9:00am (EST) continued…

The Dow jumped 78 points, or 0.5%, to close at 15,548.  We said a close above 15,500 would be bullish and that it could lead to a run to 15,800 on a close above 15,600.  Yesterday’s high was 15,589.  We would like to see the bulls hold 15,500 on any weakness today but there is risk down to 15,400-15,350 if they can’t hold the momentum.

The S&P 500 added 8 points, or 0.5%, to settle at 1,689.  The index traded to a high of 1,693 and we mentioned a break above 1,685 could trigger 1,700.  The S&P reached a peak of 1,693 and the aforementioned support and resistance levels could be bullish (1,700) or bearish (1,685) on a close above or below these levels for next week.

The Nasdaq gained a point, or 0.04%, to end at 3,611.  Tech kissed a 13-year peak of 3,624.54 and we have said there is a chance 3,650 comes into play if the bulls hold 3,600.  They have for 2 days but today will be challenging considering the high-profile earnings misses after yesterday’s close.  A finish above 3,625 could lead to our fluff target next week but a drop below 3,600 could be cause for concern.

The Russell 2000 closed right on our bulls-eye target of 1,050 after the index advanced another 8 points, or 0.7%.  The small-caps triggered 1,052.46 and could push 1,075-1,080 on continued momentum but we do expect a pause here soon.  The key level of support to watch for on a dip is 1,036 and the bulls have over 1% to play with.

The S&P 500 Volatility Index ($VIX, 13.77, down 0.01) was flat as a pancake but did drop below 13.50 to a low of 13.20.  We have said there is a chance the bulls push 12.50 but the bears are still trying to get back above 15 and still need to be respected.

As we head to press, here is how futures look:  Dow (-19); S&P 500 (-1); Nasdaq 100 -100 (-1).

We have some good news this morning on our earnings trade from Wednesday, and hopefully, we can get a 150+% return on this morning’s open.  Subscribers, check the Members Area for the updates and stay locked-and-loaded in case we take additional action this morning.

Side Note:  Detroit files for Chapter 9 bankruptcy – the biggest bankruptcy filing in U.S. municipality history.  This city is $20 billion in the hole and this could have a ripple effect in the muni bond market.

 

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 tradesor “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: 81-41, including the Weekly Wrap that is 26-3).

 

Finisar (FNSR, $18.17, down $0.10)

August 19 calls (FNSR130817C00019000, $0.50, up $0.05)

Entry Price:  $0.50 (7/18/13)
Exit Target:  $1.00
Return:  0%
Stop Target:  None

Action:  An analyst decided to follow our lead on Finisar after initiating coverage on the stock with a “Market Perform” rating.  Shares should challenge $20 over the near-term, possibly $25 by yearend.  Support at $17.  The company has some sweet, new products that could add some extra pennies to their earnings for the current quarter.

 

Skyworks Solutions (SWKS, $22.45, down $0.37)

August 25 calls (SWKS130817C00025000, $0.45, down $0.10)

Entry Price:  $0.55 (7/17/13)
Exit Target:  $1.10
Return:  -18%
Stop Target:  None

Action:  Set limit orders to close HALF the trade at $1.50 or better at the open.  We may not be able to get this price but we could if option traders use market orders at the open.  We will be watching how shares trade and we would like to see continued strength through $25.  In any event, we could have a Profit Alert shortly after the open or we will send out a Trade Alert if our limit order isn’t filled.

Shares were hopping in after-hours last night, surging nearly 7% to $23.95.  We were watching the call options into the close and volume was exploding so we weren’t too worried about the dip after our midday update.  Earnings are always tricky and we needed Skyworks to beat on the top and bottom line.  They did as earnings came in a penny ahead and revenues also topped expectations.

 

MGM Resorts International (MGM, $16.18, up $0.49)

August 16 calls (MGM130817C00016000, $0.75, up $0.25)

Entry Price:  $0.50 (7/17/13)
Exit Target:  $1.00
Return:  50%
Stop Target:  None

 

September 17 calls (MGM130921C00017000, $0.61, up $0.18)

Entry Price:  $0.42 (7/17/13)
Exit Target:  $1.00
Return:  45%
Stop Target:  None

Action:  Shares of MGM soared 3% on Thursday and triggered $16.25 on the high.  We told you we were on the verge of a breakout and the video we did on Monday night was perfect timing as we showed support in the S&P 500 holding and more importantly, we showed the multi-year breakout that was coming for MGM.  We would like to see a push towards $16.50-$17 today and if there is a dip, we would like to see $16 hold.

 

Aruba Networks (ARUN, $17.64, up $0.27)

August 17 calls (ARUN130817C00017000, $1.25, up $0.30)

Entry Price:  $0.55 (7/8/13)
Exit Target:  $1.10  (closed half @ $1.15 on 7/18/13)
Return:  118%
Stop Target:  75 cents (Hard Stop)

 

August 18 calls (ARUN130817C00018000, $0.75, up $0.15)

Entry Price:  $0.55 (7/15/13)
Exit Target:  $1.10
Return:  36%
Stop Target:  None

October 22 calls (ARUN131019C00022000, $0.55, up $0.05)

Entry Price:  $0.50 (7/15/13)
Exit Target:  $1.00
Return:  10%
Stop Target:  None

Action:  The stock traded up to $18.10 yesterday and we closed half of the August 17 calls to lock-in profits.  The August 18 calls traded to a high of 95 cents while the October 22’s reached 60 cents.  We would like to see $18 clear and hold into the close today and on a pullback we would like to see $17 stick.

