MomentumOptions.com Pre-Market Update for 5/12/2017
Dow Holds 50-day MA
The bulls battled back to make Thursday’s session more respectable but still lost to the bears with the major indexes finishing slightly lower. The VIX bubbled to its highest level in a week while closing above a key level of resistance. Although the damage was minimal, the indexes are mixed for the week with Tech showing slight gains while the broader market and the small-caps are slightly lower.
The Dow dipped 23 points, or 0.1%, to close at 20,919. The blue-chips tested a low of 20,798 shortly after the opening bell. Support at 20,800-20,700 and the 50-day moving average held with risk to 20,600-20,450 on a move below the latter. The rebound to 20,933 failed positive territory by 10 points and resistance at 21,150-21,200. If the index can clear and hold 21,050 into the weekend, next week could be bullish.
The S&P 500 fell 5 points, or 0.2%, to finish 2,394. The index also traded underwater throughout the session with the low tapping 2,381. Near-term support at 2,390-2,385 was breeched with backup help at 2,370-2,365 and the 50-day moving average coming into play if 2,380 fails to hold. If so, we can target the SPY June 235 puts (SPY170616P00235000, $1.68, up $0.17) for a possible trade. Lower resistance at 2,400-2,425 is still in play with the close just a point off yesterday’s high. We can use the SPY June 242 calls (SPY170616C00242000, $1.39, down $0.13) if the index clears and holds 2,400-2,405 today, or Monday.
The Nasdaq gave back 13 points, or 0.2%, to end just under 6,116. Tech tumbled to a low of 6,075 intraday with lower support at 6,100-6,075 holding by thee-quarters of a point. I mentioned yesterday a move below 6,050 could be an opportunity to go short and we can use the QQQ’s to do so. Resistance and fresh fluff remains at 6,150-6,175.
The Russell 2000 declined 9 points, or 0.7%, to settle at 1,390. The small-caps were the weakest link and traded down to 1,379 intraday. Support at 1,380-1,375 held along with the 50-day moving average by a point. Resistance is at 1395-1,400 with additional hurdles at 1,410-1,415.
The S&P 500 Volatility Index ($VIX, 10.60, up 0.39) stayed elevated throughout Thursday with a spike to 11.23 coming during the first half of action. Upper resistance at 10.50-11.50 held and I mentioned a move into this area ahead of the weekend would be a slightly cautious signal. Same deal for today. Support is at 10-9.50.
I could have New Trade on IMAX this morning following yesterday’s close below $30. I also mentioned the aforementioned SPY trade on a breakout, or breakdown. If I take action on either, I will send out a Trade Alert.
From desk to press, futures look like this: Dow (-16); S&P 500 (-2); Nasdaq 100 (-5).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 29-10 (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, $11.52, down $0.01)
June 12 calls (VIAV170616C00022500, $0.35, down $0.05)
Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Stop Target: None
Action: Resistance is at $11.75 with yesterday’s high reaching $11.67. Support is at $11.50-$11.25.
iShares Russell 2000 (IWM, $138.24, down $0.97)
IWM June 134 puts (IWM170616P00134000, $1.15, up $0.25)
Entry Price: $1.40 (5/2/2017)
Exit Target: $2.10-$2.80
Stop Target: 70 cents (Stop Limit)
Action: Near-term support is at $137.50-$137 with Thursday’s low kissing $136.98. Yesterday’s high on the puts reached $1.44. Resistance is at $139-$139.50.
Cypress Semiconductor (CY, $13.63, up $0.05)
CY June 14 calls (CY170616C00014000, $0.40, flat)
Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Stop Target: 25 cents
Action: Shares traded up to $13.77 yesterday. Resistance is at $13.75-$14. Support is at $13.25-$13, if $13.50 fails to hold.