Pre-Market Update for 6/15/2017

Fed Hikes Rates, Market Mixed

8:00am (EST)

The Fed raised interest rates by a quarter-point on Wednesday and a move widely expected by the market. The target interest rate now stands at 1.00%-1.25% versus consensus of 1.125%. The Fed also said it would start to unwind the balance sheet later this year if the economy performs as anticipated. As a result, the market took away mixed signals with the blue-chips setting another record high while the small-caps took the worst hit.

The Dow added 46 points, or 0.2%, to close at 21,374. The blue-chips opened in positive territory before making a backtest to 21,294 shortly after the Fed news. Rising support at 21,200-21,100 held before the run to a fresh all-time intraday high of 21,391. Lower resistance at 21,450-21,500 came into play and could be reached by week’s end on continued momentum.

The S&P 500 slipped 2 points, or 0.1%, to settle just below 2,438. The index opened at its high for the session at 2,443 and above lower resistance at 2,440-2,450. The rest of the session was basically spent underwater with the low tapping 2,428 late in the session. Near-term support remains at 2,425-2,420 with additional help at 2,410-2,400.

The Nasdaq fell 25 points, or 0.4%, to end at 6,194. Tech was choppy throughout the day but managed a high of 6,237 on the open. Upper resistance at 6,200-6,225 was cleared but levels that failed to hold into the closing bell. The close back below the 6,200 level keeps shaky support at 6,175-6,150 in play with risk to 6,100.

The Russell 2000 gave back 8 points, or 0.6%, to finish just under 1,417. The small-caps traded past 1,426 on the open to clear upper resistance at 1,420-1,425 but levels that also failed to hold. Support at 1,410-1,400 held on the intraday backtest to 1,411 with a close below the latter a bearish development.

The S&P 500 Volatility Index ($VIX, 10.64, up 0.22) tested a late day high of 11.26 with lower resistance at 11.50-12.50 easily holding. The low reached 10.01 ahead of the Fed announcement with lower support at 10.50-10 holding.

I could have New Trades shortly after the open on one or two of the major indexes. I have been mentioning the mid-May rally would have legs into mid-June and we are at the middle of the month. I have also set Stop Limits on the remaining trades as futures look a little nasty as I wrap up my thoughts.

From desk to press, futures look like this: Dow (-37); S&P 500 (-6); Nasdaq 100 (-31).


Momentum Options Play List

Closed Momentum Options Trades for 2017: 37-12 (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, $16.67, down $0.04)

FLEX July 18 calls (FLEX170721C00018000, $0.10, flat)

Entry Price: $0.40 (6/1/2017)
Exit Target: $0.80
Return: -75%
Stop Target: 5 cents (Stop Limit)

Action: Set a Stop Limit at 5 cents.

Support is at $16.50-$16.25 with yesterday’s low tapping $16.58. Resistance is at $17.


STMicroelectronics (STM, $15.42, down $0.51)

STM October 20 calls (STM171020C00020000, $0.25, down $0.10)

Entry Price: $0.70 (5/15/2017)
Exit Target: $1.40
Return: -64%
Stop Target: 15 cents (Stop Limit)


STM July 17.50 calls (STM170721C00017500, $0.15, down $0.10)

Entry Price: $0.65 (5/15/2017)
Exit Target: $1.30
Return: -77%
Stop Target: 10 cents (Stop Limit)

Action: Set a Stop Limit at 15 cents on the October 20 calls to save the remaining premium. Set a Stop Limit at 10 cents on the July 17.50 calls to save the remaining premium.

Support at $15.50-$15.25 was breeched with Wednesday’s low tapping $15.16 and why I have set Stop Limits. Lowered resistance is at $15.50-$15.75.