Dear Momentum Options Subscriber,
The bears won their third-straight Monday session yesterday, although the bulls were able to hold during the pullback to support. The action was bearish throughout the session, but the bullish close offered some hope that higher highs could be made this week.
The Dow declined 54 points, or 0.3%, to finish at 18,253. The blue-chips traded to a low of 18,203, with support at 18,200-18,150 and the 100-day moving average holding. A close below the latter would be a bearish development. Resistance is at 18,350-18,400.
The S&P 500 slipped 7 points, or 0.3%, to close at 2,161. The index tested a low of 2,154 mid-day, with support at 2,150-2,140 easily holding. A move below 2,135-2,130 would give the bears the momentum. The bulls held the 2,160 level into the close, and resistance is at 2,170-2,175.
The Nasdaq fell 11 points, or 0.2%, to end at 5,300. Tech tumbled to 5,281 during Wall Street’s lunch break to split support at 5,300-5,250. Continued closes below the latter would be a bearish signal. Resistance remains at 5,325-5,350.
The Russell 2000 gave back 5 points, or 0.5%, to settle at 1,245. The small-caps led Monday’s dip and fell to a low of 1,240. Upper support is at 1,240-1,235, and the close above these levels remains bullish. Near-term resistance is at 1,250-1,260.
The S&P 500 Volatility Index ($VIX, 13.57, up 0.28) reached a peak of 14.42 at the start of trading, but resistance at 14.50-15 and the 100-day moving average held. The close above 13.50 was slightly bearish. The bulls need to recover 13-12.50 and the 50-day moving average before the market can push higher highs.
I’m still looking to get us into several trades this week, and I will likely open bearish positions if lower lows come into play. If the bulls can recover near-term resistance, however, I will continue to stay with bullish trades. Stay close to your email inboxes throughout the day in case I decide to take action.
From desk to press, futures look like this: Dow (+23); S&P 500 (+2); Nasdaq 100 (+8); Russell (+2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 74-25 (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 8:00 a.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Halozyme Therapeutics (HALO, $12.24, up $0.16)
HALO November 13 calls (HALO161118C00013000, $0.90, down $0.20)
Entry Price: $1.07 (9/27/2016)
Exit Target: $2.15
Stop Target: $0.55 (Stop Limit)
Action: Monday’s low reached $11.82 before the run to $12.25 into the close. Resistance is at $12.25-$12.50. Near-term support is at $12-$11.75.
You can read my detailed write-up on HALO in last Wednesday’s Mid-Market Update.
Goodyear Tire & Rubber (GT, $32.51, up $0.21)
GT October 33 calls (GT161021C00033000, $0.55, down $0.02)
Entry Price: $0.75 (9/22/2016)
Exit Target: $1.50
Stop Target: $0.30 (Stop Limit)
Action: Yesterday’s high tapped $32.59. Resistance is at $32.75-$33. Support is at $32.25-$32 if $32.50 fails to hold.
You can read a more detailed write-up on GT in last Monday’s Mid-Market Update.
Viavi Solutions (VIAV, $7.31, down $0.08)
VIAV December 8 calls (VIAV161216C00008000, $0.22, up $0.02)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.15 (Stop Limit)
Action: Support is at $7.25-$7.20. Resistance is at $7.45-$7.50 and the 50-day moving average. Monday’s low reached $7.23.
Editor and Chief Options Strategist