MomentumOptions.com Pre-Market Update for 4/12/2017
Bears Eye March Lows
The recent mini trading range was tested on Tuesday as the bears made a push at March lows and getting a step closer to causing panic on Wall Street. However, the bulls once again showed their moxie despite volatility closing at its highest level of the year. The stretch and ongoing divergence has Wall Street confused and ready to throw in the towel but there were a few bullish clues worth noting.
The Dow dropped 6 points, or 0.03%, to end at 20,651. The blue-chips were weak on the open and tested a low of 20,512 shortly afterwards. Lower support at 20,600-20,550 was stretched but held for the 11th-straight close. Backup help is at 20,400-20,350 with the late March low at 20,412. The rebound to 20,660 intraday and trip into positive territory was slightly bullish but failed resistance at 20,750-20,800.
The S&P 500 slipped 3 points, or 0.1%, to finish at 2,353. The index traded in negative territory throughout Tuesday with the low reaching 2,337. The move below support at 2,350-2,340 was concerning but I have talked about wiggle room to 2,335. A move below this level gets 2,325-2300 in the mix. Resistance remains at 2,370-2,375.
The Nasdaq fell 14 points, or 0.2%, to close at 5,866. Tech was also in the red throughout yesterday’s session with the low tapping 5,819. Support at 5,850 was breeched shortly after the open with backup levels at 5,825-5,800 and the 50-day moving average holding. Resistance remains at 5,900-5,925.
The Russell 2000 gained 9 points, or 0.7%, to settle just under at 1,377. The small-caps were slightly weak throughout the first half of trading with the low reaching 1,360. Upper support at 1,360-1,350 held on a dime before the run to session highs into the closing bell. The close above lower resistance at 1,375-1,380 was slightly bullish while peaking at 1,376 shortly after the open but failed the 50-day moving average for the second straight session. A close above the latter gets 1,390-1,400 in the mix.
The S&P 500 Volatility Index ($VIX, 15.07, up 1.02) zoomed another 7% while,peaking at 15.88 following another all day ride in positive territory. The close above resistance at 14.50-15 opens risk up to 17.507. Support remains at 13.50-12.50.
I mentioned yesterday I have new trades on deck and the ones I want to start our next batch with are bullish in nature. I would like to see a better session today with higher highs on the Dow and Russell 2000 along with green closes for the S&P 500 and Nasdaq. The VIX will need to hold fresh resistance today and will need to close back below upper support by Thursday. If these scenarios play out, a major rebound rally could be in store for the rest of the month and into May.
From desk to press, futures look like this: Dow (-31); S&P 500 (-3); Nasdaq 100 (-10).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 22-7 (76%). 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, $15.06, down $0.33)
STM May 15 calls (STM170519C00015000, $0.85, down $0.25)
Entry Price: $1.15 (3/31/2017)
Exit Target: $2.30
Stop Target: 55 cents
Action: Support is at $15-$14.75 following Tuesday’s backtest to $14.92. Lowered resistance is at $15.25-$15.50.
Viavi Solutions (VIAV, $9.83, down $0.12)
VIAV May 12 calls (VIAV170519C00012000, $0.10, flat)
Entry Price: $0.29 (3/27/2017)
Exit Target: $0.60
Stop Target: None
Action: Shares traded down to $9.74 yesterday. Support is at $9.75 with risk to $9.50 on a close below this level. Resistance is at $10.25-$10.50.
Amicus Therapeutics (FOLD, $6.99, up $0.07)
FOLD April 8 calls (FOLD170421C00008000, $0.05, flat)
Entry Price: $0.60 (3/2/2017)
Exit Target: $1.20
Stop Target: None
Action: Lower resistance at $7-$7.25 was cleared following Tuesday’s trip to $7.01. Support is at $6.75.