MomentumOptions.com Pre-Market for 12/6/2017
Small-Caps Get Whacked
8:00am (EST)
The market settled to the downside on Tuesday with the Dow dipping 0.5% following its run to record highs on Monday. The Nasdaq cleared 6,800 intraday but slipped another 0.2% after trying to bounce back from several sessions of underperformance. The S&P 500 traded in a tight right before giving back 0.4% while the Russell 2000 showed the most weakness after tanking 1.3%.
Technology was the only sector that finished in the green after climbing 0.03%. Utilities led to the laggards with the sector falling 1.3%. Industrials and Consumer Staples declined 0.9% and 0.6%, respectively.
The Russell 2000 ETF (IWM, $150.93, down $1.52) fell for the third-straight session after bottoming at $150.81 ahead of the closing bell. Short-term support is at $150-$149.50 and the 50-day moving average with a move below the latter likely leading to additional weakness. Lowered resistance is at $151.75-$152. RSI remains in a downtrend with shaky support at the 50 level.
The VelocityShares Daily Inverse VIX (ZIV, 80.59, up 0.37) traded higher for the second-straight session after reaching a peak of 81.06. Lower resistance at 81.50-82 continues to hold with a move above the latter being bullish for a run towards the all-time high at 82.42. Support is at 79-78.75 and the 50-day moving average if 80 fails to hold.
The first half of December usually brings some bearish market sentiment but improves mid-month while ending with a Christmas rally that starts the day after and run into the first few days of 2018. Of course, history and patterns don’t always repeat but volatility remains low with the VIX falling 3% yesterday while closing below the 11.50 level.
I mentioned the VIX and ZIV would be the two most important indicators we were watching this week to get the best clues for bullish or bearish setups. So far, they have worked to our advantage with both balancing each other out.
Momentum Options Play List
Closed Momentum Options Trades for 2017: 53-21 (72%). 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.
Chemours (CC, $49.30, down $0.14)
January 47 puts (CC180119P00047000, $1.80, flat)
Entry Price: $1.30 (12/4/2017)
Exit Target: $2.60
Return: 38%
Stop Target: $1.35 (Stop Limit)
Action: Set an initial Stop lImit at $1.35.
Shares traded to a low of $47.82 yesterday. Support is at $48 with risk to $46-$44 on a close below this level. Resistance is at $49.50-$49.75.
Viavi Systems (VIAV, $8.89, down $0.04)
VIAV January 9 calls (VIAV180119C00009000, $0.40, down $0.05)
Entry Price: $0.65 (11/29/2017)
Exit Target: $1.30
Return: -38%
Stop Target: None
Action: Support is at $8.75 with shares finishing on the session low yesterday. Resistance is at $9.
Twitter (TWTR, $20.77, up $0.37)
TWTR January 24 calls (TWTR180119C00024000, $0.25, flat)
Entry Price: $0.70 (11/22/2017)
Exit Target: $1.40
Return: -64%
Stop Target: 15 cents (Stop Limit)
Action: Resistance is at $20.75-$21. Support is at $20.25-$20.
TiVo (TIVO, $16.05, down $0.27)
January 20 calls (TIVO180119C00020000, $0.15, down $0.05)
Entry Price: $0.60 (10/31/2017)
Exit Target: $1.20
Return: -75%
Stop Target: None
Action: Fresh support is at $16-$15.75 following Tuesday’s fade to $15.90. Resistance is at $16.25.
TherapeuticsMD (TXMD, $5.88, down $0.16)
TXMD December 7.50 calls (TXMD171215C00007500, $0.10, flat)
Entry Price: $0.95 (8/17/2017)
Exit Target: $1.90
Return: -89%
Stop Target: None
Action: Close the trade today to save the remaining premium.
This trade has been open since August and the options expire next week. There is a very slim to no chance shares clear the $7.50 level unless major news comes out. While possible, we will likely have to wait until 2018 before shares catch fire in possible drug approvals.