9:00 a.m. (EST)

The bulls put up a good fight but eventually lost Monday’s battle with the bears. It was the first Monday loss in six weeks for the blue-chips, but support held despite the losses, while tech and the small-caps showed strength on the day.

The Dow declined 26 points, or 0.15%, to settle at 17,111. The blue-chips traded to a low of 17,079 and held 17,000 while closing above 17,100. There is continued risk to 16,800 if 17,000 fails to hold, but yesterday’s close was bullish. Resistance is at 17,150, and a move above this level keeps 17,350-17,500 in play.

The S&P 500 slipped a six-pack, or 0.3%, to close at 2,001. The index traded in negative territory throughout the session and tested a low of 1,995.60. I have warned that a close below 1,995 could lead to 1,975. The bulls will obviously be trying to regain the 2,000 level today, which would keep my near-term target of 2,025-2,050 in play.

The Nasdaq added 9 points, or 0.2%, to finish at 4,592. Tech made another run past 4,600 by a half-point but was dragged down by the overall market weakness before a final hour recovery. The continued closes above 4,575 are bullish, as it keeps the door open for a run to 4,700 once 4,600 clears and holds on the close. There is risk to 4,550-4,500 on a close below 4,575. Yesterday’s intraday low was 4,570. Apple (AAPL, $98.36, down $0.61) will play a major role in market sentiment today, and shares will either help or hurt tech in the second half of trading.

The Russell 2000 advanced 2 points, or 0.2%, to end at 1,172. The small-caps traded to a high of 1,174 but struggled to clear resistance at 1,175. The bears pushed a low of 1,166 but failed at cracking support at 1,160 before the bulls held the 1,170 level by the closing bell. A breakout should occur on a close above 1,180. A breakdown could occur on a close below 1,160.

The S&P 500 Volatility Index ($VIX, 12.66, up 0.57) stayed elevated throughout the session after opening at 12.40 and testing 13.09. The close above 12.50 again was the second strike in the past three sessions against the bulls, although they held 13.50. A close above this level needs to be watched like a hawk, while a drop under 11.50 would confirm higher highs are in store.

Coming into the week, I had a feeling that Monday might be a tossup, but I’m expecting the bulls to reach continued fresh highs by the end of the week, so let’s see how it plays out.

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From desk to press, futures look like this: Dow (+13); S&P 500 (+1.5); Nasdaq 100 (+6.5).

 

Momentum Options Play List

Closed Trades for Momentum Options in 2014: 75-44 – the Weekly Wrap is 25-4 (86%) for 2014 (110-11, or 91% 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 I 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 9 a.m. and 12 p.m. – 1 p.m. 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.

Special Note: September options expire in 10 days, and I often consider any option with less than three weeks until expiration a danger zone. Trades that are up and have partial profits taken are an exception, of course, but there are still a few trades that are coming down to the wire. Keep the faith, as I’m trying to close a few of them for profits.

 

PowerShares QQQ (QQQ, $100.05, up $0.16)

QQQ October 102 calls (QQQ141018C00102000, $0.58, up $0.02)

Entry Price: $0.52 (9/5/2014)

Exit Target: $0.80 and $1.05 (limit order to close half at 80 cents)

Return: 12%

Stop Target: None

Action: The 52-week high of $100.31 was set last week, and I’m looking for a run to $102 over the near-term. I have planned to be out of this trade by Friday and have set two exit targets. I would like to close half of the trade at 80 cents and the other half at $1.05 (or better) this week. Yesterday’s high was 67 cents. Support is at $98, with backup at $97 and the 50-day moving average.

 

iShares Russell 2000 (IWM, $116.56, up $0.18)

IWM October 120 calls (IWM141018C00120000, $0.68, flat)

Entry Price: $0.62 (9/5/2014)

Exit Target: $1.25

Return: 10%

Stop Target: None

Action: I have talked about the small-caps needing to clear 1,180, which is the $118 level on the iShares. If cleared, a run to 1,200 for the index, or $120 for the iShares is in the mix. Support is at $115 and the 50-day moving average.

 

Flextronics (FLEX, $11.18, up $0.15)

FLEX October 12 calls (FLEX141018C00012000, $0.10, up $0.02)

Entry Price: $0.07 (9/5/2014)

Exit Target: $0.15-$0.25

Return: 43%

Stop Target: None

 

FLEX January 11 calls (FLEX150117C00011000, $0.80, up $0.05)

Entry Price: $0.68 (9/5/2014)

Exit Target: $1.50+

Return: 20%

Stop Target: None

Action: Shares traded to a high of $11.21 yesterday. Near-term resistance is at $11.25 and, if cleared, could lead to a run at fresh 52-week peaks again.

I believe shares are going to make a strong move past $12 in the coming weeks, $14 by year-end. There is risk to $10.75-$10.50 on a drop below $11.

Previous Notes:

Shares got a nice pop on 9/3 after shareholders approved the company to purchase up to 20% of its stock, or up to $500 million. Over the past 4 years, Flextronics has spent $1.7 billion to buy back nearly 250 million of its shares.

