Spain got downgraded 2 notches last night which weighed on futures but they were up before the open this morning as the bulls are stretching resistance.
The Dow came into the week at 13,029; the S&P 500 1,378; the Nasdaq 3,000. If resistance holds, it appears the market could be in an extended 4-week trading range as the bulls and bears continue to battle to establish the next TREND.
Despite the bullish week, we were able to close put options on LinkedIn (LNKD, $106.22, up $0.98) for a gain of nearly 70% and 33% on a bearish S&P Spiders (SPY, $140.34, up $0.18) option trade. Today, we closed a huge winner as our Deckers Outdoor (DECK, $51.90, down $17.56) May 50 puts (DECK120519P00050000, $1.50, up $1.30) returned our subscribers 180%! We were out at $1.40 after getting in at 50 cents and the puts have traded to a high of $1.80 today.
The beauty of options is that this trade was down 60% as we headed into earnings last night but we did our research and knew the company would disappoint Wall Street with their quarterly numbers. Although we may have hit the register a little early, it’s hard to feel bad with a return of 180%. Plus, some of the current trades are showing strong gains so we expect to be busy next week.
This brings our Track Record for 2012 to 75-18 which is an 80% win rate.
As we head to press, the Dow is up 35 points to 13,150 while the S&P 500 is higher by 2 points to 1,401. The Nasdaq is advancing 10 points to 3,060.
We would love to see a close below Dow 13,200; S&P 1,400; and Nasdaq 3,050, obviously, which we said should hold as resistance.
As we do our chart work over the weekend, we will try to find the clues that will give us the next possible trend direction and there is one more trading day for April. May is normally a bearish month and the problems from overseas still loom. We have called for this back test to the top but we are still positioned for a downside move.
We will look at some call options over the weekend in case there is a breakout but our last 13 CLOSED trade recommendations have been put options. We made a side note in early April for our 2012 portfolio and marked it “Trend Change?” as we noticed we were starting to recommend put options after going heavy on call options all year long.
So far, the break below the uptrend line has been rewarding as our subscribers have closed 2 triple-digit winners, another 3 trades that have returned 70% and another trade for a 50% return. The rest of the trades range in profit from 12% to 33% so the register has been ringing all month long despite a 4-week trading range.
We have started establishing our next “batch” of trades and if we are right about the market’s next move, we could have many more triple-digit winners.
If you are not in the game, we continue to tell investors this is one of the BEST environments we have seen in a couple of years to trade options. For those of you who haven’t signed up with us, hop on the bus, Gus!
We have action to take on 2 more trades before we roll so let’s go check the Members Area.
We will be back Sunday night with the Weekly Wrap so until then, have a great weekend everyone!