9:00am (EST)

“The bulls triggered 3 of our 4 near-term targets that we gave at the beginning of March and for the talking heads who said April was the new May following the prior week’s slight pullback, they were proven wrong, again.  The suit-and-ties that have called for a continued pullback are in continued disbelief and Friday’s drop and pop nearly gave the bulls a clean sweep for the week.

Although trading ranges can be frustrating and cause panic, we said the longer the market stayed in one, the bigger the breakout or breakdown would be.  We were glad to see the trading ranges break to the upside as the bulls pushed historic highs on the Dow and S&P 500 while the Nasdaq triggered 3,300.

March 3, 2013:

After giving back 1% at the open, the market started March off with decent quarter-percent gain.  With the major indexes near 5-years highs and all-time highs, another 2%-3% gain would have all of the indexes at all-time highs, excluding Tech of course, and would be the blow-off type top that sucks in the last of the quiet money still on the sidelines.  As long as support holds, the near-term targets we have given you are Dow 14,750; S&P (500) 1,600; Nasdaq 3,300; and Russell (2000) 975. (END)

The 5-year charts we have shown you for the major indexes are still bullish and this week promising to be exciting as earnings season hits second gear.  The Dow will be sending 10 batters to the plate and, collectively, they will decide if the Dow clears 15,000 or tumbles back towards 14,000 over the next few weeks.  The lineup includes Coca- Cola, Intel, and Johnson & Johnson on Tuesday followed by American Express and Bank of America midweek.  On Thursday: IBM, Microsoft and UnitedHealth Group confess to Wall Street with General Electric and McDonald’s following up on Friday.

The biggest report will be International Business Machines (IBM, $211.38, up $1.97) as it accounts for nearly 11% of the blue-chips weight.  Shares made a nice 5% jump back in January after earnings to clear the $200 hurdle and reached a peak of $215.90 in mid-March.  There is a good chance shares move another 5% and that would mean a $10 move to new all-time highs or a break back below the $200 level.  A print below $198 could cause a selloff down to $190 and the 100-day MA but IBM has been on a roll in beating Wall Street’s estimates quarter-after-quarter and we don’t expect that to change this time out.

McDonald’s makes up 5.4% of the Dow’s weight, American Express 3.4% and J&J, 4.3%.  UnitedHealth Group makes up 3.3%.  As you can see, the Dow could have a very volatile week depending on what these companies say.  GE numbers could give us good or bad clues on how well the global economies are recovering, or not.Tech will also have some influence on the market as Google, Yahoo, Intel, eBay, and Sandisk will announce their numbers as well.

Gold got mugged last week, falling over $100 an ounce, or nearly 7%.  We have been warning of the breakdown to $1,525 and we said last week it could do a perfect back test to $1,600 before the bottom fell out.  Bingo.  The close at $1,480 opens the door for a test to the 200-day MA ($1,433) and possibly a drop to $1,400.  At these levels, Gold would be at decade lows and would probably represent a great opportunity to start building positions.

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Silver just hit our BUY target again at $26 following Friday’s 5% drop to $25.89 but we mentioned there was a $4 spot on getting American Eagles.  We will see if the spot goes down but Silver is likely to outperform gold over the next few years.  The spot is high because of supply and demand despite Silver sitting at 2-year lows.  Demand is roughly 60% higher than output and silver is used in more than gold.  Buying silver under $26 with a $4 spot was unimaginable a few months ago but we believe somewhere down the road silver will be north of $50.  However, a continued selloff could lead to $22.50, or even $20.  At $20, we might back up the truck and bet the farm.

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There are a few economic reports that could cause some stickiness this week and April option expiration is this Friday.  Monday is tax deadline day and is usually bullish as the Dow has only fallen 5 times over the past 20 years on April 15.  April option expiration day is also bullish as the blue-chips have been up 13-out-of-the-last-16 Friday’s.  Some years have shown nice 1%+ pops and would be enough this year to clear 15,000 if current levels hold.

