Dear Momentum Options Subscriber,

The bears were a nag on Monday, as they took over the bulls’ camp for a day. The damage was minor, but volatility was slightly heightened on the backtest to fresh support. With second-quarter earnings heating up this week, the action should help sway the market to higher highs or possibly lower lows.

The Dow fell 77 points, or 0.4%, to finish at 18,493. The blue-chips traded in negative territory throughout the session, with the low checking in at 18,452. Backup support at 18,400-18,350 held, but there is risk to 18,200 on a move below the latter. Resistance is at 18,500-18,600, followed by 18,800-19,000.

The S&P 500 slipped 6 points, or 0.3%, to settle at 2,168. The index also stayed underwater from the open, while sinking to a low of 2,161 intraday. Near-term support at 2,160 held, and backup at 2,150-2,140 was not needed. Resistance is at 2,170-2,175.

The Nasdaq fell 2 points, or 0.1%, to close at 5,097. Tech managed a brief trip into positive territory by more than half of a point, but near-term resistance at 5,100-5,125 held. The backtest to 5,082 held support at 5,075-5,050.

The Russell 2000 declined 3 points, or 0.3%, to end at 1,209. The small-caps were also weak throughout the day and tested a low of 1,207. The higher low for the fourth-straight session was a slightly bullish clue as long as support at 1,200 holds throughout the week. Resistance remains at 1,215-1,225.

The S&P 500 Volatility Index ($VIX, 12.87, up 0.85) jumped 7% to close back above 12.50. The bears pushed a high of 13.72 but failed to hold upper resistance at 13.50. Support is at 12.50-11.50.

From desk to press, futures look like this: Dow (-10); S&P 500 (-1.5); Nasdaq 100 (+4); Russell (-0.1).

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).

 

Rambus (RMBS, $13.72, up $0.16)

RMBS September 14 calls (RMBS160916C00014000, $0.47, up $0.05)

Entry Price: $0.40 (7/22/2016)

Exit Target: $0.80

Return: 18%

Stop Target: None

Action: Shares traded to a high of $13.92 yesterday. Resistance is at $13.75-$14. A close above the latter would be very bullish. Support is at $13.25-$13 on a move back below $13.50.

 

MGM Resorts International (MGM, $23.32, up $0.13)

MGM August 24 calls (MGM160819C00024000, $0.55, up $0.05)

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

Exit Target: $1.50

Return: -26%

Stop Target: $0.35 (Stop Limit)

Action: Resistance is at $23.50-$23.75. Support is at $23-$22.75.

 

Flextronics International (FLEX, $12.96, down $0.04)

FLEX August 13 calls (FLEX160819C00013000, $0.28, down $0.02)

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

Exit Target: $0.50 (Limit Order)

Return: -36%

Stop Target: None

Action: Support is at $12.75-$12.50. Resistance is at $13.25-$13.50.

 

Green Dot (GDOT, $24.02, down $0.13)

GDOT August 25 calls (GDOT160819C00025000, $0.80, flat)

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. The recent 52-week high is at $24.34. Support is at $23.75-$23.50 if $24 fails to hold.

 

Energous (WATT, $12.37, up $0.38)

WATT August 12.50 calls (WATT160819C00012500, $0.80, up $0.05)

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

Exit Target: $3.15

Return: -49%

Stop Target: $0.50 (Stop Limit)

Action: Monday’s peak reached $12.38. Resistance is at $12.50-$12.75. Support is at $11.75-$11.50 and the 50-day moving average on a close back below $13.

 

Viavi Solutions (VIAV, $7.12, flat)

VIAV September 7 calls (VIAV160916C00007000, $0.45, up $0.05)

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

Exit Target: $1.10

Return: -18%

Stop Target: None

Action: Resistance is at $7.15-$7.25. Support is at $6.80-$6.75 and the rising 50-day moving average.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options