9:00am (EST)

The Dow rallied 128 points, or 0.8%, to finish at 15,628 on Thursday.  The blue-chips traded to a high of 15,650 and were able to hold 15,600 into the close.  We have mentioned a run to 15,800-16,000 is possible if cleared and will now try to hold as support.  If not, backup is at 15,400.

The S&P 500 surged 21 points, or 1.3%, to settle at 1,706.87.  The index reached a peak of 1,707.85 and held 1,700 into the close.  We have said a run to 1,725 could come on a close above this level and is 1% away from triggering.  Support will try to hold on this new round magic number but there is help down at 1,675 if there is a pullback.

The Nasdaq surged 49 points, or 1.4%, to end at 3,675.  Tech kissed a high of 3,678.50 and the close above 3,650 was super bullish.  We have said a run to 3.650-3,700 could be in the mix and our year-end target for the index is 3,800.  Near-term support will try to move up from 3,600 to 3,625 if there is weakness today.

The Russell 2000 added 14 points, or 1.4%, to close at 1,059.88.  The small-caps continue to give excellent clues on where the market is headed and the run past 1,050 to 1,060.96 yesterday keeps 1,075 in play.

The S&P 500 Volatility Index ($VIX, 12.94, down 0.51) fell 4% and finished below 13 after trading to a low of 12.82.  The VIX could test 11 on a continued push higher while a close above 13.50 remains the warning sign.

Futures are showing another decent open following this morning’s unemployment news that we will cover in the midday update.  As we head to press, here is how we look:  Dow (+20); S&P 500 (+3); Nasdaq 100 (+9).  Subscribers, check the Members Area for the updates.

 

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: 90-46, including the Weekly Wrap that is 27-3).

 

Xilinx (XLNX, $47.15, up $0.46)

September 50 calls (XLNX130921C00050000, $0.38, up $0.09)

Entry Price:  $0.35 (8/1/13)
Exit Target:  $0.70-$1.05
Return:  9%
Stop Target:  None

Action:  Shares are at fresh 52-week peaks and reached a high of $47.18 on Thursday.  Our near-term target is for a run past $50.  If the stock can trade up to $51.05 by mid-September, these options will return us at least 200%.

 

MGM Resorts International (MGM, $16.85, up $0.54)

August 17 calls (MGM130817C00017000, $0.50, up $0.16)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60 (closed HALF at $0.52 on 8/1/13)
Return:  89%
Stop Target:  None

 

September 17 calls (MGM130921C00017000, $0.82, up $0.27)

Entry Price:  $0.52 (7/30/13)
Exit Target:  $1.05
Return:  58%
Stop Target:  None

Action:  Shares of MGM finally cleared and held $16.50 after trading to a high of $16.99 yesterday.  We would love to see a close above $17 into the weekend and $16.75 hold on weakness.  Earnings are next week.

 

Walter Energy (WLT, $10.79, down $0.40)

August 9 puts (WLT130817P00009000, $0.15, down $0.04)

Entry Price:  $0.30 (7/25/13)
Exit Target:  $0.60
Return:  -50%
Stop Target:  None

 

September 9 puts (WLT130921P00009000, $0.60, up $0.05)

Entry Price:  $0.70 (7/25/13)
Exit Target:  $1.40
Return:  -14%
Stop Target:  None

Action:  Shares traded up to $11.95 before falling back below $11 after our midday update.  The company lost 55 cents a share that was “better” than Wall Street’s forecast for a loss of 77 cents a share.  However, revenue came in way below expectations at $441 million versus estimates for $472 million.  This is what we wanted to see and we still feel comfortable holding these puts.

The 52-week low of $9.88 was hit in late June and a test to $10 is likely over the next few weeks.  Our near-term target is $8.  If these levels crack, there is a chance $7 comes into the mix.  We will stick with the trade as long as resistance at $12 holds as there is risk up to $14 on a close above this level.

