Dear Momentum Options Subscriber,
The market continued its traditional Thanksgiving rally this week, as the major indices pushed record highs again on Wednesday. Tech was a little slack, but the small-caps extended their winning streak to 14-straight. Today’s half-session is expected to be flat, as volume will be light and much of Wall Street will be taking extended vacations.
The Dow climbed 59 points, or 0.3%, to settle at 19,083. The blue-chips opened lower at 19,015 and tested 19,000 shortly afterwards. Support at 18,900-18,800 held for the 10th-straight session and is trying to move up to 19,000-18,900. The rebound to another record high into the close keeps resistance at 19,200-19,325 in play.
The S&P 500 advanced over a point, or 0.1%, to end at 2,204. The index opened below the 2,200 level at 2,196 while trading down to 2,194 within 15 minutes. Support at 2,190-2,185 easily held before the late-day push to session highs. The bulls just missed making a fresh all-time high by a tenth of a point, but the effort keeps 2,225-2,250 in the picture.
The Nasdaq slipped 5 points, or 0.1%, to close at 5,380. Tech traded in negative throughout the day while bottoming at 5,350. Upper support at 5,350-5,325 held, and the close above 5,375 was a slightly bullish signal. Near-term resistance remains at 5,400, with continued closes likely leading to 5,450-5,500.
The Russell 2000 gained 6 points, or 0.6%, to finish at 1,342. The small-caps stumbled to a low of 1,326 on the open, with rising support at 1,325-1,320 holding. The move above 1,340 keeps my near-term target of 1,350 in focus. A close above this level could lead to blue-sky territory to 1,375-1,400.
The S&P 500 Volatility Index ($VIX, 12.43, up 0.02) stayed relatively flat after peaking at 13.01 during the first half of the action. Lower resistance at 13-13.50 held for the third-straight session. The dip to 12.19 came within a stone’s throw of support at 12-11.50.
I have two New Trades this morning to take advantage of a possible continued rally into December, so let’s check them out.
From desk to press, futures look like this: Dow (+50); S&P 500 (+4); Nasdaq 100 (+7); Russell (+0.4).
Momentum Options Play List
Closed Momentum Options Trades for 2016: 80-33 (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).
Chicago Bridge & Iron (CBI, $33.75, down $0.23)
Buy to open the CBI January (2017) 35 calls (CBI170120C00035000) for a maximum price of $1.55.
Action: I like these call options at current levels, and you can use a Limit Order up to $1.55 to get the best fills. These are the regular monthly options that expire on Jan. 20, 2017. I will provide the parameters of the trade in Monday’s Pre-Market Update.
Resistance is at $34. Support is at $33.50-$33. These options were active on Wednesday, as nearly 1,000 contracts traded.
T-Mobile (TMUS, $54.34, flat)
Buy to open the TMUS December 56 calls (TMUS161216C00056000) for a maximum price of $0.90.
Action: I like these call options at current levels, and you can use a Limit Order up to $0.90 to get the best fills. These are the regular monthly options that expire on Dec. 16. I will provide the parameters of the trade in Monday’s Pre-Market Update.
Resistance is at $55, with blue-sky territory to $57.50-$60 on continued strength. Support is at $53-$52.
Imax (IMAX, $34.10, down $0.05)
IMAX January 36 calls (IMAX170120C00036000, $0.91, up $0.01)
Entry Price: $0.90 (11/23/2016)
Exit Target: $1.80
Stop Target: None
Action: The Exit Target is at $1.80, but it is not a Limit Order at this time. There is no Stop Target at this time.
The chart below shows that shares are on the verge of a triple-top breakout on continues closes above $35. This level of resistance held in April and July, with a possible run towards $38-$40 on a breakout and short-covering. Near-term support will try to hold at $33.50-$33 on another move back below $34, which are levels that have served as a floor in prior months throughout the year.
Microsoft (MSFT, $60.40, down $0.72)
MSFT December 62.50 calls (MSFT161216C00062500, $0.27, down $0.17)
Entry Price: $0.45 (11/22/2016)
Exit Target: $1.00
Stop Target: None
Action: Short-term support is at $60.50-$60. Wednesday’s low split the middle at $60.25. Resistance is at $61.25-$61.50.
Tower Semiconductor (TSEM, $18.41, up $0.07)
TSEM January 19 calls (TSEM170120C00019000, $0.70, up $0.05)
Entry Price: $0.50 (11/16/2016)
Exit Target: $1.00
Stop Target: $0.45 (Stop Limit)
Action: Shares tested another 52-week peak of $18.61 on Wednesday. Resistance is at $18.50-$18.75. Rising support is at $18.25-$18.
Lattice Semiconductor (LSCC, $7.36, down $0.01)
LSCC December 7.50 calls (LSCC161216C00007500, $0.05, down $0.06)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60 (Limit Order)
Stop Target: None
Action: Support is at $7.25 and Wednesday’s low. Resistance is at $7.50.
Editor and Chief Options Strategist