Mid-Market Update for 1/11/2017

Biotech Gets Bumpy/ New Trade (TSEM)/ Profit Alerts (ARRY, TSEM)

2:50pm (EST)

The market got off to a good start on this morning open despite a report that oil showed a larger than expected build-up of inventories. This caused some volatility as the price of oil moved lower but has now recovered and is up nearly 4% heading into the close.

The blue-chips were working on a triple-digit gain ahead of President-elect Donald Trump’s briefing to the press. Love him, or hate him, you have to chuckle at his mojo during his press conferences. However, stocks and sectors will react according to what he might say for better or worse. While this has been true with other Presidents and politicians, it is particularly being highlighted with Trump’s rhetoric to slightly larger price swings.

This will likely settle down at the end of the month and when he takes the White House, or the volatility becomes greater. In the meantime, drug stocks are feeling the pinch as the Trumpster began his press conference by saying he would go after better drug prices for the government.

The reaction was swift as Biotech stocks pulled back, leading to a market reversal that saw the major averages gave up the earlier gains. The iShares Nasdaq Biotechnology (IBB) is down 3% and is testing its 100/200-day moving averages. The chart below also shows a rising 50-day moving average that could form a “golden cross” in the coming weeks.

This technical setup is usually a bullish setup. Today’s pullback could be viewed as bullish as long as support at $270-$265 holds on a continued pullback. Conservative traders can wait for IBB to clear $285-$290 before possibly going long and to ensure momentum has returned.

Turning our attention to the market, the Dow is up 57 points to 19,912 while the S&P 500 is off a half-point to 2,268. The Nasdaq is down 10 points to 5,541 and the Russell 2000 is lower by 2 points to 1,369.

I have a number of Trade Alerts, including a “piggy-back” trade for TSEM so let’s get on it.


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 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send an Trade Alerts outside of these time frames.


New Trade

Tower Semiconductor (TSEM, $20.33, up $0.24)

Buy to Open TSEM February 21 calls (TSEM170217C00021000, $0.65, up $0.22)

Action: I like these call options at current levels and you can use a Limit Order up to 80 cents to get the best fills. These are the regular TSEM February 21 calls that expire on February 17th, 2017. I will provide the parameters of the trade in tomorrow’s Pre-Market update.


Current Trades

Green Dot (GDOT, $24.76, down $0.21)

GDOT March 25 calls (GDOT170317C00025000, $1.30, down $0.05)

Entry Price: $1.30 (1/6/2017)
Exit Target: $2.60
Return: 0%
Stop Target: None

Action: Support is at $24.50-$24.25. Resistance is at $25-25.50.


Sprint (S, $8.59, down $0.17)

S February 9 calls (S170317C00009000, $0.40, down $0.05)

Entry Price: $0.54 (1/6/2017)
Exit Target: $1.10
Return: -26%
Stop Target: None

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


Tower Semiconductor (TSEM, $20.33, up $0.24)

TSEM February 20 calls (TSEM170217C00020000, $1.10, up $0.25)

Entry Price: $0.55 (1/3/2017)
Exit Target: $1.10 (Limit Order on 1/3)
Return: 100%
Stop Target: None

Action: Close a THIRD of the trade at current levels.

Fresh resistance is at $20.50-$20.75. Support is at $19.50-$19.25.


Sony (SNE, $30.29, up $0.76)

February 27 puts (SNE170217P00027000, $0.25, down $0.15)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30
Return: -62%
Stop Target: None

Action: Resistance at $30.50-$30.75. Support is at $30-$29.50.


Array Biopharma (ARRY, $9.37, down $0.38)

ARRY March 10 calls (ARRY170317C00010000, $0.90, down $0.40)

Entry Price: $0.85 (12/21/2016)
Exit Target: $1.70
Return: 6%
Stop Target: 90 cents (Stop Limit)

Action: The Stop Limit at 90 cents has tripped on today’s pullback. While disappointed we were stopped out, I will keep shares on my Watch List.