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Bears Breaking Bad

Friday, August 1st, 2014 Midday Update for 8/1/2014

Bears Breaking Bad

12:20 p.m. (EST)

Futures were volatile throughout the night and were higher ahead of the overseas market opening, but got progressively worse ahead of Wall Street’s open. Dow futures were down over triple-digits at one point, but made a dramatic turnaround following a weaker-than-expected Non-farm Payrolls number.

The drop to 209,000 jobs added came in worse-than-expected, but held the 200,000 level. The goldilocks number has the Fed debate on interest rates back in full gear, but I’ll save that rhetoric for another day.

The more important picture is in the charts, as the bears did do some serious technical damage on Thursday. The Dow and the S&P 500 are wrangling with their 100-day moving averages, while the Russell 2000 fell below its 200-day moving average. The Nasdaq has fallen below its 50-day moving average with today’s pullback.

I was up late doing chart work and research to figure out possible actions for next week. Needless to say, if there is no rebound today, there could be a new short-term trend developing.

August has historically been the worst month for the Dow and S&P 500 since the late 1990′s. Additionally, a second consecutive negative Friday close would add to the bearish outlook.

Heading into the second half of trading, the Dow is down 101 points to 16,461, while the S&P 500 is declining 12 points to 1,918. The Nasdaq is lower by 39 points to 4,330, and the Russell 2000 is dropping 12 points to 1,108. The VIX is up 0.47 to 17.42. I will be watching to see if the bulls can hold the 17.50 level into the close.

The stop limits on the current profitable trades are still holding and, while it is tempting to open a new position today, I usually shy away from doing so on Friday’s due to the weekend time decay. However, I do see a few trades I like and, if the selling pressure continues, I may send out a New Trade alert.

If the stop limits trigger on the current trades, I will also have additional room to open more new trades next week.

Stay locked-and-loaded into the close, but if you don’t hear from me, I will be back Sunday night with the Weekly Wrap and on Monday morning with the Daily. Until then, have a great weekend, everybody!

Goodbye July, Hello August

Friday, August 1st, 2014 Morning Update for 8/1/2014

Goodbye July, Hello August

9:00 a.m. (EST)

The bears had their best outing since mid-April following an attack that left Wall Street speechless. Warnings signs have been showing up over the past few weeks, and I have talked about a “Whoa Nelly” event happening. Yesterday was that moment.

The Dow tanked 317 points, or 1.9%, to settle at its session low of 16,563 on Thursday. The blue-chips opened at 16,869 but fell below 16,800 within minutes. I have talked about additional support at 16,600, and this level was also tested. I have warned that a close below the second wave of support would be extremely bearish, and the elevator drop opened the door for a test to 16,300-16,250 on further weakness. A recovery back above 16,700-16,800 would be bullish heading into next week.

The S&P 500 stumbled 39 points, or 2%, to end at 1,930. The bears cracked 1,960 and then 1,950 within the first hour of trading. Additional support at 1,940 also failed in the final hour. If the bears had 10 more minutes yesterday, they likely would have triggered 1,925 — a level the bulls desperately need to hold today. If not, there could be a test to 1,900. Any 10-point gains to clear prior resistance levels would help ease some of Thursday’s pain.

The Nasdaq was hammered for 93 points, or 2.1%, to close at 4,369. Tech opened under 4,425 at 4,421, which was a clear signal that 4,400 would be breeched. I have talked about wiggle room down to 4,375-4,350, and Thursday’s low reached 4,367. The bulls will be looking to reclaim 4,375-4,400 ahead of the weekend, while the bears would obviously like to get under 4,350. Any dips below this level could lead to 4,325-4,300 quickly.

The Russell 2000 sank 26 points, or 2.3%, to finish at 1,120. The small-caps started the session below 1,140 after opening at 1,137, and that was a green light that a test to 1,125 would come. I have cautioned further weakness to 1,110-1,100 on a close below this level of support. The bulls will be looking to at least clear 1,125-1,130 by today’s closing bell and, while 1,140 would be nice, it would require a 2% rebound.

