9:00am (EST)

The Dow gained 85 points, or 0.7%, to close at 13,250.  The blue-chips traded to a high of 13,269 and are now just 88 points away from the early May 1 peak of 13,338.  The bulls easily cleared 13,200 which they would like to hold into the weekend and we have been saying a move past 13,350 could lead to a jailbreak.  If the bulls huff and puff less than 1%, they are there.

The S&P 500 popped 10 points, or 0.7%, to finish at 1,415.  We have been mentioning a test to 1,425 could come if the 1,400 level held and yesterday’s high was 1,417.  The index is now just 7 points away from a new 52-week high.  There will be a little resistance at 1,433 if the 1,425 area is cleared but there could be a surge to 1,450 if the bulls can keep the momentum.  Yesterday’s low was 1,404.

The Nasdaq jumped 31 points, or 1% to settle at 3,062.  Tech easily closed above our 3,050 target and will now attempt a run at 3,100-3,150.  The index traded in the green all session long and reached a top of 3,067 while the low was 3,033.  Support at 3K is 2% back.          

The Russell 2000 cleared our magic number of 810 right around 1pm and ended at 813, up nearly 9 points, or 1.1%.  This is why we added a few call option trades yesterday and earlier this week.  We are looking for the small-caps to make a trip to 820 over the near-term.  Meanwhile, the S&P 500 Volatility Index ($VIX, 14.29, down 0.34) fell just 2% after testing 15.15 at the open.

We have added a few more possible option plays on our Watch List this morning and we may release another New Trade today.  We want to see how the action plays out in the first 15-30 minutes after the open but if we can get in at our limit prices, we may send out a New Trade Alert.

Futures are showing a mixed open and look like this:  Dow (-2); S&P 500 (-1); Nasdaq (+5).  

 

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 we list one.  We will send out a “Profit 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.

Pepsico (PEP, $73.58, up $0.96)

September 75 calls (PEP120922C0007500, $0.30, up $0.20)

Entry Price:  $0.15 (8/16/12)
Exit Target:  $0.30
Return:  100%
Stop Target:  None

October 75 calls (PEP121020C00075000, $0.70, up $0.30)

Entry Price:  $0.50 (8/16/12)
Exit Target:  $1.00
Return:  40%
Stop Target:  None

 

Action:  The September 75 calls opened at 10 cents yesterday while the October 75 calls opened at 42 cents.  We had a feeling shares would make a run at the 52-week high of $72.95 which is why we got in.  Shares continued to surge afterwards which was good news for our call options.

We would like to see one more pop today above $74 so that we can close at least half of the trade to lock-in profits ahead of the weekend but we may leave the trades open to play a continued into next week.  

 

Riverbed Technology (RVBD, $20.70, up $0.83)

September 21 calls (RVBD120922C00021000, $1.15, up $0.40)

Entry Price:  $0.90 (8/16/12)
Exit Target:  $1.35-$1.80
Return:  28%
Stop Target:  90 cents

 

Action:  We have a near-term target of $22.50 for Riverbed and a move above this level would get $25 in play.  Shares traded to a high of $20.85 while the options hit $1.22.  We have s stop of 90 cents in place but it is not a Hard Stop.  However, if shares slip below $20 we will probably exit the trade. 

 

SanDisk (SNDK, $42.70, up $1.14)

September 43 calls (SNDK120922C00043000, $1.60, up $0.50)

Entry Price:  $0.89 (8/14/12)
Exit Target:  $1.35-$1.80 (closed half at $1.45 on 9/16/12)
Return:  71%
Stop Target:  $1.15, raise to $1.25 (HARD STOP)

Action:  Shares traded to a high of $42.96 while the options peaked at $1.76.  We can enjoy further gains if shares continue higher but we have a HARD STOP of $1.15 on the other half in case shares slip.  Let’s move the hard stop up to $1.25 just in case.

 

Other 2012 Portfolio OPEN positions (10):  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 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 if the options expire.  Click on the 2012 Portfolio link in the Members Area to view ALL open/ closed trades.

AUGUST options expire TODAY!!!

iShares Dow Jones US Real Estate August 57 puts (from June 2012)  

AOL August 24 puts (from June 2012)  

Consumer Discret Select Spiders August 41 puts (from June 2012)

Freeport McMoRan Copper & Gold August 29 puts (from June 2012)

PowerShares QQQ August 59 puts (from June 2012)

 

Dow Jones Industrial Average Spiders September 119 puts (from July 2012)

S&P 500 Spiders September 123 puts (from July 2012)

Wynn Resorts September 80 puts (from August 2012)  

Veeco Instruments September 30 puts (from August 2012)

Apollo Group September 24 puts (from August 2012)

 

Bank of America January 12.50 calls 2013 (from March 2012)

 

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 but these are the trades we are watching as new candidates.

