9:00am (EST) continued…

The S&P 500 slipped a 6-pack, or 0.4%, to settle at 1,685.  The index tested 1,698 again before a 16-point drop to 1,682.  We have mentioned a close below 1,680-1,675 could be a warning sign 1,650 comes back into the picture.  A finish above 1,700 could be good for a run to 1,725.

The Nasdaq added a third of a point to end at 3,579.  Tech traded up to 3,606 like we figured but we didn’t like the pullback below 3,575 to 3,573.  It may be as far as the bears get this week but a close below 3,575 could lead to a quick drop to 3,550-3,500.  Apple (AAPL, $440.51, up $21.52) saved the bulls from a wipeout and Facebook (FB, $26.51, up $0.38) should provide some stability following its surge past $30 in after-hours last night on better-than-expected earnings.

The Russell 2000 gave back 8 points, or 0.8%, to close at 1,042.  The small-caps came within a point of triggering another all-time intraday high after reaching 1,055.85 but failed to hold 1,050 after trading down to 1,042.  We are giving the bulls to 1,040 before we stick one foot out the exit door and start closing the rest of our bullish positions.

The S&P 500 Volatility Index ($VIX, 13.18, up 0.52) jumped 4% and traded to a high of 13.49 as it held green all session long.  We have warned of a close above 13.50 and yesterday’s peak got our attention as it could lead to 15 and chaos.

We are still bullish but yesterday’s action felt funny and theirs is nothing wrong with taking profits and reducing risk like we did on a number of trades.  The indexes could also be setting up for a trading range and they can be hard to navigate so we want to continue to trade light and wait for confirmation on the next trend.

As we head to press, futures look like this:  Dow (xx); S&P 500 (xx); Nasdaq 100 (xx).

Subscribers, check the Members Area for the updates and check the Watch List as we added some new possible trades.  We really like the first one on our list and it is a put option play.

 

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: 87-45, including the Weekly Wrap that is 27-3).

 

Royal Bank of Scotland (RBS, $10.45, up $0.11)

August 10 calls (RBS130817C00010000, $0.65, up $0.05)

Entry Price:  $0.55 (7/23/13)
Exit Target:  $1.10
Return:  18%
Stop Target:  None

November 12.50 calls (RBS131116C00012500, $0.25, up $0.05)

Entry Price:  $0.20 (7/23/13)
Exit Target:  $0.60
Return:  25%
Stop Target:  None

Action:  The 52-week high is at $11.84 and we believe shares can trade up to $13 over the next few months.  The Financial stocks have been strong and we will stick with the trade as long as $10 holds.

 

Finisar (FNSR, $18.66, up $0.21)

August 19 calls (FNSR130817C00019000, $0.60, up $0.10)

Entry Price:  $0.50 (7/18/13)
Exit Target:  $1.00
Return:  20%
Stop Target:  25 cents

Action:  Shares should challenge $20 over the near-term, possibly $25 by yearend.  Yesterday’s peak was $18.97.  Support is at $17.  The company has some sweet, new products that could add some extra pennies to their earnings for the current quarter.

 

MGM Resorts International (MGM, $16.20, up $0.08)

August 16 calls (MGM130817C00016000, $0.65, flat)

Entry Price:  $0.50 (7/17/13)
Exit Target:  $1.00 (closed half @ $0.65 on 7/24/13)
Return:  40%
Stop Target:  55 cents (Hard Stop)

 

September 17 calls (MGM130921C00017000, $0.50, flat)

Entry Price:  $0.42 (7/17/13)
Exit Target:  $1.00 (closed half @ $0.50 on 7/24/13)
Return:  19%
Stop Target:  42 cents (Hard Stop)

Action:  We closed half of the trade to lock-in profits after shares failed the $16.50 level again.  Shares dipped to a low of $15.98 after our update and support at $16 held.  However, we will close the other half of the trade if $15.75 triggers or our Hard Stops.

 

Sony (SNE, $22.81, down $0.20)

August 24 calls (SNE130817C00024000, $0.50, down $0.05)

Entry Price:  $0.50 (7/11/13)
Exit Target:  $1.00
Return:  0%
Stop Target:  None

August 26 calls (SNE130817C00026000, $0.15, flat)

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

October 25 calls (SNE131019C00025000, $0.90, down $0.10)

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

Action:  We weren’t thrilled with the close back below $23 but $22.50 held.  The 52-week high is $23.38.  The next level of resistance is at $24.  News that China is lifting the ban of gaming counsels could have a huge impact on this stock that could push shares to $30 over the next 6-12 months.  Support is at $22 and then the 50-day MA.

