Dear Momentum Options Subscriber,
The bears did some damage on Monday’s open as Wall Street rushed to sell stocks at the start of trading. They wanted to sell first and ask questions later, and it made for the perfect rebound. The bottoms of the trading ranges easily held, with the Dow and S&P 500 recovering their 50-day moving averages.
The Dow jumped 117 points, or 0.7%, to close at 17,880. The blue-chips traded down to 17,646 on the open, but the bears struggled at cracking near-term support at 17,600. The rebound reached a high of 17,941 and cleared resistance at 17,800 along with the 50-day and 100-day moving averages. Additional hurdles are at 18,000-18,100, with a close above the latter signaling continued strength and a possible run at all-time highs.
The S&P 500 soared 13 points, or 0.7%, to finish at 2,080. The index fell 10 points at the start of trading to 2,056, with support at 2,050 easily holding. The bottom of the trading range at 2,040 was never threatened. The push past 2,070-2,075 and the 50-day moving average was a good sign that 2,100 could be tested over the near term.
The Nasdaq climbed 30 points, or 0.6%, to end at 4,917. Tech started the session at 4,855 and kissed 4,852 on the opening onslaught. Support at 4,850 was strong, and that is a level I said needed to hold. The bounce and close above 4,900-4,925 were bullish signals, with the high checking in at 4,929. A close above 4,950 could signal another run at 5,000.
The Russell 2000 advanced 5 points, or 0.4%, to settle at 1,260. The small-caps dropped a six-pack to 1,249 on the rush to sell at Monday’s open. Near-term support at 1,250 was stretched by a point before a run past 1,262. I have been mentioning that a pop past 1,260 could be the “all clear” sign, and now it needs to hold to keep 1,270-1,275 in play.
The S&P 500 Volatility Index ($VIX, 14.74, up 0.07) zoomed past 15 to 15.76 shortly after the opening bell but easily held 17-17.50. The drop back below 15 to 14.04 was a relief, although 13.50 needs to clear to confirm additional strength. Another close above 15 would signal continued choppiness.
I have included two charts in this morning’s commentary, so let’s go check on the action.
From desk to press, futures look like this: Dow (+46); S&P 500 (+5); Nasdaq 100 (+12).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 31-9-1 (76%). 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.
Sony (SNE, $29.35, up $1.50)
SNE May 31 calls (SNE150515C00031000, $0.75, up $0.40)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 7%
Stop Target: None
Action: Shares traded to a fresh 52-week high of $29.58 on Monday. My near-term target is $31-$32, with a shot at $35 on continued momentum and a move past $30. Support is at $28. I will have the rest of the SNE story for you this afternoon.
Comcast (CMCSA, $58.21, up $0.27)
CMCSA May 60 calls (CMCSA150515C00060000, $1.00, up $0.04)
Entry Price: $1.05 (4/6/2015)
Exit Target: $2.10
Return: -5%
Stop Target: None
Action: Shares traded to a high of $58.64 on Monday while holding the 50-day moving average into the close. A run past $59 should get the 52-week high of $60.70 in play.
PowerShares QQQ Trust (QQQ, $105.98, up $0.86)
QQQ May 109 calls (QQQ150515C00109000, $0.73, up $0.16)
Entry Price: $0.75 (4/6/2015)
Exit Target: $1.50
Return: -3%
Stop Target: None
Action: The QQQs traded to a high of $106.27 but closed just below $106 on Monday. Continued closes above this level could lead to a run at $108-$110. Support is at $105-$104.
Rigel Pharmaceuticals (RIGL, $3.68, up $0.04)
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: Shares traded to a high of $3.73 on Monday. Resistance is at $3.80, followed by $4. The 52-week high is at $4.20. Support is at $3.40.
You can read more on this trade in the April 1 Pre-Market Update.
Cypress Semiconductor (CY, $13.97, up $0.11)
CY June 16 calls (CY150619C00016000, $0.40, up $0.05)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -47%
Stop Target: None
Action: Support is at $13.75 and the 100-day moving average. A close below $13.50 would be bearish. Resistance is at $14, followed by $14.25-$14.50. Yesterday’s high reached $14.07.
Trades on Hold — other 2015 Portfolio Open positions (4): 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.
Yahoo! (YHOO) April 47 calls (from February 2015) — Continue to hold.
Marvell Technology (MRVL) May 18 calls (from February 2015) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Gogo (GOGO) April 23 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options