Dear Momentum Options Subscriber,
The bulls tried to put a two-session win streak together but failed at holding Tuesday’s opening gains. Three of the four major indexes finished lower, but tech shined and the VIX stayed relaxed.
The Dow declined 85 points, or 0.5%, to settle at 17,949. The blue-chips touched 18,109 but were unable to hold resistance at 18,100-18,200 at the start of trading. The intraday pullback to 17,929 held, and support is at 17,900-17,800.
The S&P 500 slipped 3 points, or 0.2%, to close at 2,097. The index made a run to resistance at 2,110 on the opening pop to 2,109 but spent the majority of the second half of the session in negative territory. The low checked in at 2,094, and short-term support held at 2,090. Backup support is at 2,080-2,075.
The Nasdaq advanced 19 points, or 0.4%, to finish at 5,014. Tech opened at 5,023 and kissed 5,028 while holding the 5,010 level and, more importantly, the 5,000 level into the close. Resistance is at 5,050-5,100. The 52-week high is at 5,042. Support is at 4,975-4,950 on drops or on a close below 5,000.
The Russell 2000 gave back a point, or 0.1%, to end at 1,264. The small-caps traded into resistance at 1,270-1,275 after testing a high of 1,270 on the open. The mid-day dip to 1,263 held near-term support at 1,260. There is additional help at 1,250-1,240.
The S&P 500 Volatility Index ($VIX, 13.25, down 0.05) traded to a low of 12.66 but failed at cracking 12.50 for the sixth time in the past eight sessions. A close below this level gets 11.50-10.50 in play. The bears pushed a peak of 13.51 and cleared resistance at 13.50 briefly, but they were unable to hold this level. A close above 13.50 or below 12.50 this week could set the next trend for the rest of April and into May.
From desk to press, futures look like this: Dow (-46); S&P 500 (-3.5); Nasdaq 100 (-4).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 40-11-1 (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 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, $6.41, down $0.12)
HILL September 7.50 calls (HILL150918C00007500, $0.55, down $0.05)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 22%
Stop Target: None
Action: Support is at $6-$5.80 on dips below $6.25. Resistance is at $6.50-$6.75. Tuesday’s high reached a 52-week peak of $6.67.
You can read my earnings outlook and review the stock’s chart in yesterday’s Pre-Market Update.
Sony (SNE, $30.88, up $0.52)
SNE May 32 calls (SNE150515C00032000, $0.70, up $0.15)
Entry Price: $0.50 (4/20/2015)
Exit Target: $1.00
Return: 40%
Stop Target: None
Action: Tuesday’s high reached $30.95. Resistance is at $31.50-$32. A close above the latter into earnings would be bullish for a run at $35. The recent 52-week high is at $31.77. Support is at $30-$29.50.
Earnings are due out on April 30. You can read my outlook on what to expect in the April 7 Mid-Market Update.
Rambus (RMBS, $14.18, up $1.41)
RMBS August 14 calls (RMBS150821C00014000, $1.20, up $0.55)
Entry Price: $0.65 (4/20/2015)
Exit Target: $1.70 (closed first half at $1.30 on 4/21/15)
Return: 92%
Stop Target: $0.75, raise to $0.90 (Stop Limit)
Action: Raise the Stop Limit from $0.75 to $0.90 on the second half of the trade.
Shares traded to a fresh 52-week high of $14.51 yesterday, with $14.25-$14 holding into the close. A close below $13.75 will likely get the Stop Limit in play. Resistance is at $14.50.
PowerShares QQQ Trust (QQQ, $108.06, up $0.46)
QQQ May 110 calls (QQQ150515C00110000, $0.60, up $0.15)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 0%
Stop Target: None
Action: The QQQs reached a peak of $108.41 on Tuesday. Resistance is at $108.50, and a close above this level would be bullish. Support is at $107-$106.
Jabil Circuit (JBL, $23.47, up $0.13)
JBL May 24 calls (JBL150515C00024000, $0.30, flat)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: Resistance is at $23.50-$24. Support is at $23.
Rigel Pharmaceuticals (RIGL, $4.17, up $0.02)
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: Yesterday’s top touched $4.24. Resistance is at $4.20-$4.25. Continued closes above these levels would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60 on a close below $4.
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) — The 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 from early March on BBRY receiving a takeover offer of $14 or better by mid-June — Continue to hold.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Earnings are due out next Thursday, April 30 — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options