MomentumOptions.com Pre-Market Update for 12/21/2016
VIX Holds 11.50
The talking heads were cheerleading throughout the day for another record close and Dow 20,000 but they left gassed after failing to trip this milestone level. It can’t be said with a 100% certainty the blue-chips will get there this week but the slick talking pros are saying it will happen at some point. Although my chart work from February 2015 has predicted the current price ranges for ALL of the major indexes, the assumption the knuckleheads are making, makes me a little nervous.
The Dow dipped 32 points, or 0.2%, to close just under 19,942. The blue-chips tested a high of 19,986 but fell a point shy of Tuesday’s all-time high and upper resistance at 19,900-20,000. A close above the latter could lead to 20,200-20,400 over the next few weeks. Support remains at 19,800 followed by 19,600-19,500.
The S&P 500 slipped 5 points, or 0.3%, to settle at 2,265. The index made a one-point trip to 2,271 on the open but failed lower resistance at 2,275-2,300. The backtest to the session low into the close held upper support at 2,260-2,250.
The Nasdaq dropped a dozen points, or 0.2%, to end at 5,471. Tech also traded into positive territory, briefly, after reaching a peak of 5,486 during the opening minutes. Upper resistance at 5,475-5,500 held with a shot at 5,550-5,600, if cleared and held. Near-term support remains at 5,450 with backup at 5,425-5,400. Wednesday’s low tapped 5,465.
The Russell 2000 fell 8 points, or 0.6%, to finish just below 1,375. The small-caps traded a half-point higher to 1,384 but stalled at middle resistance between 1,375-1,400. Support at 1,370-1,365 held following the fade to the session low into the closing bell. Backup help is at 1,360-1,350 on a move below the latter.
The S&P 500 Volatility Index ($VIX, 11.27, down 0.18) stayed subdued for much of the session after trading down to 10.93 shortly after the open. Longer-term support at 10 and single-digits remain in the mix on continued closes below 11.50. Short-term resistance remains at 12.50-13.50. Yesterday’s high reached 11.49 during the second half of action.
My feeling is Dow 20,000 could happen by today or Friday and ahead of the Christmas holiday, but I wouldn’t be surprised if the frustration for the talking heads lasts into next week. We also take caution Dow 20,000 may not happen this year, or next, but those odds are low. The best medicine is patience and we have done well ringing the register for December. Our current trades will takes us into February and March so keep this in mind as we build out our next batch of trades.
I have updated the parameters of yesterday’s ARRY trade so let’s go check the action.
From desk to press, futures look like this: Dow (-34); S&P 500 (-4); Nasdaq 100 (-10).
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.
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Array Biopharma (ARRY, $8.58, down $0.18)
ARRY March 10 calls (ARRY170317C00010000, $0.85, up $0.05)
Entry Price: $0.85 (12/21/2016)
Exit Target: $1.70
Stop Target: None
Action: Set an Exit Target at $1.70. There is no Stop Target at the moment.
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.
Near-term resistance is at $8.75-$9. The recent 52-week peak is at $9. Yesterday’s low tapped upper support at $8.50-$8.25.
CVS Health (CVS, $79.85, up $0.01)
CVS January 82.50 calls (CVS170120C00082500, $0.62, down $0.06)
Entry Price: $0.68 (12/20/2016)
Exit Target: $1.40
Stop Target: None
Action: Wednesday’s high reached $80.19. 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, $8.40, down $0.01)
VIAV March 9 calls (VIAV170317C00009000, $0.32, flat)
Entry Price: $0.37 (12/8/2016)
Exit Target: $1.00
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. Yesterday’s low touched $8.35.
TiVo (TIVO, $20.60, down $0.50)
TIVO January 22.50 calls (TIVO170120C00022500, $0.20, down $0.15)
Entry Price: $0.33 (11/30/2016)
Exit Target: $0.70
Stop Target: None
Action: Support is at $20.50-$20 and the 50-day moving average. Resistance is at $21.25-$21.50.