MomentumOptions.com Pre-Market Update for 5/11/2017
Tech Sets Another Record Close
Wednesday’s market action was more of the same with the major indexes trading on both side of the ledger with slight gains and losses. The current 3-week trading range with incremental higher highs continues to frustrate Wall Street and aggressive traders but sometimes there is calm before a storm. It is uncertain on when the the next major trend will develop but the odds are still favoring the bulls and higher highs.
The Dow dropped 32 points, or 0.2%, to settle at 20,943. The blue-chips traded underwater for much of the session aside from a 1-point gain to 20,976 during the first half of action. Resistance at 21,150-21,200 easily held. Support at 20,800-20,700 was hardly challenged following the low of 20,884.
The S&P 500 advanced 2 points, or 0.1%, to close 2,399. The index tested a low of 2,392 shortly after the open with support at 2,390-2,385 holding. Lower resistance at 2,400-2,425 held throughout the second half by a quarter point on the session high. A move above 2,405 will likely lead to some short-covering on fresh record highs.
The Nasdaq gained 8 points, or 0.1%, to finish at 6,129. Tech was held underwater throughout the first half of trading with the low checking in at 6,103. Near-term support is trying to move up to 6,100-6,075 with a move below 6,050 becoming a better signal to possibly go short. The run to 6,131 fell a couple points shy of another lifetime high, but was a closing high, with resistance and fresh fluff to 6,150-6,175 still in play.
The Russell 2000 climbed nearly 8 points, or 0.6%, to end at 1,399. The small-caps showed the most strength throughout the session with the index falling just a point to 1,390 shortly after the opening bell. Support at 1,380-1,375 easily held before the three-quarter point push past the 1,400 level intraday. The close above lower resistance at 1395-1,400 is looking bullish with additional hurdles at 1,410-1,415.
The S&P 500 Volatility Index ($VIX, 10.21, up 0.25) traded down to 9.62 yesterday with lowered support at 10-9.50 holding but not upper. Lower resistance at 10.50-11.50 held on rebound to 10.24 ahead of the closing bell. A move into this area ahead of the weekend would be a slightly cautious signal.
I have set an initial Stop Limit on STM so adjust your trading accounts accordingly.
From desk to press, futures look like this: Dow (-44); S&P 500 (-6); Nasdaq 100 (-19).
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, $11.53, down $0.01)
June 12 calls (VIAV170616C00022500, $0.40, flat)
Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Stop Target: None
Action: Resistance is at $11.50-$11.75 with yesterday’s high tapping $11.60. Support is at $11.25-$11.
iShares Russell 2000 (IWM, $139.20, up $0.85)
IWM June 134 puts (IWM170616P00134000, $0.90, down $0.20)
Entry Price: $1.40 (5/2/2017)
Exit Target: $2.10-$2.80
Stop Target: 70 cents (Stop Limit)
Action: The close above lower resistance at $139-$139.50 was slightly bullish following Wednesday’s run to $139.48. A move above $140 will likely trigger the Stop Limit. Near-term support is at $138.50-$138.
STMicroelectronics (STM, $16.85, up $0.27)
STM July 17.50 calls (STM170721C00017500, $0.70, up $0.05)
Entry Price: $0.55 (5/2/2017)
Exit Target: $1.10
Stop Target: 57 cents (Stop Limit)
Action: Set an initial Stop Limit at 57 cents to start protecting profits.
Resistance at $17-$17.25 after shares finished a penny of a fresh 52-week peak of $16.86. The calls reached a high of 72 cents on rising volume. Support has moved up to $16.50-$16.25.
Cypress Semiconductor (CY, $13.58, up $0.15)
CY June 14 calls (CY170616C00014000, $0.40, up $0.05)
Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Stop Target: 25 cents
Action: Shares traded up to $13.60 yesterday. Fresh resistance is at $13.75-$14. Support is at $13.25-$13, if $13.50 fails to hold.