MomentumOptions.com Pre-Market for 2/1/2018
Small-Caps Struggle on Rebound Bounce
8:00am (EST)
The market rebounded on Wednesday to snap a two-session slide following a choppy session while booking monthly gains. The major indexes slipped into negative territory late in the afternoon after the Federal Reserve hinted that it is set to raise interest rates as early as its next meeting in March before closing the session mostly higher.
The Dow added 0.3% after testing a high of 26,338 while the S&P 500 climbed 0.1% after making a run to 2,839. For the month, both indexes were up 5.8% and 5.6%, respectively, to extend its monthly win streak to 10-straight.
The Nasdaq was up 0.1% after trading a high of 7,453 before slipping below the 7,400 level late in the session. This area of support held for the 8th-straight session with the index gaining 7.4% for the month.
The Russell 2000 opened higher to reach a peak of 1,594 before slipping into negative territory an hour into trading. The mid-January lows were taken out on the backtest to 1,571 and the 0.5% negative close to lower the small-caps monthly gain to 2.7%.
Real Estate and Utilities showed sector strength after jumping 2.1% and 1.1%, respectively. Health Care sank 1.4% while Consumer Staples and Consumer Discretionary gave back 0.5% and 0.3%, respectively, and were the only three sectors in the red.
For the month, Consumer Discretionary and Health Care surged 9.6% and 8.1% while Financials and Technology spiked 6.3% and 6.2%. Utilities and Real Estate were the only sector laggards after sliding 4.2% and 3.9%.
The VelocityShares Daily Inverse VIX (ZIV) held positive territory throughout the day after peaking at 88.31. Resistance at 87.50-88 held into the closing bell with a close above the latter being a slightly bullish development. Support remains at 86-85 and the 50-day moving average.
The Russell 2000 ETF (IWM) tested a high of $158.42 shortly after the opening bell with upper resistance at $158-$158.50 holding. The fade to $155.92 held shaky support at $156-$155.50 with risk to $154-$153.75 and the 50-day moving average on a close below the latter.
RSI is trying to hold December support at 50 with a close below this level being a bearish development with risk to 40.
The Health Care Select Sector Spider (XLV) failed resistance at $90-$90.25 following the opening pop to $90.09. Continued closes above the latter would be a slightly bullish signal for another possible push towards all-time highs just south of the $92 level. Fresh support is at $88-$89.50 with a close below the latter signaling additional weakness.
RSI remains in a downtrend with December support at 50 in focus.
We have two trades that will be in play over earnings over the next couple of sessions. I have set an Limit Order to exit HALF the trade on CDNS after the company reported an impressive quarter. Shares will need to post a stromg gain on the open so let’s see how it plays out.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 5-2 (71%). 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.
Cypress Semiconductor (CY, $17.29, up $0.04)
CY February 18 calls (CY180216C00018000, $0.45, flat)
Entry Price: $0.60 (1/23/2018)
Exit Target: $1.20
Return: -25%
Stop Target: None
Action: Lower resistance at $17.50-$17.75 held on yesterday’s push to $17.45. Support remains at $17.25-$17. Earnings are due out after the closing bell.
Blackberry (BB, $12.66, up $0.08)
BB March 15 calls (BB180316C00015000, $0.15, flat)
Entry Price: $0.47 (1/16/2018)
Exit Target: $1.00
Return: -67%
Stop Target: None
Action: Resistance at $12.75-$13 was split on yesterday’s run to $12.87. Support is at $12.50-$12.25.
Apache (APA, $44.87, up $0.30)
APA February 50 calls (APA180216C00050000, $0.35, up $0.05)
Entry Price: $1.07 (1/16/2018)
Exit Target: $2.10
Return: -57%
Stop Target: 20 cents (Stop Limit)
Action: Resistance at $45-$45.50 was stretched but held with Wednesday’s high reaching $45.58. Support is at $44.50-$44.25.
Cadence Design Systems (CDNS, $44.86, up $0.88)
CDNS February 48 calls (CDNS180216C00048000, $0.65, up $0.20)
Entry Price: $0.70 (1/16/2018)
Exit Target: $1.40 (Limit Order on half)
Return: -7%
Stop Target: None
Action: Set a Limit Order at $1.40 on half the trade. The company matched earnings of $0.39 a share with revenues above expectations. More importantly, they raised current quarter guidance and full-year numbers that were also above forecasts.
Resistance is at $45-$45.25. Support is at $44.75-$44.50.