Mid-Market Update for 12/21/2016

Tight Trading Range/ New Trade (ARRY)

1:30pm (EST)

Futures were slightly higher throughout this morning but slipped off their highs as the talking heads pulled out their Dow 20K hats ahead of the open. To say the blue-chip were jinxed would be an understatement as the result has amounted to the tightest trading range in three years for the Dow.

Aside from the market, there are a number of stocks also in a trading range and this has added to the recent frustration for some investors. However, trading ranges are good for the market following the recent run to record highs.

I often say picking a market top, or bottom, is one of the absolutely hardest things to do on a technical basis but my instincts say a blowoff top might come at some point in January. This week and next will be important tells as the market prepares for 4Q earnings that start the second week of next month.

For new subscribers, my chart work from the past two February’s have penciled in possible runs to Dow 20,000 but I’m more focused on Nasdaq 6,000. Of course, this price target for Tech may or may not come in 2017, or until 2018. However, Nasdaq 5,500 is a likely still in the cards before year end or at some point next month.

The Dow is down 22 points to 19,952 while the S&P 500 is off 3 points to 2,267. The Nasdaq is declining 9 points to 5,474 and the Russell 2000 is lower by 3 points to 1,380.

I have a New Trade on a stock that is pretty familiar with the portfolio. Shares of ARRY have been in a tight range and I want to use today’s slight pullback to buy call options.


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.


New Trade!

Array Biopharma (ARRY, $8.55, down $0.21)

Buy to Open ARRY March 10 calls (ARRY170317C00010000, $0.85, up $0.05)

Action: I like these call options at current levels and you can use a Limit Order up to $1.10 to get the best fills. These are the regular ARRY March 10 call options that expire on March 17th, 2017. I will provide the parameters of the trade in tomorrow’s Pre-Market update.

Shares have remained in a tight range throughout December and could lead to a breakout (or breakdown) in the coming weeks and months. ARRY is one of my favorite Biotech stocks for 2017 and I have a March price target of $12 on the stock. This would get these call options to $2 “in-the-money” for a nice, triple-digit profit from current levels.


Current Trades

CVS Health (CVS, $80.00, up $0.16)

CVS January 82.50 calls (CVS170120C00082500, $0.68, flat)

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, $8.9, down $0.02)

VIAV March 9 calls (VIAV170317C00009000, $0.32, flat)

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

Action: 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, flat)

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: Support is at $20.50-$20 and the 50-day moving average. Resistance is at $21.25-$21.50.