MomentumOptions.com Pre-Market for 12/18/2017
Dow/ S&P 500 on 4-Week Win Streaks
U.S. markets rallied on Friday while booking weekly gains, as optimism grew that the Republicans appear to have the necessary votes to pass the tax reform bill. The S&P 500 and Dow jumped 0.9% and 0.7%, respectively, to extend their weekly win streaks to four-straight while tapping fresh record highs. The Dow rose 1.3% for the week while the S&P 500 added to its half-point gain going into Friday’s session.
The Nasdaq surged 1.2% after setting a fresh all-time high while recovery the 6,900 level for the first time since late November. It was the second-straight week the index closed higher after rising 1.4%. The Russell 2000 soared 1.6% and gained 0.6% over the week. The small-cap index is less than 1% away from its record close set last month.
All sectors traded higher on Friday and were led by Consumer Staples which rallied 1.9%. Technology and Health Care added 1.5% and were the weekly leaders with gains of 1.5% and 0.8%. Utilities were the weakest sector after sinking 1.5% followed by Energy’s 0.8% setback.
The VelocityShares Daily Inverse VIX (ZIV) traded to an all-time high of 84.97 to extend its winning streak to seven-straight sessions. Upper resistance and our near-term targets at 84.50-85 were split with continued breakout potential to 87-87.50. Support remains at 82.50-82 with a move below 81 being a slightly bearish signal.
The Russell 2000 ETF (IWM) is trying to break out of a mini trading range between $150-$152 with Friday’s high reaching $153.25. Resistance is at $152.75-$153 with continued closes above the latter being a bullish development. Support is at $152-$151.75with a move back below the latter likely leading to additional weakness to $150-$149.50 and the 50-day moving average. RSI remains in a slight uptrend with resistance at 60 level.
The Dow Jones Transportation Average ($TRAN) has traded in a tight range over the past six sessions with resistance at 10,450-10,500 and the recent all-time high just above the latter that was set earlier this month. Support is at the 10,350-10,300 with a move below the latter being a slightly bearish development. RSI has been struggling to clear resistance at 70 with continued closes above this level being a bullish development.
The percentage of S&P 500 stocks trading above the 50-day moving average is at 72% with resistance at 74.5%-75%. This percentage peaked earlier this month near 80%. Support is at 70%-69% with risk to 65% on a move below the latter.
The percentage of Nasdaq 100 stocks trading above the 200-day moving average closed just below the 73% level. Multi-month resistance is at 75%-77.5% with Friday’s high pushing 74.76%. Support is at 71.5%-70% with a move below the latter signaling upcoming weakness.
I have updated the parameters for our PFE, INTC, and TWTR positions so please do the same in your trading accounts.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 54-23 (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.
Pfizer (PFE, $37.20, up $0.74)
PFE January 37 calls (PFE180119C00037000, $0.67, up $0.31)
Entry Price: $0.43 (12/14/2017)
Exit Target: $0.90
Stop Target: 50 cents (Stop Limit)
Action: Set an initial Stop Limit at 50 cents to start protecting profits.
Fresh resistance at $37.25-$37.50 following Friday’s run to $37.22 and 52-week peak. Support is at $37-$36.75.
Spider Gold Shares (GLD, $119.18, up $0.25)
GLD January 117 puts (GLD180117P00117000, $0.47, down $0.13)
Entry Price: $0.95 (12/11/2017)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $119.25-$119.50. Support is at $119-$118.75.
Intel (INTC, $44.56, up $1.30)
INTC January 45 calls (INTC180119C00045000, $0.95, up $0.52)
Entry Price: $0.53 (12/11/2017)
Exit Target: $1.10
Stop Target: 75 cents (Stop Limit)
Action: Set an initial Stop Limit at 80 cents to start protecting profits.
Fresh resistance is at $44.75-$45 with Friday’s high reaching $44.84. Rising support is at $44.25-$44.
Bank of America (BAC, $29.04, up $0.31)
BAC January 30 calls (BAC180119C00030000, $0.43, up $0.08)
Entry Price: $0.50 (12/8/2017)
Exit Target: $1.00
Stop Target: None
Action: Resistance is at $29-$29.25. Support is at $28.75-$28.50.
Viavi Systems (VIAV, $8.65, flat)
VIAV January 9 calls (VIAV180119C00009000, $0.25, flat)
Entry Price: $0.65 (11/29/2017)
Exit Target: $1.30
Stop Target: None
Action: Resistance is at $8.75-$9. Support is at $8.50.
Twitter (TWTR, $22.23, down $0.25)
TWTR January 24 calls (TWTR180119C00024000, $0.45, down $0.15)
Entry Price: $0.70 (11/22/2017)
Exit Target: $1-$1.40 (Limit Order on half @ $1)
Stop Target: 35 cents, lower to 30 cents (Stop Limit)
Action: Lower the Stop Limit to 30 cents to give the trade a little wiggle room.
Support is at $22-$21.75 following the backtest to $22.18. Resistance is at $22.50-$22.75.