Dear Momentum Options Subscriber,
It was another mixed session on Wednesday, as the bears stayed active and pushed the VIX past 13.50. The Federal Open Market Committee (FOMC) meeting was a non-factor, as it left interest rates unchanged.
The zombies said that near-term risks to the economy have diminished and that they are closely monitoring economic and global developments. A September rate hike is now the rumor, but I have repeatedly said all year that the Fed will likely stand pat.
The Dow dipped by a point and a half, or 0.01%, to close at 18,472. The blue-chips showed the most strength on the open and reached a peak of 18,542. Resistance at 18,500-18,600 held before the backtest to 18,430. Support at 18,400-18,350 held for the third-straight session.
The S&P 500 slipped 2 points, or 0.1%, to end at 2,166. The index made another run to resistance at 2,170-2,175 but stalled at 2,174.98. These levels have held for six-straight sessions, and a close above the latter will likely lead to 2,200. The fade to 2,059 intraday held support at 2,060 for the 10th-straight session.
The Nasdaq added nearly 30 points, or 0.6%, to finish at 5,139. Tech held positive territory throughout the session after reaching a peak of 5,151. Resistance at 5,125-5,150 held, but the higher high was encouraging. Support has moved up to 5,100-5,075.
The Russell 2000 advanced 2 points, or 0.2%, to settle at 1,218. The small-caps made a 6-point run to 1,222 to push upper resistance at 1,225-1,230. A close above the latter would be bullish for a run at 1,240-1,250. Support is trying to move up to 1,210-1,200, with the latter holding for the 12th-straight session. Yesterday’s low tapped 1,212.
The S&P 500 Volatility Index ($VIX, 12.83, down 0.22) traded to a high of 13.74 to clear resistance at 13.50 before ending below this level. There is risk to 14.50-15 if 13.50 is cleared and held. Near-term support at 12.50 also held late in the session, and a close below this level would be bullish.
From desk to press, futures look like this: Dow (-21); S&P 500 (-2); Nasdaq 100 (-6); Russell (-1.5).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 60-18 (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).
Flextronics International (FLEX, $12.77, down $0.11)
FLEX August 13 calls (FLEX160819C00013000, $0.16, down $0.07)
Entry Price: $0.44 (7/14/2016)
Exit Target: $0.50 (Limit Order)
Stop Target: $0.10 (Stop Limit)
Action: Set a Stop Limit at $0.10 to limit further losses.
Support is at $12.75-$12.50. Resistance is at $13.25-$13.50.
Vuzix (VUZI, $8.12, down $0.74)
VUZI September 10 calls (VUZI160916C00010000, $0.78, flat)
Entry Price: $0.97 (7/27/2016)
Exit Target: $2.00
Stop Target: None
Action: Support is at $8-$7.50, and there is risk to $7 on a close below the latter. Resistance is at $8.25-$8.50.
Rambus (RMBS, $13.86, down $0.18)
RMBS September 14 calls (RMBS160916C00014000, $0.52, down $0.08)
Entry Price: $0.40 (7/22/2016)
Exit Target: $0.80
Stop Target: $0.45 (Stop Limit)
Action: Shares traded to a high of $14.17 on the open to push resistance at $14.25-$14.50. Support at $13.75-$13.50 held on the pullback to $13.78. The puts traded to a low of $0.47 yesterday.
Green Dot (GDOT, $24.06, up $0.11)
GDOT August 25 calls (GDOT160819C00025000, $0.75, up $0.04)
Entry Price: $0.80 (7/7/2016)
Exit Target: $1.60
Stop Target: None
Action: Shares traded to $24.35 yesterday, just missing the 52-week high of $24.39. A close above $24.25 should get $25-$26 in play. Support is at $23.75-$23.50.
Energous (WATT, $12.45, down $0.08)
WATT August 12.50 calls (WATT160819C00012500, $0.75, down $0.05)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.50 (Stop Limit)
Action: Support is at $12.25-$12. Resistance is at $12.50-$12.75.
Viavi Solutions (VIAV, $7.14, up $0.01)
VIAV September 7 calls (VIAV160916C00007000, $0.45, flat)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Wednesday’s peak reached $7.20. The 52-week high is at $7.23. A close above $7.25 would be a bullish setup for a run at $8. Support is at $7, with $6.80-$6.75 and the 50-day moving average serving as backup.
Editor and Chief Options Strategist