MomentumOptions.com Pre-Market Update for 6/12/2017
Nasdaq Nosedives Into Closing Bell
The market got a curveball on Friday after setting fresh intraday all-time highs as the Nasdaq dropped 204 points from its peak to end the week lower. The other major indexes survived the pullback, for the most part, with the blue-chips showing the most strength.
Much of the strength came from the financial stocks, as investors were fleeing out of Tech while getting back into value plays. Other sectors, like Gold, also showed weakness after smart money started moving out midweek on a “double-top” at the $1,300 level. The sector rotation will likely continue this week on higher volatility with June options expiration coming into play on Friday’s close.
The Dow gained 89 points, or 0.4%, to end at 21,271 on Friday. The blue-chips made an intraday run to an all-time high of 21,305 to keep resistance and blue-sky territory open to 21,450-21,500 in play. Rising support is at 21,200-21,100 with a move below 21,000 a warning sign of a possible near-term top.
The S&P 500 slipped 2 points, or 0.1%, to finish 2,431. The index traded to a fresh lifetime high of 2,446 but fell shy of resistance at 2,450-2,460 on continued closes above 2,440. The fade to 2,415 during the second half of trading cracked near-term support at 2,425-2,420 but levels that held into the closing bell. There is backup help at 2,410-2,400 with a move below the latter a bearish signal.
The Nasdaq tanked 113 points, or 1.8%, to close at 6,207. Tech tested an fresh lifetime high of 6,341 during the first few hours of trading with upper resistance at 6,325-6,350 holding. The sudden reversal 6,137 held near-term support at 6,150-6,100 with a move below the latter a bearish development.
The Russell 2000 added 6 points, or 0.4%, to settle at 1,421. The small-caps also tapped a record high of 1,433 intraday while holding lower resistance at 1,420-1,425. There is fluff to 1,440-1,450 on continued closes above the latter. The backtest to 1,413 intraday held rising support at 1,410-1,400 with risk to 1,390-1,385 on a close below the latter.
The S&P 500 Volatility Index ($VIX, 10.70, up 0.54) traded to a 24-year low after tapping 9.37 during the morning action. Support at 9.75-9.50 was breached but held. The surge to 12.11 afterwards cleared near-term resistance at 10.50-11.50 but levels that also held. Continued closes above the latter, or a pop past 12.50, would be bearish signals.
From desk to press, futures look like this: Dow (-26); S&P 500 (-3); Nasdaq 100 (-15).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 35-11 (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.
Bank of America (BAC, $23.67, up $0.70)
BAC July 23 calls (BAC170721C00023000, $1.23, up $0.45)
Entry Price: $0.60 (6/5/2017)
Exit Target: $1.50
Stop Target: 63 cents, raise to $1.00 (Stop Limit)
Action: Raise the Stop Limit from 63 cents to $1.00.
Fresh resistance is at $23.75-$24 with shares closing at their session high. Rising support is at $23.50-$23.25 and the 50/100-day moving averages.
Flex (FLEX, $17.33, down $0.02)
FLEX July 18 calls (FLEX170721C00018000, $0.30, down $0.05)
Entry Price: $0.40 (6/1/2017)
Exit Target: $0.80
Stop Target: None
Action: Shares traded to a high of $17.51 on Friday. Resistance is at $17.50. Support is at $17.25-$17.
Amicus Therapeutics (FOLD, $8.46, down $0.17)
FOLD July 8 calls (FOLD170721C00008000, $1.00, down $0.10)
Entry Price: $0.85 (5/22/2017)
Exit Target: $1.70-$2.55
Stop Target: 90 cents (Stop Limit)
Action: Set a Stop Limit at 90 cents.
Resistance at $8.75 was cleared but held following Friday’s test to $8.84. Support is at $8.25.
STMicroelectronics (STM, $16.54, down $0.80)
STM October 20 calls (STM171020C00020000, $0.50, down $0.15)
Entry Price: $0.70 (5/15/2017)
Exit Target: $1.40
Stop Target: None
STM July 17.50 calls (STM170721C00017500, $0.45, down $0.15)
Entry Price: $0.65 (5/15/2017)
Exit Target: $1.30
Stop Target: None
Action: Support is at $16.25-$16 and the 50-day moving average. Lowered resistance is at $16.75-$17.
Viavi Solutions (VIAV, $11.15, down $0.28)
June 12 calls (VIAV170616C00022500, $0.05, down $0.03)
Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Stop Target: 5 cents (Stop Limit)
Action: The Stop Limit at 5 cents tripped late on Friday after the calls traded up to 14 cents.