9:00am (EST)
The bulls cleared one major hurdle on Thursday and were facing a huge test ahead of this morning’s open.
The Dow jumped 98 points, or 0.6%, to settle at 16,836. The blue-chips traded down to 16,709 shortly after the open but support at 16,700-16,600 has been building a floor. The index traded to a high of 16,845 and is just 1% away from triggering 17,000.
The S&P 500 soared 12 points, or 0.7%, to end at 1,940. The index touched a low of 1,922 in the first 30 minutes of trading but I have been saying the lower lows and the hold above 1,925 could power a push to 1,950. Thursday’s all-time reached a peak of 1,941.74.
The Nasdaq zoomed 44 points, or 1.1%, to settle at 4,296. Tech tested 4,241 but easily recovered the 4,250 level and made a strong run at 4,300. I mentioned the continued closes higher and surge above 4,250 could lead to a run to 4,300 and 52-week highs. Thursday’s intraday high reached 4,299.50. Imagine that.
The Russell 2000 rocketed 23 points, or 2%, to settle just below 1,154. The small-caps traded to a low of 1,128 and said a near-term goodbye to 1,125. I talked about the push and closes above 1,140 last week was suggesting a pop past 1,150 and up to 1,175. So far, so good.
The S&P 500 Volatility Index ($VIX, 12.68, down 0.40). The bears pushed 12.34 at the start of trading but I continued to remind readers to stay relaxed until 12.50 cracks. The bulls need to get below 11.50 ahead of the weekend to confirm possible higher highs into next week.
I will cover this morning’s NonFarm Payroll report in the midday update. Futures have moved higher and look like this after the news was just released: Dow (+30); S&P 500 (+3); Nasdaq 100 (+6).
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.
Imax (IMAX, $25.88, up $0.37)
September 28 calls (IMAX140920C00028000, $0.70, up $0.15)
Entry Price: $0.60 (6/5/2014)
Exit Target: $1.20
Return: 17%
Stop Target: None
Action: Resistance is at $26.25 and the 50-day MA. A close above this level should get $28-$30 in play. A big box-office weekend could provide a nice pop next week. Support is at $25.50 and I will stick with the trade as long as $25-$24 holds.
Limelight Networks (LLNW, $2.69, up $0.19)
September 3 calls (LLNW140920C00003000, $0.25, up $0.05)
Entry Price: $0.15 (6/4/2014)
Exit Target: $0.45
Return: 67%
Stop Target: None
December 3 calls (LLNW141220C00003000, $0.35, up $0.10)
Entry Price: $0.20 (6/4/2014)
Exit Target: $0.60
Return: 75%
Stop Target: None
Action: I’m expecting a near-term run to $3. Shares went out at session highs.
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.
Fortinet (FTNT, $22.79, up $0.24)
July 25 calls (FTNT140719C00025000, $0.30, up $0.05)
Entry Price: $0.25 (6/4/2014)
Exit Target: $0.50
Return: 20%
Stop Target: None
July 24 calls (FTNT140719C00024000, $0.55, up $0.05)
Entry Price: $0.45 (5/30/2014)
Exit Target: $0.90
Return: 22%
Stop Target: None
Action: The 52-week high of $23.93. Support is at $22.
Apollo Group (APOL, $27.55, up $0.43)
June 25 puts (APOL140621P00025000, $0.15, down $0.05)
Entry Price: $0.55 (4/28/2014)
Exit Target: $1.10 (limit order to close half)
Return: -73%
Stop Target: None
August 23 puts (APOL140816P00023000, $0.55, down $0.05)
Entry Price: $0.70 (4/28/2014)
Exit Target: $1.40 (limit order to close half)
Return: -21%
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 to keep the bulls of the stock uneasy.
The company will report earnings in a couple of weeks. The June options expire in 2 weeks. The first half of the trade could come down to the wire. I will place the trade on hold as I expect one of the hedge-fund guys to announce their major short position in the company.
I mentioned I may have blew it with the June puts as the were profitable for a brief hour the week before last but I’m expecting shares to tank once earnings come out.
Bed, Bath & Beyond (BBBY, $61.33, up $0.22)
June 60 puts (BBBY140621P00060000, $0.35, down $0.05)
Entry Price: $0.60 (5/14/2014)
Exit Target: $1.20
Return: -42%
Stop Target: None
August 55 puts (BBBY140816P00055000, $0.50, flat)
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. 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, $33.89, up $0.99)
January 50 calls 2015 (TWTR150117C00050000, $1.45, up $0.15) LEAP option
Entry Price: $1.75 (5/8/2014)
Exit Target: $3.50-$5
Return: -17%
Stop Target: None
Action: Support has moved up to $32.50. Resistance is at $35. Shares traded to a high of $34.89 on Thursday.
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) – continue to hold
Kirkland’s June 15 puts (from May 2014) – continue to hold
McDonald’s July 95 puts (from May 2014) – continue to hold
