MomentumOptions.com Mid-Market Update for 12/14/2016
Fed Decision on Deck/ New Trade (GLD)
It’s now or next year for the Fed to raise interest rates by a quarter-point. I mentioned the odds of a rate hike were about as good as the sun coming up but we know gloomy days can be cloudy with no sunshine. If there is a pullback, or backtest to support, the talking heads will declare the rally is over.
Throughout 2016, I have noted the knuckleheads that have tried to call a market top, market corrections, pullbacks, and upcoming selloffs. For the short-sellers that are still waiting for an elevator drop, it has been a risky bet buying December options and a trend likely to continue if momentum stays strong.
The same zombies are also starting to chatter about the VIX and an indicator they often ignore until it trades below 12.50 or above 20. They have missed all of the intricate moves between these levels along with a basic lack of understanding technical analysis.
While other factors, signals, charts, setups, and indicators are used, the VIX remains my go to source in helping predict market direction. So while you may hear chatter that, “when the VIX is low, it’s time to go”, remember – I have talked about a possible test to 10 and possibly single-digits. Of course, this assumes the 15 level holds for the rest of the month and into 2017.
The Dow is losing 34 points to 19,876 while the S&P 500 is lower by 5 points to 2,266. The Nasdaq is down 4 points to 5,459 and the Russell 2000 is declining 7 points to 1,366.
I have a New Trade (GLD) I want to get into so let’s get on it. I could also have additional New Trades and/ or Trade Alerts, depending on the reaction to the Fed news.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 83-34 (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.
Spider Gold Shares (GLD, $110.96, up $0.51)
Buy to Open GLD January 107 puts (GLD170120P00107000, $0.75, down $0.11)
Action: I like these call options at current levels and you can use a Limit Order up to 90 cents to get the best fills. These are the regular GLD January 107 put options that expire on January 20th, 2017. I will provide the parameters of the trade in tomorrow’s Pre-Market update.
Viavi Solutions (VIAV, $8.46, down $0.02)
VIAV March 9 calls (VIAV170317C00009000, $0.37, flat)
Entry Price: $0.37 (12/8/2016)
Exit Target: $1.00
Stop Target: None
Action: Resistance is at $8.75-$9. A close above the latter should lead towards a run towards $9.50. Short-term support is at $8.40 followed by $8.25-$8.
PowerShares QQQ Trust (QQQ, $120.65, up $0.19)
QQQ January 122 calls (QQQ170120C00122000, $1.32, flat)
Entry Price: $0.90 (11/30/2016)
Exit Target: $1.80 (Limit Order on 1/2)
Stop Target: $1.12 (Stop Limit)
Action: Resistance is at $121.50-$122. Support is at $120.
Rambus (RMBS, $14.07, down $0.18)
RMBS February 14 calls (RMBS170217C00014000, $0.90, down $0.05)
Entry Price: $0.53 (11/30/2016)
Exit Target: $1.10
Stop Target: 80 cents (Stop Limit)
Action: Near-term support is at $14-$13.75. Resistance is at $14.50 and the 52-week high.
TiVo (TIVO, $21.49, down $0.15)
TIVO January 22.50 calls (TIVO170120C00022500, $0.55, flat)
Entry Price: $0.33 (11/30/2016)
Exit Target: $0.70
Stop Target: None
Action: Support is at $21.25-$21. Resistance is at $22-$22.50.
Chicago Bridge & Iron (CBI, $35.88, down $0.25)
CBI January 35 calls (CBI170120C00035000, $2.05, down $0.05)
Entry Price: $1.25 (11/25/2016)
Exit Target: $3 (closed half at $2.20 on 12/12/2016)
Stop Target: $1.85 (Stop Limit)
Action: Resistance is at $36.50-$37. Support is at $35-$34.75.
Imax (IMAX,$31.70, down $0.10)
IMAX January 36 calls (IMAX170120C00036000, $0.20, flat)
Entry Price: $0.90 (11/23/2016)
Exit Target: $1.80
Stop Target: None
Action: Support is at $31.50-$31.25. Resistance is at $32.50. A golden cross has formed with the 50-day moving average crossing above the 200-day moving average last week. This is usually a bullish indicator but shares need to clear $33 to get the short to possibly start covering again.
You can read my previous comments on IMAX from the 11/28/16 Pre-Market update.
Lattice Semiconductor (LSCC, $7.12, flat)
LSCC December 7.50 calls (LSCC161216C00007500, $0.05, flat)
Entry Price: $0.30 (10/12/2016)
Exit Target: 60 cents (Limit Order)
Stop Target: None
Action: Support is at $6.75 and the 50-day moving average. Resistance is at $7-$7.25.
You can read my previous comments on LSCC and the buyout offer of $8.30 a share from the 11/4/16 Pre-Market update