Dear Momentum Options Subscriber,
The market finished lower on Thursday, but the losses were kept in check as fresh support held. The action was relatively mild, and the indexes stayed in a tighter range, with the bulls showing some strength late in the day.
The Dow dipped 7 points, or 0.04%, to close at 18,105. The blue-chips traded to a low of 18,063 on the open before bursting to a high of 18,169 intraday. Support at 18,000-17,900 and the 50-day moving average held, as did resistance at 18,200.
The S&P 500 slipped nearly 2 points, or 0.1%, to finish just below 2,105. The index kissed near-term support at 2,100 on the open before rebounding to reach a peak of 2,111. The lower low than Wednesday’s test to 2,097 was a bullish sign. There is additional help at 2,075 on a close below 2,090. The bulls just missed making a higher high for the week, and a pop above 2,012 should get all-time highs north of 2,119 in play.
The Nasdaq gave back 3 points, or 0.1%, to end at 5,007. Tech traded down to 4,996 shortly after the open, with support at 4,975-4,950 easily holding. The bounce and close back above the 5,000 level to 5,016 was also a bullish signal. Resistance is at 5,025-5,050.
The Russell 2000 declined 2 points, or 0.2%, to settle just under 1,273. The small-caps held the 1,270-1,275 zone throughout the session, which represents near-term support and resistance. Yesterday’s low touched 1,271. Backup support is at 1,260. A close above 1,275 keeps 1,300 in play through May.
The S&P 500 Volatility Index ($VIX, 12.60, down 0.24) teased us once again, as the 12.50 level held into the close. The good news is that this is the lowest the VIX has traded all year. I have said all this month that a close below 12.50 (yesterday’s low), could lead to a major short-covering rally and a “sweet spot” for the market. A close above 13.50 would be slightly bearish for next week.
It appears that yesterday’s pullback in Sony (SNE, $31.08, down $0.67) came on news that WikiLeaks will be posting emails and documents stolen by hackers last winter. We were close to getting a triple-digit profit with our SNE May 31 calls, but yesterday’s 64% win in 10 days was still pretty good. I will likely try to get us back into a trade ahead of SNE’s earnings on April 30. We may have to wait a day or two for the dust to settle or for $32 to clear, but I believe shares will go higher and test $35.
I am also planning another trade in Rambus (RMBS, $13.00, down $0.14) for today or on Monday. We’ve had four wins for the portfolio this month trading RMBS, with three single-digit gains and one 46% winner. The company is scheduled to report earnings on Monday and, if the 50-day moving average just below $12.50 continues to hold, I might go long again with additional call options.
From desk to press, futures look like this: Dow (-138); S&P 500 (-13); Nasdaq 100 (-35).
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.
PowerShares QQQ Trust (QQQ, $107.69, down $0.15)
QQQ May 110 calls (QQQ150515C00110000, $0.60, down $0.05)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 0%
Stop Target: None
Action: Support is at $106. Continued closes above $108 will likely lead to a push to $110. The 52-week high is at $109.42.
Jabil Circuit (JBL, $23.59, down $0.36)
JBL May 24 calls (JBL150515C00024000, $0.48, down $0.22)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -20%
Stop Target: None
Action: Near-term support is at $23.50, followed by $23. A close above $24 would be bullish for a run to $26-$28.
Rigel Pharmaceuticals (RIGL, $4.17, up $0.15)
RIGL June 5 calls (RIGL150619C00005000, $0.40, flat)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00
Return: 60%
Stop Target: None
Action: Resistance is at $4.20 and the 52-week high. A close above this level would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60.
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) — This 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 that BBRY will receive a takeover offer of $14 or better by mid-June — Continue to hold.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Earnings have been pushed out until April 30. This could be super bullish or very bearish — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options