9:00am (EST)

The bulls clear another layer of resistance as the market pushed fresh highs with the small-caps and Tech also recovering.

The Dow added 15 points, or 0.1%, to settle at 16,737.  The blue-chips traded down to 16,673 shortly after the open but recovered and pushed 16,742.  The index came within 14 points of its all-time intraday high of 16,756 and remains on track to test 16,800-17,000.  Support remains 16,700-16,600.

The S&P 500 gained nearly 4 points, or 0.2%, to end at 1,927.  The index touched a low of 1,918 but rebounded 10 points to push another all-time intraday high of 1,928.63.  The close above 1,925 signals the bulls are serious at making a run at 1,950-1,960.  The bears are hoping to get back below 1,925 but support is rising from 1,909 to 1,915.

The Nasdaq jumped 17 points, or 0.4%, to close at 4,251.  Tech was also weak at the open as the index tested 4,216 but support at 4,200 has been a rock. The bulls made a run to 4,256 and held 4,250.  Bingo.  This clears the way for a rally to 4,300 and fresh 52-week peaks.

The Russell 2000 skipped 5 points higher, or 0.5%, to finish at 1,131.  The small-caps traded to a low of 1,119 during the first 30 minutes and held the 200-day once again before clearing 1,130.  The bulls have the 1,140 hurdle coming with 1,150 being the wall that must be climbed.  The bears are shooting for 1,125-1,120 by the weekend.

The S&P 500 Volatility Index ($VIX, 12.08, up 0.21) continues its caterpillar crawl towards 12.50 after testing 12.33 on the open.  I have said the VIX has room to 12.50-13.50 before Wall Street gets nervous.  Today could be the day the bears make a stab at these levels while another close below 11.50 would be confirmation higher highs on the S&P are coming.

Side Note:  I talked about Apple and its upcoming stock-split and the move shares can make ahead of the official split date.  With the stock at $628 ahead of Tuesday’s open, they traded to a low of $628.25 and closed at $637.  On Wednesday, shares reached $647.89 and closed just south of $645.

The July 700 calls (AAPL140719C00700000, $4.45, up $1.65) were going for $2.30 on Tuesday’s open and the Watch List has been a big hit.  The July 700 calls doubled during Wednesday’s trading.


I mentioned for the traders that have the options trading manual, How to Trade Options on Momentum Stocks, I said to flip to page 109 to play the move ahead of the official split.  I mentioned this on Sunday night and Monday morning.

As you can see from the Yahoo Finance quote below, these call options traded to a high of $5.35.  This was not an official trade for the newsletter but for the experienced traders that have emailed me, yes, close half the trade at current levels.  Let the rest ride with a stop limit at $3.

Heading from desk to press, futures look like this:  Dow (+1); S&P 500 (-0.20); Nasdaq 100 (-1).


Closed Trades for 2014: 50-28 – the Weekly Wrap is 15-3 (83%) for 2014 (100-10, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk.  All trades are dated and time stamped so new subscribers can look at our past history to see how the trades have played out.

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 12pm-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.

Limelight Networks (LLNW, $2.50, up $0.13)

September 3 calls (LLNW140920C00003000, $0.15, up $0.05)

Entry Price:  $0.15 (6/4/2014)
Exit Target:  $0.45
Return:  0%
Stop Target:  None

December 3 calls (LLNW141220C00003000, $0.25, up $0.15)

Entry Price:  $0.20 (6/4/2014)
Exit Target:  $0.60
Return:  25%
Stop Target:  None

Action:  The Weekly Wrap has covered this company 3 times over the past 3 years at $3.11, $3.43, and a recent $2.09.  I have talked about the company be the perfect takeover target for Apple, Google, Cisco, and even Netflix.  Of course, these rumors have come and gone but the real story is the turnaround Limelight is making.  The past quarter was a success and the recent court victory against was a huge win.

I’m expecting analysts and other research firms to jump on the bandwagon over the summer and why I went with the longer-term options.

It could be a long bullish, bearish, or choppy range bound market this summer but I like the fundamentals and the takeover chatter surrounding the company.

If shares make a run to $3.50, the return should be 200% for each trade.  A close above $4 would make both calls worth $1 and an even bigger payday.  I love this story and I’ve invested a nice penny with the hopes shares reach $5 by mid-December.

Fortinet (FTNT, $22.55, up $0.35)

July 25 calls (FTNT140719C00025000, $0.25, up $0.05)

Entry Price:  $0.25 (6/4/2014)
Exit Target:  $0.50
Return:  0%
Stop Target:  None

July 24 calls (FTNT140719C00024000, $0.50, up $0.10)

Entry Price:  $0.45 (5/30/2014)
Exit Target:  $0.90
Return:  11%
Stop Target:  None

Action:  I added the July 25 calls yesterday as it appears shares will make a run at the 52-week high of $23.93.  Support is at $22.

Apollo Group (APOL, $27.12, up $0.48)

June 25 puts (APOL140621P00025000, $0.20, down $0.05)

Entry Price:  $0.55 (4/28/2014)
Exit Target:  $1.10 (limit order to close half)
Return:  -64%
Stop Target:  None

August 23 puts (APOL140816P00023000, $0.60, down $0.10)

Entry Price:  $0.70 (4/28/2014)
Exit Target:  $1.40 (limit order to close half)
Return:  -14%
Stop Target:  None

Action:  A break below $26 should lead to the low $20’s.  Strong resistance is at $28.  The June puts continue to get drained as the time premium starts to erode so shares need to close below $26 this week to keep the bulls of the stock uneasy.

The company will report earnings in a couple of week.  The June options expire in 2 weeks from Friday.  The first half of the trade could come down to the wire.

Bed, Bath & Beyond (BBBY, $61.11, up $0.13)

June 60 puts (BBBY140621P00060000, $0.45, down $0.05)

Entry Price:  $0.60 (5/14/2014)
Exit Target:  $1.20
Return:  -25%
Stop Target:  None

August 55 puts (BBBY140816P00055000, $0.50, down $0.05)

Entry Price:  $0.63 (5/14/2014)
Exit Target:  $1.25
Return:  -21%
Stop Target:  None

Action:  Support is at $60 and a break below this level will likely lead to $57.50-$55.  An analyst downgrade would be nice this week.  Resistance is at $61.50-$62.50.  BBBY also reports the same week APOL does.  I am expecting both companies to miss Wall Street’s expectations and they could/ should pre-announce if this is the case.

Twitter (TWTR, $32.90, up $0.32)

January 50 calls 2015 (TWTR150117C00050000, $1.20, up $0.10) LEAP option

Entry Price:  $1.75 (5/8/2014)
Exit Target:  $3.50-$5
Return:  -31%
Stop Target:  None

Action:  Support has moved up to $32.50.  Resistance is at $35.

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 accordingly, when we close them or if the options expire.  Click on the 2014 Portfolio link in the Members Area to view ALL open/ closed trades.

iShares Russell 2000 June 103 puts (from May 2014)
Kirkland’s June 15 puts (from May 2014)
McDonald’s July 95 puts (from May 2014)