Dear Momentum Options Subscriber,
The market was skittish on Wednesday, but stocks managed to hold onto their gains following the release of the Federal Open Market Committee (FOMC) minutes. Unfortunately, there were no major hints in the Fed update that a rate hike would come in November or December, as the zombies tiptoed through another meeting while leaving Wall Street and investors guessing.
The Dow added 15 points, or 0.1%, to finish at 18,144. The blue-chips were weak on the open, with the bears pushing 18,082 and testing upper support at 18,000-17,800. The rebound to 18,193 fell shy of 18,200, but a move above this level should get 18,350-18,400 back in play.
The S&P 500 gained 2 points, or 0.1%, to close at 2,139. The index slipped to a low of 2,132 at the start of trading, but it held lower support at 2,125-2,120. The bounce to 2,145 and the close above 2,135 were bullish, although short-term resistance is still at 2,140-2,150.
The Nasdaq fell nearly 8 points, or 0.2%, to end at 5,239. Tech tested a low of 5,228 during the opening pullback, but support at 5,250-5,225 held. Short-term resistance at 5,250-5,300 was pushed, but those levels held following the intraday run to 5,257.
The Russell 2000 slipped about half of a point, or 0.03%, to settle at 1,227. The small-caps kissed 1,224 within the first 15 minutes of the action, with support at 1,225-1,220 standing tall. Near-term resistance at 1,235-1,240 was tested, but it held after the run to 1,232.
The S&P 500 Volatility Index ($VIX, 15.91, up 0.55) stayed elevated throughout the session and reached a peak of 16.34. Resistance at 16.50-17.50 was in play but held. The mid-day dip to 15.26 failed to clear support at 15-14.50.
I have updated the parameters of our Lattice Semiconductor (LSCC) trade from yesterday, and I also have a Trade Alert listed below for our position in Halozyme Therapeutics (HALO), as the Stop Limit was triggered yesterday afternoon. Let’s go check out the details.
From desk to press, futures look like this: Dow (-90); S&P 500 (-11); Nasdaq 100 (-27); Russell (-7).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 74-28 (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).
Halozyme Therapeutics (HALO, $10.88, down $0.70)
HALO November 13 calls (HALO161118C00013000, $0.35, down $0.25)
Entry Price: $1.07 (9/27/2016)
Exit Target: $2.15
Stop Target: $0.40 (Stop Limit)
Action: The Stop Limit at $0.40 was triggered on light volume yesterday afternoon, and we are now out of the position.
I’m super disappointed in the pullback, but I will keep shares on my watch list for another possible trade down the road.
Lattice Semiconductor (LSCC, $6.29, up $0.01)
LSCC December 7.50 calls (LSCC161216C00007500, $0.35, up $0.10)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60-$0.90
Stop Target: None
Action: The Exit Targets for the trade are at $0.60-$0.90, but these are not Limit Orders at this time. There is no Stop Target at this time.
Near-term support is at $6.00 and the 50-day moving average. Resistance is at $6.50-$6.60, but a close above these levels will likely get $7 in the mix. The 52-week peak is at $7.07. I plan to hold this trade open into December.
I will publish a more detailed write-up on LSCC with a longer-term chart later this week.
Apple (AAPL, $117.34, up $1.04)
AAPL November 125 calls (AAPL161118C00125000, $1.01, up $0.07)
Entry Price: $1.10 (10/11/2016)
Exit Target: $2.20
Stop Target: None
Action: Shares traded to a high of $117.98 on Wednesday. Resistance is at $118.75-$119. Support is at $116-$115.
Finisar (FNSR, $29.88, down $0.04)
FNSR November 31 calls (FNSR161118C00031000, $0.92, up $0.02)
Entry Price: $1.28 (10/10/2016)
Exit Target: $2.60
Stop Target: $0.60
Action: Support at $30-$29.50 was stretched on the intraday backtest to $29.32, while resistance at $30-$31.50 was pushed on the stock’s run to $30.16.
You can read my detailed write-up on FNSR in the Sept. 22 Mid-Market Update.
Viavi Solutions (VIAV, $7.43, down $0.01)
VIAV December 8 calls (VIAV161216C00008000, $0.24, flat)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Yesterday’s peak reached $7.52. Resistance is at $7.45-$7.50. Support is at $7.25-$7.15.
Editor and Chief Options Strategist