Dear Momentum Options Subscriber,
The bulls lost sight of the finish line on Monday as the bears edged them out for the win. The market slipped in the final minutes of trading, with heavy selling into the close. The losses were minimal, but it was a sloppy start to the week.
The Dow dipped 11 points, or 0.1%, to settle at 18,116 on Monday. The blue-chips opened higher and cleared resistance at 18,200 following an intraday peak of 18,205. The index literally lost its gains in the final minutes of trading, while finishing at its session low. Support is at 18,100-18,000, followed by 17,800 and the 50-day moving average.
The S&P 500 slipped 3 points, or 0.2%, to close at 2,104. The index made a run to 2,115 shortly after the open, with resistance at 2,020 holding. The backtest to support at 2,100-2,090 also held, but there is risk to 2,075 and the 50-day moving average on a close below the latter.
The Nasdaq gave back 15 points, or 0.3%, to finish at 5,010. Tech traded to a high of 5,031 but struggled with resistance at 5,050-5,100. Support at 5,000-4,975 held into the closing bell. There is additional help at 4,950 on closes below these levels.
The Russell 2000 declined nearly 2 points, or 0.1%, to end at 1,264. The small-caps traded to another all-time intraday high of 1,268 but didn’t have the firepower to clear 1,275. Support at 1,260-1,250 held, with Monday’s low checking-in at 1,262.
The S&P 500 Volatility Index ($VIX, 13.41, up 0.39) gained 3% after trading to a high of 13.53. I mentioned that closes above 13.50 are “safe” as long as 15 holds, so Monday’s close on the VIX was slightly bullish. Monday’s low reached 12.89, with the bears holding 12.50.
I mentioned yesterday that I might have a New Trade in the wings, but it took a little longer than anticipated to pick the very best one for this week. There are several candidates I like, and I have found the best options for us to use. Look for an update shortly after the open this morning if everything still looks good, or in the Mid-Market Update.
From desk to press, futures look like this: Dow (+53); S&P 500 (+5); Nasdaq 100 (+12).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 25-6-1 (78%). 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.
Cypress Semiconductor (CY, $15.36, down $0.34)
CY April 16 calls (CY150417C00016000, $0.40, down $0.15)
Entry Price: $0.40 (3/18/2015)
Exit Target: $0.80
Return: 0%
Stop Target: None
CY June 16 calls (CY150619C00016000, $0.85, down $0.05)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: 13%
Stop Target: None
Action: Support is at $15.25, followed by $15 and the 50-day moving average. Resistance is at $15.75-$16. The 52-week high is at $16.25.
I will have a review on the semiconductor sector in today’s Mid-Market Update.
Veeva Systems (VEEV, $26.37, down $0.91)
VEEV April 29 calls (VEEV150417C00029000, $0.35, down $0.25)
Entry Price: $0.60 (3/18/2015)
Exit Target: $1.20
Return: -42%
Stop Target: None
Action: Support is at $26-$25. Resistance is at $27 and the 200-day moving average. Shares are volatile, and I still like the trade as long as $25 holds.
Gogo (GOGO, $20.71, down $0.20)
GOGO April 23 calls (GOGO150417C00023000, $0.30, down $0.10)
Entry Price: $0.55 (3/17/2015)
Exit Target: $1.10
Return: -45%
Stop Target: None
Action: Monday’s action was slightly frustrating following a trip to double blackjack — $21.21. Shares fell 1%, but support held.
Resistance is at $21.50-$22. Short-term support is at $20.50-$20. A mini “symmetrical triangle” is forming at current levels and could be signaling that a strong breakout or breakdown is forthcoming.
Additionally, a “golden cross” is forming, as the 50-day moving average is on the verge of crossing above the 200-day moving average. This is a bullish sign, as a breakout could lift shares to $22-$24.
Yahoo! (YHOO, $44.72, down $0.32)
YHOO April 47 calls (YHOO150417C00047000, $0.42, down $0.18)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -48%
Stop Target: None
Action: Near-term support is at $44. Continued closes above $45 should lead to a run to $47-$48 and the 100-day moving average.
American Express (AXP, $82.20, down $0.50)
AXP April 87.50 calls (AXP150417C00087500, $0.17, down $0.08)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15, lower to $0.70 (Limit Order)
Return: -70%
Stop Target: None
Action: Lower the Exit Target from $1.15 to $0.70 and make it a Limit Order. This would give the trade a 25% return, if reached.
Support is at $81-$80. Resistance is at $83.50-$84.
The company is hosting an “investor day” on Wednesday that could provide a catalyst for the stock. Wall Street will be eager to hear more details on the impact of the loss of its partnership with Costco (COST) and what they plan to do to replace that business.
A deal involving Apple Pay would be beautiful news, as American Express needs to make up for lost revenue. A possible update on earnings will be key to determine if this trade can make a rebound.
I have lowered the Exit Target, as I would like to get us out of the trade for a profit. If shares surged past $84, we could get filled. If shares retreat below $80, I will likely close the trade.
Flextronics (FLEX, $12.36, up $0.08)
FLEX April 12 calls (FLEX150417C00012000, $0.54, up $0.04)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -19%
Stop Target: None
Action: Short-term resistance is at $12.50. The 52-week high is at $12.48. A close above this level could lead to a run at $13. Support is at $12, followed by $11.75 and the 50-day moving average.
Trades on Hold — other 2015 Portfolio Open positions (2): 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) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options