Dear Momentum Options Subscriber,

The bulls recovered the losses from earlier in the week and pushed upper resistance on Tuesday following an all-day romp in positive territory. However, the failure to clear resistance remains a concern, and the bears are still holding the VIX above 15.

The Dow gained 75 points, or 0.4%, to end at 18,161. The blue-chips reached a peak of 18,225 on the open to clear near-term resistance at 18,200. Continued closes above this level should get 18,350-18,400 back in the picture. Short-term support has moved up to 18,000-17,900, and a close below 17,800 would be a signal to go short.

The S&P 500 surged 13 points, or 0.6%, to settle at 2,139. The index made a run to 2,144 to split resistance at 2,140-2,150. A move above the latter should get 2,160-2,175 in play. Support remains at 2,125-2,120.

The Nasdaq jumped 44 points, or 0.9%, to finish at 5,243. Tech tested a high of 5,264, with resistance at 5,250-5,275 and the 50-day moving average holding. Support has moved up to 5,225-5,200.

The Russell 2000 added 7 points, or 0.6%, to close at 1,217. The small-caps failed to clear lower resistance at 1,225-1,230 following the mid-day run to 1,222. Near-term support is at 1,210-1,200.

The S&P 500 Volatility Index ($VIX, 15.28, down 0.93) traded in the red throughout the session, with the bulls pushing a low of 15.03. Support remains at 15-14.50 and the 100-day moving average, but a close below the latter would be a bearish development. Resistance is at 16.50-17.50.

From desk to press, futures look like this: Dow (+10); S&P 500 (+0.5); Nasdaq 100 (-4); Russell (+1.6).

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).

 

E*Trade Financial (ETFC, $28.42, up $0.29)

ETFC November 29 calls (ETFC161118C00029000, $0.80, up $0.04)

Entry Price: $0.90 (10/17/2016)

Exit Target: $1.80

Return: -11%

Stop Target: None

Action: Resistance is at $28.50-$28.75. Support is at $28-$27.75. Monday’s high tapped $28.69.

 

PowerShares QQQ ETF (QQQ, $117.86, up $1.04)

QQQ November 120 calls (QQQ161118C00120000, $0.97, up $0.22)

Entry Price: $0.99 (10/13/2016)

Exit Target: $2.00

Return: -2%

Stop Target: None

Action: The QQQs traded up to $118.41, with the options reaching $1.26. Resistance is at $118 and the 50-day moving average, followed by $119-$120. Support has moved up to $117.50-$117.

 

Lattice Semiconductor (LSCC, $6.41, up $0.32)

LSCC December 7.50 calls (LSCC161216C00007500, $0.30, up $0.05)

Entry Price: $0.30 (10/12/2016)

Exit Target: $0.60-$0.90

Return: 0%

Stop Target: None

Action: Resistance is at $6.50. Yesterday’s high reached $6.45. Support is at $6.00-$5.90.

 

Apple (AAPL, $117.14, down $0.08)

AAPL November 125 calls (AAPL161118C00125000, $0.85, down $0.03)

Entry Price: $1.10 (10/11/2016)

Exit Target: $2.20

Return: -23%

Stop Target: None

Action: Resistance is at $118-$118.25. Support is at $117-$116.50.

 

Finisar (FNSR, $29.14, up $0.15)

FNSR November 31 calls (FNSR161118C00031000, $0.50, down $0.05)

Entry Price: $1.28 (10/10/2016)

Exit Target: $2.60

Return: -61%

Stop Target: $0.30 (Stop Limit)

Action: Resistance is at $29-$29.50. Support is at $28.75-$28.50.

 

Viavi Solutions (VIAV, $7.27, up $0.08)

VIAV December 8 calls (VIAV161216C00008000, $0.16, down $0.02)

Entry Price: $0.51 (8/19/2016)

Exit Target: $1.05

Return: -69%

Stop Target: $0.05 (Stop Limit)

Action: Monday’s high was $7.30. Resistance is at $7.45-$7.50 and the 50-day moving average. Support is at $7.25-$7.150 and the 100-day moving average.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options