MomentumOptions.com Pre-Market for 12/14/2017
Market Loses Steam Following Rate Hike/ New Trade (PFE)
8:00am (EST)
U.S. markets showed continued momentum throughout much of Wednesday’s session following news the House and Senate have reached an agreeent on a proposed tax bill. However, the Fed decision to raise rates by a quarter-point and the press conference afterwards caused some profit taking ahead of the closing bell.
The Russell 2000 led the way higher after jumping 0.6% but is still showing a loss for the month. The Dow added 0.3% while trading to a record intraday high of 24,666 to extend its winning streak to five-straight.
The S&P 500 also set a fresh all-time high after reaching an intraday peak of 2,671 but slipped a point, or 0.1%, into the closing bell. The Nasdaq advanced 0.2% but failed near-term resistance near the 6,900 for the second-straight session.
Consumer Staples showed the most strength with the sector rising 0.6% while Health Care and Industrials gained 0.4%. Financials got whacked with the sector falling 1.2%. Energy and Real Estate were slightly weak after dipping 0.1% and 0.03%.
The Fed hiked rates by 25 basis-points and left the dots at three tightenings in 2018. The rate increase to a 1.25% to 1.50% policy band was widely expected, and the three tightenings next year was largely anticipated too. There were two dissents, with Evans and Kashkari voting for no change in rates.
The Fed’s statement said the labor market continued to strengthen while economic activity was seen rising at a solid rate. On inflation, the Fed said overall and core inflation on a 12-month basis had declined this year and are running below 2%.
The Spiders Dow Jones Industrial Average ETF (DIA) traded to an all-time intraday high of $246.99 with fresh resistance now at $247-$247.50. We mentioned a run towards $245.50-$246 could come on continued momentum. Rising support is at $245.50-$245 with a move below this level likely leading to a further backtest towards $242.50.
RSI is pushing November resistance above 80 and could reach 90 and mid-October highs on continued strength. Support is at 75-70 with a move below the latter signaling a near-term top.
Spiders S&P Homebuilders ETF (XHB) has been in a mini trading range after setting a 52-week and decade high of $44.49 earlier this month. The all-time high is north of $46 that was reached in February 2006 and when XHB started trading. Current resistance is at $43.50-$43.75 with today’s high reaching $43.51. Continued closes above the latter would be a bullish signal. Support is at $43.25-$43 with a move back below $42.75 signaling additional weakness.
RSI is trying to hold mid-November support at 60-55. A move above resistance at 65-70 would be a bullish development.
I have a New Trade I want to get into this morning so let’s go check out the limitations.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 54-23 (70%). All trades are dated and time stamped for verification. New subscribers can look at the past history to see how the trades have played out or to research our Track Records.
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 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send a Trade Alert outside of these time frames.
New Trade!
Pfizer (PFE, $36.64, up $0.06)
Buy to Open PFE January 37 calls (PFE180119C00037000, $0.45, up $0.01)
Action: I like these call options at current levels and you can use a Limit Order up to 55 cents to get the best fills on this morning’s open. We could get a better price if shares open lower. These are the regular PFE January 37 calls that expire on January 19th, 2017.
Current Trades
Spider Gold Shares (GLD, $119.17, up $1.02)
GLD January 117 puts (GLD180117P00117000, $0.62, down $0.33)
Entry Price: $0.95 (12/11/2017)
Exit Target: $1.90
Return: -31%
Stop Target: None
Action: Fresh resistance is at $119.25-$119.50 following the run to $119.35. Support is at $119-$118.75. Although there is risk to $120-$120.50 on a continued strength, I still like the position as long as the latter holds.
Intel (INTC, $43.34, up $0.01)
INTC January 45 calls (INTC180119C00045000, $0.50, flat)
Entry Price: $0.53 (12/11/2017)
Exit Target: $1.10
Return: -6%
Stop Target: None
Action: Resistance is at $43.50-$43.75 with yesterday’s high reaching $43.66. Support is at $43.25-$43.
Bank of America (BAC, $28.84, down $0.48)
BAC January 30 calls (BAC180119C00030000, $0.40, down $0.22)
Entry Price: $0.50 (12/8/2017)
Exit Target: $1.00
Return: -20%
Stop Target: None
Action: Support at $29-$28.75 was split on yesterday’s late afternoon reversal to $28.83. Resistance is at $29.25-$29.50.
Viavi Systems (VIAV, $8.85, up $0.13)
VIAV January 9 calls (VIAV180119C00009000, $0.40, flat)
Entry Price: $0.65 (11/29/2017)
Exit Target: $1.30
Return: -31%
Stop Target: None
Action: Yesterday’s high tapped $9.11 with resistance at $9-$9.25 holding. Support is at $8.75-$8.50.
Twitter (TWTR, $21.66, up $0.01)
TWTR January 24 calls (TWTR180119C00024000, $0.35, flat)
Entry Price: $0.70 (11/22/2017)
Exit Target: $1.40
Return: -50%
Stop Target: 15 cents (Stop Limit)
Action: Resistance is at $21.75-$22. Support is at $21.50-$21.25.