Dear Momentum Options Subscriber,

The bulls pushed fresh record highs on Tuesday, but they gave back some of their gains into the close. The push past upper resistance was led by the small-caps, while the financial stocks also showed strength.

The Dow advanced 17 points, or 0.1%, to end at 18,547. The blue-chips traded to a high of 18,631 to clear upper resistance at 18,600, and continued closes above this level could lead to 18,800-19,000. Support is at 18,400-18,350 following the fade into the closing bell.

The S&P 500 gained 4 points, or 0.2%, to settle at 2,186. The index made a run to 2,193, and additional fluff to 2,200-2,220 is possible over the near term. Support is at 2,180-2,175, but there is risk to 2,160 on a close below 2,170.

The Nasdaq jumped 15 points, or 0.3%, to finish at 5,260. Tech kissed a record high of 5,275 on the open, and there is additional blue-sky territory to 5,300-5,350 on continued closes above this level. Support remains at 5,225-5,200 on a pullback.

The Russell 2000 added 8 points, or 0.7%, to close at 1,248. The small-caps showed the most strength on Tuesday and tapped a high of 1,251, which was a fresh 52-week high but not a record high. Resistance is at 1,260-1,265 on continued closes above 1,250. Support has moved up to 1,240-1,235.

The S&P 500 Volatility Index ($VIX, 12.38, up 0.11) traded to a low of 11.72 shortly after the open, with support at 11.50 holding. The drift higher throughout the rest of the session to a high of 12.44 held resistance at 12.50-13.50.

I have updated the parameters of our latest trade in Vuzix (VUZI) below, and I have also placed a Stop Limit order on our Energous (WATT) trade, so please adjust your trading accounts accordingly.

From desk to press, futures look like this: Dow (+2); S&P 500 (+0.25); Nasdaq 100 (+2.5); Russell (-0.2).

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).

 

Vuzix (VUZI, $7.32, up $0.22)

VUZI October 7.50 calls (VUZI161021C00007500, $1.00, up $0.15)

Entry Price: $0.95 (8/23/2016)

Exit Target: $1.90

Return: 5%

Stop Target: None

Action: Shares are holding support at $7.25 and the 50-day moving average, but there is risk to $7 on continued closes below this level. Resistance is at $7.50-$8.

VUZI

Energous (WATT, $15.84, up $1.32)

WATT November 17.50 calls (WATT161118C00017500, $1.55, up $0.40)

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

Exit Target: $2.30

Return: 35%

Stop Target: $1.20 (Stop Limit)

Action: Set a Stop Limit at $1.20 to protect profits.

Shares traded to a fresh 52-week high of $15.88 yesterday. Near-term resistance is at $16-$16.50 on continued momentum. Support is at $15, followed by $14-$13.75.

 

Viavi Solutions (VIAV, $7.83, up $0.06)

VIAV December 8 calls (VIAV161216C00008000, $0.51, up $0.03)

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

Exit Target: $1.05

Return: 0%

Stop Target: None

Action: Shares reached a 52-peak of $7.89 on Tuesday. Resistance is at $8. Support is at $7.50.

 

MGM Resorts International (MGM, $24.31, up $0.08)

MGM September 25 calls (MGM160916C00025000, $0.28, up $0.04)

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

Exit Target: $1.40

Return: -60%

Stop Target: $0.15 (Stop Limit)

Action: Resistance is at $24.50-$24.75. Support is at $24.25-$24.

 

Bank of America (BAC, $15.35, up $0.17)

BAC September 15 calls (BAC160916C00015000, $0.51, up $0.13)

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

Exit Target: $1.00

Return: 2%

Stop Target: None

Action: Tuesday’s high reached $15.41. Near-term resistance is at $15.25-$15.50. Support is at $15-$14.75.

 

Rambus (RMBS, $13.78, down $0.15)

RMBS September 14 calls (RMBS160916C00014000, $0.25, down $0.10)

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

Exit Target: $0.80

Return: -38%

Stop Target: None

Action: Support is at $13.50-$13.25. Resistance is at $13.75-$14.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options