Dear Momentum Options Subscriber,
The market was mixed during much of Monday’s action, as both the bulls and bears split the session. Some of the baby bulls showed up to push the financial stocks to fresh highs, but the bigger story was the small-caps, which tapped a fresh all-time peak.
The Dow added 21 points, or 0.1%, to finish at 18,868. The blue-chips traded to an all-time intraday peak of 18,934 shortly after the open to push upper resistance at 18,900-19,000. A close above the latter could lead to additional blue-sky territory to 19,200-19,325. The backtest to 18,815 held near-term support at 18,700-18,600.
The S&P 500 slipped a quarter of a point, or 0.01%, to settle at 2,164. The index made a run to 2,171 at the start of trading, with resistance at 2,170-2,175 holding. Continued closes above those levels should get 2,190-2,200 and the all-time high of 2,193 in play. Near-term support at 2,150-2,140 held on the pullback to 2,156.
The Nasdaq gave back 18 points, or 0.4%, to end at 5,218. Tech failed to clear resistance at 5,250 and the 50-day moving average following the morning pop to 5,247. The fade to 5,192 held near-term support at 5,200-5,175 and the 100-day moving average. The higher low than Friday’s print of 5,179 was a slightly bullish signal.
The Russell 2000 jumped 16 points, or 1.3%, to close at 1,298. The small-caps held positive territory throughout the session after opening at 1,283. The first-half surge to 1,306 set an all-time intraday high, and the close into resistance at 1,290-1,300 was bullish. Continued closes above 1,300 could lead to additional fluff to 1,315-1,325. Support is at 1,275-1,270 on a move back below 1,285.
The S&P 500 Volatility Index ($VIX, 14.48, up 0.31) stayed slightly elevated throughout Monday’s action, with the bears pushing a high of 15.56. Resistance at 15-15.50 held, but there is risk to 16.50-17.50 on a close above the latter. Support remains at 14-13.50.
I could have a New Trade ahead of today’s Mid-Market Update, so stay locked and loaded after the open in case I take action.
From desk to press, futures look like this: Dow (+10); S&P 500 (+4); Nasdaq 100 (+13); Russell (-2).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 78-31 (72%). 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).
Array BioPharma (ARRY, $6.91, up $0.17)
ARRY January 7 calls (ARRY170120C00007000, $0.80, up $0.10)
Entry Price: $0.78 (11/14/2016)
Exit Target: $1.80
Stop Target: None
Action: Resistance is at $7-$7.25. Support is at $6.75-$6.50. I believe shares could make a run towards $9-$10 by mid-January on a breakout above the 52-week peak at $7.27.
Shares could be on the move today and on Thursday, as CEO Ron Squarer is speaking at two events. The first is this morning’s Stifel 2016 Healthcare Conference, with the scheduled speaking time at 10:15 a.m. EST. The other event will take place on Thursday at the Jefferies 2016 Global Healthcare Conference, with talking points scheduled in the afternoon.
The company’s Phase-3 trials to develop a drug in the melanoma market recently met their primary endpoint. The results from the “COLUMBUS” trial provided strong results and, according to a well-known doctor, “underscored the promise of binimetinib plus encorafenib as a potential, attractive treatment option for patients diagnosed with BRAF-mutant melanoma.”
Array could get two approvals in the $1 billion melanoma market, with binimetinib having a Prescription Drug User Fee Act (PDUFA) date of June 30. This is a process in which companies can collect fees from drug manufacturers to fund a new drug approval process. The “ARRY-797” drug is in Phase-2 trials.
Starbucks (SBUX, $54.22, up $0.29)
SBUX January 47.50 puts (SBUX170120P00047500, $0.36, down $0.01)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Yesterday’s high reached $54.47. Resistance is at $54.25-$54.50. Support is at $54-$53.75.
Lattice Semiconductor (LSCC, $7.74, up $0.02)
LSCC December 7.50 calls (LSCC161216C00007500, $0.35, up $0.05)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60 (Limit Order)
Stop Target: None
Action: Resistance is at $7.75-$8. The 52-week peak is at $7.99. Support is at $7.50.
Viavi Solutions (VIAV, $7.86, up $0.06)
VIAV December 8 calls (VIAV161216C00008000, $0.16, down $0.06)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.14 (Stop Limit)
Action: Resistance is at $8. Support is at $7.60-$7.50.
Editor and Chief Options Strategist