Dear Momentum Options Subscriber,
The bulls tried to recover from Tuesday’s losses this morning, as the market traded higher on the open. However, the gains quickly faded, and the bears continue to push lower levels of support. One bit of good news is that the small-caps are showing some relative strength, but they are still struggling with resistance.
The small-caps tested a low of 1,206 in March, and today’s low has reached 1,213. I have talked about risk to 1,200, and a close below the March lows on the Russell 2000 would be a very bearish development.
The transportation sector is another one that I have been telling you to watch, and it is also holding up well today. The Dow Jones Transportation Average ($TRAN, 8,628, up 21) was punished last week and again yesterday, but it is holding the 8,550-8,500 level.
The action will likely remain sloppy and choppy until Friday, as the market seems a little nervous ahead of the nonfarm payrolls report.
The Dow is down 98 points to 17,930, while the S&P 500 is lower by 8 points to 2,080. The Nasdaq is off by 19 points to 4,919, and the Russell 2000 is higher by 2 points to 1,217.
Our trades are holding up well, so let’s go check the action. I could have a New Trade alert ahead of the close, so stay close to your email inboxes.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 46-14-1 (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 1:10 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.
Wells Fargo (WFC, $54.84, down $0.51)
WFC June 57.50 calls (WFC150619C00057500, $0.30, down $0.05)
Entry Price: $0.31 (5/4/2015)
Exit Target: $0.65
Return: -3%
Stop Target: None
Action: Support is at $55-$54.75. The 52-week high is at $56.26.
Limelight Networks (LLNW, $3.94, down $0.01)
LLNW September 4 calls (LLNW150918C00004000, $0.50, flat)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.80 (Limit Order on half)
Return: 43%
Stop Target: $0.40 (Stop Limit)
Action: Support is at $3.80-$3.75 on continued weakness. Resistance is at $4.00-$4.20.
You can read my full update on LLNW in the May 1 Pre-Market Update.
Krispy Kreme Doughnuts (KKD, $17.30, down $0.24)
KKD June 17 puts (KKD150619P00017000, $0.85, up $0.05)
Entry Price: $0.35 (4/28/2015)
Exit Target: $1.05 (closed first half at $0.70 on 4/29/2015)
Return: 121%
Stop Target: $0.60 (Stop Limit)
Action: Today’s low has reached $17.26. I would love to see a close below $17 ahead of the weekend. Resistance is at $17.75-$18.
Earnings are due out the first week of June. I have a target of $15 for KKD going into, or after the announcement, as long as $18.50 holds.
You can read my full update on KKD in the April 29 Pre-Market Update.
Opko Health (OPK, $14.10, up $0.22)
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: Support is at $13.75-$13.50 on a continued pullback. Resistance is at $14-$14.25.
Earnings are scheduled to be released this week or early next. I have an unconfirmed date of this Friday. Analysts are looking for a loss of $0.08 a share on revenue of $23 million. I believe OPK will top these numbers.
Dot Hill Systems (HILL, $6.83, up $0.22)
HILL September 7.50 calls (HILL150918C00007500, $0.60, up $0.05)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 33%
Stop Target: None
Action: Shares have traded to $6.95 today. Near-term support is at $6.50.
Earnings are estimated to be released tomorrow, May 7. Wall Street is expecting a profit of $0.06 a share on revenue north of $59 million. The company has beaten or matched estimates the past four quarters, and another upside surprise could have shares pushing $7. There is risk back to $6 on an earnings miss or lowered guidance.
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.
SunPower (SPWR) June 38 calls (from April 2015) — I will likely close this trade if support at $30 fails. Resistance is at $32.50 — Continue to hold.
iShares Russell 2000 (IWM) May 127 calls (from April 2015) — I would like to be out of this trade by this Friday, win, lose or draw — 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