Dear Momentum Options Subscriber,
The bulls continued their assault on the tops of the trading ranges and all-time highs during Thursday’s rally. The bears made a little noise at the open, but the higher lows held support and led to higher highs into the close.
The Dow climbed 20 points, or 0.1%, to finish at 18,058. The blue-chips traded down to 17,966 on the open and spent the first half of trading in negative territory. Support at 17,900-17,800 held before a rebound to 18,131. The close below 18,100 was slightly bearish, but it was not a deal breaker. There is further resistance at 18,200 and the all-time high at 18,244. A close above these levels will likely get 18,350-18,500 in play.
The S&P 500 added 5 points, or 0.2%, to end at 2,112. The index kissed 2,103 at the start of trading, with support holding at 2,100-2,090. The bulls showed strength shortly afterwards and gave a hint they might make a run at the previous all-time high of 2,119. The run to 2,120 opened the door for fluff to 2,150-2,160.
The Nasdaq soared 20 points, or 0.4%, to settle at 5,056. Tech opened at 5,020, but the bears could only push 5,019 and never really threatened support at 5,000. The surge to 5,073 fell short of the all-time intraday high of 5,132, but it topped the previous closing high of 5,048 from 15 years ago. There is blue-sky territory to 5,200-5,250 on continued momentum.
The Russell 2000 advanced 6 points, or 0.5%, to close at 1,271. The small-caps tested support at 1,260 after opening at 1,263 and trading down to 1,262. The steady climb during the second half of the action reached a peak of 1,273 but fell shy of the all-time intraday high of 1,278.
The S&P 500 Volatility Index ($VIX, 12.48, down 0.23) dropped another 2% after testing 12.96 shortly after the open. The bears had trouble clearing 13.50, and it was a good sign that the bulls might finally get a close below 12.50. Thursday’s low of 12.12 is a 2015 low, and the 52-week low is at 10.28.
From desk to press, futures look like this: Dow (+2); S&P 500 (+1.5); Nasdaq 100 (+29).
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.
SunPower (SPWR, $34.85, up $0.11)
SPWR June 38 calls (SPWR150619C00038000, $1.05, up $0.05)
Entry Price: $0.95 (4/22/2015)
Exit Target: $1.90
Return: 11%
Stop Target: None
Action: Shares traded to a high of $35.11 on Thursday. Near-term resistance is at $36. Support is at $34.
Earnings are due out on April 30, and you can read more about what to expect in yesterday’s Pre-Market Update.
Dot Hill Systems (HILL, $6.50, down $0.02)
HILL September 7.50 calls (HILL150918C00007500, $0.55, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 22%
Stop Target: None
Action: Thursday’s peak reached $6.58. Resistance is at $6.50-$6.75. Support is at $6.25-$6.
You can read my earnings outlook and review the stock’s chart in the April 21 Pre-Market Update.
Sony (SNE, $30.72, down $1.63)
SNE May 32 calls (SNE150515C00032000, $0.65, down $0.65)
Entry Price: $0.50 (4/20/2015)
Exit Target: $1.50-$2.00 (closed 1/3 at $1.40 on 4/22/15)
Return: 80%
Stop Target: None
Action: Sony shares gapped lower on Thursday’s open and traded down to $30.15. Shares rebounded off of the low to reach $30.99. Support is at $30-$29.75, and a close below the latter will likely force me out of the remaining two-thirds of the trade. A close above $31-$31.50 today would be bullish for next week. Earnings are due out next Thursday, April 30.
Rambus (RMBS, $14.30, down $0.11)
RMBS August 14 calls (RMBS150821C00014000, $1.25, down $0.05)
Entry Price: $0.65 (4/20/2015)
Exit Target: $1.70 (closed first half at $1.30 on 4/21/15)
Return: 100%
Stop Target: $1.00 (Stop Limit)
Action: Resistance is at $14.50. Support is at $14-$13.75.
PowerShares QQQ Trust (QQQ, $109.06, up $0.41)
QQQ May 110 calls (QQQ150515C00110000, $0.90, up $0.20)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20 (closed first half at $0.70 on 4/22/15)
Return: 33%
Stop Target: $0.60, raise to $0.70 (Stop Limit)
Action: Raise the Stop Limit of $0.60 to $0.70 on the second half of the position.
Resistance is at $109-$110. Thursday’s high reached $109.55 and a fresh 52-week peak. Support is at $108.
Jabil Circuit (JBL, $23.93, up $0.17)
JBL May 24 calls (JBL150515C00024000, $0.50, up $0.05)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -17%
Stop Target: None
Action: Resistance is at $23.50-$24. Support is at $23.
Rigel Pharmaceuticals (RIGL, $4.33, up $0.09)
RIGL June 5 calls (RIGL150619C00005000, $0.45, up $0.05)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00
Return: 80%
Stop Target: None
Action: Shares cleared and closed above resistance at $4.20-$4.25, which are the levels that will now try to hold as support. The next hurdle is at $4.50, and a close above this level likely gets $4.75-$5 in play. Support is at $4 on a close below $4.20.
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