Dear Momentum Options Subscriber,

The market finished mixed on Wednesday despite getting off to a good start. Oil rose as OPEC decided to cut production, but it ran into key resistance levels at $49-$50. Economic news has been good of late, and traders are anxiously looking ahead to tomorrow’s jobs report.

The Dow advanced 2 points, or 0.01%, to close at 19,123. The blue-chips held positive territory throughout the session, while reaching a fresh all-time intraday peak of 19,225. My near-term targets of 19,200-19,325 are officially in play. Of course, this is assuming that support at 19,000-18,900 holds into the weekend.

The S&P 500 slipped nearly a 6-pack, or 0.3%, to finish at 2,198. The index traded to a record high of 2,214 shortly after the open, with lower resistance and my lower near-term fluff targets at 2,215-2,225 holding. Support at 2,200-2,190 held following the pullback to the day’s closing low, but the fall back below 2,200 was a yellow light.

The Nasdaq sank 56 points, or 1.1%, to settle at 5,323. Tech opened higher at 5,391 but stalled at 5,393, which was shy of fresh resistance at 5,400. The sudden fade into negative territory and close at the session low was surprising, and the drop back below 5,350 was slightly bearish. Backup support at 5,325-5,300 was tested, with a close below the latter being another bearish development.

The Russell 2000 also fell nearly 6 points, or 0.4%, to end at 1,322. The small-caps traded up to 1,337, while splitting resistance at 1,335-1,340. The fade below support at 1,330-1,325 was a slight warning sign, and I have talked about risk to 1,315-1,300 on a close below the latter.

The S&P 500 Volatility Index ($VIX, 13.33, up 0.43) tested a low of 12.23 but failed to hold the 12.50 level and, more importantly, support at 12-11.50. The rebound to 13.42 late in the day triggered near-term resistance at 13-13.50. There is additional risk to 14.50-15 on continued market weakness.

From desk to press, futures look like this: Dow (-2); S&P 500 (-2); Nasdaq 100 (-7); Russell (+2).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 81-34 (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).

 

E*Trade Financial (ETFC, $34.51, up $0.44)

ETFC January 35 calls (ETFC170120C00035000, $1.25, up $0.25)

Entry Price: $1.27 (11/30/2016)

Exit Target: $2.60

Return: 3%

Stop Target: None

Action: The Exit Target for the trade is at $2.60, but it is not a Limit Order at this time. There is no Stop Limit at this time.

Fresh resistance is at $34.75-$35. Yesterday’s run to $34.89 was a 52-week peak. Near-term support is at $34-$33.75. I have a price target of $37-$37.50 for ETFC by mid-January on continued momentum.

 

PowerShares QQQ Trust (QQQ, $117.64, down $1.30)

QQQ January 122 calls (QQQ170120C00122000, $0.55, down $0.33)

Entry Price: $0.90 (11/30/2016)

Exit Target: $1.80

Return: -39%

Stop Target: None

Action: Near-term support is at $117.50-$117. Resistance is at $118-$118.25.

 

Rambus (RMBS, $13.15, down $0.25)

RMBS February 14 calls (RMBS170217C00014000, $0.45, down $0.13)

Entry Price: $0.53 (11/30/2016)

Exit Target: $1.10

Return: -15%

Stop Target: None

Action: Support is at $13. Resistance is at $13.25-$13.50.

 

TiVo (TIVO, $20.25, down $0.55)

TIVO January 22.50 calls (TIVO170120C00022500, $0.29, down $0.13)

Entry Price: $0.33 (11/30/2016)

Exit Target: $0.70

Return: -12%

Stop Target: None

Action: Support is at $20. Resistance is at $20.50-$20.75. Wednesday’s high reached $20.75.

 

Chicago Bridge & Iron (CBI, $33.51, up $1.42)

CBI January 35 calls (CBI170120C00035000, $1.07, up $0.42)

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

Exit Target: $2.50

Return: -14%

Stop Target: None

Action: Yesterday’s high tapped $33.77. Resistance is at $33.50-$34. Support is at $33.

 

Imax (IMAX, $31.95, up $0.40)

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: Resistance is at $32-$32.25. Support is at $31.50-$31.25. Wednesday’s high reached $32.10.

 

Microsoft (MSFT, $60.26, down $0.83)

MSFT December 62.50 calls (MSFT161216C00062500, $0.18, down $0.14)

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

Exit Target: $1.00

Return: -60%

Stop Target: None

Action: Support is at $60.25-$60. Resistance is at $60.75-$61.

 

Lattice Semiconductor (LSCC, $7.01, down $0.03)

LSCC December 7.50 calls (LSCC161216C00007500, $0.05, flat)

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