MomentumOptions.com Pre-Market Update for 2/13/2017
Record Highs Still Shocking Wall Street
The market broke out to fresh all-time highs last week, for the most part, as three of the four major indexes continued their run to bluer-sky territories. Missing from the group are the small-caps, and they will be this week’s focus on a multi-top breakout, or, another failed attempt at record highs.
Clouding the picture and having influence on the market will be ongoing political, as well, as geopolitical news, along with corporate earnings. Fourth-quarter earning season is mostly in the books but will continue through March in preparation for 1Q earnings season that starts in April.
The Dow jumped 97 points, or 0.5%, to end at 20,269 on Friday. The blue-chips traded in the green throughout the session while reaching an all-time intraday high of 20,298. I have been talking about bluer-sky territory and fresh resistance at 20,350-20,400 over the near-term on continued closes above 20,200-20,125. A move above 20,400 gets 20,550-20,600 in play. Backup support is at 20,000-19,900. Another 2%-3% move from current levels would put the Dow in the 20,800-21,000 range.
The S&P 500 added 8 points, or 0.4%, to finish at 2,316. The index reached a second half record high of 2,319 while pushing fresh resistance 2,325-2,350. Support has moved up to 2,300-2,290 with a close below 2,285 being cause for pause and a signaling of a possible near-term top. I’m looking fora near-term top at 2,375-2,400 and I will explain why I will be cautious at these levels below.
The Nasdaq climbed nearly 19 points, or 0.3%, to settle at 5,734. Tech continued its torrid pace at lifetime highs after setting its fourth-straight record high of 5,743 during Friday’s second half of action. Fresh resistance is at 5,750-5,800 with a good shot at 5,900-6,000 coming in March, or April, on continued momentum. Near-term support is at 5,700-5,675 with a close below 5,650 signaling a possible short-term top.
The Russell 2000 advanced 10 points, or 0.8%, to close at 1,388. The small-caps were the strongest on Friday, a good sign, and traded to a high of 1,391.18. The close into resistance at 1,385-1,390 was also bullish but the failure to take out the all-time high of 1,392.72 remains a concern. Fresh resistance is at 1,400-1,425 on continued closes above 1,395 and would represent a quadruple-top breakout – a rarity. Shaky support is at 1,375-1,370 on a drop below 1,385.
The S&P 500 Volatility Index ($VIX, 10.85, down 0.03) traded to a third-straight lowered high of 10.95 on the open with lowered resistance at 11.50-12.50 easily holding. The intraday low of 10.55 failed lowered support at 11-10.50. Continued closes below the latter keeps 10 and single-digits in play. The February 1st 52-week low is at 9.97.
I wanted to keep this week’s commentary simple as I have been preparing for the run to these exact record highs for two years. For longer-term subscribers, they know every year in February, I try to forecast where the market will be in a year and I have been pretty accurate for a number of years, especially with Tech and the Nasdaq.
My chart work and Price Targets from 2016 for the major indexes were slightly lower than my 2015 Price Targets as last February followed a nasty January 2016 market pullback. Although I was still bullish, I needed to ensure lower downside targets weren’t tested and called for a “double-bottom” that followed an incredible rebound rally.
The summer of 2016 lead to a retest of prior all-time highs followed by a lowered trading range into September before a nasty swoon into early November. On September 26th I had this to say:
“The Nasdaq was at 5,213 to start the month and traded to a low of 5,097 on September 12th. The surge to fresh all-time highs throughout last week represented the 9th record close for 2016 on Thursday. The current rally has reached 208 points, or 4% since the dip below 5,100. Factoring in an 8% move off the low would have Tech near 5,500 and the target I posted in February. It is crucial the 5,200 level holds into October.”
The reason it has been easy to stay bullish for two years, despite the hundreds of professionals that have called for the “mother of all stock market corrections”, and trading ranges, and volatility, has been my own chart work. Here are the Price Targets from February 2015 I had penciled in along with the charts:
If, or when, the aforementioned Price Targets are reached and excluding the Dow, it doesn’t necessarily mean I will turn instantly bearish. In fact, I will stay bullish as long as price action dictates continued momentum. I have discussed how the VIX can stay deflated for weeks, and perhaps months, despite the slick-talking pros still telling you to “buy protection”.
I have been a student of the VIX for decades and I cannot tell you how valuable that experience and education has been to me. It is why I continue to point out how wrong these knuckleheads are and I have indicated throughout this month on areas of when we really need to load up on VIX options – to make money, and not for protection. Otherwise, I will continue to play call and put options on stocks and the major indexes.
We may have to plan for the possibility of a continued trading range if fresh highs aren’t set out of the gate to start the week, especially if the Russell 2000 starts to fade again. I will have more commentary and possible earnings trades previews throughout this week as well as possible New Trades.
