Pre-Market Update for 3/22/2017

Small-Caps Give Up 2017 Gains/ Profit Alert (VIAV)

8:00am (EST)

The bears had their best day of the year and reminded Wall Street why they like taking the elevator lower. The bulls stair-stepped to higher highs on Tuesday’s open but retreated shortly after Tech tapped another all-time high. The VIX spiked 10% but held a key level of resistance into the closing bell. There is still a little wiggle room to see if the market is shaking out the weaker hands, but not much, with the small-caps now showing a loss for the year.

The Dow tumbled 237 points, or 1.1%, to finish at 20,668. The blue-chips traded to a high of 20,970 with lower resistance at 21,000-21,200 holding on the open. The plunge to 20,653 held support at 20,600-20,550. There is risk to 20,400-20,350 and the 50-day moving average on a move below the latter. The bulls to recover the 20,800 level to regain momentum.

The S&P 500 stumbled 29 points, or 1.2%, to settle at 2,344. The index tested a high of 2,381 after opening at 2,379 with resistance at 2,390-2,400 easily holding. The late day low reached 2,341 with backup support at 2,340-2,335 holding. There is risk to 2,325-2,320 and the 50-day moving average on continued weakness. A close back above 2,360 would be a slightly bullish clue the selling pressure is over.

The Nasdaq tanked 107 points, or 1.8%, to close at 5,793. Tech made another all-time intraday high of 5,928 to clear prior and lower resistance at 5,925-5,950. The free fall to 5,790 and close below the 5,800 level was a bearish development. Backup support is at 5,750-5,725 and the 50-day moving average.

The Russell 2000 sank 37 points, or 2.7%, to end at 1,346. The small-caps made a 6-pack run to 1,390 to push lower resistance at 1,390-1,400 but was the first index to retreat. The index closed a half-point off the session low with emergency support at 1,345-1,340 and the 100-day moving average holding. A move below the latter gets 1,320-1,315 in play.

The S&P 500 Volatility Index ($VIX, 12.47, up 1.13) opened lower at 11.15 and kissed a low of 10.92 on the opening pop. The late session test to 12.85 breeched the 100-day moving average with upper resistance at 12.50-13.50 holding. Fresh support is at 11.50 and the 50-day moving average. I have highlighted this area as a key battle ground over the past few weeks and the bears regained a major advantage with yesterday’s assault.

I have another Profit Alert for one of our current trades following the slight pullback in VIAV. Although our other trades took a hit, I still like all of the positions as we have “cheap” call and put options to play the volatility over the next month. I will use more expensive options when a clearer trend emerges and I mentioned this week would be whacky. I still think higher highs will return in April but it depends on what kind of technical damage might be done this week.

From desk to press, futures look like this: Dow (-52); S&P 500 (-7); Nasdaq 100 (-14).


Momentum Options Play List

Closed Momentum Options Trades for 2017: 20-3 (87%). 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 a Trade Alert outside of these time frames.


Viavi Solutions (VIAV, $10.62, down $0.16)

VIAV April 11 calls (VIAV170421C00011000, $0.34, down $0.06)

Entry Price: $0.42 (3/20/2017)
Exit Target: $0.85
Return: -19%
Stop Target: None

VIAV April 10 calls (VIAV170421C00010000, $0.83, down $0.12)

Entry Price: $0.45 (3/15/2017)
Exit Target: $1.35
Return: 78%
Stop Target: 80 cents (Stop Limit)

VIAV June 11 calls (VIAV170616C00011000, $0.70, down $0.05)

Entry Price: $0.40 (3/15/2017)
Exit Target: $1.20
Return: 75%
Stop Target: 60 cents (Stop Limit)

Action: The Stop Limit at 80 cents on the April 10 calls triggered with the low checking in at 79 cents.

Resistance is at $10.75-$11. Support is at $10.50-$10.25 with shares closing on yesterday’s low.


Starbucks (SBUX, $55.54, down $0.27)

April 52.50 puts (SBUX170421P00052500, $0.15, up $0.05)

Entry Price: $0.40 (3/10/2017)
Exit Target: $0.80
Return: -62%
Stop Target: None

Action: Shares traded to a low of $55.49 on Tuesday. Support is at $55.50-$55. Resistance is at $56-$56.50.


Amicus Therapeutics (FOLD, $6.82, down $0.44)

FOLD April 8 calls (FOLD170421C00008000, $0.20, down $0.05)

Entry Price: $0.60 (3/2/2017)
Exit Target: $1.20
Return: -67%
Stop Target: None

Action: Support is at $6.75-$6.50 following yesterday’s backtest to $6.81. Lowered resistance is at $7-$7.25.


Tower Semiconductor (TSEM, $22.72, down $0.61)

TSEM April 24 calls (TSEM170421C00024000, $0.30, down $0.15)

Entry Price: $0.65 (3/1/2017)
Exit Target: $1.30
Return: -54%
Stop Target: None

Action: Tuesday’s low tapped $22.68. Support is at $22.50-$22.25. Resistance is at $23-$23.25.


Flex (FLEX, $16.37, down $0.34)

FLEX April 17 calls (FLEX170421C00017000, $0.15, down $0.15)

Entry Price: $0.35 (2/15/2017)
Exit Target: $0.70
Return: -57%
Stop Target: None

Action: Support is at $16.25-$16. Resistance is at $16.50-$16.75.