quarterly revenue declines, but analysts are looking for a different story this time around. Elsewhere, the financial stocks traded well last week, and they are keeping their momentum today.

One company that we will be watching after today’s close is Rambus (RMBS, $12.89, up $0.14). The company is expected to post a profit of $0.13 a share on revenue of $74.44 million. While I’m expecting an earnings beat on higher revenue numbers, earnings have been sketchy over the past year.

Rambus has topped estimates by $0.01 and $0.03 during the past two quarters, but it missed by a penny and matched numbers in the two previous quarters. Revenue has also come up short in some of the quarters, so a positive vibe with raised guidance this time around will be necessary to keep momentum going in the stock.

An earnings miss or lowered 2016 guidance could send shares tumbling towards $12-$10, depending on the severity and outlook. There could be some action in after-hours trading when the news breaks, and that should give us an idea as to how shares might open on Tuesday.

Turning to the indices, the bulls have pushed positive territory for much of the session following some weakness after the open. The range has been tight, which is likely due to the major announcements due out after the close and ahead of Tuesday’s open.

The Dow is currently up 16 points to 18,532, while the S&P 500 is higher by 5 points to 2,167. The Nasdaq is gaining 29 points to 5,059, and the Russell 2000 is gaining 2 points to 1,207.

I have updated our current trades below, so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 58-18 (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 2:50 p.m. EST.

I hereby disclose that I will be participating in the following trade(s).


MGM Resorts International (MGM, $23.39, up $0.05)

MGM August 24 calls (MGM160819C00024000, $0.61, down $0.07)

Entry Price: $0.74 (7/15/2016)

Exit Target: $1.50

Return: -18%

Stop Target: None

Action: Support is at $23.25-$23 and the 50-day moving average. Near-term resistance is at $23.75-$24.


Flextronics International (FLEX, $12.92, up $0.03)

FLEX August 13 calls (FLEX160819C00013000, $0.43, up $0.03)

Entry Price: $0.44 (7/14/2016)

Exit Target: $1.00

Return: -2%

Stop Target: None

Action: Resistance is at $13-$13.25. The 52-week high is at $13.23. Support is at $12.75-$12.50.


Rambus (RMBS, $12.89, up $0.14)

RMBS August 13 calls (RMBS160819C00013000, $0.56, up $0.06)

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

Exit Target: $1.00

Return: 22%

Stop Target: None

Action: Short-term resistance is at $12.75-$13. Support is at $12.50.


Green Dot (GDOT, $23.90, down $0.10)

GDOT August 25 calls (GDOT160819C00025000, $0.80, down $0.05)

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

Exit Target: $1.60

Return: 0%

Stop Target: None

Action: Near-term resistance is at $24.25-$24.50. Support is at $23.50-$23.


Energous (WATT, $12.00, up $0.04)

WATT August 12.50 calls (WATT160819C00012500, $0.80, down $0.10)

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

Exit Target: $3.15

Return: -52%

Stop Target: $0.75

Action: There is risk to $11.75-$11.50 on continued weakness. Resistance is at $12.25-$12.50.


Viavi Solutions (VIAV, $7.05, up $0.02)

VIAV September 7 calls (VIAV160916C00007000, $0.37, flat)

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

Exit Target: $1.10

Return: -33%

Stop Target: None

Action: Resistance is at $7.15-$7.25. Support is at $6.80-$6.75.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options