The S&P 500 Volatility Index ($VIX, 16.95, up 3.62) zoomed 27% after trading to a high of 17.11. If you flinched yesterday on the close above 15, that is understandable, as I said not to get nervous until the bears cleared this level. Naturally, the VIX got plenty of attention from the talking heads and, for those who said the index was dead, welcome back, Jack. The bulls managed to hold 17.50, but a close above this level could lead to 20-22. The bears will be trying to hold 15 heading into next week.

I have updated all of the current trades with my thoughts and instructions. Although it has been a shaky week for the market, the Daily portfolio has performed extremely well. Even better, by locking in profits on the winners, the portfolio is once again in fantastic position for new trades and the beginning of a possible new trend.

Special Notice: If this is the start of a 5%-10% pullback — please do not worry. The best time to make money is when the market is trending, up or down. Trading ranges are hard to navigate, and volatility can whipsaw you out of a lot of good trades, but I managed to avoid the pitfalls of July by sticking to the chart work and game plan.

The suit-and-ties will continue to tell you to stay out of the market, as many of them don’t know how to play a downslide slide. I love buying put options as much as call options, and the returns can be just as great. For new subscribers, check out some of the trades I recommended from 2008 when the market really folded like a cheap lawn chair. Again, don’t be nervous.

Overnight futures were showing a rebound going into this morning’s open. Nonfarm Payrolls came in worse than expected and futures are reacting accordingly.

From desk to press, futures look like this: Dow (-24); S&P 500 (-3); Nasdaq 100 (-1).

Market In Danger of Finishing July Lower/ Profit Alerts (WWE/ RFMD)!!!

Thursday, July 31st, 2014 Midday Update for 7/31/2014

Market In Danger of Finishing July Lower/ Profit Alerts (WWE/ RFMD)!!!

11:30am (EST)

The bulls spent the first 3 days of the month pushing record highs and came into today’s session with the monthly lead.  However, the bears have only needed a half-session to erase those gains following the tight trading range in between.

The action has been very reminiscent of May’s frustrating range but with a tad more volatility.  The action has caused continued confusion on Wall Street as more and more pros say a “top” is in.

While they may be patting themselves on the back today after 7 months of being wrong, I’m not ready to join that crowd…yet.  However, today’s action makes tomorrow’s Nonfarm Payrolls report that much more important as the bears have pushed the second layers of support.

I have given specific downside levels to possibility start fresh short positions by using index put options over the past 2 weeks.  While it is tempting to throw fresh bait to the sharks, I have also talked about trading ranges getting “stretched” both to the upside and downside.

The possibility of a summer rally is still in play as the uptrends lines and and major moving averages continue to hold.  Although volatility has been elevated in recent weeks, the S&P Volatility Index ($VIX, 14.96, up 1.63) has also stayed range bound and continues to be an excellent guide in navigating the current trading range.

The Dow came into the month at 16,826 while the S&P 500 started at 1,960.   The Nasdaq was at 4,408 and the Russell 2000 ended June at 1,192.

Heading into the second half of trading, the Dow is dropping 184 points to 16,696 and the S&P 500 is tanking 25 points to 1,945.  Tech is lower by 70 to 4,393 while the Russell 2000 is declining 17 points to 1,129.

As I mentioned earlier, tomorrow will be a big day as Nonfarm Payrolls will hit Wall Street ahead of the open.  The suit-and-ties are expecting around 245,000-250,000 new jobs.  Although this would be a decent number, it is a decline from last month’s surprise of 288,000 jobs created.

A better-than-expected report (over 290,000-300,000) would be very beneficial for the market as it would support this week’s Gross Domestic Product (GDP) numbers.  A number south of 250,000 could start a new market trend heading into August.

If this is a short-term top in the market, there will be a ton of opportunities to make money by using put options.  However, it is important to wait for all of the stars to align before doing so.  Today’s action is spooky but the market has seen this horror show before.

I have a number of updates for the Daily portfolio, including 3 juicy Profit Alerts.  I could also have additional updates later in the day and into the close so stay locked-and-loaded in what will be a busy and possibly hectic rest of the session.

