Dear Momentum Options Subscriber,
The bulls showed their resiliency as they moved towards the top of the trading ranges on Thursday, and tech showed continued strength to lead the way. The small-caps struggled and failed to join the party, but the VIX dropped below 13.50 to confirm possible higher highs.
The Dow gained 56 points, or 0.3%, to settle at 17,958. The blue-chips were choppy during the first half of trading as the bears pushed a low of 17,823. Support at 17,800 and the 100-day moving average held before the rebound to 17,984 late in the day. Resistance remains at 18,000-18,100, and a close above the latter would get new highs in play.
The S&P 500 advanced 9 points, or 0.4%, to close at 2,091. The index struggled at 2,085 on the open before fading to a low of 2,074 shortly afterwards. The backtest easily held support at 2,075-2,070 and the 50-day moving average. The bulls cleared 2,090 into the close after pushing a high of 2,093. The next layers of resistance are at 2,100-2,110.
The Nasdaq gained 23 points, or 0.5%, to finish at 4,974. Tech opened higher but lost its gains after the first hour of trading as the bears pushed a low of 4,928. Fresh support at 4,925 held, with backup at 4,900 not needed. The bulls made a run to resistance at 4,975 and cleared this level by a point ahead of the closing bell. Continued closes above this level keep 5,000-5,050 in play.
The Russell 2000 fell 3 points, or 0.3%, to end at 1,259. The small-caps tested a high of 1,265 shortly after the open but spent the majority of the session underwater. The intraday low reached 1,248 and cracked near-term support at 1,250 but never threatened the 1,240 level. The close back below 1,260 was slightly bearish, but it may have been stretched. A close above 1,265-1,270 today would be bullish for next week.
The S&P 500 Volatility Index ($VIX, 13.09, down 0.89) opened above 14 at 14.14 and reached 14.59 on the market’s lows. The bulls held 15 for the third-straight session and cleared 13.50 during the final hour of trading. The next test comes at 12.50, which would have the market testing its all-time highs if tripped.
I could add New Trades shortly after the open today, so stay close to your email inboxes and cell phones.
From desk to press, futures look like this: Dow (+30); S&P 500 (+3); Nasdaq 100 (+0.50).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 34-10-1 (76%). 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.
Sony (SNE, $29.90, up $0.38)
SNE May 31 calls (SNE150515C00031000, $0.80, up $0.10)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 14%
Stop Target: None
Action: Resistance is at $30, and yesterday’s peak reached $30.01. Support is at $28.50-$28. My near-term target is $32, with a shot at $35 on continued momentum. Earnings are due out on April 30.
Comcast (CMCSA, $59.59, up $0.41)
CMCSA May 60 calls (CMCSA150515C00060000, $1.40, up $0.20)
Entry Price: $1.05 (4/6/2015)
Exit Target: $2.10
Return: 33%
Stop Target: $1.10, raise to $1.20 (Stop Limit)
Action: Raise the Stop Limit from $1.10 to $1.20. Yesterday’s low on the options was $1.21.
Shares traded to a high of $59.68 yesterday. The 52-week high is at $60.70, which will likely be challenged on continued strength. Support is at $58-$57.75 and the 50-day moving average.
Rigel Pharmaceuticals (RIGL, $3.81, down $0.10)
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, followed by the 52-week high at $4.20. Support is at $3.60, followed by $3.40 on a drop back below $3.80-$3.75.
Cypress Semiconductor (CY, $14.09, up $0.28)
CY June 16 calls (CY150619C00016000, $0.40, up $0.05)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -47%
Stop Target: None
Action: Resistance is at $14.25. Support is at $13.75 and the 100-day moving average on a close back below $14.
Yahoo! (YHOO, $45.63, up $0.46)
YHOO April 47 calls (YHOO150417C00047000, $0.25, up $0.10)
Entry Price: $0.80 (2/26/2015)
Exit Target: $0.85
Return: -69%
Stop Target: None
Action: Shares of YHOO have made a nice comeback this week, as have the options. I mentioned coming into the week that we would need to see shares above $45 to stay in the trade.
These options are still “out of the money” and have bounced off of a nickel low this week, so I want to save some premium. The option premium will rapidly decay starting on Monday, so I might close half of the trade today.
The Exit Target is at $0.85, but shares will need to be near $48 for this trade to break even or to make a slight profit.
Let’s see where the action is at later this afternoon. If I take action ahead of the Mid-Market Update, I will send out a Trade Alert.
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.
Marvell Technology (MRVL) May 18 calls (from February 2015) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options