MomentumOptions.com Mid-Market Update for 12/29/2016

VIX Pushes Upper Resistance

1:20pm (EST)

The bulls are trying to regain momentum following yesterday’s pullback but the Financial stocks are helping the bears continue with their follow through. I mentioned light trading could cause some skittishness into week’s end but a lower week would be a slightly bearish signal heading into the New Year.

Bank of America (BAC, $21.81, down $0.52) and Citigroup (C, $58.77, down $1.27) are down 2% and are leading the sector lower while volatility is on the rise.

The S&P 500 Volatility Index ($VIX, 13.54, up 0.59) has cleared upper resistance but near-term support on the major indexes are holding across the board. I would like to see the buuls hold 13.50 into the closing bell.

Meanwhile, Gold is ($GOLD, $1,141, up $2) is trying to recover another layer of resistance above $1,140 and could push $1,160, if this level holds for a few days. Overall, the chart is still bearish for Gold but a continued backtest to upper resistance can’t be ruled out.

The Dow is off 24 points to 19,808 while the S&P 500 is slipping 2 points to 2,247. The Nasdaq is down 14 points to 5,424 and the Russell 2000 is off 2 points to 1,358.

I talked about the possibility of using put option index trades on continued weakness but it is still a little too early to start nibbling. I’m also looking at a possible VIX trade on continued closes above 13.50 so stay tuned. In the meantime, let’s go check on the current action.

 

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Sony (SNE, 28.14, down $0.14)

January 27.50 puts (SNE170120P00027500, $0.35, flat)

Entry Price: $0.30 (12/23/2016)
Exit Target: $0.60
Return: 17%
Stop Target: None

February 27 puts (SNE170217P00027000, $0.65, flat)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30
Return: 0%
Stop Target: None

Action: Support is at $28.25-$28. Resistance is at $28.75-$29.

 

Array Biopharma (ARRY, $8.66, up $0.01)

ARRY March 10 calls (ARRY170317C00010000, $0.90, flat)

Entry Price: $0.85 (12/21/2016)
Exit Target: $1.70
Return: 6%
Stop Target: None

Action: Support at $8.50-$8.25. Resistance is at $8.75-$9.

 

CVS Health (CVS, $79.19, up $0.15)

CVS January 82.50 calls (CVS170120C00082500, $0.35, flat)

Entry Price: $0.68 (12/20/2016)
Exit Target: $1.40
Return: -49%
Stop Target: None

Action: Resistance is at $80-$80.50 and the 50-day moving average. Support is at $78.50-$78.

 

Viavi Solutions (VIAV, $8.31, up $0.06)

VIAV March 9 calls (VIAV170317C00009000, $0.24, flat)

Entry Price: $0.37 (12/8/2016)
Exit Target: $1.00
Return: -35%
Stop Target: None

Action: Support is at $8.25-$8. Resistance is at $8.50-$8.60.