Continued…

The S&P 500 gave up a six-pack, or 0.4%, and closed at 1,332.  The index dipped to 1,329 but held the 1,325 level which is strong support.  If broken, there is risk down to 1,310-1,300.  The bulls are still pushing for a run north of 1,350 is where they want to plant the flag this week.

The Nasdaq fell 3 points, or 0.1%, and settled at 2,840.  Tech looked strong for much of the day and traded above 2,850, which is where we want to see a close, after kissing a low of 2,832.  Support at 2,825 will be in danger if the selling pressure continues with additional help at 2,800. 

We should also point out the S&P Volatility Index (VIX, 20.23, up 0.88) popped back over 20 after jumping nearly 5% on yesterday’s losses.  We can see a push up to 22 but a break above this level could spell trouble.     

The good news is that the market seems to be rewarding companies that are beating expectations and raising guidance which means we are still in a stock picker’s market.  Corporate earnings have been strong which has helped the bull’s hold support.

Amazon.com (AMZN, $214.18, up $0.69) posted their earnings and beat expectations after the bell last night.  Shares were up 6% to $228 in after-hours and those gains have held this morning.  The 52-week and all-time high for Amazon is $220 and the stock is at $227, up $13, as we head to press this morning.

Futures are pointing towards a slightly lower open:  Dow (-23), S&P (-6), Nasdaq (-12).  


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 we list one.  We will send out an “Alert” or “Trade Update” if we want you to close a position OR if a new trade comes out.  Otherwise, follow instructions at all times in the 9am and 1pm updates.  Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames but it is rare that we do.

 

Mead Johnson Nutrition (MJN, $68.84, down $0.12)

November 80 calls (MJN111119C00080000, $0.70, up $0.05)

Entry Price:  $0.55 (7/26/11)

Exit Target: $1.10+  

Return:  27%

Stop Target:  None

Action:  These options have 114 days before they expire and the company announces earnings on Thursday.  We are expecting MJN to report sweet numbers.  Shares jumped 5% in April after they beat expectations by 4 cents and these options should double if we get a move above $70-$71 in the stock.


Rambus (RMBS, $15.12, down $0.05)

September 17 calls (RMBS110917C00017000, $0.50, down $0.05) 

Entry Price:  $0.65 (7/22/11)

Exit Target: $1.30+  

Return:  -23%

Stop Target:  None


August 17 calls (RMBS110820C00017000, $0.15, down $0.05)

Entry Price:  $0.60 (6/20/11)

Exit Target: $1.20+  

Return:  -75%

Stop Target:  None

Action:  The technical picture:  Rambus continues to hold $15 after breaking through this level last Friday.  This area was major resistance and should act as short-term support.  We are expecting a run up to $19 over the next few weeks and the August options have over 3 weeks before they expire.  The September calls have 51 days.

The legal battle:  The current litigation isn’t expected to end until August but we are hearing things could wrap up this week or next.  In other words, there could be a settlement or a verdict very soon.

 

Broadcom (BRCM, $38.20, up $3.29)

August 38 calls (BRCM110820C00038000, $1.35, up $0.85)

Entry Price:  $0.55 (7/20/11)

Exit Target: $1.50 (closed half at $1.65 on 7/26/2011) 

Return:  173%

Stop Target:  $1.25, lower to $1.15 (MENTAL STOP on other half)

Action:  We want to give the other half of the trade some wiggle room so remove the hard stop of $1.25 in case shares open lower this morning.  We will probably exit the trade if the options dip below $1 but we are hoping for a run past $40.  The 52-week high is $47.39 and the stock reached $38.88 yesterday while the options kissed a high of $1.80.  If we get a run to new highs, the other half of the trade will continue to do well.  If shares retreat, we will lock in profits.  


Qualcomm (QCOM, $56.54, down $0.27)

October 65 calls (QCOM111022C00065000, $0.45, down $0.05)

Entry Price:  $0.85 (7/11/11)

Exit Target: $1.70

Return:  -47%

Stop Target:  None 

Action:  These options have 3 months before they expire and we are looking for a run past resistance at $60.  If cleared, we believe Qualcomm can make a run to $70.

   

TiVo (TIVO, $9.83, down $0.18)

August 11 calls (TIVO110820C00011000, $0.15, down $0.05)

Entry Price:  $0.55 (7/1/11)

Exit Target: $1.10

Return:  -73%

Stop Target:  None 

Action:  TiVo closed below $10 and now faces risk of falling back to $8.50-$9.  If shares can break above resistance at $11 they have a little room to run but we need to get above $10.50, first.  We are looking for a surge to $18 on short covering, buyout news, or a partnership.  Our breakeven point is $11.55 and we have until mid-August to wait for a move. 


iShares Russell 2000 (IWM, $82.43, down $0.63)

August 86 calls (IWM110820C00086000, $0.55, down $0.15)

Entry Price:  $1.10 (7/1/11)

Exit Target: $2.20

Return:  -50%

Stop Target:  $0.55 

Action:  The 52-week high is $86.81 and we would like to see a move above $85.50 this week which is short-term resistance and prior support.


