Mid-Market Update for 12/30/2016

Bears Crack Trading Range/ Trade Alerts (CVS, VIAV)

3:30pm (EST)

I often mention how trading ranges can be frustrating and the past few weeks has teased Wall Street with higher highs and record closes while they have been begging for a pullback. I had a good feeling earlier this week when the talking heads were pulling out the “Dow 20K” hats the index was likely going to stall at achieving this milestone.

All of the same knuckleheads are now saying Dow 20K is coming in January but that also makes me a little nervous. The bigger picture, however, is that earnings season is just around the corner and will start the second week of January.

This means next week could be more of the same with possible early results with raised forecasts or earnings warnings. The action will certainly pick up next month as companies come in above or below current forecasts.

Additionally, a new President and his staff will be taking over and I mentioned geopolitical events could heat up. Although I hate talking politics, and rarely do, the transition could get a little bumpy if the current shenanigans continue. For now, the incoming elect should ignore the outgoing President.

Heading into the final half hour of trading, the Dow is down 75 points to 19,744 while the S&P 500 is off 3 points to 2,267. The Nasdaq is sinking 53 points to 5,379 and the Russell 2000 is lower by 7 points to 1,356.

I mentioned I had an exploding Watch List and I will cover the possible setups in Monday’s update. I will try to cover 3-5 possible bullish and bearish trades and the entry points I’m looking to get into. In the meantime, there is some end of year cleanup I want to do as we are making early exits in CVS and VIAV.

Have a great New Year and be super safe! I believe 2017 will be one of the best trading opportunities we have seen in a decade so make sure you renew your subscriptions.


Momentum Options Play List

Closed Momentum Options Trades for 2016: 87-37 (70%). 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.

Sony (SNE, $27.95, down $0.20)

January 27.50 puts (SNE170120P00027500, $0.40, up $0.05)

Entry Price: $0.30 (12/23/2016)
Exit Target: $0.60
Return: 33%
Stop Target: None

February 27 puts (SNE170217P00027000, $0.70, up $0.05)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30
Return: 8%
Stop Target: None

Action: Support is at $28-$27.75 with a move below the latter getting $27-$26 in play. Resistance is at $28.25-$28.50.


Array Biopharma (ARRY, $8.74, up $0.06)

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, $78.80, down $0.20)

CVS January 82.50 calls (CVS170120C00082500, $0.25, down $0.10)

Entry Price: $0.68 (12/20/2016)
Exit Target: $1.40
Return: -63%
Stop Target: None

Action: Close the trade at current levels to save the remaining premium.


Viavi Solutions (VIAV, $8.18, down $0.12)

VIAV March 9 calls (VIAV170317C00009000, $0.22, down $0.02)

Entry Price: $0.37 (12/8/2016)
Exit Target: $1.00
Return: -41%
Stop Target: None

Action: Close the trade at current levels to save the remaining premium.