Dear Momentum Options Subscriber,
The bulls were cruising during the first half of trading on Monday, with the small-caps testing fresh all-time highs. The bears started making noise during the second half of trading and used a final-hour growl to get nearly a clean sweep. The broader market and tech failed to hold their gains, but the Russell avoided a loss, and first-quarter earnings season is now officially underway.
The Dow fell 80 points, or 0.5%, to finish at 17,977. The blue-chips traded to a high of 18,107 shortly after the open but failed at holding resistance at 18,100-18,200. The second-half fade to 17,974 held near-term support at 17,900 and the 50-day moving average. Additional support is at 17,800 and the 100-day moving average.
The S&P 500 slipped 9 points, or 0.5%, to end at 2,092. The index made a run to 2,107 but fell shy at clearing overhead resistance at 2,110-2,120. The intraday pullback to 2,092 easily held support at 2,090. There is additional help at 2,080-2,075 and the 50-day moving average on a close below this level.
The Nasdaq gave back 7 points, or 0.2%, to settle at 4,988. Tech made a run past 5,000 and peaked at 5,024 but had trouble threatening resistance at 5,025-5,050. The bears pushed a low of 4,985 but also had trouble cracking support at 4,975-4,950.
The Russell 2000 added a point, or 0.1%, to close at 1,265. The small-caps held positive territory throughout the session and traded to a fresh all-time high of 1,271. Wall Street failed to notice, as they were more worried about the start of earnings season. I mentioned that a near-term run to 1,275 could come on continued strength, with a possible push to 1,290-1,300 on a short-covering rally. Fresh support is at 1,260, with 1,250 serving as backup.
The S&P 500 Volatility Index ($VIX, 13.98, up 1.40) stayed elevated and traded higher throughout Monday’s session. The bears pushed a high of 14.31, but the bulls easily held 15. The close above 13.50 was slightly bearish, while a close below 12.50 keeps higher market highs in play.
I have a number of trade updates this morning, so please pay close attention to all Stop Limit instructions.
From desk to press, futures look like this: Dow (-1); S&P 500 (-0.75); Nasdaq 100 (-1).
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 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.
Jabil Circuit (JBL, $23.66, down $0.25)
JBL May 24 calls (JBL150515C00024000, $0.55, down $0.05)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -8%
Stop Target: None
Action: Near-term support is at $23.50, followed by $23. Monday’s low reached $23.62. Continued closes above $24 would be bullish for a run to $26-$28. The 10-year chart shows a possible run to $30.
Rambus (RMBS, $13.68, down $0.05)
RMBS May 14 calls (RMBS150515C00014000, $0.50, down $0.05)
Entry Price: $0.38 (4/10/2015)
Exit Target: $1.00
Return: 32%
Stop Target: $0.40 (Stop Limit)
RMBS August 15 calls (RMBS150821C00015000, $0.65, down $0.05)
Entry Price: $0.53 (4/10/2015)
Exit Target: $1.25
Return: 23%
Stop Target: $0.55 (Stop Limit)
Action: Set a Stop Limit at $0.40 on the RMBS May 14 calls. Also, set a Stop Limit at $0.555 on the RMBS August 15 calls.
Shares traded to $13.76 yesterday but failed to hold $13.75 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. Monday’s low touched $13.55. Hopefully we don’t get whipsawed out of these positions again.
PowerShares QQQ Trust (QQQ, $107.48, down $0.27)
QQQ May 110 calls (QQQ150515C00110000, $0.65, flat)
Entry Price: $0.57 (4/10/2015)
Exit Target: $1.15 (closed half at $0.83 on 4/13/2015)
Return: 30%
Stop Target: $0.60, lower to $0.57 (Stop Limit)
Action: Lower the Stop Limit from $0.60 to $0.57 on the second half of the position to give the trade a little wiggle room.
The Stop Limit of $0.60 held, with the low checking in at $0.64 following the second-half dip on the QQQs to $107.36.
A close above $108 could lead to $110 over the next week or two. Yesterday’s high reached $108.38, but the bulls failed to hold this level. Support is at $106 and the 50-day moving average.
iShares Russell 2000 (IWM, $125.70, up $0.08)
May 128 calls (IWM150515C00128000, $1.10, up $0.12)
Entry Price: $0.90 (4/10/2015)
Exit Target: $1.80 (closed half at $1.20 on 4/13/2015)
Return: 28%
Stop Target: $0.95 (Stop Limit)
Action: The Stop Limit of $0.95 on the other half held on Monday.
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. Yesterday’s run to $126.39 was a fresh 52-week and all-time high.
Sony (SNE, $30.37, down $0.19)
SNE May 31 calls (SNE150515C00031000, $0.95, down $0.10)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 36%
Stop Target: $0.87, lower to $0.80 (Stop Limit)
Action: Lower the Stop Limit from $0.87 to $0.80 to give the trade a little wiggle room.
Support is at $30, followed by $29. My near-term target is $32, with a shot at $35. 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, $4.11, up $0.18)
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 at $4 was cleared following yesterday’s surge to $4.14. The 52-week high is at $4.20. Support is moving up and is at $3.80-$3.60.
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) — Bullish traders are expecting a run to fresh 52-week highs by mid-May, as call-buying was heavy on Monday in higher strike prices. 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