MomentumOptions.com Pre-Market Update for 8/9/2017
Strong Words Stall Rally
The market traded in another tight range on Tuesday but pulled back into the closing bell on strong geopolitical talk against North Korea. Materials and Real Estate were the weakest S&P sectors while Utilities showed some strength and was the only sector to finish in the green. The indexes closed on their lows after the Fire and Fury comments from President Trump that could simmer the current rally if the rhetoric heats up.
The Dow fell 33 points, or 0.2%, to close at 22,085. The blue-chips tested an all-rime intraday high of 22,179 with lower resistance at 22,200-22,250 holding. The fade to 22,057 held upper support at 22,000-21,800. A move below the latter would be a slightly bearish development with risk to 21,550-21,500 and the 50-day moving average.
The S&P 500 slipped 6 points, or 0.2%, to settle just below 2,475. The index made a record run to 2,490 to clear lower resistance at 2,485-2,500 before stumbling into the close. The bottom held lower support at 2,475-2,470 with backup help now at 2,450-2,445 and the 50-day moving average on a close below the latter.
The Nasdaq gave back 13 points, or 0.2%, to end at 6,370. Tech opened lower before making a solid push to 6,423 midday. Upper resistance at 6,400-6,425 was nearly cleared before the 68-point pullback to 6,355. Support is at 6,325-6,300 held with a move below 6,275 and the 50-day moving average being a bearish development.
The Russell 2000 dipped 4 points, or 0.3%, to finish at 1,410. The small-caps made a semi-surge to 1,426 by Wall Street’s lunch break to clear upper resistance at 1,420-1,425 and the 50-day moving average. The reversal to 1,407 held support at 1,400-1,395 and the 100-day moving average.
The S&P 500 Volatility Index ($VIX, 10.96, up 1.03) kissed 9.52 at the halfway point during Tuesday’s action with lower support at 10-9.50 holding by a hair. Upper resistance at 10.50-11.50 was cleared on the spike to 11.52. A move above 12.50 could lead to a round of panic selling.
I have updated the parameters of the TIVO trade so let’s go check the tape. I have also raised the Stop Limit on DDD to further protect profits.
From desk to press, futures look like this: Dow (-15); S&P 500 (-5); Nasdaq 100 (-16).
Momentum Options Play List
Closed Momentum Options Trades for 2017: 43-17 (72%). 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.
TiVo (TIVO, $18.35, down $0.55)
TIVO October 20 calls (TIVO171020C00020000, $0.70, up $0.10)
Entry Price: $0.70 (8/8/2017)
Exit Target: $1.40
Stop Target: None
Action: Set an Exit Target at $1.40. There is no Stop Limit.
Yesterday’s low reached $18.30. Support is at $18.25-$18 with risk to $17.50-$17 on a close below the latter. Resistance is at $18.75-$19 and the 50/200-day moving averages. A golden cross in the the process of forming between the two and is typically a bullish development. I like TIVO based on its intellectual properties and the takeover chatter surrounding the company.
3D Systems (DDD, $12.69, down $0.27)
August 16 puts (DDD170818P00016000, $3.30, up $0.30)
Entry Price: $0.55 (8/2/2017)
Exit Target: $4 (Limit Order) (closed half @ $1.10 on 8/3/2017)
Return: 300% ($2.20 current avg. closing price)
Stop Target: $2.50, raise to $2.80 (Stop Limit)
Action: Raise the Stop Limit from $2.50 to $2.80.
Lower support at $12.75-$12.50 held on Tuesday’s trip to $12.62. Lowered resistance is at $12.75-$13.
Wendy’s (WEN, $15.22, down $0.25)
WEN August 16 calls (WEN170818C00016000, $0.20, down $0.05)
Entry Price: $0.45 (7/12/2017)
Exit Target: $0.90
Stop Target: None
Action: Support is at $15.25-$15. Resistance is at $15.50-$15.75. Shares were up 3% in after-hours trading last night and ahead of this morning’s earnings announcement.
TherapeuticsMD (TXMD, $5.34, down $0.02)
TXMD August 7.50 calls (TXMD170818C00007500, $0.10, flat)
Entry Price: $0.50 (6/22/2017)
Exit Target: $1.00
Stop Target: None
Action: Support is at $5.25-$5. Resistance is at $5.50-$5.75.