Mid-Market Update for 4/11/2017

Delta Air Lines on Deck

2:00pm (EST)

Delta Air Lines (DAL) will announce earnings on Wednesday, ahead of the open, in what has become a negative environment for the sector. Along with the recent overbooking debacle by United Continental Holdings (UAL), the sector has come under increased scrutiny following excessive fees and higher fares.

Although the sector has delivered solid earnings beats over the past year, rising fuel and labor costs have chipped away at profits. Delta is expected to report a profit of $0.74 a share on revenue just south of $9.2 billion. While impressive on paper, this would represent a drop of 44% drop in earnings due to higher costs.

The chart for DAL shows a bearish setup following the 52-week high of $52.76 from early December. The $52 level has been challenged throughout this year but the March drop below $46 was damaging and a level that now serves as near-term resistance. Support is at $44-$43.50 and the 200-day moving average.

A mini death-cross has formed with the 50-day moving average falling below the 100-day moving average. This is typically a bearish setup and a continuation pattern of the current trend to the 200-day moving average would confirm lower lows down the road. In the meantime, shares could remain volatile with upside potential on an earnings beat-and-raise quarter.

Although I do have them on my Watch List, I haven’t listed DAL call or put options to play a potential move in the stock because a better setup could come afterwards.

As far as the market, the bears are causing a ruckus as the major indexes have tested March lows with near-term support in play after getting stretched. Volatility has also tapped a fresh high for the year. While this might seem bearish, the good news is that today’s action could be bullish if certain levels hold.

The Dow is off 13 points to 20,644 while the S&P 500 is down 6 points to 2,350. The Nasdaq is lower by 20 points to 5,860 and the Russell 2000 is gaining 5 points to 1,372.

I could have a New Trade, or two, ahead of the closing bell so stay locked-and-loaded in case I take action.


Momentum Options Play List

Closed Momentum Options Trades for 2017: 22-6 (81%). 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, $15.02, down $0.37)

STM May 15 calls (STM170519C00015000, $0.90, down $0.20)

Entry Price: $1.15 (3/31/2017)
Exit Target: $2.30
Return: -22%
Stop Target: 55 cents

Action: Support is at $15. Lowered resistance is at $15.25-$15.50.


Viavi Solutions (VIAV, $9.81, down $0.14)

VIAV May 12 calls (VIAV170519C00012000, $0.10, flat)

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

VIAV April 11 calls (VIAV170421C00011000, $0.03, down $0.02)

Entry Price: $0.42 (3/20/2017)
Exit Target: $0.85
Return: -93%
Stop Target: None

Action: Close the April 11 calls at current levels. Support is at $9.75. Resistance is at $10.25-$10.50.


Amicus Therapeutics (FOLD, $6.89, down $0.03)

FOLD April 8 calls (FOLD170421C00008000, $0.05, flat)

Entry Price: $0.60 (3/2/2017)
Exit Target: $1.20
Return: -92%
Stop Target: None

Action: Support is at $6.75. Resistance is at $7-$7.25.