 

Other 2013 Portfolio OPEN positions (1):  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.

Apollo Group August 16 puts (from June 2013) – HOLD – We still like this trade and will bring back coverage once shares fall below $18.  We will close the trade if the stock clears $20, and if we do, we will send out a Trade Alert.

 

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.

 

Walter Energy (WLT, $11.53, down $2.56)

August 9 puts (WLT130817P00009000, $0.23, up $0.20)

September 9 puts (WLT130921P00009000, $0.62, up $0.40)

Thoughts:  We have been watching this stock off and on all year and yesterday’s news the company was suspending its dividend punished shares  for an 18% loss.  The August 9 put options zoomed 666% and could be an omen shares are headed for single-digits again.  If so, these options could easily double or triple again from current levels.

The 52-week low of $9.88 was hit in late June and a test to $10 is likely over the next few weeks.  If these levels crack, there is a chance $7 comes into the mix.

 

Spider Gold Shares (GLD, $127.48, down, $2.23)

August 123 puts (GLD130817P00122000, $1.10, up $0.35)

September 118 puts (GLD130921P00118000, $1.30, up $0.35)

Thoughts:  We would like to see a failed test to $130 and we could go short thisweek if it looks like resistance will hold.

 

Skyworks Solutions (SWKS, $24.51, up $0.26)

August 25 calls (SWKS130817C00025000, $0.60, up $0.05)

September 26 calls (SWKS130921C00026000, $0.75, up $0.05)

Thoughts:  If shares clear $25, we will likely get back into this trade but we wanted to close some Tech plays in case the Nasdaq fails to hold 3,575.  We have also listed some September calls that will allow the trade more time to develop if resistance is cleared.

 

Aruba Networks (ARUN, $17.39, down $0.52)

August 18 calls (ARUN130817C00018000, $0.60, down $0.10)

October 22 calls (ARUN131019C00022000, $0.45, down $0.15)

Thoughts:  Shares reached $18.09 before fading to a low of $17.32.  A close below $17.25 would have us dropping coverage as a bullish play.

 

SolarCity (SCTY, $40.03, down $0.78)

August 45 calls (weekly) (SCTY130802C00045000, $0.35, down $0.15)

Thoughts:  A run to $45 appears likely and a close above this level could lead to $50.  Support is at $40 and if it cracks we may look at put options.  Earnings are due out August 5 and the company is expected to report a loss of 38 cents a share of revenue of $27.4 million.  Anything above these numbers could get shares rolling back towards 52-week highs.  We will be watching this name right into the earnings announcement.

 

Trius Therapeutics (TSRX, $11.44, down $0.03)

August 12.50 calls (TSRX130817C00012500, $0.50, flat

September 15 calls (TSRX130921C00015000, $0.40, flat)

Thoughts:  A run to $15 could be coming and the call option pits have been active.  Support is at $11 but could be shaky down to $9 if there is continued weakness.

 

Exact Sciences (EXAS, $13.17, down $0.31)

August 14 calls (EXAS130817C00014000, $0.35, down $0.10)

Thoughts:  A close above $14 would be super bullish for a run to the upper teens as long as support at $12.50 and the uptrend line holds.

 

TearLab (TEAR, $13.72, up $0.42)

August 12.50 calls (TEAR130817C00012500, $1.65, up $0.20)

September 15 calls (TEAR130921C00015000, $0.75, up $0.10)

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.

 

Rambus (RMBS, $10.05, down $0.06)

August 10 calls (RMBS130817C00010000, $0.50, flat)

January 12 calls (RMBS140118C00012000, $0.60, flat)

Thoughts:  If $10 holds, we could go long again on Rambus.

 

 

Nvidia (NVDA, $14.21, flat)

August 14 call (NVDA130817C00014000, $0.60, flat)

Thoughts:  There is additional support is at $13.50, if $14.25 fails this week.  A close back above $14.75 would be bullish.

 

Scientific Games (SGMS, $13.37, up $0.04)

August 12.50calls (SGMS130817C00012500, $1.15, flat)

Thoughts:  We said a close above $12.50 would be bullish for a run to the mid-teens.

 

Salesforce.com (CRM, $42.01, down $0.53)

August 45 calls (CRM130817C00045000, $0.35, down $0.15)

August 40 puts (CRM130817P00040000, $0.60, up $0.10)

Thoughts:  We could be at a perfect price point to make this a strangle option trade.  There could be a back test to $42 and where we may establish a position if support holds.  We would consider puts on a drop back below $41.50.