If earnings come in better-than-expected and economic news doesn’t disappoint then the indexes should see a continued rally.  If so, the extended targets we could see are: Dow 15,300; S&P 1,625;Nasdaq 3,350.  We will keep our target of 975 for the Russell 2000.

We must admit even we are surprised by the GAINS the indexes have made for the year but we are not surprised by the rally as we told you it would have legs from December through April.  May might be a different story and there could be some seasonal weakness in late April but until the bottom uptrends lines from the 5-year charts crack, the bulls are in control.”  (from 4/14/2013 Weekly Wrap Update)…

The bears came out of hibernation last week after a long winter and made some noise following the market’s pullback back to support.  The bulls and Boston came under attack on Monday as our Nation and Wall Street was battered and bruised but both showed what America was made of following the aftermath.

The people of Boston ran towards the bombings to help those in need of care and their acts of courage and humanity were uplifting and amazing to witness.  The bulls picked themselves off the ground on Tuesday but the Financial stocks and Tech failed as backups with earnings reports.

The bears used steady pressure on Wednesday and Thursday to crack the first wave of support but the bulls fought back to win Friday’s session and reclaim it.  The uptrend lines are still intact for the major averages and while there does appear to be a downside bias, the possibility of another trading range could also be shaping up.  (read more…)

 

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The Dow gained 10 points, or 0.1%, to close at 14,547 on Friday.  The blue-chips tested the first wave of support after falling below the 14,600 level with Monday’s 266 point drop.  The close at 14,599 was a hint the bears could push 14,400 but the bulls reclaimed half of the losses on Tuesday to get the Dow back to 14,756.  We were looking for a close above 14,800 for further upside and it was a clue Wednesday’s dip back to 14,618 still favored the bears.  Thursday’s test to 14,495 was ahead of IBM’s announcement so we knew there was a good chance 14,400 could trigger if they missed expectations.  They did and the index hit a low of 14,444 on Friday’s open before rebounding by the close.  We mentioned last week the 50-day MA at 14,200 would suggest a possible trend change if busted and that a break below 14,000 and the 5-year uptrend line at 14,000 would be confirmation.  The bulls will try for 14,800 again on their quest to hit 15,000 and anything in between is just noise until one side establishes the next trend.  The Dow came into the week at 14,865 and was down 318 points, or 2.1%, by the end of it.  For 2013, the blue-chips are up 1,443 points, or 11%.

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The S&P 500 added 14 points, or 0.9%, to finish at 1,555.  The index was a 12-pack away from clearing 1,600 but Monday’s 36 point freefall brought back the 1,550 level with the close at 1,552.  Tuesday’s rebound pushed 1,575 and where we said the S&P needed to close for further upside but the close at 1,574.57 was yet another clue there would be more downside pressure.  We said a close below 1,540 would get 1,525-1.500 in play and Wednesday’s low was 1,543.  The bulls held 1,550 with the finish at 1,552 but Thursday’s print of 1,536 confirmed our belief the S&P will test 1,500 (or worse) at some point but Thursday’s close was 1,541.  The 1 point margin held as the bulls cleared 1,550 again on Friday.  A close this week above 1,575 would be bullish for another run at 1,600 while a close below 1,540 still favors the bears.  The S&P 500 started Monday at 1,588 and was lower by 33 points, or 2.1%, by Friday’s close.  For 2013, the index is higher by 129 points, or 9.1%.

