The bulls were looking to extend their Wednesday gains and make another run at all-time highs today but the bears have been relentless in their pursuit in getting below key support levels.
The trading range that is developing is hinting at lower lows but there is still another half of trading to go and the bulls will be fighting just as hard to hold support.
Nike (NKE, $76.08, down $0.39) will report their numbers after the close and will weight on the Dow Friday. Analysts are expecting the company to earn 75 cents a shares on $7.34 billion in revenues.
There are 26 suit-and-ties that follow Nike with a high estimate of 80 cents a share with a low estimate of 70 cents a share. This means there is a good chance of a big beat or miss.
Bed Bath & Beyond (BBBY, $56.26, down $4.85) is sinking 8% after lowering their outlook and missing Wall Street estimates. I mentioned there could be a dip to double-nickels if they came up short and today’s low checked in at $54.96.
The August 55 calls (BBBY140816P00055000, $1.10, up $0.60) have doubled on the move. I had recommend these calls back in May and was whipsawed out of the trade for a slight profit earlier this week after shares popped past $61.
I should have looked at the July puts but there was also the chance of the company beating estimates so I stayed on the sidelines.
I have played Nike’s earnings from time-to-time over the years, usually bullish, but I am not as confident this time around. However, I don’t like making short bets against Nike.
Heading into the final hours of trading, the Dow is down 83 points to 16,784 while the S&P 500 is lower by 9 points to 1,950. The Nasdaq is declining 18 points to 4,361 and the Russell 2000 is slipping 5 points to 1,177.
Closed Trades for 2014: 63-33 – the Weekly Wrap is 18-4 (82%) for 2014 (103-11, 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. I will send out a “Profit Alert” or “New Trade” if I 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, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
General Motors (GM, $36.75, down $0.34)
September 32 puts (GM140920P00032000, $0.40, up $0.05)
Entry Price: $0.40 (6/23/2014)
Exit Target: $0.80- $1.20
Stop Target: None
Action: 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. This trade has 3 months to play out and why I went with the longer-term put options.
Limelight Networks (LLNW, $3.01, flat)
September 3 calls (LLNW140920C00003000, $0.35, flat)
Entry Price: $0.15 (6/4/2014)
Exit Target: $0.45
Stop Target: None
December 3 calls (LLNW141220C00003000, $0.45, flat)
Entry Price: $0.20 (6/4/2014)
Exit Target: $0.60
Stop Target: None
Action: shares closed back above $3 and ended at session highs. A close above $3.25 should get shares rolling again. Support is at $2.75.
Shares traded to a high of $3.25 on 6/20 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
Apollo Group August 23 puts (from April 2014) – continue to hold