Dear Momentum Options Subscriber,
The Fed minutes provided a little relief from Wednesday’s selling pressure, although the bears still got the victory. The Federal Reserve members said they are still worried following last month’s meeting that raising interest rates too soon could damper the U.S. economic recovery. The meeting minutes signaled continued lower rates over the near-term without a rate hike and suggested continued “patience” is needed.
The Dow dipped 17 points, or 0.1%, to close at 18,029. The blue-chips traded down to 17,982 during the first half of action before rebounding late in the day to push positive territory by a point. Resistance is at 18,100, and a close above this level will likely lead to a run to 18,300-18,500. Support is at 17,900-17,800 followed by 17,600.
The S&P 500 slipped nearly a point, or 0.03%, to finish at 2,099. The index traded in negative territory throughout the day after bottoming at 2,092. Near-term support at 2,090-2,075 held on the pullback with additional help at 2,060-2,050. Continued closes above 2,100 would be bullish for a run to 2,125-2,150 over the near-term.
The Nasdaq climbed 7 points, or 0.1%, to end at 4,906. Tech was a little more stable than the other major indexes after testing a low of 4,885 on Wednesday’s open. The bulls rebounded to reach another 15-year intraday high of 4,907 and remain on track to test 4,950-5,000 over the near-term.
The Russell 2000 advanced 3 points, or 0.2%, to settle just below 1,228. The small-caps tested support at 1,220-1,210 following a dip to 1,219 shortly after the open. The bulls made a run at Tuesday’s all-time intraday high of 1,227 and cleared it after testing 1,227.98. Overhead resistance is at 1,235-1,250.
The S&P 500 Volatility Index ($VIX, 15.45, down 0.35) spiked to a high of 16.74 on Wednesday’s weakness but held the 17.50 level. The bulls still need to get below 15 to keep higher highs in play while a close above 17.50-18.50 would be bearish.
From desk to press, futures look like this: Dow (-23); S&P 500 (-3.25); Nasdaq 100 (+2.75).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 10-0 (100%). 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 8:30 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.
Marvell Technology (MRVL, $16.23, down $0.11)
MRVL May 18 calls (MRVL150515C00018000, $0.52, up $0.02)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: 4%
Stop Target: None
Action: Earnings are due out after today’s close, and I’m expecting shares to move 5%-8% on the news.
A run to $18 could be in the mix if Marvell’s numbers please Wall Street. An earnings miss could have shares testing $15.50- $15.25 and the 50-day moving average.
Western Union (WU, $19.30, flat)
WU March 19 calls (WU150320C00019000, $0.65, flat)
Entry Price: $0.40 (2/13/2015)
Exit Target: $0.80
Return: 63%
Stop Target: None
Action: Shares traded to a high of $19.41 on Wednesday. Resistance is at $19.75-$20. Near-term support is at $19.25-$19 on a pullback.
Brocade Communications Systems (BRCD, $12.59, up $0.18)
BRCD March 13 calls (BRCD150320C00013000, $0.35, up $0.08)
Entry Price: $0.24 (2/13/2015)
Exit Target: $0.50-$0.75
Return: 46%
Stop Target: None
BRCD April 12 calls (BRCD150417C00012000, $0.95, up $0.10)
Entry Price: $0.80 (12/31/2014)
Exit Target: $1.60
Return: 19%
Stop Target: None
Action: Earnings are due out today. I will likely send out a Trade Alert after the open to take action, and I’m keeping my fingers crossed for a run past $13.
Yesterday’s high reached $12.61. Resistance is at $12.75-$13. Near-term support is at $12.25-$12 with additional help at $11.75 and the 50-day moving average.
Sony (SNE, $28.02, up $1.42)
SNE March 28 calls (SNE150320C00028000, $1.10, up $0.55)
Entry Price: $0.60 (2/12/2015)
Exit Target: $1.80
Return: 83%
Stop Target: None
Action: Shares reached a peak of $28.12 on Wednesday following an upgrade from the suit and ties to Buy from Neutral.
I have a near-term target of $30 for the stock. Support is at $27-$26. A close below $25 would suggest momentum is fading.
Boston Scientific (BSX, $16.68, up $1.84)
BSX March 15 calls (BSX150320C00015000, $1.80, up $1.35)
Entry Price: $0.45 (2/10/2015)
Exit Target: Raise from $2.00 to $2.50 (closed half at $1.34 on 2/18/15)
Return: 249%
Stop Target: Raise from $1.10 to $1.25 (Stop Limit)
Action: Raise the Exit Target from $2 to $2.50. Raise the Stop Limit from $1.10 to $1.25. Yesterday’s low was $1.26.
Shares traded to a fresh 52-week peak of $16.71 yesterday and could make a run at $17-$18 over the near-term. Fresh support is at $16.25-$16 on a pullback.
AT&T (T, $34.49, down $0.22)
T March 36 calls (T150320C00036000, $0.10, down $0.02)
Entry Price: $0.26 (2/4/2015)
Exit Target: $0.75
Return: -62%
Stop Target: None
Action: Support is at $34.25-$34 and the 200-day moving average. Resistance is at $34.75-$35. My near-term target is calling for a run to $37 by mid-March. The 52-week high is at $37.48.
CBOE Holdings (CBOE, $62.13, down $0.47)
CBOE March 67.50 calls (CBOE150320C00067500, $0.10, down $0.05)
Entry Price: $0.80 (2/4/2015)
Exit Target: 60 cents on the other half (Limit Order), (closed half at $1.10 on 2/5/15)
Return: -25%
Stop Target: None
Action: Support is at $61 and the 100-day moving average. A close below these levels could force me to exit the trade for a slight loss. A close above $64 and the 50-day moving average would be bullish.
Veeva Systems (VEEV, $31.00, up $1.10)
VEEV February 31 calls (VEEV150220C00031000, $0.40, up $0.30)
Entry Price: $0.75 (1/8/2015)
Exit Target: Lower from 90 cents to 80 cents (Limit Order)
Return: -47%
Stop Target: None
Action: Lower the Exit Target from 90 cents to 80 cents and keep the Limit Order intact for today’s session.
I should have lowered the exit target coming into the week, and I’m disappointed I didn’t. It was a mistake as my goal was to get back to even or make a slight profit with this trade with the options expiring this Friday.
I could have turned a profit on yesterday’s rebound to $31.78 but didn’t lower the exit target in time to take advantage of the move. The calls traded to a high of 85 cents.
I’m still hopeful the new 80-cent Limit Order triggers today but it might not. I would like to exit the trade ahead of today’s close as these options expire tomorrow.
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.
JDS Uniphase (JDSU) March 14 calls (From January 2015) — Continue to hold.
Philip Morris (PM) March 75 puts (From January 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options