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The Nasdaq jumped 40 points, or 1.3%, to close at 3,206.  Tech fell a whopping 78 points to start the week and closed Monday at 3,216.  Support at 3,250 has been paper thin and we warned a close below this level again would get 3,200 in play, quickly.  Tuesday’s pop to 3,265 was expected following the steep selloff but when the bulls couldn’t clear 3,275 we penciled-in a drop below 3,200. Wednesday’s bottom checked in at 3,186 which got 3,150 in play and Thursday’s low was 3,154 before the close at 3,166.  Friday’s rebound back above 3,200 was mildly bullish but the bulls will be challenged at 3,250-3,275.  If they can get through these levels there is a chance for a ran back above 3,300 but another close below 3,200 and a break below 3,150 would certainly favor the bears.  The Nasdaq was at 3,294 before Monday’s open and fell 88 points, or 2.7%, for the week.  YTD, the index has advanced 187 points, or 6.2%.

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The Russell 2000 advanced 11 points, 1.2%, to close at 912 on Friday.  The small-caps were crushed for 35 points, or nearly 4%, after falling through the 920 level and testing 900.  The close at 907 was bullish for Tuesday’s pop to back above 920 to 923 but Wednesday’s back draft to 899 was an omen.  The bulls held 900 by the close and Thursday low came in 898 with the 901 holding by the bell.  This was the one indicator that gave a signal Friday would be bullish as we we were looking for a test to 875.  Same deal for this week and a close below 875 would get 850 in the mix.  A close back above 920 would favor another run to new highs or a possible trading range if 940 holds as resistance.  The Russell 2000 was at 942 to start the week and gave back 30 points, or 3.2%, ahead of the weekend.  The small-caps are showing a gain of 63 points, or 7.4%, for the year.

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The S&P Volatility Index ($VIX, 14.97, down 2.59) came into the week at 12.06 and was challenging 52-week lows but Monday’s 40% surge past 15 and close at 17.27 was what we have been warning about.  However, we said panic wouldn’t hit on Wall Street until 20 trips.  Tuesday’s rebound by the bulls pushed the VIX back above 15 with the close at 13.96 but Wednesday’s finish at 16.50 was a clue the S&P could dip further.  On Thursday’s pullback in the market, the VIX hit 18.20 and closed at 17.56.  We thought Friday was setting up for a run to 20 after the mixed Tech earnings but the rally pushed the VIX back below 15 which was slightly bullish.

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The bears made a strong statement last week but Friday’s recovery was slightly bullish.  There were a number of sectors and stocks in play and while much of the news was bearish, the bulls held longer-term support despite the short-term breakdown.  Earnings and economic news will continue to be the driver of near-term catalysts for April but May is shaping up to be the battleground for a breakout or breakdown, or a continued trading range.

The breakdown in commodities continued with a slight rebound by week’s end.  We wanted to update the Copper chart because we have mentioned it gives a good view of the overall global economy.  We have been warning of Copper’s impending drop below $3.50 for months and last week’s breakdown may have finally caught Wall Street’s eye.  Copper tanked to a low of $3.08 last weekend is at its lowest level since October 2011.  A close below $3 would signal a slowdown in the global economy and will be a big story which, in turn, could lead to weakness in the market as the pros lock-in current gains for the year.

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Gold fell to a low of $1,321 last Monday but rebounded to clear $1,400.  It’s been a dead cat bounce with 4 lives as Gold closed higher the rest of the week.  Last week’s chart clearly showed the drop to $1,400 coming but we were a little surprised of the test to $1,300 come so quickly.  The short-term charts showed a possible test to $1,325 but we have a feeling Gold could test $1,000 at some point if the selling pressure returns.

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Silver tested a low of $22 and we said last week a test to $22.50 was in the cards.  We are salivating to see Silver fall to $20, or below, but the spot prices are still incredibly high.  We did call around and found some silver for under $3 a spot so we are actively seeking to add to our position,  If Silver falls below $20, we wouldn’t mind paying a $2-$3 spot for American Eagles, or open up a coin shop to play the rebound to $50 down the road.  Silver is a big component of manufacturing and while it may take 3-5 years for a double, buying silver at these levels is starting to look luscious.  For those of you that have never purchased Silver, start buying third positions at current levels in case it does get cheaper.  Buy another third at $20 and if we get lucky and Silver drops to the teens, complete the rest of your purchase.

