9:00am (EST)

Monday was the first battle in what will be another war this week and the rest of the month between the bulls and bears.  Both sides made strong statements as the bears tried to push the next layers of support with the bulls still gunning for higher highs.

Although the lackluster close may not have given Wall Street any clue on how the rest of the week might play out, there were a few bullish signs I saw that still keeps higher highs in play.

The Dow added 5 points, or 0.03%, to close at 16,781 on Monday.  The blue-chips traded to a low of 16,722 shortly ahead of Wall Street’s lunch break but rebounded to push a high of 16,802.  Resistance at 16,800 held along with support at 16,600.  It was the bulls ninth-straight Monday win and the pop above 16,800 was slightly bullish.

The Dow added 5 points, or 0.03%, to close at 16,781 on Monday.  The blue-chips traded to a low of 16,722 shortly ahead of Wall Street’s lunch break but rebounded to push a high of 16,802.  Resistance at 16,800 held along with support at 16,600.  It was the bulls ninth-straight Monday win and the pop above 16,800 was slightly bullish. (Read More…)

The S&P 500 gained nearly 2 points, or 0.1%, to settle at 1,937.  The bears pushed a low of 1,930 midday but were unable to crack support at 1,925.  The bulls made a run past 1,940 to 1,941 but were unable to hold this level by the close.

The Nasdaq advanced 10 points, or 0.2%, to end at 4,321.  Tech tested a low of 4,296 during Monday’s session but the bulls held support at 4,300 while pushing a high of 4,326.  A close above 4,325 should get 4,350 and fresh highs in play.

The Russell 2000 slithered 4 points higher, or 0.4%, to finish at 1,166.  The small-caps tested 1,158 with support at 1,160 getting stretched before making a run to 1,170 and ending at near session highs.

The S&P 500 Volatility Index ($VIX, 12.65, up 0.47) traded up to 12.87 and tested the 12.50 level throughout the day before ending just north of this level.  I mentioned a close above 13.50 would be bearish and this level needs to be watched carefully this week.  If the bulls can get the VIX back below 11.50 then higher highs are still in store.

There were a number of trades in the current portfolio that showed strong gains yesterday.  I’m looking for continued gains but have raised the Stop Limits to protect the massive profits as mid-June has now passed.

I called for the breakout to higher highs and said in May a rally could last through mid-June.  I would love to see higher highs and the “blow-off” top that accompanies bull market tops and perhaps another trading range is developing but it is now past mid-June, technically.

I don’t believe it is time to actively search for short positions as the bulls have been fooling Wall Street for 2 years but I am cautious this week with all of the economic news scheduled and the global drama unfolding.

I mentioned yesterday to continue the ride the wave higher on one trade and that is what I have been doing while taking profits.  There will be a TON of room after the week to start New Trades as the June options expire this week and I have locked-in half positions on a number of trades including a few that are now up triple-digits..

Once again, the portfolio should be well positioned for more big paydays into July, August and September.  The patience in May has paid off but it is important not to give back the incredible gains in case another trading range is developing or lower lows are in store.  Time will tell.

Heading into the open, futures look like this:  Dow (+15); S&P 500 (+2); Nasdaq 100 (+4).

 

Closed Trades for 2014: 50-30 – the Weekly Wrap is 15-4 (79%) for 2014 (100-11, or 90% 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.

Rambus (RMBS, $14.38, up $0.74)

August 15 calls (RMBS140816C00015000, $0.70, up $0.25)

Entry Price:  $0.40 (6/13/2014)
Exit Target:  $0.80-$0.90 (Limit Order on HALF)
Return:  75%
Stop Target:  40 cents

Action:  Set Limit Orders to close HALF the trade at 90 cents or better today.

If not triggered, I would like to get 80 cents and will update the position with a Trade Alert shortly after the open or in the midday update.

Shares traded to a fresh 52-week peak of $14.40 on Monday and ended 2 pennies off their high.  The call options traded to a high of 73 cents.  I have listed a Stop Target of 40 cents but it is not a Stop Limit order, yet.

Kodiak Oil & Gas (KOG, $13.59, down $0.20)

July 14 calls (KOG140721C00014000, $0.50, down $0.05)

Entry Price:  $0.35 (6/11/2014)
Exit Target:  $0.70
Return:  43%
Stop Target:  40 cents (Stop Limit)

Action:  Kodiak traded to a low of $13.50 yesterday as the options held above the 40-cent Stop Limit.  A dip below $13.50 will likely close out the trade but I’m looking for shares to clear $14 over the near-term.

Support is at $13.50-$13.  I have set a stop limit of 40 cents to protect profits.  A close above $14 would be bullish and get 52-week highs in play.

