MomentumOptions.com Mid-Market Update for 5/22/2017

Setting Up Cisco Systems (CSCO)

12:20pm (EST)

Shares of Cisco Systems (CSCO) are trying to recover from last week’s pullback and gap below support after reporting earnings. I mentioned the company topped expectations but offered lower guidance for the current quarter and that there might be a trade afterwards.

As you can see from the chart below, near-term resistance is at $31.75-$32 with additional hurdles at $32.50 and the 100-day moving average. Shaky support is at $31.25-$31 and the 200-day moving average with risk to $30.50 on a move below the latter.

The 50-day moving average is in a downtrend and could signal further weakness if shares close below $30.50 over the near-term. Bearish traders can target the CSCO June 31 puts (CSCO170616P00031000, $0.25, down $0.18), or the CSCO July 31 puts (CSCO170721P00031000, $0.60, down $0.20), on a move below $30.75-$30.50. A continued backtest to the $29.50-$29 area could come on a close below the latter.

With shares showing some strength, there could be an opportunity for a trade if CSCO can clear $31.75-$32 this week. The CSCO June 32 calls (CSCO170616C00032000, $0.30, up $0.05), or the CSCO July 32 calls (CSCO170721C00032000, $0.50, up $0.10), will be active if shares clear to clear the aforementioned resistance levels. Today’s high on the stock has reached $31.75.

While it’s too early to get into CSCO, I wanted to show you the possible trade setup and what I’m looking at. I’m more bullish than bearish on the stock because I know the company loves to “sandbag” their numbers from time-to-time to keep Wall Street analysts in check.

As far as the market, the bulls are going for a hat trick and third-straight day of gains after setting the pace for the first half of action. The Dow is higher by 80 points to 20,885 while the S&P 500 is adding 9 points to 2,391. The Nasdaq is up 36 points to 6,120 and the Russell 2000 is gaining 5 points to 1,372.

I have updated our current trades so let’s go check the tape. I’m still looking at possible New Trades and will send out a New Trade alert if I see something I like.

 

Momentum Options Play List

Closed Momentum Options Trades for 2017: 32-10 (76%). 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.

 

Flex (FLEX, $16.69, up $0.18)

FLEX July 17 calls (FLEX170721C00017000, $0.50, up $0.05)

Entry Price: $0.45 (5/16/2017)
Exit Target: $0.90
Return: 11%
Stop Target: None

Action: Resistance at $16.75-$17. Support is at $16.50-$16.25.

 

STMicroelectronics (STM, $16.20, down $0.17)

STM October 20 calls (STM171020C00020000, $0.50, down $0.05)

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

 

STM July 17.50 calls (STM170721C00017500, $0.40, down $0.10)

Entry Price: $0.65 (5/15/2017)
Exit Target: $1.30
Return: -38%
Stop Target: None

Action: Support is at $16.25-$16 followed by $15.75 and the 50-day moving average. Resistance is at $16.50-$16.75.

 

Viavi Solutions (VIAV, $11.35, up $0.40)

June 12 calls (VIAV170616C00022500, $0.18, up $0.08)

Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Return: -49%
Stop Target: None

Action: Resistance is at $11.25-$11.50. Support is trying to move up to $11-$10.75.

 

Cypress Semiconductor (CY, $13.03, down $0.12)

CY June 14 calls (CY170616C00014000, $0.20, down $0.05)

Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Return: -76%
Stop Target: None

Action: Support is at $13-$12.75 and the 100-day moving average. Resistance is at $13.50-$13.75.