Mid-Market Update for 5/9/2017

Dow Tightness Continues

12:00pm (EST)

Despite another breakout to fresh all-time highs on the Nasdaq and S&P 500, the Dow continues to be trapped in an incredible tight trading range. The blue-chips haven’t had a 100-point close since April 25th’s 1% move, or 232-point gain. Meanwhile, the Russell 2000 continues to struggle with the 1,400 level but has held positive territory throughout today’s session.

Volatility has been a hot topic among the talking heads with the VIX at decade lows. I have talked about time periods in the past when the S&P 500 Volatility Index ($VIX, 9.87, up 0.10) has traded below 10 and I have mentioned the VIX can stay at low levels for weeks and months.

Of course, one knucklehead said the VIX is broken but this is nonsense and shows the ineptitude of most suit-and-ties that don’t study the market, or know how to trade. The VIX wasn’t broke when it traded above 15 for 6-straight sessions in April, and it isn’t broke now. In fact, it still remains one of my most reliable indicators.

While the lack of action has been frustrating, sitting somewhat idle during trading ranges is often a money saving strategy. It also gives me a chance to do a ton of research on new (and old) companies, evaluate longer-term trade setups, and relax while everyone else seems to be pressing.

Our bullish trades in SNAP, CSCO, and SQ netted quick returns of 60%, 43%, and 37%, respectively, this month. We have also closed five-straight winners and have gone 8-1 since mid-April. The portfolio is at an astounding 74% win rate for the year with three triple-digit winners.

I often say we will let the market come to us, and this is one of those time periods where our patience will pay off. Once the Dow breaks out of its current range, more opportunities should present themselves.

Heading into the second half of action, the Dow is dipping 2 points to 21,010 while the S&P 500 is up a point to 2,400. The Nasdaq is adding 16 points to 6,119 and the Russell 2000 is sliding 2 points to 1,389.

I have updated our current trades so let’s go check the tape.


Momentum Options Play List

Closed Momentum Options Trades for 2017: 28-10 (74%). 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.


Viavi Solutions (VIAV, $11.44, down $0.08)

June 12 calls (VIAV170616C00022500, $0.35, down $0.05)

Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Return: 0%
Stop Target: None

Action: Support is at $11.25-$11. Resistance is at $11.50-$11.75.


iShares Russell 2000 (IWM, $138.28, down $0.13)

IWM June 134 puts (IWM170616P00134000, $1.15, flat)

Entry Price: $1.40 (5/2/2017)
Exit Target: $2.10-$2.80
Return: -18%
Stop Target: 70 cents (Stop Limit)

Action: Near-term support is at $138-$137.50. Resistance is at $138.50-$139.


STMicroelectronics (STM, $16.50, up $0.09)

STM July 17.50 calls (STM170721C00017500, $0.65, flat)

Entry Price: $0.55 (5/2/2017)
Exit Target: $1.10
Return: 18%
Stop Target: None

Action: Resistance is at $16.50-$16.75. Support is at $16.25-$16.


Cypress Semiconductor (CY, $13.38, up $0.22)

CY June 14 calls (CY170616C00014000, $0.35, flat)

Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Return: -59%
Stop Target: 25 cents

Action: Resistance is at $13.50-$13.75 and the 50-day moving average. Support is at $13.