Dear Momentum Options Subscriber,
Futures were showing a strong open this morning following the news over the weekend that the FBI would not bring any charges against presidential candidate Hillary Clinton regarding her email debacle. While I often say that market pundits like to attach a headline when the market goes higher or lower, my notes from the weekend focused on the market’s oversold condition and a possible rebound rally this week.
The major indices were on the verge of “correction” territory, which is often defined as a 10% pullback in the market. Coming into today’s session, the Dow, S&P 500 and the Nasdaq were down 4%-5% from their all-time highs. Meanwhile, the Russell 2000 was off 8% from its all-time peak.
Today’s gains will likely end a nasty nine-day losing streak for the bulls, but my feeling is that the whipsaw action could continue for the rest of the week. Wall Street is pricing in a Clinton victory, but Donald Trump has the momentum and wants to upset the apple cart in Washington D.C. At this point, the election is still too hard to call, from my perspective, which is why I remain a little cautious for the longer term.
The Dow is currently up 345 points to 18,233, while the S&P 500 is surging 42 points to 2,127. The Nasdaq is gaining 114 points to 5,161, and the Russell 2000 is higher by 28 points to 1,191.
I have updated our current trades below, so let’s go check the tape.
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.
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 1:35 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Microsoft (MSFT, $60.47, up $1.76)
MSFT December 57.50 puts (MSFT161216P00057500, $0.63, down $0.63)
Entry Price: $0.86 (11/1/2016)
Exit Target: $1.75
Stop Target: $1.05 (Stop Limit), None
Action: Cancel the Stop Limit at $1.05.
The Stop Limit at $1.05 has failed to trigger today, as the puts have only traded to a high of $0.91. I have canceled the Stop Limit for now, but I could initiate another one on continued strength.
Resistance is at $60-$60.50. Support is at $60-$59.
You can read my previous comments on MSFT in the Oct. 31 Mid-Market Update.
Starbucks (SBUX, $54.38, up $1.63)
SBUX January 47.50 puts (SBUX170120P00047500, $0.36, down $0.23)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Fresh resistance is at $54.50-$55. Support has moved up to $54-$53.50.
Lattice Semiconductor (LSCC, $7.85, up $0.10)
LSCC December 7.50 calls (LSCC161216C00007500, $0.35, up $0.05)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.70 (Limit Order)
Stop Target: None
Action: Resistance is at $7.75-$8. Support is at $7.50.
You can read my previous comments on LSCC and the buyout offer of $8.30 a share in Friday’s Pre-Market Update.
Viavi Solutions (VIAV, $7.53, up $0.23)
VIAV December 8 calls (VIAV161216C00008000, $0.12, flat)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Resistance is at $7.50-$7.60. Support is at $7.40-$7.35.
Editor and Chief Options Strategist