Mid-Market Update for 4/12/2017

Trying to Bottom/ Trade Alert (FOLD)

1:50pm (EST)

The bears are once again pushing near-term support but haven’t cracked yesterday’s lows as we head into the second half of trading. I mentioned the bulls have a little wiggle room but continued weakness and a close below the March lows would be a very bearish development.

While I was hoping for a rebound today and early confirmation a bottom could be forming, it appears the process could last another day, or even into next week. In any event, with the portfolio light, we are in perfect position to play a snap back rally, or a continued backtest to perhaps November levels.

My feeling is there won’t be a lot of traders willing to stay long over a three-day weekend given Wall Street’s current bearishness, and it is a story that has often been bullish in the past. High spikes in the VIX over the past few years have also led to rebound rallies over a short period of time and why we might be getting a great setup.

If a turnaround starts tomorrow, or next week, the slick talking pros will dismiss it as many of them underperformed in the first quarter. It feels like most market participants are still waiting for that magical 5%-10% selloff but are unwilling to buy the 3%-4% pullbacks.

Of course, my still slightly bullish sentiment could change on continued weakness and closes below major support levels. Timing market tops, or bottoms, is never an easy task but this is the type of action I have expected since the mid-March peak. The problem has been the historical late March weakness has carried over into April and ahead of earnings season.

I have 5-10 bullish setups along with 5-10 bearish trades on my Watch List. Some of the bullish trades will be index plays and I like CY, MSFT and VIAB. Some of my bearish candidates include INTC, SFLY, and GM.

The Dow is down 69 points to 20,581 while the S&P 500 is lower by 9 points to 2,344. The Nasdaq is declining 31 points to 5,835 and the Russell 2000 is falling 14 points to 1,362. The VIX is at 15.86, up 0.79.

I know sometimes it is hard to stay patient and it is very tempting to start nibbling at bearish setups. However, another day of trading or into next week action is needed to see if near-term support levels hold.


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, $14.70, down $0.36)

STM May 15 calls (STM170519C00015000, $0.65, down $0.20)

Entry Price: $1.15 (3/31/2017)
Exit Target: $2.30
Return: -43%
Stop Target: 55 cents

Action: Support is at $14.75-$14.50. Resistance is at $15.


Viavi Solutions (VIAV, $9.60, down $0.23)

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

Entry Price: $0.29 (3/27/2017)
Exit Target: $0.60
Return: -83%
Stop Target: None

Action: Support is at $9.50. Resistance is at $9.75-$10.


Amicus Therapeutics (FOLD, $6.93, down $0.06)

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: Close the trade at current levels to save the remaining premium.