Dear Momentum Options Subscriber,

The bulls returned to their winning ways on Tuesday following some opening weakness, as the market finished mostly higher. The small-caps slacked, but tech tapped another all-time intraday high. Today’s action could see wider swings as a result of OPEC’s decision and the subsequent reaction in oil prices to a possible cut in production.

The Dow added 23 points, or 0.1%, to close at 19,121. The blue-chips slipped to 19,062 on the open, with support at 19,000-18,900 holding. The low was 10 points lower than Monday, so there is still risk to the downside. The run to 19,144 made a higher high than Monday and came within 8 points of another record intraday peak. Resistance and greener pastures remain at 19,200-19,325.

The S&P 500 added 3 points, or 0.1%, to finish at 2,204. The index fell below upper support at 2,200-2,190 after testing 2,198 shortly after the opening bell. The rebound to 2,210 was a bullish sign, with resistance at 2,215-2,225 back in play.

The Nasdaq climbed 11 points, or 0.2%, to settle at 5,379. Tech traded down to 5,360 during the first half-hour of the action, with support at 5,375-5,350 getting split. The run past resistance at 5,400 to 5,403 was another record high and reaffirms that 5,450-5,500 could trigger this week or at some point in December.

The Russell 2000 dipped less than 2 points, or 0.1%, to end at 1,328. The small-caps kissed 1,327 on the opening dust, with lower support at 1,330-1,325 standing strong. There is still risk to 1,315-1,300 on a move below the latter. Lower resistance at 1,335-1,340 was pushed intraday, and a close above the latter would be a bullish signal.

The S&P 500 Volatility Index ($VIX, 12.90, down 0.25) reached a peak of 13.55 during the morning action, with resistance at 13-13.50 getting slightly stretched. The fade to 12.62 ahead of the close fell just shy of the 12.50 level and additional support at 12-11.50.

From desk to press, futures look like this: Dow (+40); S&P 500 (+5); Nasdaq 100 (+3); Russell (+1).

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).

 

T-Mobile (TMUS, $55.39, up $0.41)

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: $0.90 (Stop Limit)

Action: Set a Stop Limit at $0.90 to protect profits.

Shares traded to a fresh 52-week high of $55.84 yesterday. Continued closes above double-nickels ($55) should lead to blue-sky territory towards $57.50-$60. Support is trying to move up to $55-$54.75.

 

Chicago Bridge & Iron (CBI, $32.09, down $0.73)

CBI January 35 calls (CBI170120C00035000, $0.65, down $0.25)

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

Exit Target: $2.50

Return: -48%

Stop Target: None

Action: Tuesday’s low reached $31.92. Support is at $32-$31.50. Resistance is at $32.50-$32.75.

 

Imax (IMAX, $31.55, down $0.50)

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: Lower support at $31.25-$31 was tested on Tuesday. Resistance is at $31.75-$32.

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

 

Microsoft (MSFT, $61.09, up $0.48)

MSFT December 62.50 calls (MSFT161216C00062500, $0.32, up $0.07)

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

Exit Target: $1.00

Return: -29%

Stop Target: None

Action: Resistance is at $61-$61.25. Yesterday’s run to $61.41 was an all-time high, with the options trading up to $0.43. Support is at $61-$60.50.

 

Lattice Semiconductor (LSCC, $7.04, down $0.05)

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