Pre-Market for 5/22/2018

Dow Reclaims 25,000 Level/ Trade Alert (BSX)

8:00am (EST)

The market opened strong and showed steady momentum throughout Monday’s action following chatter China and U.S. trade talks are progressing with tarriffs on hold. U.S. Secretary Steve Mnuchin said the U.S. won’t impose tariffs on China, for now, and China proposed to significantly increase purchases of U.S. goods and services. Volatility remains relaxed and is trying to clear a key level of support to confirm a continued rally this week and possibly into early June.

The Dow traded higher for the 11th-time in 13 sessions after jumping 1.2% while reaching a peak of 25,086 and holding the 25,000 into the closing bell. The S&P 500 soared 0.7% after making a morning run to 2,739 and coming within 3 points of the monthly high at 2,742.

The Russell 2000 closed at a fresh all-time high for the 4rd-straight session after gaining 0.7% and reaching an intraday peak of 1,639. The Nasdaq climbed 0.5% after testing a high of 7,431 but fell shy of holding the 7,400 level by a 6-pack.

Industrials led sector winners for a 2nd-straight session after surging 1.5%. Real Estate rose 1% while Energy and Technology advanced 0.9%. There were no sector laggards.

The S&P 500 Volatility Index ($VIX) traded to a morning low of 12.78 with support at 13-12.50 getting split. The 12.50 level has been holding for 7-straight sessions. The bounce to 13.59 afterwards held near-term resistance 13.75-14 and the 200-day moving average.

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The Spider S&P 500 ETF (SPY) broke out of a four-session mini trading range after tapping an intraday high of $273.98. February and March resistance at $274.50-$275 held with continued closes above the latter leading to a possible run towards $277.50-$278.

Rising support is at $272.50-$272 with a close below $270.50-$270 being a slightly bearish development.

RSI is back in an uptrend with near-term resistance from earlier this month in the 65 area. Continued closes above this level would be a bullish development for a run towards 70 and major support from December. Current support is at 60-55.

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Bitcoin Investment Trust (GBTC) has been in a bearish downtrend since late April with lower highs and lower lows throughout this month. Upper resistance at $13.50-$13.75 held on Monday’s rebound to $13.98 with the close between the 50/200-day moving averages giving a neutral reading. Continued closes back above $14 would be a slightly bullish signal.

Near-term support is at $13.50-$13.25 followed by mid-April help at $13-$12.50.

I mentioned late last month a possible death-cross had been avoided as the 50-day moving average had leveled out on the run to $16.88 and the April peak. This technical setup is back in play with the current gap between the 50/200-day moving averages at just 8 cents, down from Friday’s 16-cent spread. If confirmed, this bearish setup with the 50-day moving average closing below the 200-day moving average could lead to lower lows.

RSI has been in a downtrend since peaking in mid-April but is trying to level out. Support is at 40 with a move below this level signaling additional weakness and a continued backtest towards 35-30 and April/ March lows. Resistance is at 50.

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Analyst Upgrades/ Downgrades from Monday include:

Ctrip (CTRP) upgraded to Buy from Hold at TH Data Capital
Dillard’s (DDS) upgraded to Buy from Underperform at BofA/Merrill
Snap (SNAP) upgraded to Neutral from Sell at Moffett Nathanson

American Eagle (AEO) downgraded to Hold from Buy at SunTrust
Bristol-Myers (BMY) downgraded to Neutral from Buy at UBS
Williams Partners (WPZ) downgraded to Hold from Buy at Stifel

I have updated our latest trades AZN and IMAX. I have also raised the Stop Limit for BSX.

Momentum Options Play List

Closed Momentum Options Trades for 2018: 20-11 (65%). 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.

AstraZeneca (AZN, $36.79, up $0.46)

AZN June 37.50 calls (AZN180615C00037500, $0.50, up $0.10)

Entry Price: $0.45 (5/21/2018)
Exit Target: $0.90-$1.35
Return: 11%
Stop Target: None

Action: Set an Exit Target at 90 cents to $1.35. There is no Stop Target.

Shares tested a 52-week high of $37.01 on Monday with fresh resistance at $37-$37.25 holding. Continued closes above the latter would be bullish for a run towards $38-$38.50 on continued momentum.

Volume was huge as this contracts traded nearly 4,000 contracts yesterday. I have listed two exit targets as a move past $38.50 gets these options $1 in-the-money. Friday’s backtest to the 50-day moving average flushed out a lot of bullish traders but the 50-day moving average remains in a strong uptrend.

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Imax (IMAX, $22.95, up $0.10)

IMAX June 23 calls (IMAX180615C00023000, $0.85, up $0.03)

Entry Price: $0.85 (5/21/2018)
Exit Target: $1.70
Return: 0%
Stop Target: None

Action: Set an Exit Target at $1.70. There is no Stop Target.

Lower resistance at $23-$23.25 held on yesterday’s push to $23.15. Support is at $22.50-$22.25.

The 50-day moving average closed above the 200-day moving average to form a bullish cross. This is typically a bullish signal for higher highs down the road.

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Progenics Pharmaceuticals (PGNX, $7.50, up $0.27)

PGNX August 8 calls (PGNX180817C00008000, $1.15, up $0.15)

Entry Price: $1.00 (5/9/2018)
Exit Target: $2.00
Return: 15%
Stop Target: None

Action: Resistance at $7.35-$7.40 and the 50-day moving average was cleared on Monday’s gallop to $7.62. This area is now shoer-term support. Continued closes above $7.75 would be a bullish development.

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Viavi Systems (VIAV, $10.16, up $0.09)

VIAV June 10 calls (VIAV180615C00010000, $0.40, flat)

Entry Price: $0.50 (5/9/2018)
Exit Target: $1.00
Return: -20%
Stop Target: None

Action: Resistance is at $10.25 with yesterday’s high reaching $10.18. Support remains at $10-$9.90 and the 50-day moving average.

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Boston Scientific (BSX, $30.65, up $0.20)

BSX June 30 calls (BSX180615C00030000, $1.05, up $0.10)

Entry Price: $0.75 (5/7/2018)
Exit Target: $1.50
Return: 47%
Stop Target: 80 cents, raise to 90 cents (Stop Limit)

Action: Raise the Stop Limit from 80 cents to 90 cents to further protect profits.

Fresh resistance is at $30.75-$31 following the run to $30.85 and another 52-week peak. Rising support is at $30.50-$30.25.

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Rambus (RMBS, $13.42, up $0.04)

RMBS June 14 calls (RMBS180615C00014000, $0.12, flat)

Entry Price: $0.50 (5/3/2018)
Exit Target: $1.00
Return: -76%
Stop Target: None

Action: Resistance at $13.50 held for a 3rd-straight session despite a morning peak of $13.75. Support is at $13.25-$13.

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