Dear Momentum Options Subscriber,
The bears are trying to push fresh lows ahead of the Fed’s decision on interest rates today, which is due to be released at the top of the hour. Wall Street is nearly 100% certain that no rate hike will be announced, but I have taught myself to expect the unexpected when it comes to trading the stock market.
Investors have been seeking safety in Gold ($1,288, up $4.90) this week and throughout the month, as the yellow metal is working its way towards the $1,300 level and the downward sloping 50-day moving average.
While I can see the rush to safety over the past few weeks, resistance at $1,300 will be a major test. A “death cross” is in the process of forming, with the 50-day moving average on track to fall below the 200-day moving average. A mini death cross occurred in mid-October when the 50-day moving average took out the 100-day moving average.
If resistance at $1,300 is cleared this week or next, there could be some upside momentum to $1,325-$1,350. However, if it holds and there is a backtest to $1,280, I will be looking to go “short” on gold on a move below $1,275.
As far as the market goes, the Dow is diving 64 points to 17,973, while the S&P 500 is declining 12 points to 2,098. The Nasdaq is down 43 points to 5,110, and the Russell 2000 is sinking 11 points to 1,166.
I could have New Trades later this afternoon once the Fed news is out, so stay close to your email inboxes into the closing bell.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 77-31 (71%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.
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All prices given in this update are current as of 1:25 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Microsoft (MSFT, $59.38, down $0.42)
MSFT December 57.50 puts (MSFT161216P00057500, $0.97, up $0.09)
Entry Price: $0.86 (11/1/2016)
Exit Target: $1.75
Stop Target: None
Action: Support is at $59.50, and a backtest to $58-$57.75 and the 50-day moving average is possible on a close below this level. Resistance is at $60-$60.50.
You can read my previous comments on MSFT in the Oct. 31 Mid-Market Update.
Lattice Semiconductor (LSCC, $6.37, up $0.06)
LSCC December 7.50 calls (LSCC161216C00007500, $0.30, flat)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60-$0.90
Stop Target: None
Action: Resistance is at $6.25-$6.30 and the 50-day moving average. Support is at $6.05-$6 and the 100-day moving average.
The company is scheduled to announce earnings next Monday, and I will have a preview ready by Friday.
Viavi Solutions (VIAV, $7.22, up $0.11)
VIAV December 8 calls (VIAV161216C00008000, $0.11, down $0.01)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Support is at $7-$6.90, but there is risk to $6.75 and the 200-day moving average on a move below the latter. Resistance is at $7.20-$7.25 and the 100-day moving average.
Editor and Chief Options Strategist