We have gotten off to a strong start for 2017 and an effort that took a tremendous amount of work given the curve balls that we tossed at me to close 2016. I want to thank all of you that have stayed on through the transition from my previous publisher and for the new subscribers that have found me.
Remember, I ran MomentumOptions for 7 years before the prior 3 years with you know who, with much faster update times. Prior updates would take nearly 30 minutes with InvestorPlace and weren’t in “real-time” until after they edited my work. Of course, there was never much editing as many of you can tell, as I’m a pretty good writer on the fly and while the market is moving. Updates and the website are now ready within 1-2 minutes when my NEW team gets my market and trade commentary.
I’m still working on real-time text alerts that I hope to have ready in March so please be patient. I also plan to have the 2017 portfolios updated in the next two weeks that will be available in the Members Area. My team is also working on updating the 2016 Track Record for the Daily and the entire Easy Money Track Record for 2016 that will also include prior years of the Weekly Wrap.
The Weekly Wrap was a stock and option newsletter that I was forced to cancel in early 2016 due to IP’s inability to promote a newsletter with a win/loss rate of over 80%. Seriously. It was a covered call/ undiscovered stock trading gem of a service that I will be incorporating with Easy Money Options again in the coming weeks and months. It is also based on stocks I hold in my retirement account, or options I may trade.
In the meantime, I will continue to bring you some exciting updates and please continue to call me if you are having problems with a prior subscription. My call volume is slowing down but I’m still getting over 75 a day. Please keep this in mind and the absolute best way to get a response in 24-48 hours is to email me, directly, at Rick@MomentumOptionsTrading.com.
I apologize for the snafus caused by my previous association from my prior Shark Tank deal. In any event, I will gladly honor any past subscriptions and why I have offered some incredible deals to those that stayed through the transition. Thank you again, from me and my small staff. The newsletter and Trade Alerts now come out within two minutes after I release them and please let us know if you have additional issues. In the meantime, let’s continue to enjoy the rally and ride with the bulls.
From desk to press, futures look like this: Dow (+38); S&P 500 (+3); Nasdaq 100 (+5).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 9-2 (82%). All trades are dated and time stamped for verification. New subscribers can look at the past history to see how the trades have played out or to research our Track Records.
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.
Flex (FLEX, $16.00, up $0.30)
FLEX March 16 calls (FLEX170317C00016000, $0.40, up $0.14)
Entry Price: $0.40 (2/10/2017)
Exit Target: $0.80
Stop Target: None
Action: Resistance is at $16.25-$16.50 with Friday’s high tapping $16.10. The recent 52-week and multi-year high is at $16.16. Continued momentum could carry shares towards $17-$18 as long as they can hold $16 and build a fresh base above this level. Support is at $15.75-$15.50.
Viavi Solutions (VIAV, $10.22, down $0.07)
VIAV March 10 calls (VIAV170317C00010000, $0.55, down $0.10)
Entry Price: $0.40 (2/8/2017)
Exit Target: $0.80
Stop Target: 48 cents (Stop Limit)
VIAV March 9 calls (VIAV170317C00009000, $1.30, down $0.10)
Entry Price: $0.50 (1/25/2017)
Exit Target: $2.00
Stop Target: $1.20 (Stop Limit)
Action: Friday’s high reached $10.41 with the recent 52-week peak at $10.44. Resistance is at $10.50-$10.75. Rising support is at $10 with a move below this level likely triggering the Stop Limits.
Boston Scientific (BSX, $25.20, down $0.14)
BSX March 25 calls (BSX170317C00025000, $0.70, down $0.10)
Entry Price: $0.70 (2/7/2017)
Exit Target: $1.40
Stop Target: None
Action: Shares kissed $25.43 before closing in the red. The 52-week high is at $25.45 with resistance at $25.50-$25.75. Support is at $25-$24.75.
Tower Semiconductor (TSEM, $22.07, up $0.03)
TSEM March 23 calls (TSEM170317C00023000, $0.65, up $0.05)
Entry Price: $0.45 (2/7/2017)
Exit Target: $0.90
Stop Target: None
Action: Fresh resistance is at $22.25 and Friday’s 52-week high. Additional momentum could carry shares towards a multi-year breakout towards $23.50-$24. Support is at $21.75-$21.50.
TherapeuticsMD (TXMD, $5.80, down $0.04)
TXMD June 7.50 calls (TXMD170616C00007500, $0.60, flat)
Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Stop Target: None
Action: Resistance is at $6. Friday’s run reached $5.88 on the open before a sluggish session afterwards. Support is at $5.75-$5.50.