 

Royal Bank of Scotland (RBS, $10.17, up $0.53)

August 10 calls (RBS130817C00010000, $0.45, up $0.25)

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

 

November 12.50 calls (RBS131116C00012500, $0.20, up $0.05)

Entry Price:  $0.20 (7/23/13)
Exit Target:  $0.60
Return:  0%
Stop Target:  None

Action:  We got a sweet rebound off the 50 and 200-day MA’s like we were looking for and the close back above $10 gets $10.50 in play.  A close above this level could lead to a strong push past $11.

 

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 2013Portfolio link in the Members Area to view ALL open/ closed trades.

Sony August 24 calls, August 26 calls, October 25 calls (from July 2013) –HOLD- Shares also made a strong rebound off the 50-day MA at $21.13 and the weakness was due to some confusion on the company spinning off its entertainment division.  A report said the board rejected the idea while they say they are still considering it.  The company also reported earnings last night and turned a profit for the quarter.  These are positive developments and a run to $23 could come 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.

 

Conns (CONN, $65.82, up $1.15)

August 70 calls (CONN130817C00070000, $0.50, up $0.20)

September 70 calls (CONN130921C00070000, $2.65, up $0.25)

Thoughts:  Shares are making fresh 52-week highs.

 

iShares Dow Jones Transportation Average (IYT, $119.20, up $3.75)

August 116 puts (IYT130817P00116000, $0.60, down $1.95)

September 110 puts (IYT130921P00110000, $0.75, down $0.65)

Thoughts:  We could add puts on a drop below $113

 

Gigamon (GIMO, $34.83, down $0.93)

September 40 calls (GIMO130921C00040000, $1.00, down $0.25)

October 40 calls (GIMO131019C00040000, $1.40, down $0.40)

Thoughts:  The company reported great earnings and is showing a lot of momentum.
United Parcel Service (UPS, $88.04, up $1.24)

August 85 puts (UPS130817P00085000, $0.30, down $0.20)

September 82.50 puts (UPS130921P00082500, $0.45, down $0.15)

Thoughts:  UPS looks like a good short on a close below $85 if there is further weakness in the stock.

 

Spider Gold Shares (GLD, $126.61, down $1.35)

August 123 puts (GLD130817P00122000, $1.10, up $0.20)

September 118 puts (GLD130921P00118000, $1.50, up $0.25)

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, $24.74, up $0.71)

September 26 calls (SWKS130921C00026000, $0.70, up $0.20)

Thoughts:  If shares clear $25, we will likely get back into this trade.  Support is at $23.50 and a close below this level would have us looking at short-term puts.

 

Aruba Networks (ARUN, $18.72, up $0.94)

August 18 calls (ARUN130817C00018000, $1.15, up $0.20)

October 22 calls (ARUN131019C00022000, $0.65, up $0.20)

Thoughts:  Shares are in a tight range with a breakout to $20 possible.  A drop an close under$17.50 would be bearish.

 

SolarCity (SCTY, $40.57, down $0.78)

August 50 calls (weekly) (SCTY130809C00050000, $0.40, down $0.30)

Thoughts:  Earnings are out August 7.  Support is at $40 with risk down to $37.50 on a close below this level.  A break above $42.50 could lead to $50 if losses come in ahead of expectations.  The company is not profitable and has missed Wall Street’s estimates in its first 2 quarters as a publicly traded company by 9 and 10 cents.  The current estimate is for a loss of 38 cents, on average, for the recently ended quarter.

If revenues can come in north of $30 million, earnings may not matter as Wall Street will be looking ahead at what potential sales the company may have.  Current guesses are for sales of $27 million and a 10% upside surprise could send shares soaring.  A wider-than-expected loss or a miss in sales could push shares below $35.

 

TearLab (TEAR, $12.85, down $1.30)

September 15 calls (TEAR130921C00015000, $0.60, down $0.30)

Thoughts:  Earnings are due out next week.

 

Salesforce.com (CRM, $45.14, up $01.39)

August 45 calls (CRM130817C00045000, $1.25, up $0.55)

August 40 puts (CRM130817P00040000, $0.10, down $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.