Dear Momentum Options Subscriber,
The bulls made a great recovery on Thursday, as the market cleared resistance and stayed strong into the close. Volatility slipped a bit but remains elevated heading into the last trading day of the week.
The Dow zoomed 259 points, or 1.5%, to close at 17,895. The blue-chips opened slightly lower and tested 17,620 before reaching a high of 17,900. Support at 17,600 held, and the close above 17,800 was bullish. Additional resistance is at 18,000-18,100.
The S&P 500 soared 25 points, or 1.3%, to finish at 2,065. The index traded in positive territory throughout the session and easily held support at 2,040. The run past 2,060 and the 50-day moving average was a bullish sign and gets 2,075-2,085 into play.
The Nasdaq jumped 43 points, or 0.9%, to end just under 4,893. Tech came into the session a point below support at 4,850 but made a steady climb to 4,895 into the closing bell. Resistance at 4,900 stuck, but the close above 4,875 was slightly bullish.
The Russell 2000 rocked 20 points, or 1.7%, to settle at 1,236. The small-caps opened at 1,221 and easily cleared 1,225 shortly afterwards. This level held throughout the morning, which was a good clue that higher highs might come. The index went out near its session high and is on track to challenge 1,240-1,250 today or next week. Support is at 1,225-1,220, and a close below the latter keeps a trading range in place.
The S&P 500 Volatility Index ($VIX, 15.42, down 1.45) fell nearly 9% after trading to a low of 15.30. A close below 15 today would be bullish for next week. The bears are still trying to crack 17.50 but lost ground yesterday.
The action in Microsoft (MSFT, $41.02, down $0.96), Intel (INTC, 30.80, down $1.53) and Cisco (CSCO, $28.24, down $0.02) was a little discouraging, as “old” tech names underperformed and ended lower on yesterday’s run to resistance. I will talk about these three stocks in today’s Mid-Market Update.
From desk to press, futures look like this: Dow (-29); S&P 500 (-3); Nasdaq 100 (-4).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 22-5-1 (79%). 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.
Yahoo! (YHOO, $42.95, up $0.45)
YHOO April 47 calls (YHOO150417C00047000, $0.38, up $0.03)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -53%
Stop Target: None
Action: Shares traded to a high of $43.36 before closing just below $43. Resistance is at $43.50. Support is at $43-$42 and the 200-day moving average.
Western Union (WU, $19.58, up $0.30)
WU April 20 calls (WU150417C00020000, $0.35, up $0.05)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: -3%
Stop Target: None
Action: Support is at $19.25-$19. Resistance is at $19.50-$19.75.
American Express (AXP, $81.56, up $2.11)
AXP April 87.50 calls (AXP150417C00087500, $0.30, up $0.10)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: -46%
Stop Target: None
Action: Shares traded to a high of $82 and tested resistance before finishing below this level. A close above this level gets $83.50 in play. Support is at $80.
Flextronics (FLEX, $11.55, up $0.07)
FLEX April 12 calls (FLEX150417C00012000, $0.20, up $0.03)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -70%
Stop Target: None
Action: Support is at $11.25. A break below this level could lead to $11 and a test of the 100- and 200-day moving averages. Resistance is at $11.50-$11.75.
Marvell Technology (MRVL, $16.07, down $0.12)
MRVL May 18 calls (MRVL150515C00018000, $0.35, down $0.05)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -30%
Stop Target: None
Action: Support is at $16-$15.75 and the 50-day moving average. Thursday’s low touched $15.80. Resistance is at $16.25-$16.50.
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