MomentumOptions.com Pre-Market Update for 2/22/2017

VIX Edges Higher on Record Closes/ Profit Alert (BSX)

8:00am (EST)

It was amazing to hear some of the talking heads saying the “Trump rally” has lost steam, or has run out of gas, considering the S&P gained 1.5% last week and set another fresh intraday high on Tuesday. One yapping analyst that made the “misleading” remarks is from across the pond, has no technical background on the market, and why his remarks were a little “off base”. In any event, I like to ignore the noise and keep the news simple. With the major indexes continuing their record run, it is hard to say the BULLISH rally has lost momentum.

The Dow jumped 119 points, or 0.6%, to end at 20,743. The blue-chips held positive territory throughout the session with the fresh record high reaching north of 20,757. Resistance and fresh fluff remain at 20,800-21,000. Rising support is at 20,600-20,550 followed by 20,400-20,350.

The S&P 500 surged 14 points, or 0.6%, to close at 2,365. The index opened at 2,354 while making an intraday run to an all-time high of 2,366.71. Resistance remains at 2,375-2,400 with continued closes above 2,350 a bullish signal. Support remains at 2,325-2,300 on a close below 2,350.

The Nasdaq soared 27 points, or 0.5%, to finish at 5,865. Tech opened at 5,850 while reaching a lifetime intraday peak of 5,867.89. Fresh resistance is at 5,875-5,900 with a close above the latter firmly keeping the possibility of Nasdaq 6,000 by March, or April, in play. Rising support is at 5,850-5,825 with backup at 5,800-5,750.

The Russell 2000 rocketed 10 points, or 0.8%, to settle at 1,410. The small-caps also held green from the start of trading after opening at 1,400 and reaching a record high of 1,410.40 during the session. The close above lower resistance at 1,400-1,425 was another bullish development. Support is at 1,390-1,385 on a move back below 1,405-1,400.

The S&P 500 Volatility Index ($VIX, 11.57, up 0.08) traded higher throughout Tuesday’s action with the high tapping 12.09. The slight pop higher wasn’t too alarming as lower resistance at 12.50-13.50 easily held. Support remains at 11-10.50.

I have adjusted the Stop Limits on JBL, one of the FLEX trades, and one of the VIAV trades. The Stop Limit on BSX also tripped into Tuesday’s close.

From desk to press, futures look like this: Dow (+26); S&P 500 (+2); Nasdaq 100 (+7); Russell (+2).

 

Momentum Options Play List

Closed Momentum Options Trades for 2017: 11-2 (85%). 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, $26.20, up $0.29)

JBL March 26 calls (JBL170317C00026000, $1.05, up $0.20)

Entry Price: $0.65 (2/13/2017)
Exit Target: $1.30
Return: 62%
Stop Target: 70 cents, raise to 80 cents (Stop Limit)

Action: Raise the Stop Limit from 70 cents to 80 cents.

Shares traded to a high of $26.30 yesterday. Fresh resistance is at $26.25-$26.50. Near-term support is at $25.75-$25.50 on a move below $26.

 

Flex (FLEX, $16.79, up $0.35)

FLEX April 17 calls (FLEX170421C00017000, $0.45, up $0.13)

Entry Price: $0.35 (2/15/2017)
Exit Target: $0.70
Return: 29%
Stop Target: None

FLEX March 16 calls (FLEX170317C00016000, $0.90, up $0.27)

Entry Price: $0.40 (2/10/2017)
Exit Target: $1.10
Return: 125%
Stop Target: 50 cents, raise to 70 cents (Stop Limit)

Action: Raise the Stop Limit from 50 cents to 70 cents on the March 16 calls.

Fresh resistance is at $17-$17.25. Rising support is at $16.50-$16.25.

Shares traded to a 52-week high of $16.83 on Tuesday following a Price Target hike from $17 to $22. A bullish analyst said the company’s recent partnership with Nike (NKE) could generate $1.5-$2 billion in revenues over the next couple of years. Additionally, the analyst said it could add an additional 25 cents to Flex’s earnings while keeping his “Outperform” rating on the stock.

I like the bullish call, especially, the Price Target hike. I had already priced-in a run to fresh 52-week peaks and an upper teen Price Target. I also like FLEX as a takeover target this year. The market cap is just under $9 billion and a buyout offer of $13-$15 billion would easily get shares fetching a premium of $24-$27.

 

Viavi Solutions (VIAV, $10.74, up $0.03)

VIAV March 10 calls (VIAV170317C00010000, $0.85, flat)

Entry Price: $0.40 (2/8/2017)
Exit Target: $1.20
Return: 112%
Stop Target: 70 cents (Stop Limit)

VIAV March 9 calls (VIAV170317C00009000, $1.80, up $0.05)

Entry Price: $0.50 (1/25/2017)
Exit Target: $2.00 (Limit Order on third)
Return: 260%
Stop Target: $1.55, raise to $1.60 (Stop Limit)

Action: Raise the Stop Limit from $1.55-$1.60 on the March 9 calls.

Resistance is at $10.75-$11. Support is at $10.50. I would like to ring the register on partial profits this weeks but I’m in no hurry as long as the trades keep making money.

 

Boston Scientific (BSX, $25.28, down $0.11)

BSX March 25 calls (BSX170317C00025000, $0.75, down $0.20)

Entry Price: $0.70 (2/7/2017)
Exit Target: $1.40
Return: 7%
Stop Target: 75 cents (Stop Limit)

Action: The Stop Limit at 75 cents tripped late in the session on the intraday test to $25.26 into the closing bell.

While disappointed, we didn’t make more on the trade, news a court rejected the company’s patent licensing appeal likely caused yesterday’s slight pullback. This could weigh on shares over the near-term but I will revisit another possible trade if shares can clear upper resistance at $25.50-$25.75.

 

TherapeuticsMD (TXMD, $5.59, down $0.02)

TXMD June 7.50 calls (TXMD170616C00007500, $0.45, down $0.10)

Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Return: -40%
Stop Target: None

Action: Support is at $5.50-$5.40 with additional help at $5.25-$5. Resistance is at $6.