Obviously, management and shareholders continue to see the hidden value I saw a few weeks ago. My near-term target has been $12 but I am raising it to $14.

More…Flextronics is an assembler of Apple’s (AAPL) Mac computers and could have a biiger hand in other products as Apple moves towards having more of its devices made here at home.

There is water-cooler talk Apple is working on a spiffy 12.9″ iPad that will likely be released next year. The current buzz is about the iPhone 6 but this bigger iPad screen will dwarf the current 9.7″ and 7.9″ models. They are in talks with suppliers about development of the future iPad and FLEX could be a candidate.

 

Fortinet (FTNT, $26.45, up $0.06)

FTNT December 29 calls (FTNT141220C00029000, $1.05, flat)

Entry Price: $0.95 (9/2/2014)

Exit Target: $1.90

Return: 11%

Stop Target: None

 

FTNT September 28 calls (FTNT140920C00028000, $0.15, flat)

Entry Price: $0.55 (6/30/2014)

Exit Target: $0.55 (Limit Order)

Return: -73%

Stop Target: None

Action: Shares traded to $26.78 yesterday before fading. My near-term target remains $28-$30, and a pop past $27 this week would be bullish. Support is holding at $26.

The September 28 calls expire in 10 days, and I would like to get out of them for a scratch this week. There is a Limit Order to exit at 55 cents.

 

AKS Steel Holding (AKS, $9.84, down $0.60)

AKS October 12 calls (AKS141018C00012000, $0.10, down $0.10)

Entry Price: $0.42 (8/26/2014)

Exit Target: $0.85-$1.70

Return: -76%

Stop Target: None

 

AKS January 13 calls (AKS150117C00013000, $0.25, down $0.10)

Entry Price: $0.52 (8/26/2014)

Exit Target: $1.05-$1.50

Return: -52%

Stop Target: None

Action: I’m moving this trade to “hold,” as I want to do some additional research this week to see if the dynamics of the trade have changed. I mentioned that the company recently issued an earnings warning for the current quarter. The news was bearish and has weighed on the stock, causing me to have second thoughts.

There is additional support at $9.50 and the 50-day moving average on the close below $10. Resistance is now at $10, and all of the momentum from the past three months has been lost.

 

Rubicon (RBCN, $6.26, up $0.14)

RBCN December 8 calls (RBCN141220C00008000, $0.40, up $0.10)

Entry Price: $0.35 (8/25/2014)

Exit Target: $0.70

Return: 14%

Stop Target: None

Action: There is a gap to fill to $7, which is where the first level of resistance lies. A move above this level would be super bullish. Support is at $6, and a drop below this level would be bearish for the trade.

 

Yahoo (YHOO, $41.81, up $2.22)

YHOO October 43 calls (YHOO1018C00043000, $2.40, up $1.15)

Entry Price: $0.80 (8/11/2014)

Exit Target: $2.20+, raise to $3 (closed half at $1.60 on 9/8/14)

Return: 150%

Stop Target: $1, raise to $1.60 (Stop Limit)

Action: Shares traded to a fresh 52-week high of $41.82 yesterday and ended a penny off their peak. I have raised the Exit Target on the other half of the trade from $2.20 to $3, but it is not a Limit Order yet.

I mentioned that a run past $40 was coming and could be powerful. The suit-and-ties were tripping all over themselves to make sure they were seen recommending the stock, which is why I suggested locking in half profits.

The low on the options yesterday was $1.40, so I am going to raise the Stop Limit from $1 to $1.60 to ensure a triple-digit return. If shares continue higher, great, but if they pull back, our profits will be protected.

 

World Wrestling Federation (WWE, $14.90, up $0.14)

WWE September 15 calls (WWE140920C00015000, $0.30, up $0.05)

Entry Price: $0.50 (8/6/2014)

Exit Target: $1.00 (Limit Order)

Return: -40%

Stop Target: None

Action: Set Limit Orders to close the trade at $1.

Shares traded to a high of $14.95 ahead of Monday’s close and are nearing a breakout.

I have been talking about another round of short-covering coming on a close above $15. There is a gap to fill up to $17, and the 200-day moving average is at $17.44. Support is at $14. This trade is coming down to the wire.

 

CVS Caremark (CVS, $81.40, down $0.24)

CVS September 82.50 calls (CVS140920C00082500, $0.30, down $0.07)

Entry Price: $0.45 (7/28/2014)

Exit Target: $0.50 (Limit Order)

Return: -33%

Stop Target: None

Action: The market makers were tough on the prior 60 cent Limit Order, as these options kissed 55 cents on yesterday’s open. I lowered the Limit Order to 50 cents in the Mid-Market Update to try to get out of the trade for a slight profit, but this price was never reached during the second half of trading. Keep the Limit Order of 50 cents in place for today.

The break-even point is near $83, technically, as the entry price for the trade was 45 cents.

 

Trades on Hold– 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.

S&P 500 Spiders September 180 puts (from August 2014) — continue to hold.

Pool October 50 puts (from July 2014) — The break-even point for the trade is at $48.90, technically, by mid-October. These options have nearly two months before they expire — continue to hold.