Pre-Market Update for 4/6/2017

Blame it on the Fed

8:00am (EST)

I mentioned the Fed’s meeting minutes ahead of Wednesday’s close and some of the language it used in describing current market conditions. It seems Wall Street was also dissecting the news and decided to sell stocks on worries over how the Fed will unwind its $4.5 trillion worth of assets on their balance sheet.

The Dow dropped 41 points, or 0.2%, to end at 20,648. The blue-chips made a morning run to 20,887 to clear upper resistance at 20,750-20,800 but levels that failed to hold. The late day low reached 20,639 with upper support at 20,600-20,550 holding. There is risk to 20,400-20,350 on a move below the latter.

The S&P 500 fell 7 points, or 0.3%, to finish just under 2,353. The index traded up to 2,378 intraday to clear near-term resistance at 2,370-2,375. The backtest to 2,350 held upper support at 2,350-2,340 with risk to 2,325-2,220 if 2,335 fails.

The Nasdaq gave back 34 points, or 0.6%, to settle at 5,864. Tech made a fresh all-time high of 5,936 ahead of the Fed news to clear upper resistance at 5,900-5,925.
Lower support at 5,875-5,850 held on the fade to 5,856. I mentioned the 5,850 level would be a key battleground this week and territory the bulls can’t afford to give up. If so, there would be risk to 5,800 and the 50-day moving average.

The Russell 2000 sank 16 points, or 1.2%, to close at 1,352. The small-caps tested a high of 1,381 shortly after the open but was unable to hold resistance at 1,375-1,380 and the 50-day moving average. The breakdown to 1,350 and close below prior support at 1,365-1,360 and the 100-day moving average was a bearish development. There is wiggle room to 1,340-1,335 with the latter serving as a “double bottom” in March. I could use IWM put options on a close below 1,335-1,330 for a new trade.

The S&P 500 Volatility Index ($VIX, 12.89, up 1.10) jumped 9% after trading down to 10.90 intraday and clearing lower support at 11.50-11. The spike to the session high on and close above lower resistance at 12.50-13.50 was a slightly bearish development. A move above the latter could lead to stretch to 14.50-15.

I have set an initial Stop Limit for our current TXMD trade so adjust your trading accounts accordingly.

From desk to press, futures look like this: Dow (-43); S&P 500 (-5); Nasdaq 100 (-17).


Momentum Options Play List

Closed Momentum Options Trades for 2017: 21-4 (84%). 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.


STMicroelectronics (STM, $15.19, down $0.01)

STM May 15 calls (STM170519C00015000, $1.00, flat)

Entry Price: $1.15 (3/31/2017)
Exit Target: $2.30
Return: -13%
Stop Target: 55 cents

Action: Shares traded up to $15.47 on Wednesday. Resistance is at $15.50-$15.75. Support is at $15-$14.75.


TherapeuticsMD (TXMD, $7.97, up $0.36)

TXMD May 7.50 calls (TXMD170519C00007500, $1.20, up $0.20)

Entry Price: $0.80 (3/27/2017)
Exit Target: $1.60
Return: 50%
Stop Target: 85 cents (Stop Limit)

Action: Set an initial Stop Limit at 85 cents to start protecting profits.

Shares made a run to $8.19 but failed to hold fresh resistance at $8-$8.25. Support is at $7.75-$7.50.


Viavi Solutions (VIAV, $9.92, down $0.40)

VIAV May 12 calls (VIAV170519C00012000, $0.10, down $0.05)

Entry Price: $0.29 (3/27/2017)
Exit Target: $0.60
Return: -66%
Stop Target: None

VIAV April 11 calls (VIAV170421C00011000, $0.05, down $0.05)

Entry Price: $0.42 (3/20/2017)
Exit Target: $0.85
Return: -88%
Stop Target: None

Action: The close below $10 and at the session low was a bearish development. Fresh support is at $9.75-$9.50. Resistance is at $10.25-$10.50.


Amicus Therapeutics (FOLD, $6.97, down $0.26)

FOLD April 8 calls (FOLD170421C00008000, $0.10, down $0.05)

Entry Price: $0.60 (3/2/2017)
Exit Target: $1.20
Return: -83%
Stop Target: None

Action: Upper support at $7-$6.75 was breeched on the drop to $6.90 ahead of Wednesday’s close. Resistance is at $7-$7.25.


Tower Semiconductor (TSEM, $22.35, down $0.26)

TSEM April 24 calls (TSEM170421C00024000, $0.10, flat)

Entry Price: $0.65 (3/1/2017)
Exit Target: $1.30
Return: -85%
Stop Target: None

Action: Fresh support is at $22.25-$22 following the close below the $22.50 level. Resistance is at $22.50-$22.75. If shares can’t recover $22.75-$23 by Friday afternoon, I could close the trade to save the remaining premium.


Flex (FLEX, $16.41, down $0.29)

FLEX April 17 calls (FLEX170421C00017000, $0.10, down $0.05)

Entry Price: $0.35 (2/15/2017)
Exit Target: $0.70
Return: -71%
Stop Target: None

Action: The close below upper support at $16.50-$16.25 was slightly bearish following Wednesday’s backtest to $16.37. Resistance remains at $16.75-$17 on a move back above $16.50.