MomentumOptions.com Pre-Market Update for 11/15/2017
Small-Caps Continue to Fail 50-Day MA
The market experienced weakness on the open that briefly pushed the major indexes into negative territory for the month before a recovery off the lows. The Dow and S&P 500 fell for the third time in four sessions with the lower highs and lower lows being a slight concern.
The Nasdaq saw its 3-session win streak snapped but held 6,700 and a key level of support. The Russell 2000 continues to hold its late September breakout above 1,460 with a close below this level being a ongoing bearish signal.
Utilities showed ongoing strength after jumping 1.3% while Consumer Staples gained 0.4%. Energy and Materials were clobbered with the sectors declining 1.6% and 0.9%, respectively.
Fed Chair Janet Yellen participated in an ECB-sponsored panel discussion with ECB’s Draghi, BoJ’s Kuroda, and BoE’s Carney. Yellen said experiments to produce consensus were largely unsuccessful, but the dots on balance proved a benefit on the policy path. She said she is always trying to emphasize conditionality, as every bit of forward guidance should be conditional on the outlook of the economy. She also remarked the Fed was successful in guiding markets on the unwinding of balance sheets.
Chicago Fed Charles Evans also took part in the conference and said price level targeting might be a good way to go to achieve the 2% inflation rate, but more data is needed.
St. Louis Fed James Bullard repeated that current rate posture is appropriate though growth in the second half may be stronger than expected, he said there’s not need to increase rates as inflation remains low. Additionally, he thinks 2018 growth will be slower after saying inflation data during 2017 has surprised to the downside and called into question the idea that U.S. inflation is reliably returning toward target. He worried that even if the unemployment rate declined substantially further, the effects on inflation may be small as he suspects the 2% inflation goal may not be hit until 2018 or 2019.
Atlanta Fed Raphael Bostic believes a gradual rate hike path is appropriate over the next couple of year, as noted in his speech on the economy and labor market dynamics. He’s watching inflation closely for signs of acceleration and forecasting growth to be just a bit above 2% with the unemployment rate in the low 4%’s, with modest increases in real wage growth.
Bostic also added it’s too soon to judge how fiscal policy will impact the outlook. He said the flattening of the yield curve may signal more confidence in the U.S. economy and it’s not a primary consideration. Further, he said that an inverted yield curve wouldn’t necessarily signal a U.S. recession, in part due to safe-haven investing.
The VelocityShares Daily Inverse VIX (ZIV) stretched its losing streak to 10-straight after testing a low of 75.67. Prior support at 77-76.75 and the 50-day moving average failed to hold and now represents short-term resistance. A move above the October breakout above 75 is in play on continued weakness. A close below 74 will likely cause extreme market volatility going forward.
Folks, this is the first vacation I’ve had in literally, eight years, but as usual, I still have to watch the market. Especially with open trades, no worries though as I’ve been expecting this lower trend to continue into this week. The key will be if the indexes hold major support, or not. Either way, I could still have new trades so stay locked-and-loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 50-21 (70%). 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, $17.15, up $0.40)
January 20 calls (TIVO180119C00020000, $0.50, up $0.15)
Entry Price: $0.60 (10/31/2017)
Exit Target: $1.20
Stop Target: None
Action: Fresh resistance is at $17.25-$17.50.following yesterday’s run to $17.40. Support is at $17-$16.75.
Limelight Networks (LLNW, $5.96, up $0.27)
LLNW December 4 calls (LLNW171215C00004000, $1.95, up $0.25)
Entry Price: $0.37 (9/21/2017)
Exit Target: $2.50 (Limit Order on half at $2.50)
Stop Target: $1.50/ $1.40, raise to $1.70 (Stop Limits)
Action: Raise the Stop Limits to $1.70.
Yesterday’s 52-week peak reached $6.05 with fresh resistance at $6-$6.10 holding. Support is at $5.80-$5.75.
The company met with Oppenheimer in Texas yesterday and is with them in Atlanta today. This is usually a good signal but I raised the Stop Limit in case a secondary-offering comes out.
TherapeuticsMD (TXMD, $5.87, down $0.03)
TXMD December 7.50 calls (TXMD171215C00007500, $0.20, flat)
Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Stop Target: None
Action: Support is at $5.75-$5.50. Resistance is at $6-$6.25.