Dear Momentum Options Subscriber,
The bears won their second-straight session following another backtest to support on Tuesday. I mentioned coming into the week that the back-end of March could be a little bearish, but the damage has been minimal. The first waves of support are holding, but further weakness could lead to additional selling pressure.
The Dow fell 105 points, or 0.6%, to close at 18,011. The blue-chips were weak on the open but made a run to resistance at 18,200 intraday after testing 18,149. The late-day dive to 18,010 held support at 18,000, but there is risk to 17,800 and the 50-day moving average on a close below this level.
The S&P 500 dipped 13 points, or 0.6%, to finish at 2,091. The index struggled to hold 2,100 on the open but managed to trade up to 2,107 ahead of Wall Street’s lunch break. The second-half fade and close at the session low held backup support at 2,090. There is risk to 2,075 if this level fails to hold. Resistance is at 2,100-2,110.
The Nasdaq declined 16 points, or 0.3%, to end at 4,994. Tech came within 10 points of its multi-year high of 5,042 but struggled at resistance and closed below 5,000. There is additional help at 4,975, followed by 4,950, but a close below these levels would be bearish.
The Russell 2000 declined nearly 2 points, or 0.1%, to settle at 1,264. The small-caps nearly triggered another all-time high north of 1,268 but were choppy throughout the session. The good news is that support at 1,260-1,250 held solid following a pullback to 1,262 late in the day.
The S&P 500 Volatility Index ($VIX, 13.62, up 0.21) traded down to 12.59 during the first half of the action but struggled to get below 12.50 for the third-straight session. The close above 13.50 was a little troublesome, as it keeps 15 in play.
From desk to press, futures look like this: Dow (-27); S&P 500 (-1); Nasdaq 100 (+2).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 25-6-1 (78%). 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 8:00 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.
Dot Hill Systems (HILL, $5.41, up $0.20)
HILL June 5 calls (HILL150619C00005000, $0.85, up $0.20)
Entry Price: $0.65 (3/24/2015)
Exit Target: $1.30
Return: 32%
Stop Target: None
Action: Shares traded to a fresh 52-week high of $5.45 on Tuesday, and our timing was perfect, as Wall Street noticed the move. I’m expecting a run north of $6 on continued momentum. Support is at $5.
Cypress Semiconductor (CY, $15.32, down $0.04)
CY April 16 calls (CY150417C00016000, $0.40, flat)
Entry Price: $0.40 (3/18/2015)
Exit Target: $0.80
Return: 0%
Stop Target: None
CY June 16 calls (CY150619C00016000, $0.85, flat)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: 13%
Stop Target: None
Action: Support is at $15.25, followed by $15 and the 50-day moving average. Resistance is at $15.75-$16. The 52-week high is at $16.25.
Veeva Systems (VEEV, $27.24, up $0.87)
VEEV April 29 calls (VEEV150417C00029000, $0.45, up $0.10)
Entry Price: $0.60 (3/18/2015)
Exit Target: $1.20
Return: -25%
Stop Target: None
Action: Shares made a nice turnaround on Tuesday. Support is at $27 and the 200-day moving average, followed by $26-$25. Resistance is at $28. Shares are volatile, and I still like the trade as long as $25 holds.
Gogo (GOGO, $19.51, down $1.20)
GOGO April 23 calls (GOGO150417C00023000, $0.15, down $0.15)
Entry Price: $0.55 (3/17/2015)
Exit Target: $1.10
Return: -72%
Stop Target: None
Action: Short-term support is at $19.50-$19. Resistance is at $20-$20.50. Hopefully, shares can bounce back today and this week after the CEO made some very positive comments on CNBC yesterday about the company’s technology and its ability to turn a profit.
Yahoo! (YHOO, $44.42, down $0.30)
YHOO April 47 calls (YHOO150417C00047000, $0.34, down $0.08)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -58%
Stop Target: None
Action: Near-term support is at $44. Continued closes above $45 should lead to a run to $47-$48 and the 100-day moving average. I plan to keep this trade open into April, but $44 needs to hold to make me feel good.
American Express (AXP, $81.37, down $0.83)
AXP April 87.50 calls (AXP150417C00087500, $0.12, down $0.05)
Entry Price: $0.56 (2/25/2015)
Exit Target: $0.70 (Limit Order)
Return: -79%
Stop Target: None
Action: Support is at $81-$80. Resistance is at $83.50-$84.
The company is hosting an “investor day” today, and we will need to see some strength following the update. If shares fail to hold $80, I will likely close the trade. I would like to see a rebound to $83.50-$84 today on any positive comments.
Flextronics (FLEX, $12.45, up $0.09)
FLEX April 12 calls (FLEX150417C00012000, $0.60, up $0.06)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -10%
Stop Target: None
Action: Shares traded to a fresh 52-week peak of $12.50 yesterday. The trade has made an incredible comeback over the past few weeks, but it’s not out of the woods. It is one of my longer-running current trades, and I’m still hoping we can make solid double-digit profits with it.
I haven’t officially lowered the Exit Target, but I may send an alert to take half-profits at $0.90 or better on continued strength. If shares can trade to $13 by mid-April, these options will be worth at least a buck.
Short-term resistance is at $12.75. A close above this level could lead to a run at $13. Support is at $12.25-$12.
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