The bears got a rare Monday win as the Dow finished lower for the first time in the past 10 but the bulls made some noise as Tech pushed green throughout the session.
The Dow fell nearly 10 points, or 0.1%, to close at 16,937. The blue-chips traded to a low of 16,896 after kissing 16,954 on the open (up 7 points) before spending the rest of the session below water. The cheerleading talking heads may have jinxed a trip past 17,000 but as long as support holds at 16,900-16,800 there is a good chance it happens.
The S&P 500 slipped a quarter-point, or 0.01%, to settle at 1,962. The index gained nearly a point at the open and touched 1,963.74 but fell short of Friday’s high of 1,963.91. Support at 1,960-1,950 held before the bulls nearly made it back to even into the close. A move above 1,965 keeps 1,975-2,000 alive.
The Nasdaq added a half-point, or 0.01%, to end at 4,368.68. Tech touched another 52-week high of 4,371.81 before fading to 4,358 midday. Support at 4,350 held and the bulls pushed positive territory throughout the session. There is still risk to 4,325-4,300 on a dip below this level while 4,400-4,500 remains in play on a pop past 4,375.
The Russell 2000 gave back 3.5 points, or 0.3% to finish a shade under 1,185. The small-caps kissed 1,190 before fading to 1,183 late in the day. A move above this level keeps 1,200 in play while a close below 1,175-1,170 would be bearish.
The S&P 500 Volatility Index ($VIX, 10.98, up 0.13) held 11.50 after testing 11.35 during the first half of trading but drifted lower into the closing bell. A drop below 10.50 and Friday’s low of 10.34 should lead to single-digits.
There were a number of trades that were stopped out yesterday but the good news is they were profitable as I had already lock-in half profits in some of them.
I have been on a roll since early May, knock on wood, as I have gone 14-3, over the past 17 trades. This is an 82% win rate, including the past 9 in-a-row.
These types of rolls help when there is a clear trend (which there has been since late May) as they help offset trades that go against you when trading ranges develop or your on the wrong side of the market during a breakout or breakdown.
I am fortunate enough the market has given GREAT clues since the late May breakout that higher highs were in store once the trading range was resolved.
The December fluff targets for the major indexes I had given in December have all but triggered and I called for the breakout through mid-June. It lasted an extra week and I am hopeful it can last through but I often say calling short-term tops and bottoms are incredibly hard.
Although, I recommended a New Trade yesterday, I still want to be careful before opening the next batch of New Trades. I mentioned a trading range could develop into early July and from there 2Q earnings take center stage.
This will be the next major catalyst that moves the market to continued fresh highs or a drop to prior support levels. The are numerous drama developing overseas and I have said the market can go up during threats of war. However, if bullets start to fly and air strikes increase, hold on as things will likely get ugly.
Futures look like this ahead of the open: Dow (-12); S&P 500 (-2); Nasdaq 100 (-3).
Closed Trades for 2014: 60-33 – the Weekly Wrap is 16-4 (80%) for 2014 (101-11, 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 the 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.
General Motors (GM, $36.67, up $0.45)
September 32 puts (GM140920P00032000, $0.38, down $0.07)
Entry Price: $0.40 (6/23/2014)
Exit Target: $0.80- $1.20
Stop Target: None
Action: Shares tested a high of $36.80 with the September 32 puts trading down to $0.37. This trade has 3 months to play out and why I went longer-term the put options.
I believe shares will make a dramatic back test to $30 if $36-$35 fails to hold. There is risk to $37.50 but I am looking for $36.75-$37 to hold.
BlackBerry (BBRY, $10.12, up $0.31)
August 9 calls (BBRY140816C00009000, $1.40, up $0.20)
Entry Price: $0.45 (6/18/2014)
Exit Target: $0.90 (closed half @ 85 cents on 6/19/14, closed quarter @ $1.40 on 6/23/14)
Stop Target: 90 cents, raise to $1.05 (Stop Limit)
Action: I suggested closing another quarter of the trade after shares traded to a high of $10.14 on Monday. The call options reached a peak of $1.46 and shares held $10 into the close.
I have raised the Stop Limit from 90 cents to $1.05 on the last quarter position. Resistance is at $10.50 and a close above this level could lead to another wave of short-covering. Fresh support will try to hold at $10 with backup at $9.50.
Rambus (RMBS, $14.53, down $0.16)
August 15 calls (RMBS140816C00015000, $0.70, down $0.10)
Entry Price: $0.40 (6/13/2014)
Exit Target: $1.20 Limit Order (closed half @ 80 cents on 6/17/14, closed half @ 70 cents on 6/23/14)
Stop Target: 70 cents (Stop Limit)
Action: Shares traded down to $14.45 following the midday update and the Stop Limit of 70 cents on the other half of the trade triggered.
A close above $14.70 keeps $15 in play. I have said a move above $15 could lead to $18-$20 over the next 3-6 months.
Keep the August 16 calls (RMBS140816C00016000, $0.39, down $0.07) on your Watch List to play a move above $14.75-$15.
Limelight Networks (LLNW, $3.03, up $0.04)
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: A close above $3.25 should get shares rolling again. Support is at $2.75.
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.
Other 2014 Portfolio OPEN positions (2): 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 I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly, when the trade closes or if the options expire. Click on the 2014 Portfolio link in the Members Area to view ALL open/ closed trades.
McDonald’s July 95 puts (from May 2014) – continue to hold
August 23 puts (from April 2014) earnings are due out Wednesday – continue to hold