Dear Momentum Options Subscriber,
The bulls regained resistance for the most part on Wednesday, with the VIX continuing its push to fresh 2015 lows. The bears seem to be retreating, but we still need to keep an eye on them, as they can strike at any time.
The Dow jumped 88 points, or 0.5%, to close at 18,038. The blue-chips tested 17,887 on the open and held near-term support at 17,900-17,800. The 18,000 level was tested shortly afterwards, but it held into the close. The run to 18,056 intraday fell short of resistance at 18,100-18,200, and a close above the latter will likely get the all-time highs in play.
The S&P 500 climbed 10 points, or 0.5%, to finish just under 2,108. The index wrestled with support at 2,090 following the early-morning dip to 2,091. The bounce back above 2,100 to 2,109.98 came close to cracking resistance at 2,110-2,120. The 52-week high for the S&P is at 2,119.
The Nasdaq added 21 points, or 0.4%, to end at 5,035. Tech opened above 5,025 at 5,026 before quickly fading to a low of 4,992. Support at 5,000 was stretched before a run to resistance at 5,050. The push to 5,040 fell two points shy of the mid-March 52-week high of 5,042. Additional resistance is at 5,100, with fluff up to 5,150-5,200 and new all-time highs.
The Russell 2000 gained a point, or 0.1%, to settle at 1,265. The small-caps traded down to near-term support at 1,260-1,250 after splitting the middle at 1,255. The second-half rebound reached 1,266 but fell short of resistance at 1,270-1,275. This level is less than 1% away, and it will keep 1,300 in play if cleared.
The S&P 500 Volatility Index ($VIX, 12.71, down 0.54) fell 4% after testing 13.80 shortly after the open. The bulls easily held 13.50-14, with the VIX closing below the 15 level for the 14th-straight session. The low checked in at 12.57, and a close below 12.50 would be bullish for continued market highs.
I have a number of trade updates this morning, so let’s go check the action.
From desk to press, futures look like this: Dow (-54); S&P 500 (-7); Nasdaq 100 (-14).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 40-11-1 (77%). 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 8:00 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.
SunPower (SPWR, $34.74, up $0.28)
SPWR June 38 calls (SPWR150619C00038000, $1.00, up $0.10)
Entry Price: $0.95 (4/22/2015)
Exit Target: $1.90
Return: 5%
Stop Target: None
Action: A golden cross recently formed on the chart, with the 50-day moving average crossing above the 200-day moving average. This is usually a bullish signal. The 52-week high is north of $42, with the 52-week low at $22.75.
Earnings are due out on April 30, and shares are setting up for a 10% move, plus or minus a few percentage points. This would mean that shares could test $38.50-$39 or $31.50-$31 based on the company’s earnings announcement.
Wall Street is looking for SunPower to earn $0.09 a share for the recently ended quarter on revenue north of $452 million. The company has beat estimates over the past four quarters by $0.02, $0.06, $0.03, and $0.17, respectively.
Dot Hill Systems (HILL, $6.52, up $0.11)
HILL September 7.50 calls (HILL150918C00007500, $0.55, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 22%
Stop Target: None
Action: Resistance is at $6.50-$6.75. Support is at $6.25-$6.
You can read my earnings outlook and review the stock’s chart in the April 21 Pre-Market Update.
Sony (SNE, $32.35, up $1.47)
SNE May 32 calls (SNE150515C00032000, $1.30, up $0.60)
Entry Price: $0.50 (4/20/2015)
Exit Target: $1.50-$2.00 (closed 1/3 at $1.40 on 4/22/15)
Return: 167%
Stop Target: $0.90 (Stop Limit)
Action: Shares reached a fresh 52-week peak of $32.60 on Wednesday, with $32 holding into the close. I would like to close another third of the trade if shares can clear $33, or ahead of earnings that are due out on April 30.
You can read my outlook on what to expect in the April 7 Mid-Market Update.
Rambus (RMBS, $14.40, up $0.22)
RMBS August 14 calls (RMBS150821C00014000, $1.30, up $0.10)
Entry Price: $0.65 (4/20/2015)
Exit Target: $1.70 (closed first half at $1.30 on 4/21/15)
Return: 100%
Stop Target: $0.90, raise to $1.00 (Stop Limit)
Action: Raise the Stop Limit from $0.90 to $1.00 on the second half of the position.
Yesterday’s low touched $1.03 on the stock’s dip to $13.88. Resistance is at $14.50. Support is at $14-$13.75.
PowerShares QQQ Trust (QQQ, $108.65, up $0.59)
QQQ May 110 calls (QQQ150515C00110000, $0.70, up $0.10)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20 (closed first half at $0.70 on 4/22/15)
Return: 17%
Stop Target: $0.50, raise to $0.55 (Stop Limit)
Action: Raise the Stop Limit from $0.50 to $0.55 on the second half of the position.
The QQQs reached a peak of $108.83 into yesterday’s close. Resistance at $108.50 was cleared, which sets up a run at $109-$110. Support is at $107-$106.
Jabil Circuit (JBL, $23.76, up $0.29)
JBL May 24 calls (JBL150515C00024000, $0.45, up $0.10)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -25%
Stop Target: None
Action: Resistance is at $23.50-$24. Support is at $23.
Rigel Pharmaceuticals (RIGL, $4.24, 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 $4.20-$4.25. Continued closes above these levels would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60 on a close below $4.
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) — The sector could see heated M&A activity in the coming months, and MRVL tends to move on takeover chatter — 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.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Earnings are due out next Thursday, April 30 — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options