Dear Momentum Options Subscriber,

The weekly battle between the bulls and bears comes down to today’s action as each side holds a piece of the pie. Given the current trading range, it’s doubtful a major move will come today, but it could, following the release of the jobs reports due out ahead of the open.

The Dow dipped 3 points, or 0.02%, to finish at 18,352. The blue-chips  reached their peak on the open at 18,397 with upper resistance at 18,350-18,400 holding. The low at 18,325 was in play throughout the day and keeps backup support at 18,200-18,000 on hold. The index is down 80 points heading into today’s session.

The S&P 500 gained a half-point, or 0.02%, to settle at 2,164. The index traded to a low of 2,159 with upper support at 2,160-2,150 getting stretched by a point. The rebound to 2,168 midday failed resistance at 2,170-2,175. A close into, or above the latter, would be a bullish sign for next week. The bears are holding a 9-point lead.

The Nasdaq added 6 points, or 0.1%, to end at 5,166. Tech was weak in the morning as the bears pushed a low of 5,145. Shaky support at 5,150-5,125 is trying to establish with a close below 5,100 over the near-term being a bearish development. The bulls recovered, however, and did manage a run to 5,174. Resistance remains at 5,175-5,200 and a close above the latter would be bullish for next week. The index is up 4 points for the week.

The Russell 2000 climbed a point, or 0.1%, to close at 1,213. The small-caps showed the most strength on Thursday discarding the 1-point dip to 1,211. Support is trying to establish at 1,210-1,200 and a close below 1,195-1,190 will be our signal to possibly go short. The high of 1,219 hit at the open but was in play throughout the session. Lower resistance at 1,220-1,225 held like a champ with a close above the latter being a signal to possibly go long. The bulls need to make up a little over 6 points to get the weekly win.

The S&P 500 Volatility Index ($VIX, 12.42, down 0.44) dropped 3% to close below 12.50. The high of 12.98 held resistance at 13.50. The low reached 11.79 to test the next wave of support at 11.50.

From desk to press, futures look like this: Dow (+31); S&P 500 (+4.75); Nasdaq 100 (+9.25); Russell (+4.10).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 61-20 (75%). All trades are dated and time stamped 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 6:00 a.m. EST.

I hereby disclose that I will be participating in the following trade(s).

 

Rambus (RMBS, $13.46, up $0.03)

RMBS September 14 calls (RMBS160916C00014000, $0.27, down $0.02)

Entry Price: $0.40 (8/1/2016)

Exit Target: $0.80

Return: -33%

Stop Target: None

Action: Resistance is at $13.50-$13.75. A close above the latter would be a bullish sign. Support is at $13.25-$13.

 

Vuzix (VUZI, $7.77, down $0.07)

September 10 calls (VUZI160916C00010000, $0.55, up $0.02)

Entry Price: $0.97 (7/27/2016)

Exit Target: $2.00

Return: -43%

Stop Target: None

Action: Support is at $7.50. Resistance is at $8.

 

Green Dot (GDOT, $23.66, up $0.09)

GDOT August 25 calls (GDOT160819C00025000, $0.50, down $0.10)

Entry Price: $0.80 (7/7/2016)

Exit Target: $1.60

Return: -38%

Stop Target: None

Action: The company beat earnings expectations after the bell. I would like to see a surge past $24.50-$24.75 today. If not, we could be forced to close the trade as the options expire in two weeks.

 

Viavi Solutions (VIAV, $7.15, flat)

VIAV September 7 calls (VIAV160916C00007000, $0.42, down $0.01)

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

Exit Target: $1.10

Return: -24%

Stop Target: None

Action: Resistance is at $7.25. Support is at $7 with $6.90-$6.85 and the 50-day moving average serving as backup. Earnings are due out August 11th and I will have an update on Monday afternoon to cover the numbers.

 

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options