Dear Momentum Options Subscriber,
This week’s morning choppiness continued on Tuesday, and the market moved within a narrower trading range for much of the session. However, momentum picked up in the afternoon, led by the Nasdaq, and the Dow extended its win streak to seven-straight sessions. Higher highs continue to appear to be on the horizon, and volatility is also relaxing.
The Dow gained 54 points, or 0.3%, to settle at 18,923. The blue-chips traded down to 18,806 intraday, with rising support at 18,800-18,700 holding for the fourth-straight session. Resistance at 18,900-19,000 held following the turnaround to 18,925 afterwards. A close above the latter could lead to additional blue-sky territory to 19,200-19,325.
The S&P 500 surged 16 points, or 0.8%, to end at 2,180. The index held positive territory throughout Tuesday while going out half of a point off of its session high. The close at 2,180 gets keeps near-term resistance at 2,190-2,200 in play. The all-time high is at 2,193. Near-term support has moved up to 2,160-2,155.
The Nasdaq jumped 57 points, or 1.1%, to close at 5,275. Tech also held green throughout the day, with the high tapping 5,287 during the second half of the action. The close above 5,250 and run to fresh resistance at 5,275-5,300 was a bullish signal. Support has moved up to 5,250-5,225, but a close below 5,200 would be a cause for concern.
The Russell 2000 climbed 3 points, or 0.3%, to finish at 1,302. The small-caps slipped to a low of 1,290, with rising support at 1,290-1,285 holding. I mentioned that continued closes above 1,300 could lead to a push towards 1,315-1,325 this week.
The S&P 500 Volatility Index ($VIX, 13.37, down 1.11) traded up to 14.65, with the bulls easily holding resistance at 15-15.50. I talked about the bulls needing to get below lower support at 13.50 coming into the week, and this mission was accomplished. The bears will now try to defend 12.50-11.50 this week and next. If they do not, however, they could go into hibernation into December.
I have another New Trade this morning on a tech stock that is heavily involved in the Internet of Things. Shares are on the verge of a multi-year breakout, so let’s get on it.
From desk to press, futures look like this: Dow (-53); S&P 500 (-8); Nasdaq 100 (-19); Russell (-7).
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).
Tower Semiconductor (TSEM, $17.52, up $0.92)
Buy to open the TSEM January (2017) 19 calls (TSEM170120C00019000) for a maximum price of $0.75.
Action: I like these call options at current levels, and you can use a Limit Order up to $0.75 to get the best fills this morning. These are the regular monthly options that expire on Jan. 20, 2017. I will provide the parameters of the trade in today’s Mid-Market Update.
Shares traded to a 52-week peak of $17.76 yesterday. The 3-year chart shows longer-term resistance at $18-$18.25. Fresh support is at $17-$16.50.
Apple (AAPL, $107.11, up $1.40)
AAPL January 115 calls (AAPL170120C00115000, $1.19, up $0.11)
Entry Price: $1.24 (11/15/2016)
Exit Target: $2.50
Stop Target: $0.60
Action: Shares reached a peak of $107.68 yesterday. Fresh resistance is at $108. Support is trying to move up to $106-$104. A close below $102 would be a bearish development.
Array BioPharma (ARRY, $6.99, up $0.08)
ARRY January 7 calls (ARRY170120C00007000, $0.81, up $0.01)
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. Tuesday’s high touched $7.02.
You can read my previous comments on ARRY in yesterday’s Pre-Market Update.
Starbucks (SBUX, $54.59, up $0.62)
SBUX January 47.50 puts (SBUX170120P00047500, $0.28, down $0.08)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: SBUX kissed $54.69 yesterday, and the close above upper resistance at $54.25-$54.50 has this trade on the ropes. I could cut losses on a close or move above $55, but wait for my signal. Support has moved up to $54.25-$54.
Lattice Semiconductor (LSCC, $7.74, flat)
LSCC December 7.50 calls (LSCC161216C00007500, $0.35, flat)
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, $7.90, up $0.04)
VIAV December 8 calls (VIAV161216C00008000, $0.20, up $0.04)
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