Dear Momentum Options Subscriber,
The Dow surged to all-time highs on Thursday despite the pullback in tech. The action has caught Wall Street off guard, as most thought a selloff would occur as a result of a Trump presidency, but they were wrong. More follow-through today would be bullish for next week.
The Dow jumped 218 points, or 1.2%, to end at 18,807. The blue-chips opened above the 18,600 level and traded to an all-time high of 18,873. The close above 18,800 keeps blue-sky territory open to 19,000. Support has moved up to 18,600, followed by 18,400-18,350.
The S&P 500 added 4 points, or 0.2%, to close at 2,167. The index tested a high of 2,182 shortly after the open to clear near-term resistance at 2,170-2,175, but these levels failed to hold. The backtest to 2,151 held support at 2,150-2,140
The Nasdaq fell 42 points, or 0.8%, to finish at 5,208. Tech made a run to 5,302 at the start of trading but gave back its gains an hour into the session. Resistance at 5,275-5,300 held before the tumble to 5,145 afterwards. The close above 5,250 was slightly bullish, but there is still risk to 5,200-5,150 on continued weakness.
The Russell 2000 gained 19 points, or 1.6%, to settle at 1,251. The small-caps held positive territory throughout the day and reached a peak of 1,258. Near-term resistance at 1,260 held, with a close above this level being a bullish sign for next week. Support is at 1,240-1,235 on a move below 1,250.
The S&P 500 Volatility Index ($VIX, 14.74, up 0.36) jumped 10% after trading up to a high of 16.30 on Thursday. A move back below 14.50-13.50 would be bullish signs for higher highs.
From desk to press, futures look like this: Dow (-39); S&P 500 (-10); Nasdaq 100 (-30); Russell (+4).
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).
Microsoft (MSFT, $58.70, down $1.47)
MSFT December 57.50 puts (MSFT161216P00057500, $1.08, up $0.46)
Entry Price: $0.86 (11/1/2016)
Exit Target: $1.75 (Closed first half at $1.09 on 11/10/16)
Stop Target: $0.90 (Stop Limit)
Action: Set a Stop Limit at $0.90 on the second half of the trade.
Support is at $58. Resistance is at $58.75-$59.
Starbucks (SBUX, $53.57, down $1.01)
SBUX January 47.50 puts (SBUX170120P00047500, $0.42, up $0.10)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Thursday’s low tapped $53.51. Support is at $53.50-$53. Resistance is at $54-$54.50.
Lattice Semiconductor (LSCC, $7.66, down $0.04)
LSCC December 7.50 calls (LSCC161216C00007500, $0.30, flat)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.70 (Limit Order)
Stop Target: None
Action: Support is at $7.50. Resistance is at $7.75-$8.
Viavi Solutions (VIAV, $7.75, down $0.07)
VIAV December 8 calls (VIAV161216C00008000, $0.19, down $0.03)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Resistance is at $8. Support is at $7.60-$7.50.
Editor and Chief Options Strategist