Dear Momentum Options Subscriber,
The bears are working overtime this week, as they managed to grab another slice of the Dow’s pie on Tuesday. The bulls were stingy and didn’t want to share, however, as they needed fuel to power to high highs. A good report from Apple (AAPL, $96.67, down $0.67) following the close should help keep the momentum in tech going following the $0.04 beat.
The Dow dropped 19 points, or 0.1%, to settle at 18,473. The blue-chips made a run to resistance at 18,500-18,600 after kissing 18,522 shortly after the open. The mini-rally quickly faded as the bears pushed a low of 18,387 afterwards. Support at 18,400-18,350 held, but there is risk to 18,200 on a close below the latter.
The S&P 500 added nearly a point, or 0.03%, to close at 2,169. The index rumbled with resistance at 2,170-2,175 but failed to hold these levels on the open. The fade to support at 2,160 held, but there is risk to 2,150-2,140 on a move below this level.
The Nasdaq advanced 12 points, or 0.2%, to end at 5,110. Tech tested near-term resistance at 5,125-5,150 following the morning trip to 5,122. The intraday dip to 5,084 held support at 5,075-5,050.
The Russell 2000 jumped 7 points, or 0.6%, to finish at 1,216. The small-caps fell a point to 1,208 before spending the majority of the session in positive territory. Support at 1,200 has held for 11th-straight session. The move past 1,215 gets 1,225-1,230 in play.
The S&P 500 Volatility Index ($VIX, 13.05, up 0.18) stayed elevated following the dip to 12.80. Support at 12.50 held before the bears pushed near-term resistance at 13.50. A move above this level could lead to 14.50-15 over the near term.
I have several adjustments to our trades in Rambus (RMBS) and MGM Resorts International (MGM) to protect profits, so please make sure those changes are made in your brokerage account.
From desk to press, futures look like this: Dow (+47); S&P 500 (+4); Nasdaq 100 (+37); Russell (+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, $14.04, up $0.32)
RMBS September 14 calls (RMBS160916C00014000, $0.60, up $0.13)
Entry Price: $0.40 (7/22/2016)
Exit Target: $0.80
Stop Target: $0.45 (Stop Limit)
Action: Set a Stop Limit at $0.45 to protect profits.
Fresh resistance is at $14.25-$14.50. Support has moved up to $13.75-$13.50.
MGM Resorts International (MGM, $24.01, up $0.69)
MGM August 24 calls (MGM160819C00024000, $0.87, up $0.32)
Entry Price: $0.74 (7/15/2016)
Exit Target: $1.50
Stop Target: $0.35, raise to $0.79 (Stop Limit)
Action: Raise the Stop Limit from $0.35 to $0.79 to protect profits.
Resistance is at $24.25-$24.50. Support has moved up to $23.75-$23.50.
Flextronics International (FLEX, $12.88, down $0.08)
FLEX August 13 calls (FLEX160819C00013000, $0.23, down $0.05)
Entry Price: $0.44 (7/14/2016)
Exit Target: $0.50 (Limit Order)
Stop Target: None
Action: Support is at $12.75-$12.50. Resistance is at $13.25-$13.50.
Green Dot (GDOT, $23.95, down $0.07)
GDOT August 25 calls (GDOT160819C00025000, $0.71, down $0.09)
Entry Price: $0.80 (7/7/2016)
Exit Target: $1.60
Stop Target: None
Action: Support is at $23.75-$23.50. Near-term resistance is at $24-$24.25.
Energous (WATT, $12.53, up $0.16)
WATT August 12.50 calls (WATT160819C00012500, $0.80, flat)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.50 (Stop Limit)
Action: Resistance is at $12.50-$12.75. Support is at $12.25-$12.
Viavi Solutions (VIAV, $7.13, up $0.01)
VIAV September 7 calls (VIAV160916C00007000, $0.49, up $0.04)
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 and the rising 50-day moving average.
Editor and Chief Options Strategist