MEMBERS AREA

9:00am (EST) continued…

The S&P 500 surged 16 points, or 1.2%, to settle at 1,446.  The index reached a peak of 1,448 and came within a stone’s throw of nailing our 1,450 target.  The strong move opened the door for a test to 1,475-1,500 by yearend if this level is cleared.  Support is now at 1,425.

The Nasdaq zoomed 44 points, or 1.5%, to finish at 3,054.  Tech made a solid move past resistance after trading up to 3,056 and the close above 3,050 was exactly what we wanted to see.  The next level the bulls will target is 3,100 and a move above this level would put the Nasdaq in position to challenge its 52-week high of 3,196.

The Russell 2000 jumped 13 points, or 1.5%, to end at 847.69.  We have been highlighting the small-caps in recent weeks and said this was their time to shine into January.  We also mentioned the Financial stocks leading the market higher and Tech is showing strength.  The talking heads were quick to point the obvious out as Bank of America (BAC, $11.36, up $0.36) hit fresh 52-week highs and how Apple has made a 30+point rebound off its lows.

We have a lot to cover inside our Members Area this morning as we are close to ringing the register on a number of trades.  We also have to guard against a pullback to protect gains so make sure you read all trade instructions carefully. 

Futures are showing another strong start this morning and look like this:  Dow (+38); S&P 500 (+4); Nasdaq (+10).

MEMBERS AREA

 

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 “New Trade” 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.  Closed Trades for 2012: 150-55, or 73% win rate, including the Weekly Wrap which is 26-0).

Special Notice:  We are looking for a continued run higher but in case we stall at resistance, please make sure you have Hard Stops in place on trades that have profits.  We can continue to ride the wave in but we also want to take some off the table where it is prudent.  We have added more Hard Stops this morning so please adjust your positions accordingly.

 

JPMorgan Chase (JPM, $43.87, up $0.39) 

January 45 calls (JPM130119C00045000, $0.65, up $0.10)

Entry Price:  $0.65 (12/18/12)
Exit Target:  $1.30
Return:  0%
Stop Target:  None

Action:  The 52-week high is at $46.49 and we are expecting a push to $48 by mid-January.  Support is at $42.

 

Nuance Communications (NUAN, $22.95, up $0.63)  

January 24 calls (NUAN130119C00024000, $0.40, up $0.15)

Entry Price:  $0.35 (12/18/12)
Exit Target:  $0.70
Return:  14%
Stop Target:  None

Action:  Shares closed above $22.50 after touching a high of $23.01.  The 200-day MA is just pennies ahead so a close above $23.05 could get $25 in play.  Support is strong at $20.

 

Southern Copper (SCCO, $38.40, up $0.18)

January 40 calls (SCCO130119C00040000, $0.50, flat)

Entry Price:  $0.45 (12/14/12)
Exit Target:  $1.00
Return:  11%
Stop Target:  None

Action:  The 52-week high is $39.44 set at the beginning of November and we would like to see a close above $40 this week.  We are going to have a tight stop for this trade and may close it if shares fail to hold $37.

 

Akamai Technologies (AKAM, $40.94, up $1.48)

January 42 calls (AKAM130119C00042000, $1.10, up $0.50)

Entry Price:  $0.56 (12/14/12)
Exit Target:  $1.15, raise to $1.60
Return:  96%
Stop Target:  85 cents (half), 75 cents (half) (Hard Stop)

Action:  The calls traded up to $1.13 yesterday and came within pennies of hitting out initial exit target.  The close yesterday was strong and the high was $41.11.  We would like to see a continued move higher into blue-sky territory as a push to $45 would get these call options to $3 for a 400%+ return.  However, if there is a dip back below $40, we will exit the trade.  We have set Hard Stops of 85 cents on HALF the trade and 75 on the other HALF.  If these stops are hit, our average closing price would be 80 cents and the trade will make over 40%.  That is not a bad worse-case-deal but we would like to get one more 400% winner for you before the year is up.   

 

MGM Resorts International (MGM, $11.63, up $0.21)

January 11 calls (MGM130119C00011000, $0.85, up $0.15)

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  67%
Stop Target:  60 cents (Hard Stop)

Action:  We would like to see a close above $11.75 this week and yesterday’s high was $11.65.  We will leave the Hard Stop at 60 cents for now.

