Pre-Market Update for 1/4/2017

VIX Closes Back Below 13.50

8:00am (EST)

The bulls checked-off a few boxes on Tuesday with the main two being a return to resistance along with a lowered VIX that had been bubbling. Of course, we know one-day doesn’t make or break a trend but the return into a continued trading range was also a bullish development.

The Dow jumped 119 points, or 0.6%, to finish at 19,881. The blue-chips traded in positive territory throughout the session with the high reaching 19,939. The close between resistance at 19,900-20,000 was a bullish development. Support remains at 19,800-19,725.

The S&P 500 soared 19 points, or 0.9%, to settle at 2,257. The index also held green throughout Tuesday after making a run to 2,263 while splitting resistance at 2,250-2,275. The close back above the 2,250 level was a good sign and a battleground that will be hot today and likely the rest of the week. Support remains at 2,240-2,235.

The Nasdaq zoomed 46 points, or 0.9%, to close at 5,429. Tech opened at 5,425 while holding short-term resistance at 5,400-5,425 into the close. I mentioned yesterday, the more important level is at 5,450 and the bears pushed a high of 5,452. Backup support remains at 5,350-5,300 and the 50-day moving average on a close back below 5,400.

The Russell 2000 rallied 8 points, or 0.6%, to end at 1,363. The small-caps were a intraday but the 2-point dip to 1,355 held support at 1,350-1,360. The close back above the latter gets lower resistance at 1,370-1,375 back on the map. Yesterday’s high reached 1,375 and a move back above this level would be another bullish sign record highs are in play, again.

The S&P 500 Volatility Index ($VIX, 12.85, down 1.19) dropped over 8% while staying deflated throughout Tuesday’s action. The bulls pushed a low of 12.85 and the close back below the 13.50 level was another positive development to start the week. Longer-term support is at 12.50-11.50. Red light resistance remains at 14.50-15.

I have updated the parameters of the latest trade to the portfolio so make sure you set them in your brokerage accounts.

From desk to press, futures look like this: Dow (+26); S&P 500 (+3); Nasdaq 100 (+10).
Momentum Options Play List

Closed Momentum Options Trades for 2017: 0-0 (0%). 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.
Tower Semiconductor (TSEM, $19.16, up $0.13)

TSEM February 20 calls (TSEM170217C00020000, $0.55, up $0.05)

Entry Price: $0.55 (1/3/2017)
Exit Target: $1.10 (Limit Order on 1/3)
Return: 0%
Stop Target: None

Action: Set an Exit target at $1.10 with a limit order to close a third of the trade, if triggered. There is no Stop target.

Near-term resistance is at $19.25-$19.50 with yesterday’s peak reaching $19.39. Support is at $19 and a level that has been holding since mid-December.
Sony (SNE, $28.29, up $0.26)

January 27.50 puts (SNE170120P00027500, $0.35, down $0.05)

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

February 27 puts (SNE170217P00027000, $0.75, flat)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30
Return: 15%
Stop Target: None

Action: Resistance is at $28.25-$28.50. Support is at $28-$27.75 with a move below the latter getting $27-$26 in play.
Array Biopharma (ARRY, $8.56, down $0.23)

ARRY March 10 calls (ARRY170317C00010000, $0.95, down $0.05)

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

Action: Shares cleared upper resistance at $8.75-$9 after setting a fresh 52-week high of $9.12. Upper support at $8.50-$8.25 held on the backtest and lower close.
Rick Rouse