Dear Momentum Options Subscriber,
Although the market is mixed heading into the second half of trading, the action appears to be favoring the bulls, as tech and the small-caps are showing strength. However, the bears are attacking the broader market and the financial stocks, so neither side has gained a clear advantage.
Much of the headline risk for May has been cleared, as most major economic reports and first-quarter earnings have been released. There is still plenty of geopolitical risk to the market as the world stays hot and agitated, but hopefully cooler heads prevail throughout the year.
As far as the earnings front, there are a few names I’m watching this week for possible trades. We do have one trade that will be affected by earnings after today’s close, but I usually don’t take too many earnings trade because they can be tricky. However, while we are waiting for the next trend to develop, there could be an opportunity for a quick trade or two this week.
Lifeway Foods (LWAY), Opko Health (OPK) and YY Inc. (YY) will highlight the action after today’s close.
Eagle Pharmaceuticals (EGRX), GoDaddy (GDDY), International Flavors and Fragrances (IFF) and McKesson (MCK) will announce their numbers on Tuesday.
For Wednesday, it’s all about retail, as J.C. Penney (JCP), Macy’s (M) and Ralph Lauren (RL) take center stage. Cisco Systems (CSCO), Jack in the Box (JACK), Tower Semiconductor (TSEM), Vipshop Holdings (VIPS) and Zebra Technologies (ZBRA) will also confess their numbers, and these could also be stocks worth watching.
Applied Materials (AMAT), Children’s Place Retail Stores (PLCE), El Pollo Loco Holdings (LOCO), Kohl’s (KSS), Perry Ellis International (PERY), Nordstrom (JWN) and Symantec (SYMC) will update Wall Street with their quarterly results on Thursday.
And, finally, the week will close out with Tsakos Energy Navigation (TNP) and a few other lesser-known companies reporting earnings.
As we make the turn, the Dow is down 45 points to 18,145, while the S&P 500 is lower by 4 to 2,111. The Nasdaq is up 4 points to 5,007, while the Russell 2000 is adding a 6-pack to 1,240, which is a level I would love to see hold in to the close.
I have updated our current trades below, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 47-15-1 (75%). 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 1:05 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.
Sony (SNE, $30.96, up $0.32)
SNE June 32 calls (SNE150619C00032000, $0.85, up $0.05)
Entry Price: $0.70 (5/8/2015)
Exit Target: $1.40
Return: 18%
Stop Target: None
Action: Resistance is at $31-$31.50. The recent 52-week high is at $32.60. Support is at $30, followed by $29 and the 50-day moving average.
Wells Fargo (WFC, $55.57, down $0.48)
WFC June 57.50 calls (WFC150619C00057500, $0.31, down $0.07)
Entry Price: $0.31 (5/4/2015)
Exit Target: $0.65
Return: 0%
Stop Target: None
Action: Support is at $55, followed by $54.50 and the 50-day moving average. Resistance is at $56.
Limelight Networks (LLNW, $4.05, up $0.08)
LLNW September 4 calls (LLNW150918C00004000, $0.55, flat)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.80 (Limit Order on half)
Return: 57%
Stop Target: $0.40 (Stop Limit)
Action: Resistance is at $4.20-$4.25. Support is at $3.80, followed by $3.65 and the 50-day moving average.
You can read my full update on LLNW in the May 1 Pre-Market Update.
Opko Health (OPK, $14.31, up $0.18)
OPK June 16 calls (OPK150619C00016000, $0.30, flat)
Entry Price: $0.50 (4/27/2015)
Exit Target: $1.00
Return: -40%
Stop Target: None
Action: Earnings are scheduled to be released today, after the close. Analysts are looking for a loss of $0.08 a share on revenue of $23 million.
Resistance is at $14.25 and the 50-day moving average. Support is at $13.75-$13.50 on another drop below $14.
Dot Hill Systems (HILL, $6.93, up $0.03)
HILL September 7.50 calls (HILL150918C00007500, $0.60, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 33%
Stop Target: None
Action: Continued closes above $7 would be bullish for a run to $7.25. Support is at $6.75-$6.50.
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.
SunPower (SPWR) June 38 calls (from April 2015) — Resistance is at $32.75 and the 50-day moving average. Support is at $30 — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade from early March on BBRY receiving a takeover offer of $14 or better by mid-June — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options