Pre-Market Update for 12/23/2016

Light Volume Hampering Bulls

8:00am (EST)

Volume has dried up this week as I often talk about Wall Street taking early vacations near holidays. However, between Christmas and New Year’s is when the number of days taken off really swells. While this has led to a lack of follow through momentum over the past two weeks, the last trading day ahead of Christmas is usually bullish.

The Dow declined 23 points, or 0.1%, to settle at 19,918. The blue-chips traded in negative territory throughout the session with the low checking in at 19,882. Thursday’s 51-point range held support at 19,800. The close third-straight close above lower resistance at 19,900-20,000 remains a bullish signal.

The S&P 500 gave back 4 points, or 0.2%, to end just under 2,261. The index also stayed underwater throughout the day while slitting support at 2,260-2,250 after tapping 2,256. Resistance remains at 2,275-2,300.

The Nasdaq sank 24 points, or 0.4%, to finish at 5,447. Tech made a one-point run into positive territory to reach 5,472 on the opening bell. Lower resistance at 5,475-5,500 held before the midday fade to 5,432. Support at 5,425-5,400 held but the close below 5,450 was slightly bearish.

The Russell 2000 tumbled 12 points, or 0.9%, to close at 1,362. The small-caps also made a trip into greener pastures shortly after the open but the one-third of a point pop failed lower resistance at 1,375-1,400. The intraday test to 1,360 help fresh support at 1,360-1,350.

The S&P 500 Volatility Index ($VIX, 11.43, up 0.16) kissed a low of 11.14 during the first half of action with support at 10.50-10 easily holding. The second half flight to 11.67 held short-term resistance at 12.50-13.50. The close below 11.50 for the third-straight session remains a bullish signal.

Today’s action could be just as boring as the past few sessions along with a lackluster past two weeks. The slick talking pros are wishing for a 5%-10% pullback between now and at some point in January while momentum traders are still hoping for the traditional Santa rally to start next week.

I will be publishing a Mid-Market update but I don’t expect to take any new positions ahead of the upcoming three-day weekend.

From desk to press, futures look like this: Dow (+15); S&P 500 (+2); Nasdaq 100 (+1).


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.


Array Biopharma (ARRY, $8.61, up $0.03)

ARRY March 10 calls (ARRY170317C00010000, $0.85, flat)

Entry Price: $0.85 (12/21/2016)
Exit Target: $1.70
Return: 0%
Stop Target: None

Action: Thursday’s high reached $8.78. Near-term resistance is at $8.75-$9. The recent 52-week peak is at $9. Support at $8.50-$8.25.


CVS Health (CVS, $78.79, down $1.06)

CVS January 82.50 calls (CVS170120C00082500, $0.40, down $0.22)

Entry Price: $0.68 (12/20/2016)
Exit Target: $1.40
Return: -41%
Stop Target: None

Action: Support is at $78.50-$78. Yesterday’s low touched $78.50. Resistance is at $80-$80.50 and the 50-day moving average.


Viavi Solutions (VIAV, $8.32, down $0.08)

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: Thursday’s low reached $8.28. Support is at $8.25-$8. Resistance is at $8.35-$8.40.


TiVo (TIVO, $20.40, down $0.20)

TIVO January 22.50 calls (TIVO170120C00022500, $0.20, flat)

Entry Price: $0.33 (11/30/2016)
Exit Target: $0.70
Return: -39%
Stop Target: None

Action: Support is at $20.50-$20 and the 50-day moving average. Resistance is at $21.25-$21.50. Yesterday’s bottom tapped $20.05.
Rick Rouse