 

Fusion-io (FIO, $28.23, up $1.97)

September 31 calls (FIO120922C00031000, $0.80, up $0.50)

September 30 calls (FIO120922C00030000, $0.90, up $0.55)

Thoughts:  Shares were up 8% yesterday and look headed past $30.  We profiled FIO in our Weekly Wrap earlier this year and it is a volatile stock.

 

MGM Resorts (MGM, $9.67, up $0.05)

September 10 calls (MGM120922C00010000, $0.65, up $0.10)

Thoughts:  MGM could push $12.50 over the near-term.

 

Cypress Semiconductor (CY, $12.34, up $0.47)

September 13 calls (CY120922C00013000, $0.20, up $0.05)

January 15 calls (CY130119C00015000, $0.35, up $0.05)

Thoughts:  Shares could make a run to $13.50 which would get the September calls to at least 50 cents which is a 150% return.  Watch for now. 

 

Harris Group (HRS, $46.00, up $0.13)

September 45 calls (HRS120922C00045000, $1.60, up $0.25)

September 50 calls (HRS120922C00050000, $0.10, flat)

Thoughts:  Harris Group hit a 52-week high of $46.30 yesterday.  Shares could make a run at $50 but resistance at $46 has been hard to crack twice this year.

 

Taiwan Semiconductor Manufacturing (TSM, $14.45, up $0.03)

January 15 calls (TSM130119C00015000, $0.70, flat)

Thoughts:  We are waiting for a close above $14.75 before possibly going long.

 

Buffalo Wild Wings (BWLD, $74.60, up $1.12)

September 80 calls (BWLD120922C00075000, $0.70, up $0.10)

September 65 puts (BWLD120922P00065000, $0.45, down $0.15)

Thoughts:  In late July, the stock fell from $78.90 to $70.43 the day after the company reported earnings and traded down to $68.71 intraday.  The recovery high was $75.01 which is near-term resistance.  This is the level we will need to watch for a bullish breakout and buy calls. A move below $70 would suggest we use put options for a possible test down to $65-$60.  If shares can clear their 50-day MA there is a chance for a quick run to $80. 

 

Dillard’s (DDS, $75.06, up $0.87)

September 67.50 puts (DDS120922P00067500, $0.60, down $0.10)

October 60 puts (DDS121020P00060000, $1.20, down $0.15)

Thoughts:  We are now following the September 67.50 puts and we have added the October puts as well.

 

Broadcom (BRCM, $36.02, up $1.31)

September 36 calls (BRCM120922C00036000, $1.20, up $0.55)

September 32 puts (BRCM120922P00032000, $0.30, down $0.10)

Thoughts:  The 52-week high is $39.66.  We would wait until shares clear $36 before going long and on a break below $34 we might look to go short.

 

Ingersoll-Rand (IR, $46.30, up $0.99)

September 42 puts (IR120922P00042000, $0.40, down $0.15)

September 46 calls (IR120922C00046000, $1.55, up $0.45)

Thoughts:  IR reached another 52-week high of $45.68 yesterday.  Shares could continue higher and make a run at $50 over the near-term but a drop below $41-$40 would be bearish.   

 

Akamai Technologies (AKAM, $37.81, up $1.01)

September 34 puts (AKAM120922P00034000, $0.30, down $0.20)

September 38 calls (AKAM120922C00038000, $1.40, up $0.45)

November 45 calls (AKAM121117C00045000, $0.90, up $0.20)

January 45 calls (AKAM130119C00045000, $1.50, up $0.30)

Action:  We said a close above $37 could lead to a test of the 52-week high of $39.14.  Yesterday’s high was $37.94.  If shares make a move past $40 it would represent blue-sky territory and a possible push to $45-$50.  A drop below $34 would be bearish and could lead to a test of $30.  We have also listed the January and November 45 calls on a possible run to $50 and would give us an additional 2-4 months to play a breakout.

 

KLA-Tencor (KLAC, $53.31, up $0.76)

September 55 calls (KLAC120922C00055000, $0.85, up $0.25)

September 50 puts (KLAC120922P00050000, $0.55, down $0.20)

Thoughts:  Shares look headed to double-nickels ($55) and a blue-sky breakout could be in the mix.  A move below $51-$50 would reverse the recent uptrend.