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Earnings were a mixed bag with some good, some bad but overall, they were ugly.  We were looking at Tech and the Financials, specifically, for clues of a test to news highs or a break below support.  The earnings bar is really low for a lot of companies to beat Wall Street’s estimates but it’s the revenue shortfalls that we are noticing.  Over 65% of the companies that have reported beat earnings buy only 55% are topping revenue.

We wanted to see a breakout in the Financial stocks but when JPMorgan (JPM, $47.23, up $0.59) failed to break $50 on its earnings report, we knew the sector could be in trouble.  Bank of America (BAC, $11.66, up $0.22) fell below its 50-day and 100-day moving average (MA) and Goldman Sachs (GS, $138.72, up $0.12) failed to clear $150 when they confessed to the suit-and-ties.  The Financial Select Spiders (XLF, $18.08, up $0.25) give a better snapshot of the recent weakness and could be a good tell if they will help or hurt the bulls’ case.  The break above $18.50 was bullish the prior week for a possible test to $20 and continued new highs but the close below $18 and back test is worrisome.  The XLF looks like it could fall to $17.50 and a close below $17.25 would be bearish.  A rebound and close above $18.25 would be bullish.

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As far as Tech, we felt there was a chance Google (GOOG, $799.87, up $33.96) would miss Wall Street’s estimates but it would have been a hard bet to make and why we didn’t.  Shares recently topped out at $844 and the cat calls for $1,000 were growing louder so you had to respect the upside as the company beat estimates by 92 cents a share.  Google came in at $11.58 while the suit-and-ties had penciled in $10.66.  However, revenues came in at $13.97 billion versus estimates for $14.09 billion.  The big story Wall Street is missing is the huge tax break Google got during the quarter for “Federal research”.  If analysts were to back this number out of the equation then Google would have earned $10.36 a share and missed by 30 cents!

We haven’t talked about negative Monday/ Friday closes in a while as Friday’s have been mostly bullish all year long with Monday’s mixed to bearish over the past few months.  However, the blue-chips had a lower previous Friday and a lower Monday before Friday’s slightly higher close.  We were amazed to see the blue-chips end in positive territory after International Business Machines (IBM, $190.00, down $17.15) rare earnings miss.  The 8% drop in the stock accounted for 130 negative Dow points and McDonald’s (MCD, $99.92, down $1.99) added another 15 red points.  If the Dow ends higher on Monday it would suggest a continued trading range but a lower finish would suggest further weakness is ahead.

The late April swoon came right on cue last week and this week could be more of a tell if there is further weakness or a snapback rally.  Economic news and earnings will once again dominate the week with Apple’s (AAPL, $390.53, down $1.52) numbers as the main event after Tuesday’s close.  Shares have been in a freefall for months after topping at $700 in late September.  The stock fell below the $400 for the first time in over 2 years last week so this report could be one of the biggest in the company’s history.

If shares rally on better-than-expected earnings AND revenue, the overall market will likely benefit.  The same is true if Apple announces worse-than-expected numbers.

Futures are showing a higher open this morning:  Dow futures are up 66 points to 14,536 while the S&P 500 futures are higher by 8 points to 1,555.  The Nasdaq 100 futures are advancing 16 points to 2,784.

 

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 2013: 38-25, for a 60% win rate, including the Weekly Wrap that is 12-1).

 

Caterpillar (CAT, $80.43, down $0.03)

May 77.50 puts (CAT130518P00077500, $1.20, down $0.20)

Entry Price:  $1.25 (4/18/13)
Exit Target:  $2.50
Return:  -4%
Stop Target:  60 cents

Action:  Earnings are out this morning and there could be a rebound to $82-$85 if Wall Street likes the report.  We were looking for a drop below $80 on Friday as a possible clue that shares could fall into the $70’s today but the low of $80.01 has a little worried for today.  These are May puts so we have plenty of time for any back test to play out but they options will take a hit if shares make a run higher to resistance.