Freeport-McMoRan (FCX, $56.08, up $0.62)

August 57 calls (FCX110820C00057000, $1.60, up $0.15)

Entry Price:  $1.18 (7/1/11)

Exit Target: $2.40

Return:  36%

Stop Target:  $1.40 

Action:  FCX traded up to $56.78 on Tuesday and the options reached a high of $1.90.  We said shares face resistance at $57-$58 which should lead to a pop to $60 if cleared.  Support has been strong at $55.     

   

Symantec (SYMC, $19.07, down $0.02)

October 20 calls (SYMC111022C00020000, $0.75, flat) 

Entry Price:  $0.93 (6/21/11)

Exit Target: $2.00  

Return:  -19%

Stop Target:  None

Action:  Symantec will announce earnings today.  The $19.50 area has been strong resistance over the past few months while support has been solid at $18.65.  Our price target is $22 for Symantec over the next 3-6 months.


MGM Resorts International (MGM, $15.87, up $0.04)

September 17 calls (MGM110917C00017000, $0.65, flat) 

Entry Price:  $0.70 (5/13/11)

Exit Target: $1.40

Return:  -7%

Stop Target:  None

Action:  Shares were up over $16 in after-hours trading last night.  The 52-week high is $16.95 which will also be the next area of resistance if $15.75 holds.  Support is strong at $14.50. 


Other 2011 Portfolio OPEN positions (6):  These are trades that are still open in the portfolio that have longer expiration dates or are on “hold” but are not worth mentioning until they turn around.  This means we would not open any new positions.  We are still keeping track of the trades and we will record the results, accordingly, when we close them or the options expire.  Click on the 2011 Portfolio link in the Members Area to view ALL open/ closed trades.

RF MicroDevices August 10 calls (from February 2011)  

Dendreon August 50 calls (from April 2011)

Vivus September 10 calls (from May 2011)

Rediff.com India October 15 calls (from June 2011) 

Seattle Genetics August 22.50 calls (from June 2011)

Seattle Genetics September 20 calls (from May 2011) 

Global Payments August 55 calls (from July 2011)


WATCH LIST SECTION

These trades are NOT recommendations.  They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices.  We try not to have more than 12-15 open trades at any one time which is why we created a Watch List.  We will not list entry prices because these stocks are on the verge of breaking out or they could sell-off.


Visa (V, $89.20, up $0.12)

August 95 calls (V110820C00095000, $0.65, down $0.15)

Thoughts:  Visa announces earnings today and we like these calls but we just don’t trust Visa’s numbers.  Sometimes they are good, sometimes they miss expectations or botch guidance.


Coinstar (CSTR, $51.68, down $2.89)

August 45 puts (CSTR110820P00045000, $0.60, up $0.35)

Thoughts:  The company reports earnings on Thursday and these options could do well if they pull a Netflix.


Amgen (AMGN, $54.70, down $0.20)

August 55 calls (AMGN110820C00055000, $1.15, down $0.05)

Thoughts:  The company reports earnings on Friday and there is a chance for a run to $57 if Wall Street likes what it hears.  If not, a drop to $54 or under is in order.  We like these calls at current levels but if we do an official trade it may be with the September 57.50’s which are at 75 cents.


Quality Systems (QSII, $89.25, down $0.38)

September 100 calls (QSII110917C00100000, $0.70, down $0.20)

Thoughts:  The company will announce earnings on Thursday.


RealD (RLD, $17.82, up $0.47)   

August 17.50 puts (RLD110820P00017500, $1.65, down $0.30)

Thoughts:  We are hoping to get another shot at these options if shares trade back to $20.  The 52-week low for the stock is $15.63.  


Polycom (PLCM, $29.93, down $0.48) 

August 32.50 calls (PLCM110716C00032500, $0.40, down $0.20)

Thoughts:  Shares could test $28 again which was prior support.  If so, we may have to go with these options or a September call option. 

      

Williams-Sonoma (WSM, $38.99, up $0.53)

August 40 calls (WSM110716C00040000, $1.10, up $0.20) 

Thoughts:  We have replaced the August 40 calls with the 39’s following yesterday’s advance.  Resistance is at $39 and a break above $40 would be bullish.  The 52-week high is $45.48 so we will be watching for a move above this level as confirmation for a breakout.