Dear Momentum Options Subscriber,
The day after Easter is typically the second worst post-holiday session according to the history books, but Friday’s nonfarm payrolls made for a splashier headline and caused a bit of a pullback at the open this morning. The talking heads are trying to explain the rebound off of the lows and the reasons for a higher market as we make the turn into afternoon trading.
With the Dow still experiencing mixed Monday/Friday signals, this week’s closes are going to be important. I listed a few clues this morning to watch for, and you can add this indicator to the list. I will cover the M/F closes in more detail next Monday, but a higher close today would be bullish.
The Dow Jones Transportation Average ($TRAN, 8,691, down 14) tried to join the rebound rally but continues to struggle with its 200-day moving average. The transports have traded down to 8,527, and I talked about a possible test to 8,350-8,300 on continued weakness.
The Financial Select Sector (XLF, $24.25, up $0.04) is holding $24 following this morning’s dip to $23.97.
Futures were showing a lower open from midnight until 3:00 a.m., and there was no improvement during my five-hour nap. Dow futures were down 142 points to 17,534. S&P 500 futures were lower by 16 points to 2,043, while the Nasdaq 100 futures were tanking 35 points to 4,271. The Russell minis were also off 13 points to 1,239. This indicated that the bottom of the trading ranges would be in play. They were, they held and the rebound is good to see.
Heading into the second half of trading, the Dow is up 131 points to 17,894, while the S&P 500 is higher by 14 points to 2,081. The Nasdaq is adding 29 points to 4,915, and the Russell 2000 is advancing 4 points to 1,260.
I have two New Trades for the portfolio, so let’s get to it.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 31-9-1 (76%). 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 12:40 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.
New Trades
Comcast (CMCSA, $58.50, up $0.56)
Buy to open the CMCSA May 60 calls (CMCSA150515C00060000, $1.05, up $0.09) at current levels.
Shares recovered their 50-day moving average on Thursday, and today’s push past $58 is suggesting further strength. I like these call options at current levels. These are the regular monthly calls that expire on May 15.
PowerShares QQQ Trust (QQQ, $105.99, up $0.87)
Buy to open the QQQ May 109 calls (QQQ150515C00109000, $0.75, up $0.18) at current levels.
The QQQs have cleared $106, and I like these call options to play a run to $108-$110. These are the regular monthly calls that expire on May 15.
Current Trades
Sony (SNE, $29.54, up $1.69)
SNE May 31 calls (SNE150515C00031000, $0.75, up $0.40)
Entry Price: $0.70 (3/31/2015)
Exit Target: $1.40
Return: 7%
Stop Target: None
Action: My near-term target is $31-$32, with a shot at $35 on continued momentum. Support is at $28. I will have detailed chart work and commentary tomorrow.
Rigel Pharmaceuticals (RIGL, $3.63, down $0.01)
RIGL June 5 calls (RIGL150619C00005000, $0.40, flat)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00
Return: 60%
Stop Target: None
Action: Shares have traded to a high of $3.73 today. Resistance is at $3.80, followed by $4. The 52-week high is at $4.20. Support is at $3.40.
You can read more on this trade in the April 1 Pre-Market Update.
Cypress Semiconductor (CY, $13.90, up $0.04)
CY June 16 calls (CY150619C00016000, $0.35, flat)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -53%
Stop Target: None
Action: Support is at $13.75 and the 100-day moving average. A close below $13.50 would be bearish. Resistance is at $14, followed by $14.25-$14.50.
Trades on Hold — other 2015 Portfolio Open positions (4): 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.
Yahoo! (YHOO) April 47 calls (from February 2015) — Earnings are due out on April 21, which is after these options expire. If shares can’t clear $45 by Friday, I will likely exit the trade — Continue to hold.
Marvell Technology (MRVL) May 18 calls (from February 2015) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Gogo (GOGO) April 23 calls (from March 2015) — Shares need to recover $20 by Friday or I could bail on the trade — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options