9:00am (EST)
The market fell for the second-straight session on Thursday but the bulls did a good job of keeping the losses in check. There are still 2 trading days left for the month of March and despite this week’s pullback, there is a slight chance the bulls can make it up. The bears are up a little more than 2% for the month and they will fight hard to keep the indexes below resistance.
The bulls will have need a good Friday and Monday showing and we have talked about the importance of these two days. If there is a rebound, then April promises to be better as it is usually the most bullish month in the bull cycles that run from November through April, historically.
The Dow dipped 5 points, or 0.03%, to settle at 16,264 on Thursday. The blue-chips traded down to 16,191 on the open and slipped below support at 16,200 before testing 16,300 throughout the session. A close above 16,350 would be bullish for next week while a close below 16,200 would be bearish.
The S&P 500 slipped 3 points, or 0.2%, to end at 1,849. The index tested support at 1,840 after trading to a low of 1,842 at the start of trading but rebounded to push 1,855. The bulls will be trying to clear 1,860 ahead of the weekend but a close below 1,840 would suggest further selling pressure.
The Nasdaq fell 22 points, or 0.5%, to close at 4,151. Tech touched a low of 4,131 and tested its 100-day MA (moving average) before bouncing to a high of 4,186. The bulls will need a close back above 4,175-4,200 to make a run on Monday while the bears will be licking their chops to get under 4,150-4,125 today.
The Russell 2000 gave back 4 points, or 0.4%, to finish at 1,151 on Thursday. The small-caps tested support and its 100-day MA at 1,145 after kissing 1,146 but roared back to push 1,160 after the open. The bulls held 1,150 into the close and if they can clear and hold 1,160, it would be bullish for next week. A close below 1,145 would be bearish and likely lead to 1,125-1,100 over the near-term.
The S&P 500 Volatility Index ($VIX, 14.62, down 0.31) traded in a tight range but ended below 15 again. The bears pushed a high of 15.63 on the open but the bulls kissed 14.49 on the rebound an hour afterwards. There is still risk to 17.50 while a close below 14 today would be mildly bullish.
As we head from desk to press, futures are showing a higher open: Dow (+20); S&P 500 (+3); Nasdaq 100 (+13).
We have a lot to cover this morning with specific instructions for 2 of our current trades we are looking to make 50+%. Subscribers, hit the Members Area for the updates.
MEMBERS AREA
Closed Trades for 2014: 32-18 – the Weekly Wrap is 12-3 for 2014 (97-10, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk.
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.
PowerShares QQQ (QQQ, $86.88, down $0.49)
April 90 calls (QQQ140419C00090000, $0.30, down $0.10)
Entry Price: $0.60 (3/24/2014)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: There is further risk to $85. We would like to see a close back above $87.50-$88 today.
iShares Russell 2000 (IWM, $114.40, down $0.29)
April 120 calls (IWM140419C00120000, $0.25, down $0.05)
Entry Price: $0.70 (3/24/2014)
Exit Target: $1.40
Return: -57%
Stop Target: None
Action: There is further risk to $113-$112.50 on continued selling pressure. A close back above $116 would be bullish.
EMC (EMC, $27.41, up $0.08)
May 29 calls (EMC140517C00029000, $0.30, flat)
Entry Price: $0.50 (3/21/2014)
Exit Target: $1-$1.50
Return: -40%
Stop Target: None
April 28 calls (EMC140419C00028000, $0.25, down $0.05)
Entry Price: $0.50 (3/21/2014)
Exit Target: $1-$1.50
Return: -50%
Stop Target: None
Action: There is further risk to $27 and where we will have to make a decision if tested. We still believe shares are headed north of $30 over the next month or two.
Finish Line (FINL, $26.48, down $0.90)
April 30 calls (FINL140419C00030000, $0.30, down $0.15)
Entry Price: $0.50 (3/20/2014)
Exit Target: $1-$1.50 (Limit Orders)
Return: -40%
Stop Target: None
Action: Set limit orders to close half the trade at $1 and half at $1.50.
Earnings are due out this morning.
Kodiak Oil & Gas (KOG, $11.61, up $0.15)
June 13 calls (KOG140621C00013000, $0.50, up $0.05)
Entry Price: $0.70 (2/13/2014)
Exit Target: $1.40
Return: -29%
Stop Target: None
Action: We believe the company is a takeover candidate and could get a bid north of $15. Support is at $11. Resistance is at $11.75-$12.
Exact Sciences (EXAS, $13.75, HALTED)
April 19 calls (EXAS140419C00019000, $0.20, HALTED)
Entry Price: $0.88 (1/22/2014)
Exit Target: $1.20 (Limit Order)
Return: -77%
Stop Target: None
Action: Set limit orders to close the trade at $1.20 or better.
An FDA advisory panel recommended approval of Cologuard by a unanimous 10-0 vote that the company demonstrated safety, effectiveness and a favorable risk benefits. We believe it is a breakthrough drug that it is non-invasive in screening for colorectal cancer.
The FDA is not required to follow the recommendation of the advisory committee, but does consider their guidance for further evaluations.
We were going to send a New Flash afterwards but shares didn’t get the pop we were looking for. Although they did jump 7% to $14.70 we were looking for a close above $15. Perhaps once shares officially open there will be a run to $20. Now, we have set limit orders to exit at $1.20 on the open as sometimes investors rush to the gates to buy options using market orders. Because we are already in the trade, we could get lucky and get filled. If not, we may have to ride this one out for the next 3 weeks.
Hopefully, biotechs have bottomed and Wall Street sees the good news behind this major development.
Other 2014 Portfolio OPEN positions (3): 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 mkh jb√ 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 April 20 calls (from January 2014) – continue to HOLD
Ariad Pharmaceuticals May 11 calls (from January 2014) – continue to HOLD
Zynga April 5.50 calls (from March 2014) – continue to HOLD
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 and why we have 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
Morgan Stanley (MS, $30.92, down $0.32)
April 32 calls (MS140419C00032000, $0.40, down $0.15)
Thoughts: We could be getting a good entry point if support at $30 holds. We still believe a run to $34-$35 could be coming.
Millennial Media (MM, $6.65, down $0.21)
April 7.50 calls (MM140419C00007500, $0.15, down $0.05)
May 7.50 calls (MM140517C00007500, $0.50, down $0.05)
Thoughts: We have mentioned this company as a takeover target and our feelings haven’t changed. Resistance is at $7.25-$7.50 while near-term support is at $6.75.
Philip Morris (PM, $80.07, down $0.35)
April 80 puts (PM140419C00077500, $1.15, up $0.15)
Thoughts: Shares could test $82 over the near-term. A close below $80-$79 would be bearish.