Hercules Offshore (HERO, $4.99, up $0.16)

October 5 calls (HERO141018C00005000, $0.55, up $0.10)

Entry Price:  $0.35 (6/11/2014)
Exit Target:  $0.70
Return:  50%
Stop Target:  None

Action:  Shares made a run past $5 to $5.05 while finishing just below this level into the close.  Next up is a trip to $6 if Hercules can hold fresh support.  Backup is at $4.60 and the 100-day MA.

Imax (IMAX, $27.85, up $0.87)

September 28 calls (IMAX140920C00028000, $1.30, up $0.35)

Entry Price:  $0.60 (6/5/2014)
Exit Target:  $1.20 (closed half @ $1.30 on 6/16/14)
Return:  117%
Stop Target:  70 cents, raise to $1 (Stop Limit)

Action:  Imax tested resistance after trading to a high of $28.  The options kissed $1.40.  Half of the trade was closed at $1.30 on Monday during the midday update to lock-in profits.  I have raised the Stop Limit from 70 cents to $1 on the other half of the trade but shares could still make a run at $30.

Limelight Networks (LLNW, $2.98, up 0.15)

September 3 calls (LLNW140920C00003000, $0.40, up $0.10)

Entry Price:  $0.15 (6/4/2014)
Exit Target:  $0.45
Return:  167%
Stop Target:  None

December 3 calls (LLNW141220C00003000, $0.50, up $0.10)

Entry Price:  $0.20 (6/4/2014)
Exit Target:  $0.60
Return:  150%
Stop Target:  None

Action:  I certainly didn’t believe a buyout offer would come so quickly for Limelight Networks but I mentioned the company’s cheap market cap would make it a very luscious takeover target.  Its litigation issues have decreased dramatically following their recent win against AKAM and profits are starting to turn around.

A bid by Tuition Build offered roughly $645 million, or $6.55 a share, that Limelight rejected.

Shares have traded to $3.25 but simmered after the company dismissed the Silicon Valley’s private-equity firm’s offer as a serious marriage.

I was a little disappointed shares couldn’t hold $3 but these are longer-term options and higher bids north of $7 could come over the next 3-6 months.

The September 3’s traded to a high of 53 cents while while the December 3’s kissed double-nickels (55 cents).

Fortinet (FTNT, $24.17, up $0.55)

July 25 calls (FTNT140719C00025000, $0.55, up $0.10)

Entry Price:  $0.25 (6/4/2014)
Exit Target:  $0.50 (closed half @ $0.45 on 6/11/14)
Return:  100%
Stop Target:  30 cents, raise to 40 cents (Stop Limit)

July 24 calls (FTNT140719C00024000, $1.00, up $0.25)

Entry Price:  $0.45 (5/30/2014)
Exit Target:  $0.90 (closed half @ $0.80 on 6/11/14)
Return:  100%
Stop Target:  60 cents, raise to 80 cents (Stop Limit)

Action:  Shares traded to a fresh 52-week peak of 14.22 yesterday.  I have raised the Stop Limits on the other halves of the trades to continue to protect profits.

Twitter (TWTR, $38.02, up $1.12)

January 50 calls 2015 (TWTR150117C00050000, $2.30, up $0.30) LEAP option

Entry Price:  $1.75 (5/8/2014)
Exit Target:  $3.50 (closed half @ $2.10 on 6/12/14)
Return:  26%
Stop Target:  $1.70, raise to $1.80 (Stop Limit)

Action:  Shares made a nice run past past $38 to $38.07 after the midday update.  I mentioned close above $37.50 would be bullish for a run to $38-$40.  Support is at $35 and is moving up.  Yesterday’s low on the options was $2.05 so I have raise the Stop Limit to $1.80.

Bed, Bath & Beyond (BBBY, $60.33, up $0.10)

June 60 puts (BBBY140621P00060000, $0.35, down $0.10)

Entry Price:  $0.60 (5/14/14
Exit Target:  $0.90 (Limit Order)
Return:  -42%
Stop Target:  None

August 55 puts (BBBY140816P00055000, $0.50, down $0.10)

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

Action:  Shares traded to a low of $60.08 on Monday.  The June puts made a tremendous comeback last week and why I say to always trust your chart work.  Of course, the premium in the June calls will evaporate quickly this week so I’d like to see a close below $60 today.

The break even point on the June puts is at $59.40, technically, by Friday’s close as the entry price was 60 cents.  I do not want to carry the trade into Friday but might have too.  I have set Limit Orders to exit the trade at 90 cents.

The August puts still have plenty of time to wait for a continued breakdown.  Earnings are due out next week.

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
McDonald’s July 95 puts (from May 2014) – continue to hold
Apollo Group – continue to hold
June 25 puts (from April 2014)
August 23 puts (from April 2014)