The bulls battled back ahead of Thursday’s close to nearly get the win but more importantly, held support. The bears made another strong attack at the open and triggered lower lows but their efforts were once again wasted.
The Dow dipped 21 points, or 0.1%, to end at 16,846. The blue-chips fell below 16,800 after testing a low of 16,746 but recovered to hold support. The next 1% move higher or lower from here could be a great clue for how next week and July might play out.
The S&P 500 slipped 2 points, or 0.1%, to settle at 1,957. The index tried to clear 1,960 on the open after pushing 1,959.89 but quickly faded to 1,944. I have talked about 1,950-1,940 being a crucial zone for the bulls to hold and they have done so for 3-straight sessions.
The Nasdaq declined a point, or 0.02, to close at 4,379. Tech tumbled to 4,347 at the start of trading but made a steady uphill climb to recover 4,350-4,375. This was a bullish sign and keeps 4,400-4,500 on the radar.
The Russell 2000 gave back 2 points, or 0.2%, to close at 1,180. The small-caps fell 10 points to 1,172 after a tenth of a point pop into positive territory on the open. Support at 1,175-1,170 has held all week and the continued closes above 1,180 is also bullish.
The S&P 500 Volatility Index ($VIX, 11.63, up 0.04) traded to 12.51 but was basically flat for the second half of trading on Thursday. I have mentioned a close above 12.50 could lead to further weakness while a finish below 11.50 keeps single-digits in play.
Friday’s have been bullish for 7-straight weeks but the bears snapped Monday’s streak at 9. Today could be a spicy with the rebalancing of the Russell indexes.
Heading from desk to press, futures look like this: Dow (-32); S&P 500 (-5); Nasdaq 100 (-8).
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, $36.90, down $0.19)
September 32 puts (GM140920P00032000, $0.35, flat)
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, $3.03, up $0.02)
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: 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