Dear Momentum Options Subscriber,

One of my favorite sectors to play long and short positions on is the grocery and supermarket stocks. I usually stick to two names for the most part, which I have recommended on a frequent basis as official positions for the portfolio over the years.

I tend to be both bullish and bearish on Whole Foods (WFM), but I’ve been mostly bearish on Kroger (KR). While both stores have had a presence in my home city, Kroger left over a decade ago, and Whole Foods became the new kid on the block a few years ago.

Perhaps this explains some of my bias towards one over the other. However, when it comes to trading, all I care about is price action. I’m not worried about which store might be better, but instead I focus on the chart work and expectations for each company going into the announcement.

While the best price action comes on trading the news when it occurs, it is basically a 50/50 shot on the stock going up or down that day or the following session. For investors that like the allure of trading earnings, it is also important to note that no matter how good your homework might be on a possible beat or miss, it all comes down to the conference call and the vibe of the analysts.

Kroger is set to announce its quarterly results on Thursday, before the market opens, and Wall Street is looking for a profit of $0.42 a share on revenue north of $26 billion. The company has topped expectations over the past four quarters by $0.02, a penny, and $0.03 and $0.04, respectively.

While this looks good on the surface, revenues have been spotty over the past year, and they could come in shy of expectations this time around. A top- and bottom-line beat would make for a bullish quarter that could propel shares higher.

I’m looking at a possible bullish or bearish trade in KR, but I will likely be sitting on the sidelines ahead of the news. There could be an opportunity to play the move afterwards, so I will keep you posted.

As far as the market goes, the Dow is gaining 37 points to 19,135, while the S&P 500 is adding 7 points to 2,209. The Nasdaq is up 32 points to 5,400, and the Russell 2000 is higher by 4 points to 1,334.

I have updated our current trades below, including a Trade Alert for our position in Tower Semiconductor (TSEM), so let’s go check the action.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 80-34 (70%). 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, $18.08, up $0.04)

TSEM January 19 calls (TSEM170120C00019000, $0.47, down $0.23)

Entry Price: $0.50 (11/16/2016)

Exit Target: $1.00

Return: -30%

Stop Target: $0.35 (Stop Limit)

Action: The Stop Limit at $0.35 has triggered today, and we are now out of the position.


Chicago Bridge & Iron (CBI, $32.27, down $0.55)

CBI January 35 calls (CBI170120C00035000, $0.67, down $0.23)

Entry Price: $1.25 (11/25/2016)

Exit Target: $2.50

Return: -46%

Stop Target: None

Action: Support is at $32.25-$32. Resistance is at $32.75-$33.


T-Mobile (TMUS, $55.57, up $0.59)

TMUS December 56 calls (TMUS161216C00056000, $1.08, up $0.33)

Entry Price: $0.75 (11/25/2016)

Exit Target: $1.50

Return: 44%

Stop Target: None

Action: Resistance is at $55, with continued closes above this level leading to blue-sky territory towards $57.50-$60. Support is at $54.50-$54.


Imax (IMAX, $31.38, down $0.67)

IMAX January 36 calls (IMAX170120C00036000, $0.45, flat)

Entry Price: $0.90 (11/23/2016)

Exit Target: $1.80

Return: -50%

Stop Target: None

Action: Support is at $31.25-$31. Resistance is at $31.75-$32.

You can read my previous comments on IMAX in yesterday’s Pre-Market Update.


Microsoft (MSFT, $61.49, up $0.79)

MSFT December 62.50 calls (MSFT161216C00062500, $0.42, up $0.17)

Entry Price: $0.45 (11/22/2016)

Exit Target: $1.00

Return: -7%

Stop Target: None

Action: Resistance is at $61-$61.25 Support is trying to move up to $61.


Lattice Semiconductor (LSCC, $7.05, down $0.04)

LSCC December 7.50 calls (LSCC161216C00007500, $0.05, up $0.03)

Entry Price: $0.30 (10/12/2016)

Exit Target: $0.60 (Limit Order)

Return: -83%

Stop Target: None

Action: Support is at $7-$6.75. Resistance is at $7.20-$7.25. Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options