Mid-Market Update for 1/9/2017

Monday Blues

3:20pm (EST)

I mentioned the start of the week has been bullish over the shortened holiday weekends that have closed the market the past two Monday’s. Futures were slightly higher as I wrapped up my late night homework but turned south ahead of this morning’s open.

Although today’s results really don’t matter in the overall scheme of things, as one day doesn’t make a trend, today’s close will be important to monitor. If the market closes higher and finishes the first five days of January higher, odds are extremely high there will be full-year gains for 2017.

I will cover more history on these results in my weekly commentary next Monday and there are other, more important clues, we needed to follow this week. The upside targets I mentioned this morning for the indexes still provide bullish opportunities on continued momentum while the downside targets will provide possible short-term plays.

In any event, I will likely use call options on individual stocks as long as fresh highs are in play. I will use index option trades on the major averages if key levels of support crack in the coming weeks. Otherwise, I mentioned this tricky trading range we have been in since early December.

The top of the range continues to be in focus and it is best to keep trades light during these time periods. It is also wise to have a mixture of calls and puts with lighter than normal positions during trading ranges. This means if you trade round lots of 10-50 contracts, slim down to 5-25. Or if you invest $500-$1,000 a trade, maybe lower your limits to $250-$500.

I mention this often because it is important to reserve cash during trading ranges. However, you never want to be totally out of the market. My biggest paydays have come on trades that were stuck in the mud for weeks before an earnings announcement, a takeover rumor, or the technical outlook improved.

Our current trades have February and March expiration dates with no near-term January options in the portfolio. This means we are planning for price action for the next one to two months and not just the next few weeks. December was a great month and I’m still expecting a nice run to start 2017 with our current trades.

The Dow is down 56 points to 19,907 while the S&P 500 is off 6 points to 2,270. The Nasdaq is gaining 14 points to 5,535 and the Russell 2000 is lower by 8 points to 1,358.

I have updated our current trades so let’s go check the tape.
Momentum Options Play List

Closed Momentum Options Trades for 2017: 1-0 (100%). 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.
Green Dot (GDOT, $24.70, down $0.37)

GDOT March 25 calls (GDOT170317C00025000, $1.20, down $0.15)

Entry Price: $1.30 (1/6/2017)
Exit Target: $2.60
Return: -8%
Stop Target: None

Action: Support is at $24.75-$24.50 on a move back below $25. Resistance at $25.25-$25.50.
Sprint (S, $8.72, up $0.03)

S February 9 calls (S170317C00009000, $0.50, flat)

Entry Price: $0.54 (1/6/2017)
Exit Target: $1.10
Return: -7%
Stop Target: None

Action: Resistance is at $8.75-$9 with a continued closes above the latter, and 52-week peak, a bullish signal. Support is at $8.50-$8.25.
Tower Semiconductor (TSEM, $19.60, up $0.22)

TSEM February 20 calls (TSEM170217C00020000, $0.65, up $0.05)

Entry Price: $0.55 (1/3/2017)
Exit Target: $1.10 (Limit Order on 1/3)
Return: 16%
Stop Target: None

Action: Resistance is at $19.50-$19.75. The 52-week high is at $20.04. Support is at $19.25-$19.
Sony (SNE, $28.86, down $0.09)

February 27 puts (SNE170217P00027000, $0.45, flat)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30
Return: -31%
Stop Target: None

Action: Support is at $28.50-$28.25. Resistance is at $29-$29.25.
Array Biopharma (ARRY, $9.43, up $0.49)

ARRY March 10 calls (ARRY170317C00010000, $1.10, up $0.10)

Entry Price: $0.85 (12/21/2016)
Exit Target: $1.70
Return: 28%
Stop Target: None

Action: Resistance is at $9.50. Support is at $8.75-$8.50. I have a $12-$14 Price Target for AARY by mid-March.