Dear Momentum Options Subscriber,
Futures were forecasting a decent open this morning as I wrapped up last night’s research, but the major indices have faded heading into the second half of trading today. The biggest clues I’m looking for this week are for the bulls to get volatility below 15 and for tech and the small-caps to show continued strength.
Last week’s rally was nice, but it came as Apple (AAPL, $113.59, down $1.33) made a double-digit percentage move and dashed from $103 to Friday’s peak north of $116. Shares are heavily weighted in the major indices, which saved the Dow and S&P 500 from posting losses last week. The stock also accounted for half of the Nasdaq’s 2% gain.
A rising tide usually lifts all boats, and Apple’s surge helped the market stay above water last week. I covered the near-term chart in last Thursday’s Mid-Market Update and, given the recent breakout, shares could make a run towards $117.50-$120 on continued strength.
Word has it that Samsung went to market early with the launch of its Galaxy Note 7 to capitalize on the “perceived” lack of features in the iPhone 7. However, rushing a smartphone to market that has now been recalled could be a devastating blow to the company’s market share. Obviously, safety concerns will be kept in mind when consumers get new phones or upgrade down the road.
The Dow is currently gaining 40 points to 18,163, while the S&P 500 is higher by 5 points to 2,144. The Nasdaq is adding a point to 5,225, and the Russell 2000 is up 9 points to 1,234.
If AAPL shares clear $116.25-$116.50, I could have a bullish New Trade, so stay tuned. If shares fall back below $113-$112.50, I could use put options to play a possible backtest to $110-$108.
In the meantime, let’s go check the action in our current trades, as two of our positions were stopped out today.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 72-24 (75%). 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 1:05 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Chicago Bridge & Iron (CBI, $27.49, up $0.07)
CBI October 27.50 puts (CBI161021P00027500, $1.20, down $0.10)
Entry Price: $1.11 (9/14/2016)
Exit Target: $2.25
Stop Target: $1.15 (Stop Limit)
Action: The Stop Limit at $1.15 was triggered during this morning’s push to $27.42 in the stock, and we are now out of the position.
Xilinx (XLNX, $53.55, up $0.19)
XLNX October 57.50 calls (XLNX161021C00057500, $0.72, down $0.08)
Entry Price: $0.71 (9/12/2016)
Exit Target: $1.45
Stop Target: $0.74 (Stop Limit)
Action: The Stop Limit at $0.74 was triggered despite today’s run towards $54 in the stock, and we are now out of the position.
Kroger (KR, $30.84, down $0.24)
KR October 30 puts (KR161021P00030000, $0.50, up $0.04)
Entry Price: $0.78 (9/7/2016)
Exit Target: $1.60 (Limit Order on first half)
Stop Target: None
Action: Support is at $31-$30.75. A move below $30.50 should lead to a test to $29-$28. Resistance is at $31.25-$31.50.
Vuzix (VUZI, $8.88, up $0.38)
VUZI October 10 calls (VUZI161021C00010000, $0.45, up $0.05)
Entry Price: $0.68 (9/7/2016)
Exit Target: $1.40
Stop Target: $0.25 (Stop Limit)
Action: Resistance is at $8.75-$9. Support is at $8.50-$8.25.
Viavi Solutions (VIAV, $7.42, up $0.08)
VIAV December 8 calls (VIAV161216C00008000, $0.30, up $0.04)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.15 (Stop Limit)
Action: Near-term resistance is at $7.50-$7.75. Support is at $7.25-$7.20
Editor and Chief Options Strategist