MomentumOptions.com Pre-Market Update for 6/12/2018
Resistance Holds Ahead of a Busy Week
The markets opened slightly higher as there was little reaction to the contentious G-7 meeting over the weekend despite President Trump leaving early while highlighting the divisiveness over the trade disputes among the allies.
Trading was choppy afterwards with a slight pullback as Wall Street turned its focus towards the upcoming U.S.-North Korea summit. However, upside momentum resumed after the White House said negotiations are ahead of schedule, which may bode well for a plan to de-nuclearize the Korean peninsula.
The Nasdaq was up 0.2% after reaching a midday peak of 7,677 while coming within 20 points of a fresh all-time high.
The Russell 2000 added 0.1% following the morning run to 1,677 while missing another record high by just over 2 points.
The S&P 500 gained 0.1% after testing a high of 2,790 with major resistance at 2,800 holding.
The Dow was up for the 6th-time in 7 sessions after rising nearly 6 points, or 0.02% while tapping 25,402 intraday.
Consumer Staples and Energy showed the most sector strength with gains of 0.8% and 0.5%, respectively.
Utilities were weak after slipping 0.3% while Financials dipped 0.2%. Real Estate was the only other sector laggard, slipping 0.03%.
The S&P 500 Volatility Index ($VIX) stayed slightly elevated throughout the session with the high reaching 12.69 shortly after the open. Resistance at 12.50-13 was split but held.
We mentioned a close back above 13.50-14 and the 200-day moving average this week would be a slightly bearish development.
Support remains at 11.50-11 with a close below the latter being a continued bullish signal.
The Russell 2000 ETF (IWM) tested a high of $167.11 with near-term resistance at $167-$167.25 holding. Last week’s all-time high reached $167.23 with continued closes above $167.25 leading towards a possible run at $169-$170.
Current support is at $166.25-$166 with a move below $164 signaling a short-term top.
RSI is trying to hold support at 70 with continued closes above this level signaling additional strength and a push towards 75-80 and June/ January highs. Support is at 65-60 with a move below the latter signaling additional weakness.
The Spider Gold Shares (GLD) have been in a mini trading range between $122-$123.75 since mid-May with today’s high reaching $123.42. Continued closes above the latter would be a slightly bullish development with fresh resistance at $124 and the 200-day moving average.
The 50-day moving average has been in a downtrend since late April and is showing signs of falling below the 200-day moving average. This would form a death cross and is typically a bearish technical setup for lower lows.
Current support is at $122.75-$122.50. A close below $122 would signal additional weakness towards the $121-$120 area.
RSI is in a slight uptrend with mid-May resistance at 50. Continued closes above this level would be a slightly bullish signal. Support is at 45-40.
We got some nice pin action on BSX and CVS yesterday and I have updated the trades to reflect the gains.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 21-13 (62%). 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 Daily updates.
Boston Scientific (BSX, $34.32, up $2.37)
BSX July 32 calls (BSX180720C00032000, $3.00, up $2.00)
Entry Price: $0.80 (6/8/2018)
Exit Target: $1.60, raise to $5 (Limit Order on half)
Stop Target: $2.60 (Stop Limit)
Action: Raise the Exit Target from $1.60 to $5 with a Limit Order on half. Set a Stop Limit at $2.60 to start protecting triple-digit profits.
Shares surged to a high of $37.30 with the options peaking at $4.80 following a takeover offer from Stryker. Shares were halted a few times yesterday after the Wall Street Journal reported that Stryker (SYK) has made a takeover approach to the company. Boston Scientific said in a regulatory filing that it is aware of such reporting but said it does not comment on market rumors or speculation.
These are July options and will give us plenty of time for this story to play out. However, shares could pullback if the offer was just a rumor.
Fresh resistance is at $34.75-$35. Rising support is at $34-$33.75.
CVS Health (CVS, $66.94, up $0.91)
CVS July 67.50 calls (CVS180720C00067500, $1.85, up $0.45)
Entry Price: $0.85 (6/1/2018)
Exit Target: $1.70, raise to $2.50 (Limit Order on half)
Stop Target: $1.60 (Stop Limit)
Action: Raise the Exit Target from $1.70 to $2.50 with a Limit Order on half. Set a Stop Limit at $1.60.
Fresh resistance is at $66.50-$67 following Monday’s surge to $67.73. Rising support at $66.50-$66.
Alarm.com (ALRM, $46.02, up $0.61)
ALRM July 47.50 calls (ALRM180720C00047500, $1.00, up $0.15)
Entry Price: $0.65 (6/1/2018)
Exit Target: $1.30
Stop Target: 70 cents, raise to 80 cents (Stop Limit)
Action: Raise the Stop Limit from 70 cents to 80 cents.
Fresh resistance is at $46.25-$46.50 following yesterday’s run to $46.19. Rising support is at $45.75-$45.50.
Progenics Pharmaceuticals (PGNX, $8.79, up $0.06)
PGNX August 8 calls (PGNX180817C00008000, $2.20, flat)
Entry Price: $1.00 (5/9/2018)
Exit Target: $2.00
Stop Target: $1.70 (Stop Limit)
Action: Resistance is at $9-$9.25. Support is at $8.50-$8.25.