Bulls Rebound on Fed’s Comments

Thursday, July 31st, 2014 Morning Update for 7/31/2014

Bulls Rebound on Fed’s Comments

9:00am (EST)

The market was volatile Wednesday but bounced off its lows after the zombies cut another $10 billion from their monthly bond buying spree while keeping interest rates unchanged.

Of course, the tight trading range over the past 3 weeks could continue today as Wall Street awaits Friday’s Nonfarm Payroll numbers. (read more…)

Twitter (TWTR) Zooms on Earnings Beat/ Update on US Steel (X)/ New Trade!!!

Wednesday, July 30th, 2014 Midday Update for 7/30/2014

 Twitter (TWTR) Zooms on Earnings Beat/ Update on US Steel (X)/ New Trade!!!

12:50pm (EST)

Twitter (TWTR, $46.79, up $8.20) sent the shorts sellers of its stock running for cover as shares are surging 21% today following an earnings beat-and-raise quarter.

The naysayers that say said shares were headed back to the lows $30′s or that the company’s business model needed “tweaking” are now having second thoughts.

The company reported a profit of 2cents a share on revenue of $312 million.  The suit-and-ties were expecting a loss for a penny a share on revenue of $283 million.  Obviously, Wall Street’s expectations were too low and pessimism was too high.

I have chronicled Twitter’s fall from grace following the 52-week high just south of $75 to the May low to under $30.  I recommended the January 50 calls (TWTR150117C00050000, $4.70, up $2.85) back in early May at $1.75 and the trade made 28% by mid-June after closing the trade for an average price of $2.20.  They are up over 150%.  Unfortunately, I didn’t keep them on my Watch List as these options were back near the original price point.  However, shares were at $32 and not $38 so the risk parameters were much higher going into earnings.

Twitter may be complicated to use to some, quirky for others, or a non-factor in most people lives.  I have talked about their brand name and news feed (tweeting) being a global force and the earnings surprise was just what the bulls needed.

Elsewhere, shares of United States Steel (X, $32.80, up $5.13) are soaring nearly 20% after reporting a smaller-than-expected loss.  I talked about Wall Street’s expectations coming into the quarter and the wide range analysts had but the bigger news is what the options are doing.

The US Steel September 30 calls (X140920C00030000, $3.40, up $2.80) are up a jaw-dropping 467%.

Heading into the second half of trading, the Dow is down double-nickels to 16,856 while the S&P 500 is lower by 3 points to 1,966.  The Nasdaq is higher by 9 points to 4,451 while the Russell 2000 is up a point to 1,143.

I have another New Trade for today on a stock that is no stranger to the portfolio.  I recommended call options in early February that returned readers over 200% in 3 weeks.  I’m looking to pull another rabbit or two out of the hat as I’m also looking at a longer-term trade for the Weekly Wrap as well.

Subscribers, hit the Members Area for the updates and New Trade.

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Trader Comments:
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year of membership rather than the one quarter. Thanks again, and LOVE YOU ALL. REGINA L.

    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help. STEVE T.

    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide. SCOTT H.

    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485 PETER G.

    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming. LAWRENCE O.

    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again! C.J.

    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace! SHAUN

    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good profitable calls. Keep up the good work. MICHAEL K.

    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!
    PARAG P.

    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN. JAY P.

    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You. MIKE

    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks. TRISH D.

    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock! MIN L.

    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you! JOE G.

    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming. GREG F.

    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade. NOEL

    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today. TODD F.

    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you! PAUL H.

    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ” NOEL

    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.” CHRISTIAN

    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.” JOHN

    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.” CHARLES M.

    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.” BRYAN C.

    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.” JOHN H.

