Dear Momentum Options Subscriber,
The talking heads were finally patting themselves on the back yesterday, as they blamed Wednesday’s “pullback” on a market that had gone too high, too fast. However, that theory was broken by last Friday’s close. In reality, the market was split and closed mixed, with tech continuing its rebound. The financial stocks held the bulls from what would likely have been clean sweep, but momentum is still on their side.
The Dow dropped 55 points, or 0.3%, to end at 18,868. The blue-chips were in the red throughout Wednesday’s session, with the low checking in at 18,825. Support at 18,800-18,700 has been strong for five-straight sessions. Resistance remains at 18,900-19,000.
The S&P 500 slipped 3 points, or 0.2%, to close just under 2,177. The index also courted negative territory throughout the session, with the low tapping 2,172. The hold above 2,170 looks bullish, with additional support at 2,160-2,155. Resistance is at 2,180, but there is fluff to 2,190-2,200 on continued closes above this level.
The Nasdaq added 19 points, or 0.4%, to finish at 5,294. Tech held fresh support at 5,250, which was a bullish sign, following the morning backtest to 5,251. The push to upper resistance at 5,275-5,300 reached 5,299 and offered another bread crumb. Continued closes above 5,300 should get all-time highs back in the mix.
The Russell 2000 barely budged yesterday and settled at 1,302. The small-caps traded in less than a nine-point range following the morning dip to 1,296. Support at 1,290-1,285 held on the pullback. Blue-sky resistance remains at 1,315-1,325.
The S&P 500 Volatility Index ($VIX, 13.72, up 0.35) reached a peak of 14.49 on the open, with resistance at 15-15.50 hardly threatened. The close above 13.50 needs to be respected, with support remaining at 12.50-11.50.
I have raised the Stop Limit on our Apple (AAPL) trade, and I’ve also set a Stop Limit for our position in Starbucks (SBUX), so please adjust your trading accounts accordingly.
From desk to press, futures look like this: Dow (-2); S&P 500 (+1); Nasdaq 100 (+9); Russell (+3).
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).
Apple (AAPL, $109.99, up $2.88)
AAPL January 115 calls (AAPL170120C00115000, $1.83, up $0.64)
Entry Price: $1.24 (11/15/2016)
Exit Target: $2.50
Stop Target: $0.60, raise to $1.49 (Stop Limit)
Action: Raise the Stop Target from $0.60 to $1.49 (Stop Limit) to protect our double-digit profits.
Resistance is at $110, with yesterday’s peak reaching $110.23. Additional hurdles are at $112-$112.50. Fresh support is at $108.
Starbucks (SBUX, $55.44, up $0.85)
SBUX January 47.50 puts (SBUX170120P00047500, $0.23, down $0.05)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: $0.12 (Stop Limit)
Action: Set a Stop Limit at $0.12.
The close above additional layers of resistance at $55-$55.25 yesterday was bullish. I mentioned that I would likely exit the trade on a close above double-nickels, which is why I have set a Stop Limit. Support has moved up to $55.
I got this one wrong, and I want to move on to save the remaining premium. However, I gave the trade a little wiggle room, as I would like to keep at least some put protection on heading into the New Year.
Tower Semiconductor (TSEM, $17.50, down $0.02)
TSEM January 19 calls (TSEM170120C00019000, $0.45, down $0.05)
Entry Price: $0.50 (11/16/2016)
Exit Target: $1.00
Stop Target: None
Action: Resistance is at $17.75-$18. Continued closes above $18.25-$18.50 should get $20 in play by mid-January. Support is at $17-$16.50.
Array BioPharma (ARRY, $7.00, up $0.01)
ARRY January 7 calls (ARRY170120C00007000, $0.85, up $0.04)
Entry Price: $0.78 (11/14/2016)
Exit Target: $1.80
Stop Target: None
Action: Wednesday’s peak reached $7.20. Resistance is at $7-$7.25. The 52-week high is at $7.27. Support is at $6.75-$6.50.
You can read my previous comments on ARRY in Tuesday’s Pre-Market Update.
Lattice Semiconductor (LSCC, $7.69, down $0.05)
LSCC December 7.50 calls (LSCC161216C00007500, $0.26, down $0.09)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60 (Limit Order)
Stop Target: None
Action: Support is at $7.50. Resistance is at $7.75-$8. The 52-week peak is at $7.99.
Viavi Solutions (VIAV, $7.93, up $0.03)
VIAV December 8 calls (VIAV161216C00008000, $0.21, up $0.01)
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