The bears made an attempt at cracking the second layers of support on Wednesday’s open but ran into a bullish brick wall. The bulls responded quickly and easily defended the weak attack as they regained half of Tuesday’s losses.
The Dow gained 49 points, or 0.3%, to finish at 16,867. The blue-chips traded to a low of 16,799.41 and held support at 16,800 before rebounding to push a high of 16,883. The index is less than 1% from clearing 17,000 and a pop past 16,900 this week could do the trick.
The S&P 500 added 9 points, or 0.5%, to close at 1,959.53. The bears pushed a 2-point loss to 1,947 before the bulls made a run past 1,960. A close above this level keeps 1,975 in play. The 1,950-1,940 level still needs to be watched in case yesterday’s action was just a back test to resistance.
The Nasdaq advanced 29 points, or 0.7%, to settle at 4,379. The dip to 4,339 easily held support at 4,325. The close above 4,375 keeps my December fluff targets of 4,400-4,500 in the mix.
The Russell 2000 jumped 9 points, or 0.8%, to end at 1,182. The small-caps slid 5 points to 1,168 and below support at 1,170 before clearing 1,175 again. The index ended near session highs and is back on track to test 1,200.
The S&P 500 Volatility Index ($VIX, 11.59, down 0.54) tested 11.37 but the bulls were unable to hold down 11.50. The bears are trying to clear and hold 12.50.
Ahead of the open, futures are up: Dow (+9); S&P 500 (+1); Nasdaq 100 (+1).
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, $37.09, up $0.51)
September 32 puts (GM140920P00032000, $0.35, down $0.05)
Entry Price: $0.40 (6/23/2014)
Exit Target: $0.80- $1.20
Stop Target: None
Action: The hits keep coming. After the close, GM announced it was halting sales of its Chevy Cruze for possible air bag issues. Shares were back below $37 in extended trading.
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, up $0.10)
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