MomentumOptions.com Mid-Market Update for 5/18/2017

Bulls Rebound Off Lows/ Profit Alert (QQQ)

12:40pm (EST)

The bears tried to carry over their momentum from yesterday into this morning and were successful in pushing lower lows. However, the bulls defended near-term support and have rebounded to push positive territory. The indexes are off their highs and today’s close will be crucial in determining how Friday’s and next week’s action plays out.

Shares of Cisco Systems (CSCO) are down over 7% despite earnings that topped Wall Street’s forecasts. The company reported a profit of $0.60 a share on revenue of $11.9 billion versus estimates earnings of $0.58 a share on revenue of $11.89 billion.

The problem was Cisco’s forecast for current quarter earnings estimates of $0.60-$0.62 a share versus numbers for $0.62 a share profit. The company also said 4Q revenue might slide 4%-6%.

Today’s pullback has pushed the stock below its 200-day moving average with multi-month support at $30.50 holding. While today’s news was disappointing for shareholders, the pullback is worth watching and may have created a buying opportunity, or a bullish option play down the road.

Heading into the second half of trading, the Dow is up 12 points to 20,617 while the S&P 500 is adding 3 points to 2,360. The Nasdaq is gaining 18 points to 6,029 and the Russell 2000 is advancing a point to 1,357.

I have a Profit Alert for the QQQ’s and I’m working on another new trade I hope to have ready shortly. For now, let’s go check the tape.

 

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.

 

PowerShares QQQ ETF (QQQ, $136.69, up $0.62)

QQQ June 132 puts (QQQ170616P00132000, $0.95, down $0.20)

Entry Price: $0.75 (5/17/2017)
Exit Target: $1.75 (Limit Order on half)
Return: 13%
Stop Target: 85 cents (Stop Limit)

Action: The Stop Limit at 85 cents tripped shortly after the open with the the low reaching 83 cents. We might play the QQQ’s again on another close below $136, but for now, we are back on the sidelines.

 

Flex (FLEX, $16.12, down $0.10)

FLEX July 17 calls (FLEX170721C00017000, $0.30, down $0.05)

Entry Price: $0.45 (5/16/2017)
Exit Target: $0.90
Return: -33%
Stop Target: None

Action: Support is at $16-$15.75. Lowered resistance is at $16.25-$16.50.

 

STMicroelectronics (STM, $16.08, down $0.01)

STM October 20 calls (STM171020C00020000, $0.50, flat)

Entry Price: $0.70 (5/15/2017)
Exit Target: $1.40
Return: -29%
Stop Target: None

 

STM July 17.50 calls (STM170721C00017500, $0.45, flat)

Entry Price: $0.65 (5/15/2017)
Exit Target: $1.30
Return: -31%
Stop Target: None

Action: Support is at $15.75-$15.50 and the 50-day moving average if $16 fails to hold. Resistance is at $16.25-$16.50.

 

Imax (IMAX, $27.07, down $0.03)

IMAX June 28 puts (IMAX170616P00028000, $1.40, flat)

Entry Price: $0.40 (5/12/2017)
Exit Target: $1.75 (closed half at $1.20 on 5/17/2017)
Return: 225%
Stop Target: $1.10 (Stop Limit)

Action: Support is at $27-$26.75. Resistance is at $27.25-$27.50.

 

Viavi Solutions (VIAV, $10.96, up $0.06)

June 12 calls (VIAV170616C00022500, $0.15, flat)

Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Return: -57%
Stop Target: None

Action: Support is at $10.75. Resistance is at $11.25-$11.50.

 

iShares Russell 2000 (IWM, $135.28, up $0.39)

IWM June 134 puts (IWM170616P00134000, $2.10, down $0.10)

Entry Price: $1.40 (5/2/2017)
Exit Target: $2.80 (closed half at $2.10 on 5/17/2017)
Return: 50%
Stop Target: $1.90 (Stop Limit)

Action: Resistance is at $135.50-$136. Support is at $134.50-$134.

 

Cypress Semiconductor (CY, $12.75, down $0.04)

CY June 14 calls (CY170616C00014000, $0.20, flat)

Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Return: -82%
Stop Target: None

Action: Support is at $12.75-$12.50. Resistance is at $13.50.