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Sina (SINA, $46.26, down $0.28)

May 40 puts (SINA130518P00040000, $0.62, down $0.05)

Entry Price:  $0.67 (4/18/13)
Exit Target:  $1.35
Return:  -7%
Stop Target:  None

Action:  We would like to see $47.50 hold this week but there is risk to $50 on a close above this level.  We have a near-term target of $40 for the stock and a break below $45 should lead to $42-$40, quickly.

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Spider S&P 500 (SPY, $155.48, up $1.34)

May 150 puts (SPY130518P00150000, $0.95, down $0.45)

Entry Price:  $1.35 (4/18/13)
Exit Target:  $2.70
Return:  -30%
Stop Target:  None

Action:  There is risk to $157.50 and a close above this level would likely force us out of the trade.  We are looking for a close below

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PowersharesQQQ (QQQ, $68.09, up $0.92)

May 66 puts (QQQ130518P00066000, $0.55, down $0.35)

Entry Price:  $0.80 (4/18/13)
Exit Target:  $1.60
Return:  -31%
Stop Target:  None

Action:  There is risk to $69 with Apple’s earnings in the mix this week and a break above this levels could lead to another run past $70.  A close below $67 this week would be bearish for further declines into May.

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Freeport-McMoRan Copper & Gold (FCX, $28.24, up $0.19)

May 26 puts (FCX130518P00026000, $0.40, down $0.15)

Entry Price:  $0.75 (4/17/13)
Exit Target:  $1.50
Return:  -47%
Stop Target:  None

Action:  There is risk to $30 on a back test but we have a price target of $25 by mid-May for FCX.  Last week’s low was $27.24 and another close below $27 should get $25 in play, quickly.

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Symantec (SYMC, $23.55, down $0.01)

May 25 calls (SYMC130518C00025000, $0.30, flat)

Entry Price:  $0.60 (4/11/13)
Exit Target:  $1.20
Return:  -50%
Stop Target:  None

Action:  We didn’t like the close below $24 but we wanted to do some chart work before throwing the baby out with the bathwater.  We will stick with the trade as long as $23 holds and we would like to see a close back above $24 this week.

 

Keryx Biopharmaceuticals(KERX, $8.03, up $0.42)

June 10 calls (KERX130622C00010000, $0.45, up $0.10)

Entry Price:  $0.70 (2/12/13)

Exit Target:  $1.40
Return:  -36%
Stop Target:  None

Action:  Keryx tested a low of $7.55 last week and has been holding $7 before finishing the week above $8.  The current trading range continues but a break above $8.50 would be a good clue a run to $10 is coming.

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Other 2013 Portfolio OPEN positions (2):  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 2013Portfolio link in the Members Area to view ALL open/ closed trades.

 

Ironwood Pharmaceuticals May 20 calls (from March 2013)

MGM Resorts International June 15 calls (from February 2013)

 

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 candidat

 

FedEx (FDX, $92.39, up $0.52)

May 90 puts (FDX130518P00090000, $1.25, down $0.40)

Thoughts:  Watch for now.

 

Cyberonics (CYBX, $44.80, up $0.79)

May 40 puts (fCYBX130518P00040000, $0.65, down $0.40)

Thoughts:  Watch for now. 

 

Spider Gold Shares (GLD, $135.47, up $1.17)

May 125 puts (GLD130518P00125000, $0.80, down $0.15)

June 120 puts (GLD130622P00120000, $0.95, down $0.15)

Thoughts:  Watch for now.    

 

Bank of America (BAC, $11.66, up $0.22)

June 12 calls (BAC130622C00012000, $0.40, up $0.05)

Action:  Watch for now,

iShares Russell 2000 (IWM, $90.61, up $1.03)

May 87 puts (IWM130518P00087000, $0.95, down $0.35)

Thoughts: Watch for now.