Mid-Market Update for 1/31/2017

Bears Still Lingering/ New Trade (IWM)

1:30pm (EST)

The bears are pursuing their assault on the bottom of the trading ranges as the multi-session pullback continues ahead of Apple’s (AAPL) earnings after the close. The action has gone exactly as planned as I mentioned there would be weakness into mid-week. The question unanswered will be is if we will be going long or short the market with call or put options.

The answer could be both as we wind down January and look ahead to February. The indexes were on track for some impressive gains but they have lessened dramatically since last Friday. The broader market will still finish the month in the green, but the small-caps likely won’t make it, and today’s lows must hold into the close.

The Dow is down 161 points to 19,809 while the S&P 500 is off 10 points to 2,270. The Nasdaq is down 29 points to 5,584 and the Russell 2000 is up a half-point to 1,352.

I have a New Trade and it’s an index play on a rebound in the small-caps. I have been on record saying there could be a return to all-time highs at some point in February following the end of month pullback. Here is our opportunity. If I’m wrong, we will know quickly. I will likely carry a Stop Limit with this trade in case the bears continue growling.


Momentum Options Play List

Closed Momentum Options Trades for 2017: 5-1 (83%). 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

iShares Russell 2000 (IWM, $134.23, down $0.06)

Buy to Open IWM March 138 calls (IWM170317C00138000, $1.50, down $0.03)

Action: I like these call options at current levels and you can use a Limit Order up to $1.65 to get the best fills. These are the regular IWM March 138 calls that expire on March 17th, 2017. I will provide the parameters of the trade in tomorrow’s Pre-Market update.


Current Trades

Viavi Solutions (VIAV, $8.82, up $0.06)

VIAV March 9 calls (VIAV170317C00009000, $0.42, flat)

Entry Price: $0.50 (1/25/2017)
Exit Target: $1.00
Return: -16%
Stop Target: None

Action: Resistance is at $9-$9.25. Support is at $8.75-$8.50.


TherapeuticsMD (TXMD, $5.68, up $0.03)

TXMD June 7.50 calls (TXMD170616C00007500, $0.65, flat)

Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Return: -13%
Stop Target: None

Action: Resistance is at $5.75-$6. Support is at $5.25-$5.


Green Dot (GDOT, $26.60, down $0.22)

GDOT March 25 calls (GDOT170317C00025000, $2.40, flat)

Entry Price: $1.30 (1/6/2017)
Exit Target: $5 (closed half at $3 on 1/26/17)
Return: 108%
Stop Target: $2 (Stop Limit on other half)

Action: Support is at $26.25-$26. Resistance is at $26.75-$27.


Sony (SNE, $30.11, up $0.67)

February 27 puts (SNE170217P00027000, $0.10, down $0.05)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30 (closed half at 10 cents on 1/23/17)
Return: -88%
Stop Target: None

Action: Resistance is at $29.75-$30. Support is at $29.25-$29. Earnings are due out on Thursday.