Dear Momentum Options Subscriber,
The indexes traded in a tighter range on Thursday, with the bulls recovering from a two-session skid. The bias to the upside was a bullish sign despite the worries over this morning’s jobs report.
The Dow added nearly 39 points, or 0.2%, to settle at 18,135. The blue-chips traded to a first-half high of 18,160 but fell short of clearing resistance at 18,200. The second half fade to 16,087 held support at 18,100-18,000. The next triple-digit move from current levels, either way, will favor the action into next week.
The S&P 500 gained over 2 points, or 0.1%, to close at 2,101. The index reached a peak of 2,104 before sinking to a mid-day low of 2,095. The close back above 2,100 was a good signal for a continued test to resistance at 2,115-2,125. Near-term support is at 2,090-2,075 on another dip below 2,100.
The Nasdaq advanced 15 points, or 0.3%, to finish at 4,982. Tech traded to a high of 4,993 shortly after the open but fell shy at passing 5,000. A run to 5,050-5,100 is still in the mix on continued closes above 5,000. Support is at 4,950-4,925 on another close below 4,975.
The Russell 2000 climbed 3 points, or 0.3%, to end at 1,234. The small-caps were slightly volatile on the start after opening at 1,232 before testing 1,228 within minutes. Near-term support at 1,230-1,225 held for the eighth-straight session. The rebound to 1,236 represented the 13th-straight session and close above 1,225. Resistance is 1,235-1,240, with further fluff to 1,250-1,260 once cleared.
The S&P 500 Volatility Index ($VIX, 14.04, down 0.19) traded to a low of 13.88 on the market highs before reaching 14.58 on the pullback. A close below 13.50 ahead of the weekend would be bullish for next week. The bears are still trying to get a VIX close above 15.
The banks passed their first stress tests after the close on Thursday. Today’s jobs report could also help or hinder this morning’s open.
From desk to press, futures look like this: Dow (+3); S&P 500 (+1); Nasdaq 100 (+5).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 19-3-1 (83%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.
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 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
All prices given in this update are current as of 8:30 a.m. EST.
Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.
Atmel (ATML, $8.80, down $0.02)
ATML May 9 calls (ATML150515C00009000, $0.60, flat)
Entry Price: $0.40 (3/4/2015)
Exit Target: $1.00 (closed 1/3 at $0.65 on 3/5/2015)
Return: 54%
Stop Target: $0.45, raise to $0.50 (Stop Limit)
Action: Raise the Stop Limit from $0.45 to $0.50 on the remaining 2/3-sized position.
Shares traded to a high of $9.11 yesterday, with the options reaching a peak of $0.75.
ATML failed to hold $9 into the close, which is why I locked in a third of the profits. Support is at $8.50-$8.40 on a close below $8.75. Resistance remains at $9, which is a level I still hope is cleared and holds. If not, I have raised the Stop Limit to protect profits.
Gogo (GOGO, $20.07, up $0.44)
GOGO May 20 calls (GOGO150515C00020000, $1.60, up $0.20)
Entry Price: $0.85 (3/2/2015)
Exit Target: $2.25 (closed half at $1.85 on 3/5/2015)
Return: 103%
Stop Target: $1.25, raise to $1.35 (Stop Limit)
Action: Raise the Stop Limit from $1.25 to $1.35 on the second half of the position.
Shares traded to a high of $20.63 on Thursday and held $20 into the close. Support will try to hold at $19.75-$19.50 on a pullback. The low on the options was $1.45 yesterday, which is why I bumped the Stop Limit up by a dime.
If $20 continues to hold today or next week, I could add to the position, but I want to protect profits in case momentum fades.
BlackBerry (BBRY, $10.89, up $0.05)
BBRY June 13 calls (BBRY150619C00013000, $0.55, flat)
Entry Price: $0.60 (3/2/2015)
Exit Target: $1.20
Return: -8%
Stop Target: None
Action: BBRY traded to $11.03 on Thursday but failed to hold $11. Further resistance is at $11.25 on closes above this level. Support is at $10.75.
Yahoo! (YHOO, $44.16, up $0.17)
YHOO April 47 calls (YHOO150417C00047000, $0.65, flat)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -19%
Stop Target: None
Action: Resistance is at $45. Yesterday’s peak reached $44.31 following a dip to $43.50. Support is at $43-$42 on a close below this level.
Western Union (WU, $19.49, down $0.16)
WU April 20 calls (WU150417C00020000, $0.30, down $0.05)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: -17%
Stop Target: None
Action: The close below fresh support at $19.50 was slightly bearish. Additional help is at $19.25-$19. Resistance is at $19.75-$20.
American Express (AXP, $81.15, up $0.52)
AXP April 87.50 calls (AXP150417C00087500, $0.30, up $0.05)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: -46%
Stop Target: None
Action: Resistance is at $81.50-$82. Thursday’s peak reached $81.40. Support is at $80, and a close below this level could lead to $78.
Flextronics (FLEX, $11.97, up $0.02)
FLEX April 12 calls (FLEX150417C00012000, $0.40, flat)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -40%
Stop Target: None
Action: Support is at $11.75. Resistance is at $12-$12.25. Yesterday’s high reached $12.03.
Marvell Technology (MRVL, $16.51, up $0.30)
MRVL May 18 calls (MRVL150515C00018000, $0.40, up $0.10)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -20%
Stop Target: None
Action: Resistance at $16.50 was cleared on yesterday’s 2% pop. Additional hurdles are at $16.75-$17. Near-term support is at $16.25-$16 on another backtest.
Brocade Communications Systems (BRCD, $12.36, down $0.05)
BRCD March 13 calls (BRCD150320C00013000, $0.08, down $0.02)
Entry Price: $0.24 (2/13/2015)
Exit Target: $0.50-$0.75
Return: -67%
Stop Target: None
Action: Support is at $12.25-$12, followed by the 50-day moving average. Resistance is at $12.50-$12.75.
JDS Uniphase (JDSU, $13.32, up $0.13)
JDSU March 14 calls (JDSU150320C00014000, $0.15, flat)
Entry Price: $0.78 (1/8/2015)
Exit Target: $1.00
Return: -81%
Stop Target: None
Action: Shares were pushing $13.50 in after-hours trading last night. Resistance is at $13.75-$14 if this level is clear on the open. Support is at $13.25-$13.
Trades on Hold — other 2015 Portfolio Open positions (1): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the Open Trades and Closed Trades pages to see all open and closed positions.
Philip Morris (PM) March 75 puts (From January 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options