MomentumOptions.com Pre-Market Update for 1/26/2017
VIX Taps 30-Month Low
Lost in the hoopla of the Dow’s record close above 20,000 on Wednesday was the fact volatility slipped to a 2 1/2-year low. The fresh all-time highs certainly peaked Main Street’s interest along with waiters and Uber drivers across the country as the hoopla now hits another gear. Higher highs certainly appear to be on the horizon as investors start to chase the hottest stocks but the astute market players, like you and I, are still finding stocks that have yet to participate in the rally.
The Dow zoomed 155 points, or 0.8%, to end at 20,068. The blue-chips opened at 19,994 and easily cleared upper resistance at 19,900-20,000 while reaching a lifetime high of 20,082. The close above the latter gets my near-term fluff targets of 20,200-20,350 in play. Rising support is at 19,900-19,800 with backup help at 17,700-17,600.
The S&P 500 sizzled 18 points, or 0.8%, to finish at 2,298. The index also made a steady run throughout the session to an all-time high of 2,299.55. The bulls just missed clearing resistance and my lower fluff target of 2,300-2,325 by a half-point. Support has moved up to 2,280-2,275 with 2,260-2,250 serving backup.
The Nasdaq climbed double-nickels, or 1%, to settle at 5,656. Tech made a steady run to 5,658 ahead of the closing bell and easily cleared my near-term targets of 5,625-5,650. The close above the latter gets 5,700-5,750 in play. I have talked about a possible run at Nasdaq 6,000 over the past few years and I will be reviewing my homework from back then, next Monday. Not too hard to believe, but my charts from February 2015 and 2016 were spot on. Short-term support has moved up 5,600-5,575 followed by 5,550-5,525.
The Russell 2000 advanced 13 points, or 1%, to close at 1,382. The small-caps also showed strong gains but fell shy of its lifetime high of 1,392 after reaching 1,383 ahead of the final bell. I highlighted short-term resistance at 1,385-1,400 and the bulls will need the Russell to follow through this week or next to ensure a group effort. Support is at 1,370-1,365 followed by 1,345-1,340.
The S&P 500 Volatility Index ($VIX, 10.81, down 0.26) traded to a fresh 52-week low of 10.52 on Wednesday to close below lower support at 11.50-11. This gets 10 and single-digits into play and something I said would madden Wall Street. Resistance is at 12-12.50 with a move above 13.50 a warning sign down the road.
I have updated the parameters of our latest trade, VIAV, along with multiple adjustments to our current GDOT (+77%) and TSEM (+69) call option trades to start locking-in these juicy profits.
From desk to press, futures look like this: Dow (+55); S&P 500 (+4); Nasdaq 100 (+17).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 4-0 (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.
Viavi Solutions (VIAV, $9.02, down $0.30)
VIAV March 9 calls (VIAV170317C00009000, $0.50, down $0.22)
Entry Price: $0.50 (1/25/2017)
Exit Target: $1.00
Stop Target: None
Action: Set an Exit Target at $1. There is no Stop Target.
Shares traded to a 52-week high of $9.40 on Tuesday and I’m looking for short-term support at $9-$8.75 to hold. Resistance is at $9.25-$9.50. I have talked about this stock making a run past $10 as we traded the name a few times last year. Although this wasn’t meant to be an “earnings trade”, the company announces earnings next week. I will cover their numbers next Monday.
TherapeuticsMD (TXMD, $5.77, up $0.13)
TXMD June 7.50 calls (TXMD170616C00007500, $0.70, flat)
Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Stop Target: None
Action: Yesterday’s high reached $5.82. Near-term resistance is at $5.75-$6. Support is at $5.25-$5.
Transocean (RIG, $15.30, up $0.38)
RIG March 17 calls (RIG170317C00017000, $0.40, up $0.10)
Entry Price: $0.66 (1/13/2017)
Exit Target: $1.35
Stop Target: None
Action: Shares traded up to $15.43 on Wednesday. Resistance is at $15.50-$15.75. Support is at $15-$14.75.
Tower Semiconductor (TSEM, $21.44, up $0.63)
TSEM February 21 calls (TSEM170217C00021000, $1.10, up $0.30)
Entry Price: $0.65 (1/11/2017)
Exit Target: $1.30, raise to $1.50 (Limit Order on half)
Stop Target: 90 cents (Stop Limit)
Action: Raise the Exit Target from $1.30 to $1.50 with a Limit Order to close half the trade.
Set an initial Stop Limit at 90 cents to protect profits. Yesterday’s low on the calls checked-in at 91 cents.
Fresh resistance is at $21.50-$22 following yesterday’s 52-week peak of $21.48. Rising support is at $21-20.50.
Green Dot (GDOT, $26.60, up $0.49)
GDOT March 25 calls (GDOT170317C00025000, $2.30, up $0.45)
Entry Price: $1.30 (1/6/2017)
Exit Target: $2.60, raise to $3 (Limit Order on half)
Stop Target: $1.50 (Limit Order)
Action: Raise the Exit Target from $2.60 to $3 with a Limit Order to close half the trade.
Raise the Stop Target from $1.50 to $1.90 to continue protecting profits.
Fresh resistance is at $26.75-$27. Rising support is at $26.25-$26.
Sony (SNE, $30.79, up $0.30)
February 27 puts (SNE170217P00027000, $0.10, flat)
Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30 (closed half at 10 cents on 1/23/17)
Stop Target: None
Action: Resistance is at $30.75-$31. Support is at $30.25-$30.