Dear Momentum Options Subscriber,
The bulls regained their footing on Wednesday, as all of the major averages finished higher. The gains have pushed the indexes to or above the tops of their trading ranges, and the all-times highs are in play once again.
The Dow advanced 76 points, or 0.4%, to settle at 18,112. The blue-chips held positive territory throughout the session and reached a peak of 18,160 intraday. The bulls cleared resistance at 18,100 but fell short of 18,200 and the top of the trading range from early February. The all-time high is at 18,288. A move above this level will likely lead to 18,350-18,500 over the near term. Support is at 18,000-17,900 and the 50-day moving average.
The S&P 500 added 10 points, or 0.5%, to close at 2,106. The index opened at 2,097 and easily cleared resistance at 2,100-2,110 after trading to a high of 2,111. The close into this zone opens the door for a run at 2,125-2,150 and the all-time high at 2,119. Support is at 2,090-2,075 on another drop below 2,100.
The Nasdaq jumped 33 points, or 0.7%, to finish at 5,011. Tech tested the 5,000 level throughout the first half of trading before making a run to 5,021. The bulls fell shy at tapping fresh 52-week peaks north of 5,042, but the close above 5,000 was bullish. I mentioned yesterday that the next 25-point swing will likely set the next short-term trend. Continued momentum could carry the Nasdaq to 5,100-5,150. Backup support is at 4,975-4,950 on another drop below 5,000.
The Russell 2000 soared 10 points, or 0.8%, to end at 1,275. The small-caps led Wednesday’s rally, as they tapped another all-time high of 1,278. I have talked about fluff to 1,275-1,300 on continued strength, and the close at 1,275 was a good sign. Support is at 1,260 on dips below 1,270.
The S&P 500 Volatility Index ($VIX, 12.84, down 0.83) fell 6% while closing near its session low of 12.83. The bulls reclaimed 13.50 but fell shy at getting the VIX below 12.50. There is still risk to 15, but there is no need to worry about going short until the bears get a close above this level.
From desk to press, futures look like this: Dow (-59); S&P 500 (-9); Nasdaq 100 (-18).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 39-11-1 (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 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.
PowerShares QQQ Trust (QQQ, $107.84, up $0.67)
QQQ May 110 calls (QQQ150515C00110000, $0.65, up $0.15)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 8%
Stop Target: None
Action: The QQQs traded up to $108.07 on Wednesday. Continued closes above $108 will likely lead to a push to $110. The 52-week high is at $109.42.
Jabil Circuit (JBL, $23.95, up $0.05)
JBL May 24 calls (JBL150515C00024000, $0.70, up $0.03)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 17%
Stop Target: None
Action: Wednesday’s high reached a fresh 52-week peak of $24.11. Continued closes above $24 would be bullish for a run to $26-$28. Near-term support is at $23.50, followed by $23.
Sony (SNE, $31.75, up $0.62)
SNE May 31 calls (SNE150515C00031000, $1.60, up $0.20)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40, raise to $2.10 (Limit Order on first half)
Return: 129%
Stop Target: $0.95, raise to $1.15 (Stop Limit)
Action: Raise the Exit Target from $1.40 to $2.10 and set a Limit Order to close the first half of the trade at $2.10. Also, raise the Stop Limit from $0.95 to $1.15.
Shares traded to a high of $31.77 on Wednesday. My near-term target is $32, with a shot at $35. Support is at $30. Earnings are due out on April 30. You can read my full update on what to expect in the April 7 Mid-Market Update.
Rigel Pharmaceuticals (RIGL, $4.02, down $0.04)
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: Resistance is at $4.20 and the 52-week high. A close above this level would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60.
Trades on Hold — other 2015 Portfolio Open positions (3): 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) — This sector could see heated M&A activity in the coming months, and MRVL tends to move on takeover chatter — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade that BBRY will receive a takeover offer of $14 or better by mid-June — Continue to hold.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options