Dear Momentum Options Subscriber,

The market trudged higher on Wednesday to push near-term resistance levels once again. Continued strength appears to be in the cards, but October options expiration is this Friday, so how we finish the week will be the more important part of the overall picture.

The Dow advanced 40 points, or 0.2%, to settle at 18,202. The blue-chips held positive territory throughout the session, with the high reaching 18,252. The close above near-term resistance at 18,200 was bullish, but there are additional hurdles at 18,350-18,400. Support remains at 18,000-17,900.

The S&P 500 climbed 4 points, or 0.2%, to finish at 2,144. The index slipped a point to 2,138 on the open, with support at 2,125-2,120 easily holding. The close into resistance at 2,140-2,150 was a bullish sign, and a close above the latter could lead to 2,160-2,175.

The Nasdaq added 2 points, or 0.1%, to close at 5,246. Tech traded in negative territory on the opening bell and throughout the first half of the action. Support at 5,225-5,200 held on the backtest to 5,234. The second-half test to 5,253 cleared lower resistance at 5,250-5,275 but failed to hold.

The Russell 2000 advanced 5 points, or 0.4%, to end at 1,222. The small-caps traded down to 1,214 during the opening hour, with near-term support at 1,210-1,200 holding. The rebound to 1,226 pushed lower resistance at 1,225-1,230. A close above the latter should get 1,240-1,245 back in play.

The S&P 500 Volatility Index ($VIX, 14.41, down 0.87) tumbled 6% to close below 15-14.50 and the 100-day moving average. This was a bullish development, but additional layers of support are at 13.50-12.50, and these are levels I would like to see cleared into the weekend. Resistance is at 16.50-17.50 on a move back above 15.

From desk to press, futures look like this: Dow (+23); S&P 500 (+2); Nasdaq 100 (+6); Russell (+5).

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, $28.48, up $0.06)

ETFC November 29 calls (ETFC161118C00029000, $0.80, flat)

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

Exit Target: $1.80

Return: -11%

Stop Target: None

Action: Monday’s high reached $28.71. Resistance is at $28.50-$28.75. Support is at $28-$27.75. Earnings are due out after the closing bell today.

You can read my detailed write-up on ETFC in yesterday’s Mid-Market Update.

 

PowerShares QQQ ETF (QQQ, $117.85, down $0.01)

QQQ November 120 calls (QQQ161118C00120000, $0.92, down $0.05)

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

Exit Target: $2.00

Return: -7%

Stop Target: None

Action: Yesterday’s high tapped $118.02. 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, $6.51, up $0.10)

LSCC December 7.50 calls (LSCC161216C00007500, $0.35, up $0.05)

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

Exit Target: $0.60-$0.90

Return: 17%

Stop Target: None

Action: Resistance is at $6.75. Monday’s peak reached $6.56. Support is at $6.25.

 

Apple (AAPL, $117.12, down $0.35)

AAPL November 125 calls (AAPL161118C00125000, $0.74, down $0.11)

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

Exit Target: $2.20

Return: -33%

Stop Target: None

Action: Support is at $117-$116.50. There is risk to $114-$113.75 on a close below the latter. Resistance is at $118-$118.25.

 

Finisar (FNSR, $29.65, up $0.65)

FNSR November 31 calls (FNSR161118C00031000, $0.70, up $0.20)

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

Exit Target: $2.60

Return: -45%

Stop Target: $0.30 (Stop Limit)

Action: Monday’s high tapped $29.75. Resistance is at $29.50-$30. Support is at $29-$28.75.

 

Viavi Solutions (VIAV, $7.35, up $0.08)

VIAV December 8 calls (VIAV161216C00008000, $0.16, flat)

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

Exit Target: $1.05

Return: -69%

Stop Target: $0.05 (Stop Limit)

Action: 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