 

Sony (SNE, $22.14, up $0.04)

August 24 calls (SNE130817C00024000, $0.40, down $0.05)

Entry Price:  $0.50 (7/11/13)
Exit Target:  $1.00
Return:  -20%
Stop Target:  None

August 26 calls (SNE130817C00026000, $0.15, down $0.05)

Entry Price:  $0.20 (7/11/13)
Exit Target:  $0.60
Return:  -25%
Stop Target:  None

October 25 calls (SNE131019C00025000, $0.85, flat)

Entry Price:  $0.80 (7/11/13)
Exit Target:  $1.60
Return:  6%
Stop Target:  None

Action:  Resistance is at $23-$24 and a close above $22.50 should get 52-week highs in play.  News that China is lifting the ban of gaming counsels could have a huge impact on this stock.  Support is at $21 and the 50-day MA and we like these trades going forward as long as $20 holds.

 

Apollo Group (APOL, $18.84, up $0.07)

August 16 puts (APOL130817P00016000, $0.20, flat)

Entry Price:  $0.65 (6/26/13)
Exit Target:  $1.30
Return:  -69%
Stop Target:  None

Action:  We will stick with the trade as long as $20.25 holds and we would like to see a trip below $18 this week.

 

Rambus (RMBS, $9.89, up $0.09)

August 9 calls (RMBS130817C00009000, $1.10, up $0.05)

Entry Price:  $0.55 (6/18/13)
Exit Target:  $1.10 (closed half @ $1.05 on 7/16/13, quarter @ $1.05 on 7/17/13)
Return:  91%
Stop Target:  80 cents (Hard Stop)

Action:  The company reported a profit of 6 cents a share versus expectations for a loss of 12 cents.  Revenues also came in about $1 million higher than forecasts.  Shares did not trade in after-hours.  Shares have struggled clearing $10 but could today.  If not, and shares selloff, we have a Hard Stop of 80 cents on the remaining quarter position.

 

Other 2013 Portfolio OPEN positions (4):  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 2013 Portfolio link in the Members Area to view ALL open/ closed trades.

MGM Resorts International July 17 calls (from May 2013) – Expire today! We would love to see shares run past $17 to make this a profitable trade but we plan to make it up with our current 2 trades.  We will see where these options are at during our midday update.

Clean Energy Fuels July 16 calls (from May 2013) – Expire today!  Shares have been stuck in a trading range and we did not get the breakout (yet) we were looking for.

Spiders Dow Jones July 141 puts (from June 2013) – Expire today!  We added these 2 put option trades when the indexes tested the 100-day MA’s back in June.  We thought there could be a test to the 200-day MA’s and we were wrong.  We didn’t go overboard on put positions and since these trades we have traded call options to play the market’s surge to new highs.  Playing put options this year has been rough but sometimes it is important to have “insurance” in case the market does fall out of bed.

iShares Russell 2000 Index July 90 puts (from June 2013) – Expire today!

 

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.

 

TearLab (TEAR, $12.18, up $0.10)

August 12.50 calls (TEAR130817C00012500, $0.90, up $0.05)

September 15 calls (TEAR130921C00015000, $0.50, up $0.05)

Thoughts:  The 52-week high is at $12,97 and shares are up 300+% from the 52-week low of $3.10.  Earnings are due out in early August and we will be covering this company in our Weekly Wrap in the next week or two.

 

Spider Gold Shares (GLD, $124.01, up $0.69)

August 115 puts (GLD130817P00115000, $0.65, down $0.20)

Thoughts:  Gold is having trouble clearing $1,300 and the Gold Spiders could take another tumble below $120 to $115.  We would like to see a failed test to $125 and we could go short next week if it looks like resistance will hold.

 

Nvidia (NVDA, $14.55, down $0.06)

August 15 call (NVDA130817C00015000, $0.35, flat)

Thoughts:  Shares cleared resistance at $14.25 and a close above $14.75 should get $15-$15.50 in play.  Support is at $13.75, if $14.25 fails.  We have a 6-12 month price target of $20 for the stock.

 

Applied Materials (AMAT, $16.56, down $0.13)

August 17 calls (AMAT130817C00017000, $0.35, down $0.05)

September 17 calls (AMAT130921C00017000, $0.50, down $0.05)

Thoughts:  We think shares can test $17 over the next month.  Support is at $15.75.

 

Scientific Games (SGMS, $13.01, up $0.16)

August 12.50 calls (SGMS130817C00012500, $1.00, up $0.15)

Thoughts:  We should have been in this trade on the close above $12.50 last week and we are looking at the August and October 15’s.

 

Salesforce.com (CRM, $41.90, down $0.81)

August 45 calls (CRM130817C00045000, $0.45, down $0.20)

November 50 calls (CRM131116C00050000, $0.85, down $0.20)

Thoughts:  There could be a back test to $40 and where we may establish a position if support holds.

 

Yahoo (YHOO, $29.66, flat)

August 28 calls (YHOO130817C00028000, $2.05, up $1.40)

Thoughts:  Shares traded to a high of $29.83 and we will be dropping coverage of these calls.  We are glad some of you made triple-digits on the trade and we will be listing possible call options to play on a drive above $30 at some point this year.