Dear Momentum Options Subscriber,
The bears pushed monthly lows during Tuesday’s session, and the bulls struggled into the closing bell. Continued weakness today could get the September lows in play, but these levels will need to hold in order to avoid a possible selloff.
The Dow dropped 200 points, or 1.1%, to settle at 18,128. The blue-chips traded in negative territory throughout the session and bottomed at 18,061. Support at 18,200-18,100 was stretched, and there is risk to 18,000-17,800 on a close below the latter. Resistance remains at 18,350-18,400.
The S&P 500 sank 27 points, or 1.2%, to finish at 2,136. The index tested a low of 2,128, but backup support at 2,125-2,120 held. A move below the latter could lead to further weakness to 2,100. Resistance has moved down to 2,140-2,150 over the near term.
The Nasdaq tanked 82 points, or 1.5%, to close at 5,246. Tech tumbled to an intraday low of 5,227, which brought lower levels of support at 5,250-5,225 into play. A close below the latter would be a very bearish development, with risk to 5,200-5,150. Short-term resistance is at 5,275-5,300.
The Russell 2000 declined 23 points, or 1.9%, to end at 1,227. The small-caps stumbled to a low of 1,222 to push lower levels of support at 1,225-1,220. A move below the latter could lead to 1,210-1,200. Near-term resistance is at 1,235-1,240.
The S&P 500 Volatility Index ($VIX, 15.36, up 1.98) opened at 13.71 and reached a peak of 16.47 intraday. The bulls held upper resistance 16.50-17.50, but a close above the latter could get 20-22 back in play. Support is at 15-14.50, which are levels the bulls need to recover as soon as possible.
From desk to press, futures look like this: Dow (-14); S&P 500 (-1.5); Nasdaq 100 (-5); Russell (-0.2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 74-26 (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).
Apple (AAPL, $116.30, up $0.25)
AAPL November 125 calls (AAPL161118C00125000, $0.94, up $0.14)
Entry Price: $1.10 (10/11/2016)
Exit Target: $2.20
Stop Target: None
Action: Tuesday’s high tapped $118.69. Resistance is at $118.75-$119. Support is at $116-$115.
Finisar (FNSR, $29.92, down $0.72)
FNSR November 31 calls (FNSR161118C00031000, $0.90, down $0.38)
Entry Price: $1.28 (10/10/2016)
Exit Target: $2.60
Stop Target: $0.60
Action: Support is at $30-$29.50. Resistance is at $31-$31.50. Yesterday’s low reached $29.59.
You can read my detailed write-up on FNSR in the Sept. 22 Mid-Market Update.
Kroger (KR, $30.11, up $1.06)
KR November 27.50 puts (KR161118P00027500, $0.27, down $0.13)
Entry Price: $0.50 (10/4/2016)
Exit Target: $1.00
Stop Target: None
Action: Fresh resistance is at $30.50-$30.75. Support is at $30-$29.50.
Halozyme Therapeutics (HALO, $11.58, down $0.59)
HALO November 13 calls (HALO161118C00013000, $0.60, down $0.05)
Entry Price: $1.07 (9/27/2016)
Exit Target: $2.15
Stop Target: $0.40 (Stop Limit)
Action: Support is at $11.50-$11.25. Resistance is at $11.75-$12. Tuesday’s low tapped $11.41.
Viavi Solutions (VIAV, $7.44, up $0.12)
VIAV December 8 calls (VIAV161216C00008000, $0.24, up $0.06)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Resistance is at $7.45-$7.50. Support is at $7.25-$7.15.
Editor and Chief Options Strategist