MomentumOptions.com Mid-Market for 12/1/2017
Dow Clears 24,000
11:30pm (EST)
U.S. markets returned to record highs following some solid economic numbers and additional support on the Senate tax reform bill. The Dow reached an all-time high of 24,327 after zooming 1.4% while the S&P 500 tapped a lifetime peak of 2,657 after rising 0.8%. Both indexes extending their monthly winning streak to 8-straight.
The Russell 2000 made a record run to 1,551 before slipping into negative territory by a point ahead of the closing bell. The index held a 2-point gain, or 0.1%, but worth noting as the small-caps will likely lead the action on a tax vote possibly tonight or ahead of Friday’s market close. Meanwhile, the Nasdaq recovered half of its prior session losses after jumping 0.7% but failed the 6,900 level.
Dallas Fed Robert Kaplan said the FOMC faces the challenge of full employment and low inflation while adding an aging population and labor participation were top concerns as well, with another big threat coming from technology disruptions. On policy, he reiterated the FOMC should gradually and patiently raise the funds rate.
Fed Governor Randal Quarles warned that digital currencies may create serious financial stability issues if widely adopted. He’s particularly concerned that central bank digital currencies could face money laundering and cyber attack issues, which would require extensive review before being adopted.
The Atlanta’s Fed’s GDPNow model forecast for real GDP growth was adjusted lower in the fourth quarter of 2017 at 2.7% on November 30th, down from 3.4% on November 22nd.
The VelocityShares Daily Inverse VIX (ZIV) traded above the 80 level throughout the session while tapping a high of 80.85. Lower resistance at 81.50-82 easily held with a move above the latter signaling additional market strength. Support remains at 80-79.50 and levels that have been holding for the past seven sessions.
The Spider S&P 500 ETF (SPY) traded to an all-time high of $266.05 with fresh resistance at $266-$266.25. Continued closes above the latter could lead to a run towards $267-$267.50. Rising support is at $263.50-$263.25. A move back below the latter would likely lead to a retest of $262-$260 to retrace the gaps higher this week. RSI is nearing October resistance near the 80 level is approaching overbought territory.
The Energy Select Sector Spider (XLE) surged 1.5% and above its 50-day moving average after reaching a peak of $69.23. Fresh resistance is at $69.25-$69.50 with a move above the latter being a continued bullish development. I mentioned earlier this month it would be important for XLE to recover the $67.50-$67.75 area to show momentum has returned with rising support now at $68.50-$68.25. RSI is back in a strong uptrend after clearing mid-month resistance at the 50 level and appears on track to challenge 70 on continued strength.
Folks, I’m running a little late this morning due to DC traffic. I live about an hour away and I left at 5am to get up there with this morning’s update written. For anyone that has traveled I95, it is often a disaster. In any event, the mobile office is setup so I will be watching the action into the closing bell as usual. If I see anything I like, or take action, I will send out a Trade Alert.
If you don’t hear from me, have a great and safe weekend. This morning’s commentary is an afterthought with the market turning south as I head to press. News the Michael Flynn has admitted to lying and has struck a plea deal is causing some market drama. Trade quotes are live.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 52-21 (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.
Viavi Systems (VIAV, $9.05, down $0.27)
VIAV January 9 calls (VIAV180119C00009000, $0.55, down $0.05)
Entry Price: $0.65 (11/29/2017)
Exit Target: $1.30
Return: -14%
Stop Target: None
Action: Support is at $9. Resistance is at $9.25.
Twitter (TWTR, $20.44, down $0.14)
TWTR January 24 calls (TWTR180119C00024000, $0.35, flat)
Entry Price: $0.70 (11/22/2017)
Exit Target: $1.40
Return: -21%
Stop Target: None
Action: Support is at $20.50-$20.25. Resistance is at $20.75.
Bank of America (BAC, $28.00, down $0.17)
BAC January 28 calls (BAC180119C00028000, $1.12, down $0.09)
Entry Price: $0.63 (11/16/2017)
Exit Target: $1.75 (closed half at $1.30 on 11/29/2017)
Return: 95%
Stop Target: $1.05 (Stop Limit)
Action: Support is at $28-$27.75. Resistance is at $28.25.
TiVo (TIVO, $17.78, down $0.02)
January 20 calls (TIVO180119C00020000, $0.35, flat)
Entry Price: $0.60 (10/31/2017)
Exit Target: $1.20
Return: -41%
Stop Target: None
Action: Support is at $17.75-$17.50. Resistance at $18-$18.25.
TherapeuticsMD (TXMD, $5.93, down $0.27)
TXMD December 7.50 calls (TXMD171215C00007500, $0.10, down $0.05)
Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Return: -91%
Stop Target: None
Action: Support is at $6-$5.75. Resistance is at $6.25.