MomentumOptions.com Pre-Market Update for 2/16/2017
VIX Spikes 11%
Lost in Wednesday’s bullish shuffle to higher highs, the VIX went unnoticed by the talking heads as volatility spiked 11% while closing above lowered resistance levels. The damage wasn’t major but any fender bender is a cause for concern, especially, when you have money invested in bullish positions. Of course, we have stayed one-step ahead of the slick talking pros and there is no reason to abandon ship, but the action could get choppy with February option expiration on Friday and a three-day weekend approaching.
The Dow added 107 points, or 0.5%, to close at 20,611. The blue-chips slipped 8 points on the open to 20,496 with near-term support at 20,400-20,350 easily holding. The run to 20,620 afterwards set another record high with upper resistance at 20,550-20,600 being cleared. Continued closes above the latter keeps bluer-sky territory to 20,800-21,000 in play.
The S&P 500 soared 11 points, or 0.5%, to end at 2,349. The index tested a low of 2,334 at the start of trading with upper support at 2,325-2,300 standing strong. The bounce to 2,351 ahead of the closing bell was a fresh lifetime high with lower resistance at 2,350-2,375 getting breeched but holding.
The Nasdaq jumped 36 points, or 0.6%, to finish at 5,819. Tech fell a 6-pack on the opening scuffle to 5,776 with rising support at 5,750-5,725 easily holding. The rebound to 5,821 was the index’s 7th-straight gain with upper resistance at 5,750-5,800 being cleared. Continued closes above the latter get fresh hurdles at 5,850-5,875 in the mix.
The Russell 2000 climbed 7 points, or 0.6%, to settle at 1,404. The small-caps traded down to 1,392 in the opening minutes with rising support at 1,390-1,385 holding. A close below the latter remains our signal to possibly go short. However, the run to 1,405 afterwards and close above lower resistance at 1,400-1,425 still keeps me bullish.
The S&P 500 Volatility Index ($VIX, 11.97, up 1.23) stayed elevated throughout the session with the high reaching 12.01. The close above lower resistance at 11.50-12.50 needs to be respected with a move above the latter being a bearish development. Support remains at 11-10.50.
I have adjusted a number of Stop Limits and Exit Targets this morning so please take note and make the changes in your brokerage accounts.
From desk to press, futures look like this: Dow (-17); S&P 500 (-3); Nasdaq 100 (-1).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 10-2 (83%). 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.
Jabil Circuit (JBL, $25.72, up $0.56)
JBL March 26 calls (JBL170317C00026000, $0.80, up $0.15)
Entry Price: $0.65 (2/13/2017)
Exit Target: $1.30
Stop Target: None
Action: Shares closed on a fresh 52-week high. Resistance is at $25.75-$26 with breakout potential to $27-$28. Support is at $25.25-$25.
Flex (FLEX, $16.53, up $0.26)
FLEX April 17 calls (FLEX170421C00017000, $0.37, up $0.10)
Entry Price: $0.35 (2/15/2017)
Exit Target: $0.70
Stop Target: None
FLEX March 16 calls (FLEX170317C00016000, $0.70, up $0.15)
Entry Price: $0.40 (2/10/2017)
Exit Target: $0.80, raise to $1.10
Stop Target: 50 cents (Stop Limit)
Action: Set an Exit Target at 70 cents for the FLEX April 17 calls. There is no Stop Target.
Set an initial Stop Limit at 50 cents on the FLEX March 16 calls to protect profits. Yesterday’s low was 51 cents. Raise the Exit Target from 80 cents to $1.10.
Fresh resistance is at $16.75-$17. Yesterday’s run to $16.63 set another 52-week high. Rising support is at $16.25-$16.
Viavi Solutions (VIAV, $10.76, up $0.14)
VIAV March 10 calls (VIAV170317C00010000, $0.95, up $0.10)
Entry Price: $0.40 (2/8/2017)
Exit Target: $0.80, raise to $1.20
Stop Target: 70 cents (Stop Limit)
VIAV March 9 calls (VIAV170317C00009000, $1.85, up $0.20)
Entry Price: $0.50 (1/25/2017)
Exit Target: $2.00 (Limit Order on third)
Stop Target: $1.30, raise to $1.55 (Stop Limit)
Action: Set an initial Stop Limit at 70 cents on the VIAV March 10 calls to protect profits. Raise the Exit Target from 80 cents to $1.20.
Raise the Stop Limit from $1.30 to $1.55 on the VIAV March 9 calls. Set a Limit Order to exit a third of the trade at $2.00.
Shares traded to another 52-week peak of $10.88 on Wednesday. Fresh resistance is at $11-$11.25 and levels I would like to see and cleared ahead of the weekend. Rising support is at $10.75-$10.50.
Boston Scientific (BSX, $25.41, up $0.23)
BSX March 25 calls (BSX170317C00025000, $1.00, up $0.35)
Entry Price: $0.70 (2/7/2017)
Exit Target: $1.40
Stop Target: 75 cents (Stop Limit)
Action: Set an initial Stop Limit at 75 cents to protect profits.
Shares traded to another 52-week high of $25.65 yesterday. These options likely got a nice pop yesterday as the BSX March 27 calls traded over 19,000 contracts. I could also piggyback this trade on continued strength. If so, I will likely do so in the midday update.
Resistance is at $25.50-$25.75. Support is at $25-$24.75.
TherapeuticsMD (TXMD, $5.89, up $0.03)
TXMD June 7.50 calls (TXMD170616C00007500, $0.65, up $0.05)
Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Stop Target: None
Action: Wednesday’s high reached $5.93. Resistance is at $6. Support is at $5.75-$5.50.