Dear Momentum Options Subscriber,
First-quarter earnings season kicks off this week, and the financial stocks will garner much of the attention. While I covered the low expectations for earnings, overall, this sector should perform well given the recent bank stress test results.
Here is a list of some of the financial names that will report this week, along with other marquee names.
After today’s close, Pep Boys (PBY) will announce earnings.
On Tuesday, Fastenal (FAST), Johnson & Johnson (JNJ), JPMorgan Chase (JPM) and Wells Fargo (WFC) will confess their results ahead of the open. After the closing bell, CSX (CSX) and Intel (INTC) are on deck.
Bank of America (BAC), Delta Air Lines (DAL), Progressive (PGR), Titan Machinery (TITN) and U.S. Bancorp (USB) will announce their numbers Wednesday morning. Netflix (NFLX) and SanDisk (SNDK) will grab headlines in after-hours trading.
On Thursday, Citigroup (C), Cypress Semiconductor (CY), Philip Morris (PM), Sherwin-Williams (SHW), Sonoco (SON), Taiwan Semiconductor Manufacturing (TSM), Travelzoo (TZOO) and UnitedHealth Group (UNH) will try to impress Wall Street ahead of the bell. American Express (AXP), Mattel (MAT) and Schlumberger (SLB) highlight happy hour in the afternoon.
General Electric (GE), Honeywell International (HON) and Seagate Technology (STX) wrap up the week and could set the tone for Friday’s action.
I will likely stay on the sidelines instead of trading any of these events. However, we do have one name that will be in play on Thursday with Cypress Semiconductor.
The suit-and-ties are expecting $0.09 a share on revenue of $220 million. Although this trade is currently on “hold,” a beat-and-raise quarter could get shares moving in the right direction. The company has matched or beaten estimates over the past four quarters, so the odds are good that there could be an upside surprise.
If shares can clear $14.75 and the 50-day moving average, our CY June 16 calls will continue to bounce back.
An earnings miss could have shares stumbling back below $14 and testing their 50-day moving average. Either way, I will provide a fresh update on Thursday if we need to take action, or if I bring back daily coverage.
Heading into the second half of trading, the Dow is up 7 points to 18,065, while the S&P 500 is higher by 2 points to 2,104. The Nasdaq is gaining 19 points to 5,015, and the Russell 2000 is popping 5 points to 1,270.
I have updated our current trades, along with adjustments to several Stop Limit targets. I could have a New Trade ahead of the close, so stay locked and loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 35-11-1 (74%). 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 12:20 p.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.
iShares Russell 2000 (IWM, $126.19, up $0.57)
IWM May 128 calls (IWM150515C00128000, $1.20, up $0.22)
Entry Price: $0.90 (4/10/2015)
Exit Target: $1.35-$1.80 (Limit Order on first half at $1.35)
Return: 33%
Stop Target: $0.95 (Stop Limit)
Action: Take profits and sell to close the first half of the IWM May 128 calls at current levels. Also, set a Stop Limit at $0.95 on the second half of the trade. Today’s low has been $0.98.
I’m expecting a possible push towards $127-$128 over the near term as long as $125-$124 holds. There is additional help at $122 and the 50-day moving average. The 52-week and all-time highs are at $126.32.
Jabil Circuit (JBL, $23.89, down $0.02)
JBL May 24 calls (JBL150515C00024000, $0.60, flat)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 0%
Stop Target: None
Action: Continued closes above $24 would be bullish for a run to $26-$28. The 10-year chart shows a possible run to $30. Near-term support is at $23.50, followed by $23. Today’s low has been $23.79.
Rambus (RMBS, $13.73, down $0.01)
RMBS May 14 calls (RMBS150515C00014000, $0.55, flat)
Entry Price: $0.38 (4/10/2015)
Exit Target: $1.00
Return: 45%
Stop Target: None
RMBS August 15 calls (RMBS150821C00015000, $0.70, flat)
Entry Price: $0.53 (4/10/2015)
Exit Target: $1.25
Return: 32%
Stop Target: None
Action: Shares have traded to a high of $13.76 today, and I’m rooting for $13.75 to hold into the close. Resistance is at $14, followed by $14.25-$14.50. The 52-week high is $14.82. Support is at $13-$12.75 if $13.50 fails.
PowerShares QQQ Trust (QQQ, $108.01, up $0.26)
QQQ May 110 calls (QQQ150515C00110000, $0.78 up $0.13)
Entry Price: $0.57 (4/10/2015)
Exit Target: $1.15 (closed first half at $0.83 on 4/13/2015)
Return: 41%
Stop Target: $0.60 (Stop Limit)
Action: I wanted to close the first half of the trade on the QQQs’ run past $108 this morning. Today’s high has reached $108.38, with the calls reaching $0.86. The low on the options has been $0.66, and there is a $0.60 Stop Limit on the second half to protect profits.
A close above $108 could lead to $110 over the next week or two. Support is at $106 and the 50-day moving average.
Sony (SNE, $30.52, down $0.04)
SNE May 31 calls (SNE150515C00031000, $1.05, flat)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 50%
Stop Target: $0.80, raise to $0.87 (Stop Limit)
Action: Raise the Stop Limit from $0.80 to $0.87.
My near-term target is $32, with a shot at $35 on continued momentum. Today’s high has reached $30.65. Support is at $30, followed by $29.
Earnings are due out on April 30. You can read my full update on what to expect in the April 7 Mid-Market Update.
Rigel Pharmaceuticals (RIGL, $4.00, up $0.07)
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: Resistance is at $4, followed by the 52-week high at $4.20. Support is at $3.60, followed by $3.40 on a drop back below $3.80-$3.75.
Trades on Hold – other 2015 Portfolio Open positions (3): 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) — Over 500 contracts have traded on the MRVL May 20 calls today, and the action is suggesting that bullish traders are expecting a run to fresh 52-week highs by mid-May. Shares are still holding their 100-day moving average and are trying to build strength to challenge the 50-day moving average. This sector could see heated M&A activity this year, and MRVL tends to move on takeover chatter — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade that BBRY will receive a takeover offer of $14 or better by mid-June — Continue to hold.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Earnings are due out on Thursday — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options