Mid-Market Update for 5/12/2017

J.C. Penney Falls Below $5/ New Trade (IMAX)

12:45pm (EST)

Shares of J.C. Penney (JCP) are at fresh multi-year lows despite an earnings beat the company reported ahead of the open. The 10% pullback is adding to the retail wreckage we have seen this week in the sector.

J.C. Penney reported earnings of $0.06 a share, versus expectations for a $0.21 loss. However, revenue of $2.7 billion fell shy of forecasts for $2.77 billion, while same-store comp sales slid 3.5%.

The news follows disappointing reports from others in the retail sector, including Macy’s (M) and Kohl’s (KSS), which both posted lower overall revenues and disappointing same-store sales in the quarter.

While the carnage may be creating some buying opportunities down the road, investing in this space will take patience and a lot of homework. In the meantime, there could be additional shorting opportunities in the coming weeks and months as consolidation and bankruptcies take shape.

Today’s market action is following a pattern we have seen play out throughout the week with lower opens and a rebound off the bottom heading into the second half action of trading. Today’s mixed session will likely give the bears the weekly win, aside from Tech.

The Dow is down 32 points to 20,886 while the S&P 500 is slipping 4 points to 2,389. The Nasdaq is up 2 points to 6,118 and the Russell 2000 is lower by 5 points to 1,384.

I mentioned I might have a New Trade today in IMAX so let’s get on it. I’m also doing some research on a trade that could be a “tenbagger” that I hope to have ready ahead of the closing bell. It is a small-cap stock breaking out to new highs that trades options. If you don’t hear from me again, have a safe and great weekend and I will bring you this story next week.


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.

New Trade!

Imax (IMAX, $29.55, down $0.30)

Buy to Open IMAX June 28 puts (IMAX170616P00028000, $0.40, up $0.10)

Action: I like these put options at current levels and you can use a Limit Order up to 55 cents to get the best fills. These are the IMAX June 28 put options that expire on June 16th, 2017. I will provide the parameters of the trade in Monday’s Pre-Market update.


Current Trades

Viavi Solutions (VIAV, $11.48, down $0.04)

June 12 calls (VIAV170616C00022500, $0.35, flat)

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

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


iShares Russell 2000 (IWM, $137.75, down $0.49)

IWM June 134 puts (IWM170616P00134000, $1.25, up $0.10)

Entry Price: $1.40 (5/2/2017)
Exit Target: $2.10-$2.80
Return: -11%
Stop Target: 70 cents (Stop Limit)

Action: Near-term support is at $137.50-$137. Resistance is at $139-$139.50.


Cypress Semiconductor (CY, $13.49, down $0.14)

CY June 14 calls (CY170616C00014000, $0.40, flat)

Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Return: -53%
Stop Target: 25 cents

Action: Support is at $13.25-$13, if $13.50 fails to hold. Resistance is at $13.75-$14.