Pre-Market Update for 12/21/2016

Small-Caps Lead Bullish Charge

2:45pm (EST)

The Dow party hats were being pulled out on Tuesday but stayed off the lids of traders as the index fell a baker’s dozen shy of 20K. Depending on futures this morning, this milestone could be cleared on the open or at some point today as the bulls are quietly regaining momentum again.

The Dow jumped 91 points, or 0.5%, to close at 19,974. The blue-chips held positive territory throughout the session after opening at 19,920 and reaching an all-time high of 19,987. Lower resistance at 19,900-20,000 was cleared and held with a run to 20,100-20,200 coming on a close above the latter. Support remains at 19,800 followed by 19,600-19,500.

The S&P 500 advanced 8 points, or 0.4%, to settle at 2,270. The index made a run to 2,272 intraday with lower resistance remains at 2,275-2,300 holding into the close. The recent all-time high is at 2,277. Support remains at 2,250 followed by 2,240-2,235.

The Nasdaq gained 26 points, or 0.5%, to end at 5,483. Tech triggered a fresh all-time high after reaching a peak of 5,489 intraday. There is additional blue-sky territory to 5,550-5,600 on a close above 5,500. Near-term support is at 5,450 with backup at 5,425-5,400.

The Russell 2000 soared 12 points, or 0.9%, to finish just below 1,384. The small-caps traded up to 1,385 shortly after the open and came within 8 points of setting another record high. The close above lower resistance at 1,375-1,400 was a bullish signal. Support is trying to move up to 1,370-1,365 with backup at at 1,360-1,350.

The S&P 500 Volatility Index ($VIX, 11.45, down 0.26) stayed below lower resistance at 12.50-13.50 after testing 11.75 intraday. The low of 11.38 and close below 11.50 gets 10 and single-digits in play. This is when the market will be setting up for a short-term top but the VIX can trade at these low levels for weeks, and perhaps months.

I have set the parameters for our latest CVS trade. I’m also looking at another possible new position at some point today so stay locked-and-loaded.

From desk to press, futures look like this: Dow (+20); S&P 500 (+1); Nasdaq 100 (+3).


Momentum Options Play List

Closed Momentum Options Trades for 2016: 87-36 (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.


CVS Health (CVS, $79.84, down $0.09)

CVS January 82.50 calls (CVS170120C00082500, $0.68, down $0.04)

Entry Price: $0.68 (12/20/2016)
Exit Target: $1.40
Return: 0%
Stop Target: None

Action: Resistance is at $80-$80.50 and the 50-day moving average. A close above the latter could lead to a short-term run to $82-$86. Support is at $78.


Viavi Solutions (VIAV, $8.41, up $0.06)

VIAV March 9 calls (VIAV170317C00009000, $0.32, down $0.03)

Entry Price: $0.37 (12/8/2016)
Exit Target: $1.00
Return: -14%
Stop Target: None

Action: Tuesday’s high reached $8.51. Resistance is at $8.50-$8.75. Short-term support is at $8.40-$8.35 followed by $8.25-$8.


TiVo (TIVO, $21.10, up $0.30)

TIVO January 22.50 calls (TIVO170120C00022500, $0.35, flat)

Entry Price: $0.33 (11/30/2016)
Exit Target: $0.70
Return: 6%
Stop Target: None

Action: Yesterday’s peak reached $21.20. Support is at $20.50-$20 and the 50-day moving average. Resistance is at $21.25-$21.50.