Dear Momentum Options Subscriber,
The market could be on the verge of establishing a short-term trend, either bullish or bearish, as a result of this morning’s jobs report and the start of third-quarter earnings season next week. The recent action is suggesting that higher highs could come into play, but the market can turn on a dime, as we have seen throughout the year.
The Dow dipped 12 points, or 0.07%, to end at 18,268. The blue-chips traded in negative territory throughout much of Thursday’s session, with the bears pushing a low of 18,162. Support at 18,200-18,100 was split, and there is risk to 18,000-17,800 on a move below the latter. Resistance at 18,350-18,400 was hardly tested following the mid-day push to 18,288. A close above the latter could lead to another run at 18,600.
The S&P 500 added a point, or 0.05%, to settle at 2,160. The index tested a low of 2,150 during the first half of the action, with upper support at 2,150-2,140 holding. During the second half of the action, the index reached a peak of 2,162, with lower resistance at 2,165-2,170 holding. A move above 2,175 would be a bullish development for a possible return to all-time highs.
The Nasdaq slipped 9 points, or 0.2%, to finish at 5,306. Tech traded in the red throughout the session, with the low checking in at 5,281. Support at 5,300-5,275 held for the fifth-straight session, but there is risk to 5,250-5,225 on a close below the latter. Resistance remains at 5,325-5,350.
The Russell 2000 fell 2 points, or 0.2%, to close at 1,246. The small-caps struggled from the start of trading after opening at 1,247 and testing a low of 1,237. Support at 1,240-1,235 was split, and there is risk to 1,225-1,220 on a move below the latter. Resistance is at 1,250-1,260.
The S&P 500 Volatility Index ($VIX, 12.84, down 0.15) tapped a high of 13.84 shortly after the open, with resistance at 14.50-15 easily holding. The backtest to 12.80 and close below 13.50 were bullish signals, but I would like to see the VIX get below 12.50 ahead of the weekend.
I could have a New Trade after the open this morning, depending on the action, so stay close to your email inboxes.
From desk to press, futures look like this: Dow (-1); S&P 500 (-1.5); Nasdaq 100 (-2.5); Russell (-0.4).
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).
Kroger (KR, $29.37, up $0.53)
KR November 27.50 puts (KR161118P00027500, $0.36, down $0.12)
Entry Price: $0.50 (10/4/2016)
Exit Target: $1.00
Stop Target: None
Action: Yesterday’s peak reached $29.60. Resistance is at $29.50-$29.75. A move above $30 could force us to make an early exit. Near-term support is at $29.25-$29.
Halozyme Therapeutics (HALO, $12.12, down $0.19)
HALO November 13 calls (HALO161118C00013000, $0.85, down $0.05)
Entry Price: $1.07 (9/27/2016)
Exit Target: $2.15
Stop Target: $0.55 (Stop Limit)
Action: Shares kissed $12.39 mid-day before fading to a low of $12.10. Near-term support is at $12-$11.75. Resistance is at $12.25-$12.50.
Goodyear Tire & Rubber (GT, $32.86, up $0.20)
GT October 33 calls (GT161021C00033000, $0.68, up $0.03)
Entry Price: $0.75 (9/22/2016)
Exit Target: $1.50
Stop Target: $0.30 (Stop Limit)
Action: Shares traded to a high of $32.96 on Thursday. Resistance is at $33. Support is at $32.75-$32.50. The company is scheduled to announce earnings during the last week of the month.
Viavi Solutions (VIAV, $7.38, flat)
VIAV December 8 calls (VIAV161216C00008000, $0.22, flat)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.15 (Stop Limit)
Action: Yesterday’s high reached $7.43. Resistance is at $7.45-$7.50 and the 50-day moving average. Support is at $7.25-$7.20. Earnings are due to be released during the first week of November.
Editor and Chief Options Strategist