 

TiVo (TIVO, $12.75, flat)  

January 12.50 calls (TIVO130119C00012500, $0.70, down $0.15)

Entry Price:  $0.60 (12/7/12)
Exit Target:  $1.20
Return:  17%
Stop Target:  70 cents (Hard Stop)

 

May 14 calls (TIVO130518C00014000, $1.05, flat)

Entry Price:  $0.68 (12/7/12)
Exit Target:  $1.30
Return:  25%
Stop Target:  85 cents (Hard Stop)

Action:  The January calls hit our Hard Stop of 70 cents after our midday update so the trade is closed.  The May 14 calls also traded down to our Hard Stop of 85 cents.  We are a little disappointed both positions were closed because we still feel a run to $16 is coming.  We will keep the stock on our Watch List and we may get back into these options on a pullback.

 

Taser International (TASR, $8.46, up $0.81)

January 10 calls (TASR130119C00010000, $0.20, up $0.10) 

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  33%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.45, up $0.25)

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  50%
Stop Target:  None

Action:  Shares zoomed 10% in the afternoon on no apparent news.  Shares went out at their peak so there could be some good news coming.  The recent 52-week high is $9.26 and a move above this level could get Taser to double-digits and our options to triple-digits. 

 

Vivus (VVUS, $13.14, up $0.07)

January 15 calls (VVUS130119C00015000, $0.65, flat)

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  0%
Stop Target:  None

Action:  There is a gap to fill to $16 and we will need support to stick at $12 if there is a pullback.

 

Rosetta Stone (RST, $12.29, down $0.11)

January 15 calls (RST130119C00015000, $0.15, flat)

Entry Price:  $0.20 (11/19/12)
Exit Target:  $1.00
Return:  -25%
Stop Target:  None

Action:  We would like to see a close above $12.50 this week.  Support has been strong at $12 and we will stick with the trade as long as $11.50 holds.

 

Knight Capital Group (KCG, $3.33, up $0.07)

January 2.50 calls (KCG130119C00002500, $0.85, up $0.05)

Entry Price:  $0.55 (8/21/12)
Exit Target:  $1.10
Return:  55%
Stop Target:  65 cents

Action:  Knight is going with the Getco deal and will get $3.75.  It is a cash and stock deal and shares were near $3.50 in after-hours trading.  Unless a higher, hostile bid comes in from left field, out trade could be maxed.  We may close half the position into strength this morning to lock-in profits.  If so, look for a Profit Alert.

 

Other 2012 Portfolio OPEN positions (5):  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.

 

Bank of America January 12.50 calls (2013) (from March 2012) – continue to hold

Solazyme December 12.50 calls (from September 2012) – continue to hold

Lufkin Industries December 45 puts (from November 2012) – half position open

LifeLock December 10 calls (from November 2012) – continue to hold

Monster Beverage January 35 puts (from November 2012) – continue to hold

Apollo Group December 18 puts (from October 2012) – continue to hold

 

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.

 

Dunkin’ Brands Group (DNKN, $32.82, up $0.21)

January 32.50 calls (DNKN130119C00032500, $1.00, up $0.15)

Thoughts:  We got out of these calls at 90 cents and 70 cents for 78% win and we may get back in them if there is continued momentum.  The January 35 calls (DNKN130119C00035000, $0.15, flat) look “cheap” as shares could perk up to $34 over the near-term with a chance at $36 coming into play.

 

iShares Russell 2000 Index (IWM, $84.66, up $1.14)

January 83 calls (IWM130119C00083000, $2.30, up $0.65)

January 84 calls (IWM130119C00084000, $1.70, up $0.55)

Thoughts:  We have talked about the small-caps leading the next leg higher and these options have nearly doubled this week.

 

Microsoft (MSFT, $27.56, up $0.47)

January 27 calls (MSFT130119C00027000, $0.95, up $0.25) 

January 28 calls (MSFT130119C00028000, $0.45, up $0.10)

Thoughts:  These options look attractive and shares could easily make a run back to $28.50 if current levels hold.  A move below $26.50 would signal a test to new lows and a switch to put options.

 

Cree (CREE, $34.45, up $0.41)  

January 35 calls (CREE130119C00035000, $1.35, up $0.10)

Thoughts:  Shares are near 52-week highs and there could be a push to $40 if momentum sticks.  A close below $32 would be bearish.