    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.” JEFFREY

    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.” ED

    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.” GREG

    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.” KEN

    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.” GARETT

    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.” TERENCE

    Jan. 31 2012
    Rick, new member...Studied all current trades, did some chart work,picked ZNGA, PEP, MGM...Sold on Feb. 2 for $3600.00 profit...Cost for 1-year membership to your newsletter was less than $1000.00..All I have to say..Thank you. John H –

    Rick, I purchased 10 contracts of the Nike March 85 puts Thursday afternoon for $2.00. Thing is, I was upset because the puts went down to $1.60 or so before the market closed. Well, needless to say Nike didn’t impress Wall Street and when I turned on the computer this morning the puts were worth $7.10! Sold them for a $5,100 profit!. Thanks again, you are the MAN. Chuck J-

    Hi Rick,

    I will start off with a thank you for your time and dedication to all
    the research you and your team commit yourself to. This is not me just being excited about the profits I have accumulated aka (bank) ! You have helped me get back to the passion I had of researching stocks/options. Keith N-

    Hi Rick,

    I want to share my great results on GMCR. Based on your comments on February 15th, I bought 20 options at $0.28. They closed today at $7.00, which is a 2,300% gain. My $560 dollars turned into $14,000 in less than a month. In decades of trading, this is my single best trade ever. Thank you! By the way, the Dow was down 228 points today and I could care less. What a great trade. It proves the amazing power of options. I am so grateful for your service, which calls it straight all the time, your options trading manual, and most of all, your amazing skill
    at finding winning trades. I have attached a copy of the trade from
    my brokerage screen.

    Hi Rick,

    Wow!! my account it up 70% since i joined last month and market is going the opposite direction. Really appreciate your service. I just wanted to drop a note to say THANK YOU. Hope to be with you guys for a very long time. Mel


    Great call on Fosl I bought the may 120 puts for 3.70 yesterday morning just sold for $32.00 today
    Keep up the great work
    Thank you, Henri

    Rick –

    I bought 10 Deckers Outdoor (DECK) May 55 puts at $0.50 on 4/26/12 and sold them on 4/27/12 for $1.65. I made $1150 in one day. Thanks. I knew something good would happen sooner or later.
    HOW THE HECK did you know Green Mountain Coffee (GMCR) was going to go down 20 points???!!!! I bought 10 of the May 35 puts at $0.49 and then 5 more at .30. I sold them at 5.80. Thank you again.
    You have made a believer out of me. Alan

    Rick –
    I have only been a member for about 6 weeks but I have done well on most of the trades. My first two were QQQ and SPY a month ago and since then I've gotten into the groove and been doing well.
    I try to execute the trades that you recommend as soon as you send them out, sometimes I can't and I miss the Entry price. However, sometimes when I miss the Entry, the price goes down and I get a better price.
    That's exactly what happened with GMCR.
    You recommended it at around $.81 I think, but by the time I got to it, the price was $.27. I bought 100 Puts on Wednesday May 2, 2012 and sold half of them 24 hours later at $5.95 for a nice 2,203% gain. As per your recommendation, as GMCR went above $30 I sold the remaining 50 Puts at $5.50 for a slightly less 2,037% gain.
    On average that one trade netted me a 2,120% gain, entirely based on YOUR recommendation (and a little bit of luck). To put this in real terms, I risked $2,700 on Wednesday and pocketed $54,550 just 24 hours later.
    So uhh, let's do that again real soon!!
    Feel free to use my name. The tax guys have me on speed-dial already anyway. Dennis

    That was awesome on your GMCR pick, I know how risky it can been holding into earnings but you pulled it off. 
    I just started my autotrading with you today and am in on your QQQ play. I look forward this service. 
    I have a busy career and I have tried to follow and trade throughout the day and found it too hard. I hope you continue to have a great year, I plan to go along for the ride. I am starting slow but will pile more in once I have secured some profits. 
    Keep up the good work your trading has been spot on. I am sure you paid your dues to get this point in your career. Anthony


    Great call on GMCR!  I have been trading for about 15 years actively.  This may be the best trade I ever made.  Got in on Monday, April 30 and the stock was up from when you recommended it.  It went up further after I got in.  Here are the facts:
    Monday, April 30th: Bought 15 June 37's at $1.25= $1900 approx
    Thursday, May 3rd: Sold 15 June 37's at $9.30=$13,950
    Gain for the week: $12,050.
    I understand you will not get them all right.  It’s important to ride those winners and as you could tell from my selling price, I sold when the stock went to $28.10, so left a little on the table.  Who can complain.
    Keep the suggestions coming, looking for another jump on your FSLR, one that I have been riding very hard.
    Best regards, Bob

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