Momentum Trades

Momentum Stocks Weekly

Close but No Cigar

The bulls continued their May momentum, as they rebounded from a choppy week with a strong Friday to get the weekly win. The bandwagon-jumping could continue despite the indices closing in on the top of their trading ranges, as traders (and the Fed heads) continue to try to call a market top.

Daily Update, Momentum Options

Close but No Cigar

Pre-Market Update: The bulls continued their May momentum, as they rebounded from a choppy week with a strong Friday to get the weekly win. The bandwagon-jumping could continue despite the indices closing in on the top of their trading ranges, as traders (and the Fed heads) continue to try to call a market top.

Daily Update, Momentum Options

Alibaba (BABA) at All-Time Lows Ahead of Earnings

Mid-Market Update: Alibaba is expected to report earnings of $0.43 a share on revenue of $2.78 billion. The company beat expectations by six cents last time out and matched the previous quarter since becoming public in September 2014. Sentiment has been bearish on the stock and the company will need to impressive quarter to change investor’s minds about getting back into the stock.

Momentum Stocks Weekly

Trading Ranges Stay in Play

While May has a reputation for being a bearish month, it has been bullish in recent years. During the past 16 years, May has been split, with the bulls and bears getting eight wins apiece. The “sell in May and go away” theme started gaining steam on Thursday’s pullback but settled down on Friday’s rebound.

Daily Update, Momentum Options

Trading Ranges Stay in Play

Pre-Market Update: The bears got the last Monday win, as all of the major indices closed lower to start the week. The small-caps led the way and gave the first clue that a rocky week would be forthcoming. The VIX held 13.50 on Monday but bubbled higher on Tuesday despite another blowout quarter by Apple (AAPL). Shares ran to an intraday all-time high of $134.54 but finished the session lower by $2.

Momentum Stocks Weekly

Trade Alerts: AKS, DRYD, BEBE, VVUS, ZNGA, GALE

Sell to open the AKS September 6 calls (AKS150918C00006000, $0.40, down $0.05) at current levels.

Sell to open the DRYS September 1 calls (DRYS150918C00001000, $0.05, flat) at current levels.

Sell to open the BEBE September 4 calls (BEBE150918C00004000, $0.35, down $0.05) at current levels.

Sell to open the VVUS September 4 calls (VVUS150918C00004000, $0.10, down $0.05) at current levels.

Sell to open the ZNGA September 3 calls (ZNGA150918C00003000, $0.16, flat) at current levels.

Sell to open the GALE October 2 calls (GALE151016C00002000, $0.15, down $0.03) at current levels.

Momentum Options, Daily Update

Wall Street Sells Sony (SNE)’s Earnings; Profit Alerts (FCX, TIVO); Trade Alert (JBL)

Mid-Market Update: Shares of Sony (SNE, $30.25, down $0.45) are down nearly 2% and are testing $30 despite posting better-than-expected earnings. The company had been updating Wall Street that it would beat expectations, but maybe it should have just kept quiet. The company said it will return to profitability for the first time in three years but gave conservative guidance going forward.

Daily Update, Momentum Options

Bears Push Support

Pre-Market Update: The Fed heads failed to inspire a rebound off of the lows on Wednesday, as the market closed at its near-term support levels. The dictionary word of the day is “transitory,” which is a word used by the zombies to describe economic growth. The Federal Open Market Committee (FOMC)’s meeting minutes also revealed that its “calendar-based” guidance was officially retired, as they remain cautious on inflation risks as well.

Daily Update, Momentum Options

Sony (SNE) Raises Earnings Outlook; Profit Alert (QQQ)

Mid-Market Update: The back-and-forth action and nearly-three-month-long trading range has been frustrating for Wall Street. The ones that don’t do homework are on pins and needles waiting for next major pullback so they can star nibbling on oversold stocks. They believe stocks are overvalued at current levels and have said that quarterly earnings would be lousy.

Daily Update, Momentum Options

Bulls Recover Resistance as VIX Settles Below 13.50

Pre-Market Update: The bulls recovered most of Friday’s losses and reclaimed resistance during Monday’s snapback rally. The bears are still lingering, however, and fresh support is just a sneeze away. The action should heat up throughout the week, with some of the larger blue-chip companies and a number of marquee tech names scheduled to report earnings.

Daily Update, Momentum Options

Bears Pushing Weekly Win

Mid-Market Update: The bulls are trying to put a cherry on top of a good week while keeping their momentum going into the heart of first-quarter earnings next week. April option-expiration day has been bullish over the past two decades, as the Dow has finished higher 75% of the time. However, those odds went out the window at this morning’s open.

Daily Update, Momentum Options

Small-Caps Tap Record High; VIX Holds 15

Pre-Market Update: 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.

Momentum Options

New Trades (IWM, QQQ, RMBS)

Buy to open the IWM May 128 calls (IWM150515C00128000, $0.90, up $0.05) at current levels.

Buy to open the QQQ May 110 calls (QQQ150515C00110000, $0.57, down $0.03) at current levels.

Buy to open the RMBS May 14 calls (RMBS150515C00014000, $0.38, up $0.03) at current levels.

Buy to open the RMBS August 15 calls (RMBS150821C00015000, $0.53, down $0.02) at current levels.

Daily Update, Momentum Options

Bottom of Trading Ranges Hold; New Trades (CMCSA, QQQ)

Mid-Market Update: The day after Easter is typically the second worst post-holiday session according to the history books, but Friday’s nonfarm payrolls made for a splashier headline and caused a bit of a pullback at the open this morning. The talking heads are trying to explain the rebound off of the lows and the reasons for a higher market as we make the turn into afternoon trading.

Daily Update, Momentum Options

Oh No; Nonfarm Payrolls Half Expectations

Pre-Market Update: Although the market was closed on Friday, the nonfarm payrolls report was released, and the results had a negative 1% impact on futures. The report came in much worse than expected, as just 126,000 jobs were added versus expectations for 250,000. The unemployment rate stayed flat at 5.5%, but more Americans are out of work. These results will certainly reheat the Fed’s interest-rate debate, but bigger concerns lay ahead if the bottoms of the trading ranges fail to hold.

Daily Update, Momentum Options

Bottom Trading Ranges Holding

Pre-Market Update: The first day of April was foolishly spent worrying about a major correction, as the talking heads were in overdrive throughout the session. The bears were growling, but the bulls’ planned traps held them back. While there is always the chance of lower lows, the game plan we had coming into this week is rounding out perfectly. Today’s action could provide the clues we are looking for regarding how the next week or two and the rest of April may play out.

Momentum Stocks Weekly

March Madness Almost Over

History shows that when Wall Street and Main Street have been this bearish in the past, the S&P 500 has risen 98% of the time. Even more mind-blowing is that the average gain is more than 25% on the index. This would equate to the S&P trading past 2,500, but don’t tell this to the suits and ties.

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