Dear Momentum Options Subscriber,
The Dow came into today’s session with a 1-point gain for the week, while the S&P 500 was higher by nearly 4 points. The Nasdaq has shown the most strength, as it was up 44 points, or nearly 1%. However, the Russell 2000 was down roughly 2 points for the week, but it did trade to its highest level of the year yesterday.
Thursday’s pullback once again had the slick-talking pros questioning the recent rally and saying that the market has come too far, too fast. They also said that the losses following the Brexit vote were overdone, but they failed to put fresh cash to work. I didn’t wait, however, as I have had our game plan well in place since the end of the four-month trading range.
We have been cashing out of winning trades all month long, as the portfolio is currently on an 8-trade winning streak. I mentioned on Monday that the current rally had a chance of going on for another 2-4 weeks, and this week’s performance will confirm that price action as long as rising support holds.
The Dow is currently up 19 points to 18,536, while the S&P 500 is higher by 6 points to 2,171. The Nasdaq is advancing 23 points to 5,097, and the Russell 2000 is gaining 9 points to 1,213.
Monday will be an important set-up day for the market and the S&P 500 Volatility Index ($VIX, 12.12, down 0.62), and today’s action, if it holds, is looking bullish for next week.
I have updated our current trades below, including an important change to our position in Flextronics International (FLEX), and I could have a New Trade ahead of the closing bell. However, if you don’t hear from me again, have a great and safe weekend, and we will chat again on Monday.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 59-18 (77%). 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 1:55 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Flextronics International (FLEX, $12.97, down $0.18)
FLEX August 13 calls (FLEX160819C00013000, $0.24, down $0.28)
Entry Price: $0.44 (7/14/2016)
Exit Target: $1.00
Stop Target: Cancel $0.50 Stop Limit
Action: Cancel the Stop Limit order at $0.50 at this time, as the options have only traded to a high of $0.25 today.
I want to keep the position open into next week to see if shares can recover $13. The breakeven point for the trade is at $13.44, which is a level that is still in play.
MGM Resorts International (MGM, $23.20, up $0.03)
MGM August 24 calls (MGM160819C00024000, $0.50, down $0.02)
Entry Price: $0.74 (7/15/2016)
Exit Target: $1.50
Stop Target: $0.35 (Stop Limit)
Action: Support is at $23-$22.75. Resistance is at $23.50-$23.75.
Green Dot (GDOT, $24.16, up $0.10)
GDOT August 25 calls (GDOT160819C00025000, $0.80, flat)
Entry Price: $0.80 (7/7/2016)
Exit Target: $1.60
Stop Target: None
Action: Near-term resistance is at $24.25-$24.50. Support is at $23.75-$23.50.
Energous (WATT, $11.93, up $0.19)
WATT August 12.50 calls (WATT160819C00012500, $0.70, up $0.05)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.50 (Stop Limit)
Action: Resistance is at $12-$12.25. Support is at $11.75-$11.50.
Viavi Solutions (VIAV, $7.12, up $0.04)
VIAV September 7 calls (VIAV160916C00007000, $0.40, flat)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Resistance is at $7.15-$7.25. Support is at $6.80-$6.75.
Editor and Chief Options Strategist