Dear Momentum Options Subscriber,
Despite a slow start to the session, the bulls got their second-straight win on Tuesday. The slight dip on the open was a simple backtest to fresh support and one that was expected following Monday’s huge rally. The rebound to higher highs was also a given, with the bears holding resistance ahead of the presidential election.
The Dow jumped 73 points, or 0.4%, to finish at 18,332. The blue-chips traded to a low of 18,200 on the open, with upper support at 18,200-18,100 holding. The recovery to 18,400 held near-term resistance at 18,350-18,400. A close above the latter should get 18,600-18,800 in play.
The S&P 500 added 8 points, or 0.4%, to settle at 2,139. The index tested a low of 2,123 shortly after the open, with support at 2,120-2,115 easily holding. Backup help is at 2,100. The turnaround to 2,146 split fresh resistance at 2,140-2,150, but the close below the latter was a slightly bearish sign.
The Nasdaq advanced 27 points, or 0.5%, to end at 5,193. Tech fell to 5,145 on the opening skirmish, but support at 5,125-5,100 was hardly threatened. The surge to 5,214 afterwards cleared upper resistance at 5,175-5,200, and the close in between looked bullish. A close above the latter could lead to a run towards 5,250-5,300.
The Russell 2000 gained 3 points, or 0.2%, to close at 1,195. The small-caps kissed 1,184 at the start of trading, with support at 1,180-1,175 standing strong. The charge to upper resistance afterwards at 1,190-1,200 was a bullish clue, but there are additional hurdles at 1,215-1,220.
The S&P 500 Volatility Index ($VIX, 18.74, up 0.03) pushed a high of 19.91 on the morning scrum, with resistance at 19.50-20 standing tall. There is risk to 22.50-25 on a move above this level. Support remains at 18-17.50.
Futures are significantly lower following the results of last night’s presidential election. I could have a New Trade ahead of today’s Mid-Market Update, so stay close to your email inboxes in case I decide to take action.
From desk to press, futures look like this: Dow (-274); S&P 500 (-33); Nasdaq 100 (-93); Russell (-14).
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 8:00 a.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Starbucks (SBUX, $54.62, up $0.13)
SBUX January 47.50 puts (SBUX170120P00047500, $0.36, down $0.02)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Tuesday’s peak reached $54.79. Resistance is at $54.50-$55. Support is at $54-$53.50.
Microsoft (MSFT, $60.47, up $0.05)
MSFT December 57.50 puts (MSFT161216P00057500, $0.61, down $0.03)
Entry Price: $0.86 (11/1/2016)
Exit Target: $1.75
Stop Target: None
Action: 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.
Lattice Semiconductor (LSCC, $7.75, down $0.11)
LSCC December 7.50 calls (LSCC161216C00007500, $0.30, down $0.15)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.70 (Limit Order)
Stop Target: None
Action: Support is at $7.50. Yesterday’s low touched $7.70. Resistance is at $7.75-$8.
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, $7.56, up $0.06)
VIAV December 8 calls (VIAV161216C00008000, $0.11, 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