9:00am (EST)

The Dow slipped a point to finish at 15,520.  The blue-chips tested a high of 15,593 but failed to clear and hold 15,600 again.  The bears made a push below 15,500 (again) to 15,479 but need a close below 15,400 to start the selling pressure.

The S&P 500 added nearly a point to settle at 1,686.  The index reached 1,,693 before falling to 1,682 late in day and recovering to end in positive territory.  A break out of the trading range will occur on a close above 1,700 or below 1,675.

The Nasdaq gained 17 points, or 0.5%, to end at 3,616.  Tech held green from start to finish and easily cleared 3,600 (again) after reaching a peak of 3,629.  We have mentioned a close above 3,625 could lead to 3,650-3,700 and the strength in Apple (AAPL, $453.32, up 5.53) is help pushing Tech higher.

The Russell 2000 advanced 3 points, or 0.3%, to end at 1,043.51.  The small-caps held 1,040 after a test to 1,039.92 late in the afternoon but held support.  A close below this level would signal a test to 1,025 but the bulls are still trying to push new all-times highs and make a run at 1,075 if they can clear 1,050 (again).

The S&P 500 Volatility Index ($VIX, 13.39, flat) traded up to 14.14 but closed below 13.50.  The VIX is giving us good clues that the market still wants to move higher.

We have a lot to cover this morning, including an update on Trius Therapeutics (TSRX, $11.71, up $0.26, a stock on our Watch List that should get a nice pop at the open after getting a buyout offer after yesterday’s close.

As we head to press, futures look like this:  Dow (-16); S&P 500 (-1); Nasdaq 100 (-1).  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 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: 90-45, including the Weekly Wrap that is 27-3).

 

MGM Resorts International (MGM, $16.35, up $0.39)

August 17 calls (MGM130817C00017000, $0.31, up $0.14)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60
Return:  11%
Stop Target:  None

September 17 calls (MGM130921C00017000, $0.55, up $0.15)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60
Return:  6%
Stop Target:  None

Action:  Shares made another 52-week high at $16.52 yesterday and a close above $16.50 would be bullish heading into earnings next week.  Shares of Goodyear Tire & Rubber (GT, $18.56, up $1.52) made a strong breakout on earnings yesterday and a name we have traded with great success in May.  We didn’t have them on our earnings calendar so we missed a beautiful trade yesterday but we are hoping shares of MGM follow GT’s recent performance.  Yes, two different companies but their charts look identical.  MGM reports earnings next week.

 

Walter Energy (WLT, $11.02, down $0.07)

August 9 puts (WLT130817P00009000, $0.24, up $0.04)

Entry Price:  $0.30 (7/25/13)
Exit Target:  $0.60
Return:  -14%
Stop Target:  None

September 9 puts (WLT130921P00009000, $0.60, up $0.07)

Entry Price:  $0.70 (7/25/13)
Exit Target:  $1.40
Return:  -26%
Stop Target:  None

Action:  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, $9.71, down $0.31)

August 10 calls (RBS130817C00010000, $0.20, down $0.15)

Entry Price:  $0.55 (7/23/13)
Exit Target:  $1.10
Return:  -64%
Stop Target:  None

November 12.50 calls (RBS131116C00012500, $0.10, down $0.10)

Entry Price:  $0.20 (7/23/13)
Exit Target:  $0.60
Return:  -50%
Stop Target:  None

Action:  We didn’t like the close below $9.75 yesterday and we are going to give the trade wiggle room down to $9.50.  We believe shares can trade up to $15 over the next 3-6 months but the August calls could be in trouble if there isn’t a rebound back above $10 this week.

 

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.

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.

Sony August 24 calls, August 26 calls, October 25 calls (from July 2013)– Shares are up 2% today and a close above $22 would be bullish.

 

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.

 

Trius Therapeutics (TSRX, $11.71, up $0.26)

August 12.50 calls (TSRX130817C00012500, $0.50, up $0.05)

September 15 calls (TSRX130921C00015000, $0.40, flat)

Thoughts:  These options will zoom at the open as the company received a buyout offer after the close yesterday.  Even though this isn’t an official trade, if you are in it, lock-up profits into strength this morning.

“A run to $15 could be coming and the call option pits have been active.  Support is at $11.”

 

iShares Dow Jones Transportation Average (IYT, $114.63, up $0.31)

August 110 puts (IYT130817P00110000, $0.65, down $0.05)

September 105 puts (IYT130921P00105000, $0.85, down $0.05)

Thoughts:  We could add puts on a drop below $113.
United Parcel Service (UPS, $86.41, down $0.40)

August 85 puts (UPS130817P00085000, $0.70, up $0.10)

September 82.50 puts (UPS130921P00082500, $0.70, up $0.05)

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

 

Spider Gold Shares (GLD, $128.12, down $0.35)

August 123 puts (GLD130817P00122000, $0.90, flat)

September 118 puts (GLD130921P00118000, $1.20, flat)

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, $23.77, up $0.17)

September 26 calls (SWKS130921C00026000, $0.45, flat)

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, $17.83, up $0.11)

August 18 calls (ARUN130817C00018000, $0.65, flat)

October 22 calls (ARUN131019C00022000, $0.45, flat)

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, $41.47, down $0.37)

August 50 calls (weekly) (SCTY130809C00050000, $0.45, down $0.10)

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, $14.55, down $0.18)

August 12.50 calls (TEAR130817C00012500, $2.40, down $0.20)

September 15 calls (TEAR130921C00015000, $1.20, down $0.05)

Thoughts:  There August 12.50 call options were at $0.80 and the September 15’s at 40 cents last Monday.  Earnings are due out in early August.

 

Salesforce.com (CRM, $43.99, up $0.68)

August 45 calls (CRM130817C00045000, $0.75, up $0.15)

August 40 puts (CRM130817P00040000, $0.20, down $0.05)

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.