Dear Momentum Options Subscriber,
The bulls rebounded from last Friday’s drubbing to get a Monday win, but the bears made a little noise as they pressured tech and kept volatility elevated.
The Dow gained 139 points, or 0.8%, to finish at 17,995. The blue-chips traded to a high of 18,031 late in the session before closing just below the 18,000 level. I mentioned that a return above 18,000-18,100 to start the week would be a bullish sign, but there is still risk to 17,800-17,600 despite Monday’s solid rebound.
The S&P 500 added 8 points, or 0.4%, to end at 2,079. The index reached a peak of 2,083 and held 2,075 into the close. This was a slightly bullish sign, but additional hurdles remain at 2,090-2,100. The bears are still gunning for a test to 2,050, and last week’s low of 2,067 will need to hold on another drop below 2,075.
The Nasdaq advanced 15 points, or 0.3%, to settle at 4,942. Tech was choppy, as the index traded down to 4,920 on the open and backup support at 4,925 during the first half of trading. A close below 4,900 would be bearish. The bulls made a run past 4,950 by half of a point in the second half of trading but failed to hold this level. A more convincing run past 4,950-4,975 is needed to get 5,000 back into play.
The Russell 2000 popped a 6-pack, or 0.5%, to close at 1,223. The small-caps held positive territory throughout the session and traded past 1,225 by nearly a point before failing to hold this level into the closing bell. Support is at 1,210-1,200 on another drop below 1,220. A move above 1,225-1,230 would be a bullish sign.
The S&P 500 Volatility Index ($VIX, 15.06, down 0.14) opened higher at 15.72 before falling to a low of 14.71. The bulls came close to holding 15-14.75 but need to tap 13.50 again to regain their momentum. There is still risk to 17.50, and possibly 20, on continued closes above 15.
Apple’s (AAPL, $127.14, up $0.54) new product announcements and the display of their splashy smart-watches, along with a thinner MacBook, got a golf clap from Wall Street on Monday.
The lowest-priced model of the watch starts at $349, with the mid-tier model coming in at $549. The mind-blowing price tag was reserved for the Apple Watch Edition, which starts at $10,000. The watches will be available in late April.
Consumers may have been happier to hear that the Apple TV is now $30 cheaper at just $69. In addition, Apple ecosystem users will be able to use HBO’s Now service that will cost you $15/month but won’t require a separate cable subscription.
From desk to press, futures look like this: Dow (-147); S&P 500 (-17); Nasdaq 100 (-31).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 20-4-1 (80%). 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, $8.83, up $0.04)
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: 56%
Stop Target: $0.50 (Stop Limit)
Action: Monday’s high reached $8.87. Resistance is at $9. If cleared, a run to $10 could come quickly. Support is at $8.40-$8.30 and the 50- and 100-day moving averages on a close below $8.75.
Yahoo! (YHOO, $42.98, down $0.46)
YHOO April 47 calls (YHOO150417C00047000, $0.40, down $0.10)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -50%
Stop Target: None
Action: Support is at $43-$42 and the 200-day moving average. A close below the latter could get $40 into play. Resistance at $43.50-$45.
Western Union (WU, $19.57, up $0.12)
WU April 20 calls (WU150417C00020000, $0.30, flat)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: -17%
Stop Target: None
Action: Monday’s peak reached $19.63. Resistance is at $19.50-$19.75. Support is at $19.25-$19 if $19.50 fails to hold.
American Express (AXP, $80.51, up $0.20)
AXP April 87.50 calls (AXP150417C00087500, $0.20, flat)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: -64%
Stop Target: None
Action: Resistance is at $81.50-$82. Support is at $80, and a close below this level could lead to $78.
Flextronics (FLEX, $11.65, down $0.11)
FLEX April 12 calls (FLEX150417C00012000, $0.25, down $0.05)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -63%
Stop Target: None
Action: Support is at $11.50 and the 50-day moving average. A move below this level would be bearish. Resistance is at $11.75-$12.
Marvell Technology (MRVL, $16.50, down $0.06)
MRVL May 18 calls (MRVL150515C00018000, $0.45, flat)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -10%
Stop Target: None
Action: Resistance is at $16.75-$17. Near-term support is at $16.25-$16 on a backtest. A close below the latter could lead to $15.75 and the 50-day moving average. I believe a run to $20 is coming by mid-May once $17 is cleared.
JDS Uniphase (JDSU, $13.89, flat)
JDSU March 14 calls (JDSU150320C00014000, $0.30, flat)
Entry Price: $0.78 (1/8/2015)
Exit Target: $1.00
Return: -62%
Stop Target: None
Action: Resistance is at $14-$14.25, and a close above the latter could lead to a run at the 52-week high at $14.99. Support is at $13.50-$13.25 and the 100-day moving average on a drop back below $13.75.
Trades on Hold — other 2015 Portfolio Open positions (2): 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) — Keep the Limit Order to sell to close the position at $0.95 in place — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options