Dear Momentum Options Subscriber,
Monday’s action brought some much-needed relief, as the bulls recovered short-term support and pushed prior resistance levels. The VIX showed a little nervousness on the open, but it settled down and recovered its near-term support levels. I often say that one day doesn’t make a trend, but the rebound from last Friday’s late-day weakness was a good sign for the few of us that are still long the market.
The Dow jumped 107 points, or 0.6%, to close at 18,503. The blue-chips opened at 18,421 and reached an intraday peak of 18,523. The bulls held lower resistance at 18,500-18,600, and a move above the latter could lead to 18,800-19,000. Support has moved up to 18,400-18,350 again.
The S&P 500 soared 11 points, or 0.5%, to end at 2,180. The index opened at 2,170 and made a run to 2,183 on Monday. Lower support at 2,175-2,170 held, but there is risk to 2,160 on another move below the latter. Fresh resistance is at 2,190-2,200, while the recent record high is at 2,193.
The Nasdaq advanced 13 points, or 0.3%, to settle at 5,232. Tech tested a high of 5,245, with upper resistance at 5,225-5,250 holding for the fourth-straight session. Continued closes above this level should get 5,275-5,300 and all-time highs back in play. Short-term support has moved up to 5,200-5,175.
The Russell 2000 climbed nearly 7 points, or 0.6%, to finish just below 1,245. The small-caps made a steady push towards lower resistance at 1,250-1,260 after reaching a high of 1,248 during the second half of trading. Support is at 1,240-1,235, with 1,225-1,220 serving as backup.
The S&P 500 Volatility Index ($VIX, 12.94, down 0.71) traded up to 14.43 on the open, with resistance at 14.50-15 holding for the second-straight trading day. The low of 12.90 and close into the support zone at 13.50-12.50 was a slightly bullish development. Continued closes below the latter should lead to record highs again for the broader market.
I have updated the parameters for our trades in Vuzix (VUZI), Energous (WATT) and Bank of America (BAC) below, so let’s go check the action.
From desk to press, futures look like this: Dow (-3); S&P 500 (-1); Nasdaq 100 (-10); Russell (-0.6).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 63-23 (73%). 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, $8.59, up $0.74)
VUZI October 7.50 calls (VUZI161021C00007500, $1.70, up $0.55)
Entry Price: $0.95 (8/23/2016)
Exit Target: $1.90, raise to $2.50
Stop Target: $1.15, raise to $1.25 (Stop Limit)
Action: Raise the Exit Target from $1.90 to $2.50, but do not make it a Limit Order at this time. Also, raise the Stop Limit from $1.15 to $1.25.
Resistance is at $8.75-$9. The 52-week high is at $9.30. Support has moved up to $8.25-$8 if $8.50 fails.
Energous (WATT, $18.37, up $1.64)
WATT November 17.50 calls (WATT161118C00017500, $3.00, up $1.10)
Entry Price: $1.15 (8/22/2016)
Exit Target: $2.50-$3.00, raise to $5.00 (closed first half at $2.50 on 8/29/2016)
Stop Target: $1.45, raise to $2.00 (Stop Limit)
Action: Raise the Exit Target from $2.50-$3.00 to $5.00 on the second half of the trade.
Also, raise the Stop Limit from $1.45 to $2.00.
Shares traded to a 52-week high of $18.58 on Monday. Resistance and additional blue-sky territory is at $18.50-$19, followed by $20. Support is at $16.50-$16 if $17.50 fails to hold.
Bank of America (BAC, $15.84, up $0.05)
BAC September 15 calls (BAC160916C00015000, $0.86, up $0.01)
Entry Price: $0.50 (8/8/2016)
Exit Target: $1.25 (closed first half at $0.63 on 8/25/2016)
Stop Target: $0.70, raise to $0.80 (Stop Limit)
Action: Raise the Stop Limit from $0.70 to $0.80.
Monday’s high reached $16.01. Resistance is at $16-$16.25. Support is at $15.75-$15.50.
Nucor (NUE, $49.44, up $0.75)
NUE October 52.50 calls (NUE161021C00052500, $0.60, up $0.04)
Entry Price: $0.63 (8/25/2016)
Exit Target: $1.30
Stop Target: None
Action: Yesterday’s high tapped $49.58. Resistance is at $49.50-$50. A close above the latter would be bullish for a possible run towards $52.50-$53. Support has moved up to $49-$48.50.
Viavi Solutions (VIAV, $7.78, up $0.01)
VIAV December 8 calls (VIAV161216C00008000, $0.46, flat)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: None
Action: Resistance is at $7.85-$8. Support is at $7.75-$7.50.
Rambus (RMBS, $13.79, down $0.12)
RMBS September 14 calls (RMBS160916C00014000, $0.20, down $0.08)
Entry Price: $0.40 (8/1/2016)
Exit Target: $0.80
Stop Target: None
Action: Support is at $13.75-$13.50. Resistance is at $14.
Editor and Chief Options Strategist