The month of June has historically been a nightmare for the bulls but with the bears on the ropes from the May breakout, the run to all-time highs continues. There are six trading days left for the month and the bulls have momentum.
The bears could roll over into 2Q July earnings season as most Wall Street pros start to take early vacations (again) but geopolitical events from around the world are still in play.
The Dow added 25 points, or 0.2%, to settle at 16,947 on Friday. The blue-chips traded to an intraday all-time high of 16,978 and remain on track to trip 17,000. On 6/10/14, I said there could be a push to 17,250-17,300 on an overshoot past 17,000 but the second wave of support needed to hold. Support at 16,800 has been solid and a close below this level could be a warning sign. Backup support is at 16,600. The Dow is up 230 points for the month.
The S&P 500 added 3 points, or 0.2%, to close just below 1,963. The index also traded to another fresh 52-week and all-time high of 1,963.91 before closing a point off its peak. I have mentioned if 1,950 held there could be a run to 1,975-2,000. Any closes back below this level, and more specifically, 1,940 would be bearish. The S&P 500 is up nearly 40 points for the month.
The Nasdaq jumped nearly 9 points, or 0.2%, to end at 4,368. Tech also kissed a fresh 52-week high of 4,368.80 and is less than 1% away from triggering my 4,400-4,500 fluff targets from December. As long as 4,350-4,325 holds as support there is a good possibility for higher highs. A close below 4,300 could signal a short-term top. The index is up 126 points for June.
The Russell 2000 advanced 4 points, or 0.4%, to finish at 1,188.52. The small-caps went out near their session high and remain on a mission to tag 1,200 again. Fresh support at 1,175 needs to hold on any back test this week. There is risk to 1,160 on a close below this level. The index is up 54 points for the month.
The S&P 500 Volatility Index ($VIX, 10.85, up 0.23) traded to another 52-week and 7-year low of 10.34 on Friday. I have broken the record in saying the index will test single-digits this year but the skip to single-digits will irritate Wall Street even more once it does. There were several prominent “Wall Street” pros that came on tv and continued their bashing of the VIX on Friday. At least 3 suit-and-ties said the index was a useless indicator but to the contrary, it has been one of the BEST market tools I use and has been for over two decades.
The bulls are working on a 9-session Monday win streak for the Dow and will be looking to make it 10 to start the week. The Friday closes have been just as bullish with the blue-chips up 7-straight with his past Friday’s push to all-time highs.
The VIX continues to hold 11.50-12.50 and a drop into single-digits is still in play. I have talked about additional fluff for the market and June could end with a bang if the bulls get below 10.
The small-caps could lead the bullish run into July as the indexes rebalance after the close this Friday. It is an annual event every June as new stocks are shuffled-in while older ones with lesser rank are shipped out. This could also help the Monday/ Friday closes and signal money is continuing to flow into the market.
Heading from desk to press, futures look like this: Dow (+12); S&P 500 (+2); Nasdaq 100 (+3).
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CVS Caremark (CVS, $76.79, down $0.66)
August 80 calls (CVS140816C00080000, $0.65, down $0.15)
Entry Price: $0.60 (6/18/2014)
Exit Target: $1.20
Stop Target: 60 cents (Stop Limit)
Action: Shares slipped nearly 1% on Friday and traded to a low of $76.72. The calls traded down to 64 cents. I have a Stop Limit of 60 cents that could trigger if shares open lower. A close above $78 would be bullish. Support is at $76-$75.
Note: Walgreen (WAG, $74.54, down $0.85) reports on Tuesday so shares could trade in tandem and why I may exit the trade, either way. More in the midday update.
BlackBerry (BBRY, $9.81, up $0.72)
August 9 calls (BBRY140816C00009000, $1.20, up $0.50)
Entry Price: $0.45 (6/18/2014)
Exit Target: $0.90 (closed half @ 85 cents on 6/19/14)
Stop Target: 60 cents, raise to 90 cents (Stop Limit)
Action: Shares traded to a high of $9.89 on Friday and remain on track to trip $10. I have raised the Stop Limit to 90 cents on the other half of the trade. Support is at $9.
Rambus (RMBS, $14.69, up $0.04)
August 15 calls (RMBS140816C00015000, $0.80, flat)
Entry Price: $0.40 (6/13/2014)
Exit Target: $1.20 Limit Order (closed half @ 80 cents on 6/17/14)
Stop Target: 70 cents (Stop Limit)
Action: Rambus kissed $14.71 and a fresh 52-week high. A close above $14.70 keeps $15 in play. I have said a close above $15 should get $18-$20 in play.
Support is at $14.50 with backup at $14. I have a Stop Limit of 70 cents on the other half of the trade.
Imax (IMAX, $27.77, down $0.48)
September 28 calls (IMAX140920C00028000, $1.40, down $0.20)
Entry Price: $0.60 (6/5/2014)
Exit Target: $1.20 (closed half @ $1.30 on 6/16/14)
Stop Target: $1.20 (Stop Limit)
Action: The close back below $28 was discouraging but the stop limit held on Friday. A dip below $27.50 will likely close the trade. I’m still hopeful a run to $30 comes if shares can clear $28 again.
Limelight Networks (LLNW, $2.99, flat)
September 3 calls (LLNW140920C00003000, $0.40, flat)
Entry Price: $0.15 (6/4/2014)
Exit Target: $0.45
Stop Target: None
December 3 calls (LLNW141220C00003000, $0.50, flat)
Entry Price: $0.20 (6/4/2014)
Exit Target: $0.60
Stop Target: None
Action: Shares traded to a high of $3.25 last Monday after Tuition Build offered roughly $645 million, or $6.55 a share, for Limelight. The company dismissed the Silicon Valley’s private-equity firm’s offer after basically saying they weren’t experienced enough to run the business.
I have been suggesting a buyout offer would come for Limelight Networks with the company’s cheap market cap and said they would make a very luscious takeover target.
Its litigation issues have decreased dramatically following their recent win against AKAM and they are open to a much bigger marriage.
A close above $3.25 should get shares rolling again. Support is at $2.75.
Roth Capital lifted its Price Target for Limelight Networks to $4.50 from $3 following its recent court win against AKAM. I have already covered the acquisition appeal of the stock and Captain Obvious echoed those comments last week. I was hoping shares would go unnoticed by the suit-and-ties and perhaps they have been reading my updates but I have a much higher target for Limelight. I have said shares could make a run to $5, possibly $8 if the takeover talk heats up over the summer.
Apple, Google, Facebook, Microsoft and Verizon, just to name a few, could take a look at this company as it looks to build out its CDN network. Limelight has a market cap of just $280 million and would be a great acquisition target for Apple. The market cap was just $214 million when I started recommending shares at the end of May at $2.16.
Bed, Bath & Beyond (BBBY, $60.07, down $0.61)
August 55 puts (BBBY140816P00055000, $0.75, up $0.20)
Entry Price: $0.63 (5/14/14)
Exit Target: $1.25
Stop Target: None
Action: Earnings are due out on Wednesday. Shares briefly dipped below $60 on Friday and I have been calling for a drop to double-nickels on a close below this level.
Shares could move 10+%, or $5-$6, depending on how their numbers and outlook come in. I would like to see a close below $60 to start the week. If not, I may close the trade if shares look like they may be headed to $65.