Dear Momentum Options Subscriber,
Futures were up ahead of the opening of overseas markets and were showing a strong start to this morning’s trading on Wall Street. However, futures turned negative in between, and the market opened slightly lower to start today’s trading session.
Despite the choppiness, I was actually glad we didn’t scream to new highs on the open. The mixed action is still slightly bullish, and the broader market is up while tech is showing a little weakness.
Of course, today’s close is important, as the gains need to hold. A positive close on the Dow would mark the fourth-straight Monday win for the index. This would signal that money is moving into the market and off of the sidelines.
I mentioned that there could be further upside of 3% for the market, and I’m looking to lock-in gains from our current trades this week and into next. With April options expiring in less than four weeks, it will be important for us to close them, as the time premium in the options will start to decay.
I also have a few trades into May and June, but I want to make sure the portfolio is light going into April and first-quarter earnings season.
There will be companies reporting earnings into the first week of April, but this is when first-quarter earnings start for Wall Street.
This upcoming earnings season will have a major impact on the market, and I cannot stress this enough. This is when the rubber meets the road, as Wall Street will want to see proof in companies’ earnings to support the market’s “lofty” valuations.
I will talk more next week about why the market is still trading at attractive valuations, but getting out of current trades is our game plan for now. This doesn’t mean that I won’t have New Trades, just that they just might be shorter or quicker option trades.
Heading into the second half of trading, the Dow is up 54 points to 18,181, while the S&P 500 is higher by 3 points to 2,111. The Nasdaq is down 3 points to 5,023, and the Russell 2000 is gaining nearly 2 points to 1,268.
There are a couple of potential trades I like, so stay locked and loaded into the close. I’m still doing the math and trying to figure out the best trade for us, but I hope to have it ready shortly. In the meantime, I have updated our current trades, so let’s go check the action.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 24-6-1 (77%). 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 1:15 p.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.
Western Union (WU, $19.88, up $0.68)
WU April 20 calls (WU150417C00020000, $0.39, up $0.19)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: 8%
Stop Target: None
Action: Take profits and sell to close the WU April 20 calls at current levels.
I could come back to WU on a move above $20, but, given today’s strong gains, I want to lock-in profits and move on to faster-developing trades.
Cypress Semiconductor (CY, $15.43, down $0.27)
CY April 16 calls (CY150417C00016000, $0.50, down $0.05)
Entry Price: $0.40 (3/18/2015)
Exit Target: $0.80
Return: 25%
Stop Target: None
CY June 16 calls (CY150619C00016000, $0.85, down $0.05)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: 13%
Stop Target: None
Action: Support is at $15.25. Resistance is at $15.75-$16. The 52-week high is at $16.25.
Veeva Systems (VEEV, $26.48, down $0.80)
VEEV April 29 calls (VEEV150417C00029000, $0.45, down $0.15)
Entry Price: $0.60 (3/18/2015)
Exit Target: $1.20
Return: -25%
Stop Target: None
Action: Support is at $27 and the 200-day moving average. There is additional risk to $26-$25 on a close below this level. A move above $28.50 and the 50- and 100-day moving averages could lead to additional short covering and a run past $30.
Gogo (GOGO, $20.81, down $0.10)
GOGO April 23 calls (GOGO150417C00023000, $0.35, down $0.05)
Entry Price: $0.55 (3/17/2015)
Exit Target: $1.10
Return: -36%
Stop Target: None
Action: Resistance is at $21.50-$22. Short-term support is at $20.50-$20. A mini “symmetrical triangle” is forming at current levels and could be signaling that a strong breakout or breakdown is forthcoming.
Additionally, a “golden cross” is forming, as the 50-day moving average is on the verge of crossing above the 200-day moving average. This is a bullish sign, as a breakout could lift shares to $22-$24.
Yahoo! (YHOO, $45.02, down $0.02)
YHOO April 47 calls (YHOO150417C00047000, $0.50, down $0.10)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -38%
Stop Target: None
Action: Continued closes above $45 should lead to a run to $47-$48 and the 100-day moving average. Near-term support is at $44.
American Express (AXP, $82.96, up $0.26)
AXP April 87.50 calls (AXP150417C00087500, $0.25, flat)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: -55%
Stop Target: None
Action: Shares have traded to a high of $83.54 today. A close above $84 would be bullish. If cleared, a move to $86-$87 and the 100-day moving average could come quickly. Support is at $81-$80.
Flextronics (FLEX, $12.29, up $0.01)
FLEX April 12 calls (FLEX150417C00012000, $0.50, flat)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -25%
Stop Target: None
Action: Today’s high has reached $12.39. Short-term resistance is at $12.25-$12.50. The 52-week high is at $12.48. A close above this level could lead to a run at $13. Support is at $11.75 and the 50-day moving average if $12 fails to hold.
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.
Marvell Technology (MRVL) May 18 calls (from February 2015) — 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