In This Issue:
Dear Momentum Stocks Weekly Subscriber,
The bulls made another strong showing on Wednesday as the market chugged higher for the third-straight session. Strength was displayed throughout the day, and the bears stayed in hibernation while volatility continued to relax. The stair-stepping to the upside looks good, but I always warn that the elevator drops are what we really have to watch out for.
The Dow climbed 257 points, or 1.6%, to close at 16,453. The blue-chips opened above 16,200 at 16,217. I mentioned that a move above this level would get 16,350-16,400 in play. This area is now acting as short-term support following yesterday’s run to 16,486. Fresh resistance is at 16,600, followed by 16,800.
The S&P 500 zoomed 31 points, or 1.7%, to end at 1,926. The index made a steady push past resistance at 1,925 after opening just under the 1,900 level at 1,898. The bulls pushed a high of 1,930, and additional resistance is now at 1,940-1,950. Support will try to hold at 1,910-1,900 on a pullback.
The Nasdaq soared 98 points, or 2.2%, to settle at 4,534. Tech cleared the 4,500 level about an hour into trading and reached an intraday peak of 4,540. The next layers of resistance are at 4,550-4,600. Support has moved up to 4,525-4,500.
The Russell 2000 rocketed higher by 15 points, or 1.5%, to finish at 1,011. The small-caps easily cleared the 1,000 level shortly after the open and pushed an intraday high of 1,016. I mentioned that a move above 1,000 should get 1,010-1,020 on the radar. Near-term resistance is now at 1,020-1,025, and a close above the latter would be another bullish signal. Support will try to hold at 1,000-995 on a pullback.
The S&P 500 Volatility Index ($VIX, 22.31, down 1.80) dropped 7% and traded in negative territory throughout Wednesday’s session. The low touched 21.83, and the close below 23.50-22.50 was a very bullish development. A close below 20 ahead of the weekend would be a beautiful bonus for the bulls. Resistance is at 23.50-25.
From desk to press, futures look like this: Dow (+56); S&P 500 (+5); Nasdaq 100 (+18); Russell (+2).
Momentum Stocks Weekly Play List
All prices given in this update are current as of Feb. 17, 2016. I hereby disclose that I will be participating in the following trade(s).
The Momentum Stocks Weekly Closed Trade Track Record is 0-1, for a 0% win rate for 2016 (144-26, or 85% win rate, overall since the start of 2011).
View the entire list of open and closed trades by clicking here.
Whole Foods Market (WFM, $31.76, up $0.86)
WFM February 32 calls (WFM160219C00032000, $0.20, up $0.13)
Entry Price: $0.50 (2/10/2016)
Exit Target: $1.00 (Limit Order)
Return: -60%
Stop Target: None
Action: Resistance is at $32. A move above $32.50 will make this trade profitable, but we are running out of time. These options expire on Friday’s close. I’m still looking for shares to trade to $33, which should trigger our Exit Target at $1.00. If shares lose momentum, I will likely send out a Trade Alert ahead of today’s closing bell.
Hansen Medical (HNSN, $2.45, up $0.17)
Original Entry Price: $4.50 (2/2/2016)
Lowered Price from Selling Options: N/A
Exit Target: $6.00
Return: -46%
Stop Target: $2.00
Action: Resistance is at $2.75, followed by $3 and the 100-day moving average. Support is at $2.25-$2.
Twitter (TWTR, $17.46, up $1.10)
Wrote the TWTR February 15 call (TWTR160219C00015000, $2.45, up $1.00)
Original Entry Price: $17.90 (1/22/2016)
Lowered Price from Selling Options: $14.40
Exit Target: $15.00
Return: 21%
Stop Target: $14.00
Action: Shares appear as though they will hold the $15 level into Friday’s close. Our gains are capped at 5% if the trade is “called away” at the call’s $15 strike price. We can then buy TWTR shares again, possibly as early as next week, and sell another deep-in-the-money call option against the position.
Resistance is at $18. Support is at $17-$16.50.
Lattice Semiconductor (LSCC, $4.76, flat)
Original Entry Price: $6.77 (12/29/2015)
Lowered Price from Selling Options: N/A
Exit Target: $9.00
Return: -30%
Stop Target: $3.50 (Stop Limit)
Action: Resistance is at $4.75-$5 and the 100-day moving average. Support is at $4.25-$4.
Relypsa (RLYP, $18.90, up $0.58)
Wrote the RLYP March 30 call (RLYP160318C00030000, $0.70, up $0.10)
Original Entry Price: $28.29 (12/28/2015)
Lowered Price from Selling Options: $25.49
Exit Target: $30.00+
Return: -26%
Stop Target: $14.00
Action: Resistance is at $19-$20. Fresh support is at $18.
You can read my detailed write-up in the Jan. 4 Issue.
Planet Fitness (PLNT, $14.00, up $0.16)
Entry Price: $17.85 (9/16/2015)
Lowered Price from Selling Options: N/A
Exit Target: $22.00
Return: -22%
Stop Target: $12.00
Action: Resistance is at $14-$14.25. Support is at $13.75-$13.50. Earnings are due to be released on March 3, after the close.
You can read my latest write-up on PLNT in the Nov. 16 Issue.
Rave Restaurant Group (RAVE, $4.99, up $0.01)
Original Entry Price (First Position): $13.92 (7/9/2015)
Lowered Price from Selling Options: N/A
Exit Target: $20.00
Return: -64%
Stop Target: $4.00
Original Entry Price (Second Position): $11.70 (8/17/2015)
Lowered Price from Selling Options: N/A
Exit Target: $13.00+
Return: -57%
Stop Target: $4.00
Action: Support is at $4.75-$4.50. Resistance is at $5.25-$5.50.
You can read my most recent write-up on the company in the Dec. 24 Issue.
Rigel Pharmaceuticals (RIGL, $2.48, up $0.11)
Original Entry Price: $3.51 (6/2/2015)
Lowered Price from Selling Options: N/A
Exit Target: $4.00-$5.00
Return: -29%
Stop Target: $2.00 (Stop Limit)
Action: Resistance is at $2.60-$2.70. Support is at $2.40-$2.35.
Psychemedics (PMD, $12.10, up $0.71)
Original Entry Price: $15.67 (5/5/2015)
Lowered Price from dividends: $15.22
Exit Target: $15.75 (Limit Order)
Return: -21%
Stop Target: $7.75 (Stop Limit)
Dividend Yield: 5.4%
Action: Resistance is at $12.25-$12.50. Support is at $11.50-$11.
The next dividend of $0.15 per share will be paid on March 4.
Huttig Building Products (HBP, $3.28, up $0.20)
Original Entry Price: $4.00 (8/13/2014)
Lowered Price from Selling Options: N/A
Exit Target: $6.00+
Return: -18%
Stop Target: $2.00 (Stop Limit)
Action: Resistance is at $3.35-$3.40. Support is at $3.
Rambus (RMBS, $12.42, up $0.15)
Original Entry Price: $17.83 (11/14/2011)
Lowered Price from Selling Options: $16.38
Exit Target: $15.00+
Return: -24%
Stop Target: $9.00
Action: Resistance is at $12.50-$12.75. Support is at $12-$11.75.
Trades on Hold (1): These are trades that are still open in the portfolio but are down from the original recommended price. These trades are on “hold” and are not a buy until I bring back coverage of the stock. This means I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when a trade closes. I do not recommend adding to these positions or opening new positions.
Zynga (ZNGA, March 2014) — Continue to hold.
Trade on!
Rick Rouse
Editor
Momentum Stocks Weekly
