Dear Momentum Options Subscriber,

The battle between the bulls and bears resulted in a Monday draw, with the major indices trading within another tight intraday range. This type of action could continue into Friday, but Fed Chair Janet Yellen’s comments on interest rates and the current state of the economy could lead to a possible breakout or breakdown.

The Dow declined 23 points, or 0.1%, to end at 18,529. The blue-chips were weak on the open and fell to a low of 18,466. Support at 18,400-18,350 held, but there is risk to 18,200 on a move below the latter. Resistance at 18,500-18,600 held on the rebound to 18,570 intraday, and continued closes above the latter would be bullish.

The S&P 500 slipped 1 point, or 0.1%, to settle at 2,182. The index tested a low of 2,175 shortly after the opening bell, with support at 2,180-2,175 holding. There is risk to 2,160-2,150 on a close below 2,170. Resistance remains at 2,190-2,200, and Monday’s mid-day peak reached 2,185.

The Nasdaq added 6 points, or 0.1%, to finish at 5,244. Tech traded down to 5,224 on the open, with support at 5,225-5,200 holding for the 12th-straight session. There is risk to 5,175-5,150 on a move below the latter. The run to 5,252 cleared resistance at 5,250, and a close above this level would likely lead to 5,275-5,300.

The Russell 2000 gained 3 points, or 0.2%, to close at 1,239. The small-caps opened at 1,236 and kissed 1,232 on the opening weakness. Support at 1,230-1,225 also held for the 12th-straight session. Short-term resistance at 1,240-1,245 was pushed, as the index went out at its session high, and a move above the latter will likely get 1,250-1,260 in play.

The S&P 500 Volatility Index ($VIX, 12.27, up 0.93) jumped 8% to reach a peak of 13.02. The bears pushed resistance at 12.50-13.50, but the bulls held these levels into the close. Support remains at 11.50, but a move below this level would signal possible new market highs.

I have set the parameters for yesterday’s Energous (WATT) trade below, and I could have another New Trade ready for us at some point today, so stay locked and loaded.

From desk to press, futures look like this: Dow (+44); S&P 500 (+5); Nasdaq 100 (+13); Russell (+3).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 63-22 (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).

 

Energous (WATT, $14.52, up $0.55)

WATT November 17.50 calls (WATT161118C00017500, $1.15, up $0.02)

Entry Price: $1.15 (8/22/2016)

Exit Target: $2.30

Return: 0%

Stop Target: None

Action: The Exit Target for the WATT November 17.50 calls is at $2.30, but it is not a Limit Order. There is no Stop Target at this time.

Shares traded to a fresh 52-week high of $15.71 last week. Near-term resistance is at $14.75-$15. Support is at $14-$13.75.

 

MGM Resorts International (MGM, $24.23, up $0.07)

MGM September 25 calls (MGM160916C00025000, $0.24, down $0.04)

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

Exit Target: $1.40

Return: -66%

Stop Target: $0.15 (Stop Limit)

Action: Set a Stop Limit at $0.15 to protect the remaining premium.

Support is at $24.25-$24, followed by $23.75 and the 50-day moving average. Resistance is at $24.50-$24.75.

 

Viavi Solutions (VIAV, $7.77, flat)

VIAV December 8 calls (VIAV161216C00008000, $0.48, down $0.01)

Entry Price: $0.51 (8/19/2016)

Exit Target: $1.05

Return: -6%

Stop Target: None

Action: Resistance is at $7.75-$8. Support is at $7.50.

 

Bank of America (BAC, $15.18, down $0.04)

BAC September 15 calls (BAC160916C00015000, $0.38, down $0.05)

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

Exit Target: $1.00

Return: -24%

Stop Target: None

Action: Monday’s low tapped $15.12. Support is at $15-$14.75. Near-term resistance is at $15.25-$15.50.

 

Rambus (RMBS, $13.93, up $0.09)

RMBS September 14 calls (RMBS160916C00014000, $0.35, up $0.05)

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

Exit Target: $0.80

Return: -13%

Stop Target: None

Action: Resistance is at $13.75-$14. Yesterday’s high reached $14. Support is at $13.50-$13.25.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options