Dear Momentum Options Subscriber,
Heading into today’s session, the bulls have a little wiggle room in their quest to get the weekly win. However, another negative close could give the bears a lift as the heat of the summer doldrums sets in. A split week wouldn’t be too bad, as it would still favor the bullish momentum, but we will have to watch out for any red flags going into today’s close to make sure higher highs are in store.
The Dow fell 77 points, or 0.4%, to end at 18,517 on Thursday. The blue-chips traded in the red throughout the session and bottomed at 18,469. Support at 18,600-18,500 was slightly stretched, with a move below the latter likely leading to 18,400-18,350. Resistance is at 18,800-19,000 on a recovery of the 18,600 level.
The S&P 500 slipped 7 points, or 0.4%, to finish at 2,165. The index pushed upper resistance at 2,175 as it reached 2,174, but it also spent the majority of the session underwater. The bears breached near-term support at 2,060 following the backtest to 2,059 intraday. There is risk to 2,050-2,040 if the bulls fail to hold this level into the weekend.
The Nasdaq gave back 16 points, or 0.3%, to settle at 5,073. Tech cleared near-term resistance at 5,100 to test a high of 5,102 shortly after the open. Fresh support at 5,050 held following the late-day low of 5,061. There is risk to 5,025-5,000 on a move back below this level.
The Russell 2000 lost nearly 6 points, or 0.5%, to close at 1,203. The small-caps traded up to 1,213 during the first half of the action, with upper resistance at 1,210-1,215 holding. Support at 1,200-1,190 held following the second-half low of 1,201.
The S&P 500 Volatility Index ($VIX, 12.74, up 0.97) cleared lower resistance at 12.50 following yesterday’s run to 13.06. It is imperative that the bulls hold upper resistance at 13.50 today or they face risk to 15. Support is at 12.50-11.50.
Flextronics International (FLEX) announced earnings after Thursday’s close, so our current trade will be in play on the open. I could have a Trade Alert and/or New Trade ahead of today’s Mid-Market Update, so stay close to your email inboxes.
From desk to press, futures look like this: Dow (+14); S&P 500 (+2); Nasdaq 100 (+4); Russell (+2).
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 8:00 a.m. EST.
I hereby disclose that I will be participating in the following trade(s).
MGM Resorts International (MGM, $23.17, down $0.33)
MGM August 24 calls (MGM160819C00024000, $0.52, down $0.15)
Entry Price: $0.74 (7/15/2016)
Exit Target: $1.50
Stop Target: $0.35 (Stop Limit)
Action: Set a Stop Limit at $0.35 to limit potential losses.
Shares closed $0.03 below their 50-day moving average on the move below $23.25. Backup support is at $23-$22.75. Resistance is at $23.50-$23.75.
Flextronics International (FLEX, $13.14, down $0.11)
FLEX August 13 calls (FLEX160819C00013000, $0.58, down $0.05)
Entry Price: $0.44 (7/14/2016)
Exit Target: $1.00
Stop Target: $0.50 (Stop Limit)
Action: The calls traded to a low of $0.51 yesterday but avoided the Stop Limit at $0.50 by a penny.
After the close, the company reported earnings that matched Wall Street’s estimates for a profit of $0.27 a share. Revenues came in higher at $5.877 billion versus the forecast for $5.7 million. FLEX provided current-quarter guidance for a profit of $0.26-$0.30 versus expectations at the higher end, on average. Revenue of $5.8-$6.2 billion came up shy, if averaged, against the forecast for $6.15 billion.
Shares were down below $13 in after-hours last night, and our Stop Limit could come into play on this morning’s open.
Green Dot (GDOT, $24.06, flat)
GDOT August 25 calls (GDOT160819C00025000, $0.80, flat)
Entry Price: $0.80 (7/7/2016)
Exit Target: $1.60
Stop Target: None
Action: Thursday’s high tapped $24.22. Near-term resistance is at $24.25-$24.50. Support is at $23.75-$23.50.
Energous (WATT, $11.74, down $0.13)
WATT August 12.50 calls (WATT160819C00012500, $0.65, down $0.10)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.50 (Stop Limit)
Action: Support is at $11.75-$11.50. Resistance is at $12-$12.25.
Viavi Solutions (VIAV, $7.08, up $0.09)
VIAV September 7 calls (VIAV160916C00007000, $0.40, up $0.03)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Resistance is at $7.15-$7.25. Support is $6.80-$6.75.
Editor and Chief Options Strategist