MomentumOptions.com Pre-Market Update for 5/3/2017
Tech Fades Into Close
The Nasdaq continued its run to fresh all-time highs but slipped into Tuesday’s close ahead of another barrage of Tech heavy earnings. The small-caps slacked and traded in the red for much of the session. This was a slight warning sign as near-term support was stretched but held into the closing bell. Today’s action could reaffirm a bullish run to record highs continues, while the bears will be looking to take advantage of any weakness.
The Dow gained 36 points, or 0.2%, to finish at 20,949. The blue-chips traded down to 20,904 during the first half of action with support at 20,800-20,700 easily holding. Resistance at 21,150-21,200 remains strong and also held following the intraday high of 20,960.
The S&P 500 climbed 3 points, or 0.1%, to end at 2,391. The index traded to a high north of 2,392 on the open with the close above lower resistance at 2,390-2,400 a slightly bullish sign. A move above the latter keeps 2,425-2,450 in play. Support at 2,375-2,370 held on the fade to 2,385 afterwards. A move below 2,380 is a warning sign for further weakness.
The Nasdaq added 3 points, or 0.1%, to settle at 6,095. Tech reached another intraday lifetime high of 6,102.72 with near-term resistance at 6,150-6,200 holding. The backtest to 6,081 easily held support at 6,025-6,000.
The Russell 2000 fell 8 points, or 0.6%, to close at 1,399. The small-caps reached 1,409 at the start of trading but the 2-point pop failed resistance at 1,415-1,425. Lower support at 1,400-1,395 held on the intraday low with risk to 1,380-1,375 on a close below the latter.
The S&P 500 Volatility Index ($VIX, 10.59, up 0.48) kissed a low of 10.04 on the open with support at 10.50-10 holding. Near-term resistance at 11.50 held with the VIX going out at its session high. There is risk to 12.50-13.50 on a move above this level.
I have updated the parameters of the STM trade and have set a Stop Target for CY. I have also set a Stop Limit for ORCL and I have also raised the Stop Limit for SQ. I will profile SQ’s earnings this afternoon.
I mentioned we would be watching the IWM June 135 puts (IWM170616P00135000, $1.35, up $0.10) for a bearish trade if $138.50-$138.25 is breeched. The iShares Russell 2000 (IWM, $139.15, down $0.71) kissed a low of $138.69 yesterday and I came thisclose to adding them watching the action into the closing bell. This was my top trade coming into the week and if I take action after the open, I will send out a New Trade Alert.
From desk to press, futures look like this: Dow (-12); S&P 500 (-2); Nasdaq 100 (-16).
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Closed Momentum Options Trades for 2017: 26-10 (72%). 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, $16.49, up $0.25)
STM July 17.50 calls (STM170721C00017500, $0.55, up $0.05)
Entry Price: $0.55 (5/2/2017)
Exit Target: $1.10
Stop Target: None
Action: Set an Exit Target at $1.10. There is no Stop Target.
Shares traded to a fresh 52-week peak of $16.57 on Tuesday. I have a July target of $20 for shares with near-term resistance at $16.75-$17. Support is at $16.25-$16.
Oracle (ORCL, $45.13, up $0.08)
ORCL June 46 calls (ORCL170616C00046000, $0.65, up $0.05)
Entry Price: $0.55 (4/26/2017)
Exit Target: $1.10
Stop Target: 57 cents (Stop Limit)
Action: Set an initial Stop Limit at 57 cents to protect profits.
Resistance at $45.25-$45.50 was split with yesterday’s high tapping $45.35. Support is at $45-$44.75.
Cypress Semiconductor (CY, $13.33, down $0.47)
CY June 14 calls (CY170616C00014000, $0.40, down $0.20)
Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Stop Target: 25 cents
Action: Set a Stop Target at 25 cents.
The close below the 50-day moving average was a bearish development with support at $13.25-$13 following Tuesday’s tumble to $13.22. Resistance is at $13.50.
I could close half, or all, of the trade if shares fall below $13 to save the remaining premium.
Square (SQ, $18.81, up $0.20)
SQ June 18 calls (SQ170616C00018000, $1.70, up $0.20)
Entry Price: $0.95 (4/20/2017)
Exit Target: $1.90 (closed half at $1.20 on 4/28/2017)
Stop Target: $1.05, raise to $1.40 (Stop Limit)
Action: Raise the Stop Limit from $1.05 to $1.40 on the other half of the trade.
Upper resistance at $18.75-$19 was cleared following yesterday’s run to a 52-week peak of $19.03. This sets up for a run past $20 on good earnings after the closing bell. Support is at $18.50-$18.25.