Dear Momentum Options Subscriber,
The bears are on track to score their second-straight weekly win this afternoon, as the bulls need to make up losses of 1%-2% across the board. While that is certainly possible, I’m more worried about the market’s down-trending resistance level ahead of the weekend.
The Dow declined 45 points, or 0.3%, to finish at 18,098. The blue-chips traded to a low of 17,959, with support at 18,000-17,800 holding. The rebound to 18,137 was a weak attempt to tap resistance at 18,200. However, a move above this level should get 18,350-18,400 back in the mix.
The S&P 500 slumped 6 points, or 0.3%, to close at 2,132. The index opened at 2,130 and tested 2,114, with lower support at 2,125-2,120 getting stretched. The recovery to 2,138 fell shy of lower resistance at 2,140-2,150.
The Nasdaq fell 25 points, or 0.5%, to end at 5,213. Tech tumbled to a low of 5,169 intraday, with backup support at 5,200-5,150 getting some attention. The recovery of the 5,200 level was a slightly bullish clue, and resistance is moving down to 5,250-5,275. The bulls need to recover the 5,300 level to regain the momentum.
The Russell 2000 gave back 11 points, or 0.9%, to settle at 1,215. The small-caps kissed a low of 1,209, with lower levels of support at 1,210-1,200 holding. A close below the latter could spell big trouble. Near-term resistance has moved down to 1,225-1,230.
The S&P 500 Volatility Index ($VIX, 16.69, up 0.78) surged to a peak of 17.95 mid-day to clear upper resistance at 16.50-17.50. A close above the latter should get 20-22.50 in focus. Support has moved up to 16.50-15.
Coming into Monday morning, my game plan was for a flat to lower market this week and, heading into this morning’s open, that is where the action stands. However, the rest of the month could see a sweet rally if support levels hold, but we could also get a nasty correction, depending on today’s action. We are right where we want to be, but things can turn on a dime, so I’m still slightly cautious.
From desk to press, futures look like this: Dow (+89); S&P 500 (+10); Nasdaq 100 (+19); Russell (+4).
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).
PowerShares QQQ ETF (QQQ, $117.00, down $0.42)
QQQ November 120 calls (QQQ161118C00120000, $0.94, down $0.13)
Entry Price: $0.99 (10/13/2016)
Exit Target: $2.00
Stop Target: None
Action: The Exit Target for the trade is at $2.00, but it is not a Limit Order at this time. There is no Stop Target at this time.
Support is at $116.00. Resistance is at $118-$118.50. Thursday’s low tapped $115.94.
Lattice Semiconductor (LSCC, $6.06, down $0.23)
LSCC December 7.50 calls (LSCC161216C00007500, $0.30, down $0.05)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60-$0.90
Stop Target: None
Action: Yesterday’s bottom reached $6.05. Near-term support is at $6.00 and the 50-day moving average. Resistance is at $6.50-$6.60.
Apple (AAPL, $116.96, down $0.36)
AAPL November 125 calls (AAPL161118C00125000, $0.93, down $0.08)
Entry Price: $1.10 (10/11/2016)
Exit Target: $2.20
Stop Target: None
Action: Yesterday’s low reached $115.72. Support is at $116-$115. Resistance is at $118.75-$119.
Finisar (FNSR, $29.32, down $0.56)
FNSR November 31 calls (FNSR161118C00031000, $0.69, down $0.23)
Entry Price: $1.28 (10/10/2016)
Exit Target: $2.60
Stop Target: $0.30 (Stop Limit)
Action: FNSR tapped a low of $28.71 on Thursday. Support is at $30-$29-$28.75. Resistance is at $28.75-$28.50.
Viavi Solutions (VIAV, $7.28, down $0.15)
VIAV December 8 calls (VIAV161216C00008000, $0.17, down $0.07)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Support is at $7.25-$7.15. Resistance is at $7.45-$7.50.
Editor and Chief Options Strategist