Dear Momentum Options Subscriber,
The agonizing back-and-forth action continued this week, with the major indices making minor gains on Thursday. The weekly win is still up for grabs, as the bulls are only ahead slightly, but a Friday win would seal the deal.
The Dow gained 23 points, or 0.1%, to finish at 18,597. The blue-chips were choppy throughout the first half of trading and bottomed at 18,533 mid-day. Support is at 18,400-18,350 on a break below 18,500. The intraday high of 18,600 tested upper resistance at 18,500-18,600, and a close above this level would be a bullish development for next week.
The S&P 500 added 4 points, or 0.2%, to close at 2,187. The index kissed upper support at 2,180-2,175 throughout the session a couple of times, with the top of this level holding on the low. The rebound to session highs into the closing bell keeps resistance at 2,190-2,200 in play.
The Nasdaq climbed 11 points, or 0.2%, to end at 5,240. Tech was a little rocky on the open after falling to a low of 5,221, but support at 5,225-5,200 easily held before the run to 5,243. Resistance at 5,225-5,250 held as well, but a close above the latter could lead to 5,275-5,300 and fresh all-time highs.
The Russell 2000 jumped 9 points, or 0.8%, to settle at 1,236. The small-caps held positive territory throughout Thursday’s session following a quarter-point slide to 1,227. Lower support at 1,230-1,225 held before the index went out at its session high. Resistance at 1,240-1,245 will be challenged on continued strength, and a close above the latter would be a bullish sign for next week.
The S&P 500 Volatility Index ($VIX, 11.43, down 0.76) traded to a high of 12.53 shortly after the opening bell, with lower resistance at 12.50-13.50 holding. The close below 11.50 and low of 11.42 were bullish developments that keep a test to 10 and single-digits in the mix.
I have a New Trade for the portfolio that I want us to get into on this morning’s open, so let’s go check it out.
From desk to press, futures look like this: Dow (-42); S&P 500 (-5); Nasdaq 100 (-11); Russell (-3).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 62-22 (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, $7.67, up $0.07)
Buy to open the VIAV December 8 calls (VIAV161216C00008000) for a maximum price of $0.60.
Action: I like these call options at current levels, and you can use a Limit Order up to $0.60 to get the best fills on this morning’s open.
These are the regular monthly options that expire on Dec. 16. I will provide the parameters of the trade in today’s Mid-Market Update.
Energous (WATT, $14.43, up $0.36)
WATT November 15 calls (WATT161118C00015000, $2.00, up $0.20)
Entry Price: $1.65 (8/17/2016)
Exit Target: $2.40
Stop Target: $1.70 (Stop Limit)
Action: Set a Stop Limit at $1.70 to protect profits. I want to start protecting profits, as these are “higher-priced” options that are getting close to being in the money.
Thursday’s high tapped $14.60. Resistance is at $14.50-$15. Support is at $14-$13.75.
MGM Resorts International (MGM, $24.36, down $0.07)
MGM September 25 calls (MGM160916C00025000, $0.39, down $0.02)
Entry Price: $0.70 (8/8/2016)
Exit Target: $1.40
Stop Target: None
Action: Support is at $24.25-$24. Resistance is at $24.50-$24.75.
Bank of America (BAC, $15.16, up $0.01)
BAC September 15 calls (BAC160916C00015000, $0.39, down $0.03)
Entry Price: $0.50 (8/8/2016)
Exit Target: $1.00
Stop Target: None
Action: Near-term resistance is at $15.25-$15.50. Support is at $15-$14.75.
Rambus (RMBS, $13.56, up $0.07)
RMBS September 14 calls (RMBS160916C00014000, $0.21, flat)
Entry Price: $0.40 (8/1/2016)
Exit Target: $0.80
Stop Target: None
Action: Support is at $13.50-$13.25. Resistance is at $13.75-$14.
Editor and Chief Options Strategist