Dear Momentum Options Subscriber,

The market pulled back on Monday despite some opening strength that allowed the S&P 500 to tap another all-time intraday high. The pullback in the Dow wasn’t too concerning, as a higher high than Friday was made. However, it was the third-straight Monday loss for the blue-chips that helped stall the rally from last week.

The Dow dipped 14 points, or 0.1%, to end at 18,529. The blue-chips made a run to 18,569 at the open, with the bears defending upper resistance at 18,500-18,600. Support is at 18,400-18,350, and Monday’s low reached 18,502.

The S&P 500 slipped 2 points, or 0.1%, to close at 2,180. The index tapped another all-time intraday high of 2,185 to keep near-term resistance at 2,200 in the mix. Short-term support at 2,175-2,170 stood strong, with the pullback stalling at 2,177. There is risk to 2,160-2,150 on a close below 2,170.

The Nasdaq gave back 8 points, or 0.2%, to finish at 5,213. Tech kissed another fresh yearly high of 5,228 but fell shy of holding lower resistance at 5,225-5,250. Support at 5,175-5,200 stuck like Chuck, with the bears stalling at 5,202. A move below the latter could lead to 5,150-5,100 depending on volatility.

The Russell 2000 declined a point, or 0.1%, to settle at 1,230. The small-caps pushed a fresh 52-week high of 1,235 but fell short of resistance at 1,245-1,250. Support at 1,210-1,200 held following the late-day test to 1,228.

The S&P 500 Volatility Index ($VIX, 11.50, up 0.11) added 1% to close right on fresh support at the 11.50 level. The range of 11.41-11.78 was one of the tightest in weeks, but the VIX held lower resistance at 12.50-13.50. There is risk to 14.50-15 on a move above the latter. Continued closes below 11.50 should keep 10.50-10 in play.

From desk to press, futures look like this: Dow (+19); S&P 500 (+2); Nasdaq 100 (+6); Russell (+2).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 61-21 (74%). 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 8:00 a.m. EST.

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

 

MGM Resorts International (MGM, $24.64, up $0.19)

MGM September 25 calls (MGM160916C00025000, $0.65, up $0.01)

Entry Price: $0.70 (8/8/2016)

Exit Target: $1.40

Return: -7%

Stop Target: None

Action: Resistance is at $24.75-$25. The 52-week high for MGM is at $25.29. Support is at $24.25-$24, followed by $23.75 and the 50-day moving average.

 

Bank of America (BAC, $15.10, up $0.05)

BAC September 15 calls (BAC160916C00015000, $0.49, up $0.04)

Entry Price: $0.50 (8/8/2016)

Exit Target: $1.00

Return: -2%

Stop Target: None

Action: Resistance is at $15.25-$15.50. Support is at $15-$14.75, followed by $14.50 and the 200-day moving average.

 

Rambus (RMBS, $13.58, down $0.09)

RMBS September 14 calls (RMBS160916C00014000, $0.32, down $0.03)

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

Exit Target: $0.80

Return: -20%

Stop Target: None

Action: Support is at $13.50-$13.25. Resistance is at $13.75-$14. A move above the latter would be bullish.

 

Vuzix (VUZI, $7.24, down $0.23)

VUZI September 10 calls (VUZI160916C00010000, $0.31, down $0.04)

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

Exit Target: $2.00

Return: -68%

Stop Target: None

Action: Support is at $7.25-$7 and the 50-day moving average. Resistance is at $7.50-$7.75.

 

Viavi Solutions (VIAV, $7.25, flat)

VIAV September 7 calls (VIAV160916C00007000, $0.52, up $0.04)

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

Exit Target: $1.10

Return: -5%

Stop Target: None

Action: Shares traded to a 52-week high of $7.32 on Monday, with fresh resistance being established at $7.25-$7.50. Support is at $7, with $6.90-$6.85 and the 50-day moving average serving as backup. Earnings are due out on Thursday, and I will cover the company’s expected numbers this afternoon.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options