Dear Momentum Options Subscriber,
The back-and-forth action continued on Tuesday, as the bears held the bulls back from reaching higher record highs. The damage was minimal, but it raised some concern, as the VIX jumped 7%.
The Dow fell 84 points, or 0.5%, to end at 18,552. The blue-chips traded in negative territory throughout the session, with the low checking in at 18,550. The bulls are holding resistance at 18,500-18,600, but 18,800-19,000 are still in play. Support is at 18,400-18,350.
The S&P 500 dropped 12 points, or 0.6%, to settle at 2,178. The index held rising support at 2,180-2,175, but it ended at its session low. A close below 2,170 would be a bearish development. Resistance is at 2,190-2,200.
The Nasdaq sank 35 points, or 0.7%, to finish at 5,227. Tech also traded in the red from the open while holding support at 5,225-5,200. Tuesday’s low tapped 5,226. Resistance is at 5,225-5,250, and a move above the latter would be another bullish sign that higher highs are still in the mix.
The Russell 2000 declined 10 points, or 0.9%, to close at 1,231. The small-caps opened at 1,241 and went out a point off of its low of 1,230. Backup support at 1,230-1,225 held, but a drop below 1,220 would be a warning sign. Resistance is at 1,240-1,245.
The S&P 500 Volatility Index ($VIX, 12.64, up 0.83) stayed elevated and traded to a high of 12.78 into the closing bell. The bulls held resistance at 12.50-13.50, but there is risk to 14.50-15 on a move above the latter. Support at 11.50 continues to be a stickler.
I could have a New Trade ahead of today’s Mid-Market Update, so stay locked and loaded this morning in case I take action. I have also raised the Stop Limit for our position in Viavi Solutions (VIAV) below, so let’s go check out the trades.
From desk to press, futures look like this: Dow (-8); S&P 500 (+1); Nasdaq 100 (+6); Russell (+0.4).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 61-22 (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).
Viavi Solutions (VIAV, $7.60, up $0.06)
VIAV September 7 calls (VIAV160916C00007000, $0.70, up $0.06)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: $0.57, raise to $0.62 (Stop Limit)
Action: Raise the Stop Limit from $0.57 to $0.62.
Resistance is at $7.75-$8 following Tuesday’s push to $7.65, which was another fresh 52-week peak. Support is at $7.25.
MGM Resorts International (MGM, $24.49, down $0.35)
MGM September 25 calls (MGM160916C00025000, $0.50, down $0.06)
Entry Price: $0.70 (8/8/2016)
Exit Target: $1.40
Stop Target: None
Action: Support is at $24.50-$24.25. Yesterday’s low touched $24.29. Resistance is at $24.75-$25.
Bank of America (BAC, $15.17, up $0.15)
BAC September 15 calls (BAC160916C00015000, $0.44, up $0.08)
Entry Price: $0.50 (8/8/2016)
Exit Target: $1.00
Stop Target: None
Action: Yesterday’s high reached $15.19. Near-term resistance is at $15.25-$15.50. Support is at $15-$14.75.
Rambus (RMBS, $13.55, down $0.17)
RMBS September 14 calls (RMBS160916C00014000, $0.23, down $0.12)
Entry Price: $0.40 (8/1/2016)
Exit Target: $0.80
Stop Target: None
Action: Support at $13.50-$13.25 held yesterday following the dip to $13.51. Resistance is at $13.75-$14.
Editor and Chief Options Strategist