MomentumOptions.com Pre-Market for 2/20/2018
Bulls Post Strong Weekly Gains
8:00am (EST)
U.S. markets traded mostly higher for a 6th-straight session following Friday’s gains with the major indexes continuing their v-shape recovery. It was the second-straight up Friday for the Dow and S&P 500 and showed cash is still coming back into the market and off the sidelines. More importantly, the slight overall gains came ahead of a 3-day holiday weekend as Wall Street was closed on Monday for President’s Day.
The Russell 2000 climbed 0.4% and showed the most strength after trading to a midsession high of 1,551. The small-caps closed just 4 points below its 50-day moving average after rallying 4.4% for the week.
The Dow climbed 0.1% after testing a high of 25,432 while the S&P 500 added a point, or 0.04% after reaching an intraday peak of 2,754. For the week, the Dow rose 4.3% to post its biggest one-week percentage rise since November 2016. The S&P 500 also gained 4.3% for its best week since January 2013.
The Nasdaq showed strength throughout the first half of action while testing a top of 7,303 before turning south to finish 0.2% lower on the close. The index easily held the 7,200 level on the pullback while closing above its 50-day moving average for the third-straight session. The Nasdaq ended up 5.3% in its best weekly percentage gain since December 2011.
Utilities showed continued strength with the sector rising 0.9% while Health Care and Real Estate added 0.7%. Consumer Discretionary and Materials led sector laggards after giving back 0.5% and 0.4%, respectively.
All major sectors closed in positive territory for the week and were led by Technology’s 5.8% surge. Financials and Industrials rallied 4.7% while Consumer Discretionary and Health Care soared 4%.
The VelocityShares Daily Inverse VIX (ZIV) tested a midday high of 70.96 to push upper resistance at 70.50-71 before fading to finish the session lower. Near-term support is at 68-67.50 on a close below 70.
RSI recently cleared current support at 30 and a level that needs to hold on additional weakness. Resistance is at 40 with a move above this level being a bullish signal for a possible run at 50.
The Russell 2000 ETF (IWM) closed higher for a 6th-straight session after peaking at $154.29. Resistance at $153.50-$154 and the 50-day moving average held with continued closes above the latter being a bullish development for a run at $156. Near-term support is at $152.50-$152 with risk to $150 on a move below the latter.
RSI is trying to hold resistance at 50 with continued closes above this level being a bullish signal for a possible push towards 60. There is risk to 40 on a move back below 50.
Bitcoin Investment Trust (GBTC) recently converted a 91-for-1 stock split of bitcoin. This drastically reduced making GBTC more accessible to retail investors at current levels following the split on January 26th.
The current chart shows GBTC is testing near-term resistance at $19.50-$20.50 and the 50-day moving average for the second-straight session. Continued closes above the latter could lead to a short-term recovery towards the $22.50-$25 depending on momentum. Short-term support is at $17-$16.50 with a close below the latter signaling additional weakness towards $15.
RSI is trying to hold support at 50 and a level that served as prior support in early November and December. Continued closes above this level would be a slightly bullish development for a run towards 70. A move below 50 would signal additional upcoming weakness with risk to 40-30.
The percentage of S&P 500 stocks trading above the 200-day moving is currently at 69.3% with Friday’s high reaching 70.89%. Continued closes above this level could lead to a quick run towards resistance at 75% and previous support levels throughout December. A close back below the 65% level would be a slightly bearish development.
The percentage of Nasdaq 100 stocks trading above the 50-day moving average is currently at 55.76%. Resistance is at 60% with Friday’s high tapping 59.61%. Continued closes above this level would signal additional strength for a possible push towards 70%. Support is at 55%-50% with a move below the latter signal additional weakness.
Momentum Options Play List
Closed Momentum Options Trades for 2018: 6-5 (55%). 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.
Oracle (ORCL, $50.71, up $0.07)
ORCL March 50 calls (ORCL180316C00050000, $1.85, up $0.05)
Entry Price: $1.10 (2/15/2018)
Exit Target: $2.20 (Limit Order on half)
Return: 68%
Stop Target: $1.35, raise to $1.60 (Stop Limit)
Action: Set a Limit Order at $2.20 to close half the trade. Raise the Stop Limit from $1.35 to $1.60.
Shares traded to a high of $51.14 with resistance at $50.75-$51 holding into the closing bell. The options tapped $2.03. Support remains at $50.25-$50.
Bank of America (BAC, $31.97, down $0.24)
BAC March 33 calls (BAC180316C00033000, $0.30, down $0.10)
Entry Price: $0.50 (2/15/2018)
Exit Target: $1.00
Return: -40%
Stop Target: None
Action: Support at $31.75-$31.50 held on Friday’s backtest to $31.92. Lowered resistance is at $32-$32.25.
Intel (INTC, $45.56, down $0.36)
INTC April 46 calls (INTC180420C00046000, $1.75, down $0.25)
Entry Price: $1.28 (2/14/2018)
Exit Target: $2.60
Return: 38%
Stop Target: $1.65 (Stop Limit)
Action: Resistance at $46-$46.25 was cleared on the run to $46.59 but levels that failed quickly afterwards. Support at $45.50-$45.25 held on Friday’s fade to $45.51 into the closing bell.
The Stop Limit will likely trigger on further weakness or a decay in time premium. If so, we can get back in INTC when momentum returns.
Viavi Systems (VIAV, $9.93, up $0.23)
VIAV March 10 calls (VIAV180316C00010000, $0.30, up $0.05)
Entry Price: $0.45 (2/6/2018)
Exit Target: $0.90
Return: -33%
Stop Target: None
Action: Fresh resistance is at $10 following Friday’s run to $9.98. Continued closes above this level and the 200-day moving average would be a bullish development for a run towards $10.25-$10.50. Rising support is at $9.75-$9.50.
These options have another a little more than 3 weeks before expiration and I’m looking for a possible run towards $11. This would get the options to $1 in-the-money and would get us to a triple-digit return from the entry level price.
