Dear Momentum Options Subscriber,
The bulls held on to Thursday’s gains and recovered resistance, for the most part, but the market is still lower for the week. This morning’s nonfarm payrolls report will have an impact on the open, although today’s close could play a bigger role in deciding next week’s trend.
The Dow gained 82 points, or 0.5%, to end at 17,924. The blue-chips were a little choppy on the open after testing support at 17,800 and a low of 17,796. The rebound to 17,973 cleared the 50-day moving average, but the bulls failed at holding this level into the close. Additional resistance is at 18,000-18,100. Support is at 17,800 and the 100-day moving average.
The S&P 500 added nearly 8 points, or 0.4%, to settle at 2,088. The index made a backtest to support at 2,075-2,070 after testing 2,074.99 and then rebounded to reach a peak of 2,092. The close missed holding the 50-day moving average by a point. Resistance remains at 2,090-2,100.
The Nasdaq climbed 26 points, or 0.5%, to close at 4,945. Tech slipped to 4,914 at the start of trading and easily held support at 4,900. The bounce higher to 4,957 cleared resistance at 4,950 and the 50-day moving average, but that level also failed to hold into the closing bell. The bulls will be trying to clear 4,975-5,000 ahead of the weekend.
The Russell 2000 advanced 6 points, or 0.5%, to finish at 1,225. The small-caps tested near-term support at 1,215 but bounced off of this level to push a high of nearly 1,229. The bulls came close to clearing 1,230, but the more important battles are at 1,240-1,250.
The S&P 500 Volatility Index ($VIX, 15.13, down 0.02) traded to a high of 15.97 before the bulls pushed a low of 14.81. The bears held the 15 level for the second consecutive session, but a close above 17.50 would be a negative development. A finish back into the 14-13.50 zone by today’s close would be bullish.
From desk to press, futures look like this: Dow (+129); S&P 500 (+14); Nasdaq 100 (+33).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 47-14-1 (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 8:30 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.
Wells Fargo (WFC, $54.81, down $0.11)
WFC June 57.50 calls (WFC150619C00057500, $0.27, down $0.03)
Entry Price: $0.31 (5/4/2015)
Exit Target: $0.65
Return: -13%
Stop Target: None
Action: Support is at $54.50-$54. Yesterday’s low touched $54.61. Resistance is at $55-$55.50. The 52-week high is at $56.26.
Limelight Networks (LLNW, $4.13, up $0.15)
LLNW September 4 calls (LLNW150918C00004000, $0.60, up $0.15)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.80 (Limit Order on half)
Return: 71%
Stop Target: $0.40 (Stop Limit)
Action: Shares made a nice surge past resistance at $4.00 late in the day to reach a peak of $4.16. Resistance is at $4.20-$4.25. Support is at $4, followed by 3.80-$3.75.
You can read my full update on LLNW in the May 1 Pre-Market Update.
Opko Health (OPK, $14.14, up $0.14)
OPK June 16 calls (OPK150619C00016000, $0.30, flat)
Entry Price: $0.50 (4/27/2015)
Exit Target: $1.00
Return: -40%
Stop Target: None
Action: Resistance is at $14-$14.25. Thursday’s high touched $14.24. Support is at $13.75-$13.50 on another drop below $14.
Earnings are scheduled to be released next week or later in the month. Analysts are looking for a loss of $0.08 a share on revenue of $23 million. I believe OPK will top these numbers.
Dot Hill Systems (HILL, $6.84, up $0.02)
HILL September 7.50 calls (HILL150918C00007500, $0.65, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 44%
Stop Target: None
Action: Shares traded down to $6.67 before reaching a high of $7 on Thursday.
The company reported a profit of $0.06 a share on revenue of $60.3 million. This topped Wall Street’s expectations for a profit of $0.06 a share on revenue north of $59 million.
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.
SunPower (SPWR) June 38 calls (from April 2015) — I will likely close this trade if support at $30 fails. Resistance is at $32.50 — Continue to hold.
iShares Russell 2000 (IWM) May 127 calls (from April 2015) — I will likely close this trade later this afternoon, as I mentioned that I wanted to be out by today’s close. These options expire next week, and I don’t believe the calls will recover enough to get us back to even — 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.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options