MomentumOptions.com Mid-Market Update for 1/8/2019

Earnings for the Week

1:30pm (EST)

The “official” start of 4Q earnings gets underway this week with the market suspect that earnings estimates likely need to fall a lot more before stabilizing. A lot will depend on company guidance and management’s discussion of business conditions with next week’s releases from the big banks flowing in first.

Total Q4 earnings for the S&P 500 index are expected to be up 11.8% from the same period last year on 5.6% higher revenues. Estimates have been coming down, with the current 11.8% rate down from 15.9% at the start of the quarter.

For the small-cap S&P 600 index, total Q4 earnings are expected to be up 7.1% on 6.5% higher revenues. This would follow 33.6% earnings growth on 5.7% revenue growth in Q3.

For full-year 2019, total earnings for the S&P 500 index are expected to be up 7.5% on 5.9% higher revenues, which would follow the 20.7% earnings growth on 6.9% higher revenues in 2018. Estimates for 2019 have been steadily coming down, with the current 7.5% growth rate down from 9.8% in early October 2018.

As far as this week’s announcements, after today’s close: Exfo (EXFO), Kush Bottles (KSHB), Smart Global Holdings (SGH)

Wednesday

Before the open: Acuity Brands (AYI), Constellation Brands (STZ), Greenbrier Companies (GBX), Lennar (LEN), Plug Power (PLUG), Schnitzner Steel Industries (SCHN)

After the close: Bed, Bath & Beyond (BBBY), Franklin Covey (FC), KB Home (KBH), PriceSmart (PSMT), Richardson Electronics (RELL), Simulations Plus (SLP), Voxx International (VOXX), WD-40 (WDFC)

Thursday

Before the open: Emmis Communications (EMMS), FuelCell Energy (FCEL)

After the close: Aehr Test Systems (AEHR), Synnex (SNX)

Friday

Before the open: Aphria (APHA), Infosys Technologies (INFY)

After the close: None

LEN, BBBY and SCHN will likely make major moves and are interesting trade ideas. However, I don’t want to take any earnings trades just yet.

As far as the market, the Dow is up 182 points to 23,713 while the S&P 500 is adding 14 points to 2,563. The Nasdaq is higher by 46 points to 6,870 and the Russell 2000 is advancing 14 points to 1,419.

I have updated our current trades so let’s go check the tape.

 

Momentum Options Play List

Closed Momentum Options Trades for 2019: 0-0 (0%). 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 “Stops” entered to close any trades or “Limit 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.

 

Energy Select Spiders (XLE, $61.14, up $0.38)

XLE February 64 calls (XLE190215C00064000, $1.05, up $0.10)

Entry Price: $1.15 (1/8/2019)

Exit Target: $2.30

Return: -10%

Stop Target: None

Action: The options opened at $1.14 and have traded up to $1.21. If you haven’t established a position, you can do so now.

 

CVS Health (CVS, $69.26, up $0.65)

CVS February 72.50 calls (CVS190215C00072500, $1.15, up $0.10)

Entry Price: $1.20 (1/8/2019)

Exit Target: $2.40

Return: -5%

Stop Target: None

Action: The options opened at $1.20 and have traded up to $1.25. If you haven’t established a position, you can do so now.

 

New Age Beverages (NBEV, $5.53, up $0.06)

NBEV February 6 calls (NBEV190215C00006000, $0.50, up $0.05)

Entry Price: $0.50 (1/7/2019)

Exit Target: $1.00

Return: 0%

Stop Target: None

Action: Resistance is at $5.75-$5.80. Support is at $5.30-$5.25.

Shares have been in a tight trading range since mid-December with RSI flatlining over the same time period. Usually the longer the time-frame, the bigger the breakout, or breakdown, will be. The higher lows and higher highs have been slightly bullish over the past 4 session with today’s high reaching $5.60.

 

Consumer Staples Select Spiders (XLP, $51.49, up $0.30)

XLP February 53 calls (XLP190215C00053000, $0.50, up $0.02)

Entry Price: $0.52 (1/7/2019)

Exit Target: $1.05

Return: -4%

Stop Target: None

Action: Resistance is at $51.50-$52. Support is at $51-$50.50.

 

Imax (IMAX, $20.12, up $0.46)

IMAX February 18 puts (IMAX190215P00018000, $0.30, down $0.15)

Entry Price: $0.60 (1/3/2019)

Exit Target: $1.20

Return: -50%

Stop Target: None

Action: Fresh resistance is at $20-$20.25. Rising support is at $19.50-$19.25.