Dear Momentum Options Subscriber,
Tech came through in a big way on Monday, as the Nasdaq cleared major resistance. Merger and acquisition news stole the headlines, but the bigger development was the bulls’ ability to clear upper resistance across the board. Volatility continued to fall, but it is holding lower support ahead of a busy week for earnings.
The Dow gained 77 points, or 0.4%, to end at 18,223. The blue-chips traded in positive territory throughout Monday’s session, with the bulls pushing a high of 18,275. The close above 18,200 was bullish, with fresh resistance at 18,300-18,350 and the 50-day moving average. Support has moved up to 18,100-18,000.
The S&P 500 soared 10 points, or 0.5%, to settle at 2,151. The index made a run to 2,154 shortly after the open while clearing and holding upper resistance at 2,145-2,150. Additional hurdles are at 2,165-2,175. Support has moved up to 2,135-2,125.
The Nasdaq zoomed 52 points, or 1%, to finish at 5,309. Tech tested a high of 5,311, and the close above 5,300 was a bullish sign. Fresh resistance is at 5,325-5,350 and the all-time at 5,342. Support has moved up to 5,300-5,250.
The Russell 2000 rallied 8 points, or 0.7%, to close at 1,226. The small-caps peaked at 1,231 shortly after the open to split resistance at 1,225-1,235. A close above the latter should get 1,240-1,250 back in play. Support has moved up to 1,220-1,215.
The S&P 500 Volatility Index ($VIX, 13.02, down 0.32) stayed deflated throughout the session, with the low checking in at 12.83. Support remains at 12.50. Near-term resistance is at 13.50, followed by 14.50-15.
I have set new parameters for our PowerShares QQQ ETF (QQQ) trade in order to protect profits, so please make the adjustments in your brokerage accounts accordingly.
From desk to press, futures look like this: Dow (+14); S&P 500 (+2); Nasdaq 100 (+7); Russell (+0.2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 75-28 (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, $119.57, up $1.42)
QQQ November 120 calls (QQQ161118C00120000, $1.42, up $0.53)
Entry Price: $0.99 (10/13/2016)
Exit Target: $2.00 (Limit Order on first half)
Stop Target: $1.10 (Stop Limit)
Action: Set a Limit Order to close the first half of the trade at $2.00. Also, set a Stop Limit at $1.10 to protect profits.
Monday’s high tapped $119.65. Resistance is at $119.50-$120. Support has moved up to $118.
Lattice Semiconductor (LSCC, $6.56, up $0.13)
LSCC December 7.50 calls (LSCC161216C00007500, $0.25, down $0.04)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60-$0.90
Stop Target: None
Action: Yesterday’s peak reached $6.65. Near-term resistance is at $6.60-$6.75. Support is at $6.30-$6.25 and the 50-day moving average on a close back below $6.50.
Apple (AAPL, $117.65, up $1.05)
AAPL November 125 calls (AAPL161118C00125000, $0.77, up $0.14)
Entry Price: $1.10 (10/11/2016)
Exit Target: $2.20
Stop Target: None
Action: Resistance is at $117.50-$118. Monday’s high reached $117.74. Support is at $116.50.
Finisar (FNSR, $29.86, up $0.70)
FNSR November 31 calls (FNSR161118C00031000, $0.60, flat)
Entry Price: $1.28 (10/10/2016)
Exit Target: $2.60
Stop Target: $0.30 (Stop Limit)
Action: Shares traded up to $30 yesterday. Fresh resistance is at $30-$30.25. Support is at $29-$28.75.
Viavi Solutions (VIAV, $7.29, up $0.10)
VIAV December 8 calls (VIAV161216C00008000, $0.19, up $0.04)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Resistance is at $7.25-$7.35 and the 50-day moving average. Support is at $7.10-$7 and the 100-day moving average.
Editor and Chief Options Strategist