It was a bullish Thursday on Wall Street, as the major averages opened higher, set record highs and held positive territory throughout the day. It is hard to define “resistance” with the broader market setting fresh all-time highs, as the higher fluff targets I have given are coming into play. However, tech and the small-caps still have hurdles to clear before I go “all-in.”

The Dow jumped 109 points, or 0.6%, to close at 17,265. The blue-chips traded to a high of 17,275 and remain on track for a run to 17,350-17,500. Support is moving up and will now try to hold at 17,000 on a pullback.

The S&P 500 soared nearly 10 points, or 0.5%, to finish at 2,011 and a fresh all-time closing high. The index opened 2 points higher and easily held 2,000 following a run to an all-time intraday high of 2,012.34. I have talked about a push to 2,025-2,050 over the near-term as long as 2,000 holds as support.

The Nasdaq advanced 31 points, or 0.7%, to settle at 4,593. Tech traded to a high of 4,593.98 but failed at clearing 4,600. It is likely that this level will trigger if Alibaba (BABA) stays above $70 today. A close above 4,600 gets 4,700-4,800 back in play. There is risk to 4,550-4,500 on an end-of-week pullback.

The Russell 2000 gained 5 points, or 0.5%, to end at 1,159. The small-caps made a run past 1,160 but failed at holding resistance by a point. This was nearly a given, as I have said the index is also giving great clues on market direction this week. There are additional resistance levels at 1,175-1,170 and then 1,180. Support is at 1,150-1,140. At current levels, the see-saw battle is even as far as risk goes for both the bulls and bears. One side or the other could get blinded-sided by the fat kid, so keep one leg on the ground for safety.

The S&P 500 Volatility Index ($VIX, 12.03, down 0.62) fell 5% and tested a low of 11.98 while holding the 12.50 level. The bulls came close to triggering 11.50 and, if they can get under this level, next week could be bullish. The bears are trying to get the action back above 13.50 ahead of the weekend.

The Scots voted “No” to be an independent country yesterday and will remain with the United Kingdom. Also, today is September options expiration day. These events, along with the Alibaba debut, have made today the perfect storm going into the week.

The bulls are in “perfect” position for a run to higher highs, and tech and the small-caps have a shot at clearing resistance. However, if the VIX pops higher and Alibaba finishes today’s session lower, a trading range or lower lows could be shaping up for next week. This means any opening pop needs to hold.

Shares of Alibaba were officially priced at $68 last night, and a Chinese company is set to become the biggest U.S. initial public offering ever.

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From desk to press, futures look like this: Dow (+59); S&P 500 (+4.5); Nasdaq (+12).

Momentum Options Play List

Closed Momentum Options Trades for 2014: 71-43 (62%). 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.

 All prices given in this update are current as of 9:00 a.m. EST.

Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.


Aruba Networks (ARUN, $22.97, up $0.45)

ARUN October 23 calls (ARUN141018C00023000, $0.85, up $0.15)

Entry Price: $0.75 (9/18/2014)

Exit Target: $1.50

Return: 13%

Stop Target: None

Action: I’m looking for shares to make a run at $24 over the near-term, possibly $26 on a breakout. Yesterday’s high was $23.15, and the 52-week peak is at $23.90. Support is at $22-$21.50.


Staples (SPLS, $13.05, up $0.01)

SPLS December 14 calls (SPLS141220C00014000, $0.45, up $0.05)

Entry Price: $0.45 (9/18/2014)

Exit Target: $0.70-$0.90

Return: 0%

Stop Target: None

Action: I have a near-term target of $14. The 52-week high is at $16.67. The open interest in these call options is well north of 16,000 contracts. The 50-day moving average (MA) recently crossed over the 100-day MA and shares are in a nice uptrend. Support is at $12.60-$12.40 and the 200-day MA.


Freeport-McMoRan (FCX, $34.31, down $0.20)

FCX October 35 calls (FCX141018C00035000, $0.45, down $0.10)

Entry Price: $0.75 (9/16/2014)

Exit Target: $1.10-$1.50

Return: -40%

Stop Target: None


FCX November 36 calls (FCX141122C00036000, $0.50, down $0.05)

Entry Price: $0.70 (9/16/2014)

Exit Target: $1.05-$1.40

Return: -29%

Stop Target: None

Action: The next level of resistance is at $35.50. Support is at $34.50 and the 200-day moving average.


World Wrestling Federation (WWE, $14.98, up $0.36)

WWE October 16 calls (WWE141018C00016000, $0.35, up $0.05)

Entry Price: $0.45 (9/11/2014)

Exit Target: $0.90 (Limit Order on half)

Return: -22%

Stop Target: None

Action: Set limit orders to close half the trade at 90 cents. With volatility picking up and today being September expiration, shares could surge on a breakout.

WWE traded to a high of $15 even and finished a couple pennies below this level on Thursday. There is a chance for a breakout to $17 if the shorts start to cover again. Support is at $14.75-$14.50.


Flextronics (FLEX, $10.93, up $0.09)

FLEX October 12 calls (FLEX141018C00012000, $0.05, up $0.01)

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

Exit Target: $0.15-$0.25

Return: -29%

Stop Target: None


FLEX January 11 calls (FLEX150117C00011000, $0.65, up $0.05)

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

Exit Target: $1.50+

Return: -3%

Stop Target: None

Action: The company’s management team is meeting with analysts today, so an upgrade could be coming.

Support is at $10.75. Near-term resistance is at $11.25. If cleared, shares could make another run at $11.75 and fresh 52-week peaks again.

I believe shares are going to make a strong move past $12 in the coming weeks and $14 by year-end.


Fortinet (FTNT, $26.78, up $0.49)

FTNT December 29 calls (FTNT141220C00029000, $1.05, up $0.10)

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

Exit Target: $1.90

Return: 11%

Stop Target: None

Action: The previous 52-week high was at $26.80, and shares topped this level by a penny yesterday. This sets up a run to $28-$30 as long as support holds at $26.


Rubicon (RBCN, $5.12, down $0.20)

RBCN December 8 calls (RBCN141220C00008000, $0.20, flat)

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

Exit Target: $0.70

Return: -43%

Stop Target: None

Action: Support is at $5.25-$5. Resistance is at $6.

I still like the trade, as open interest is massive in these call options. The short-interest is also ballooning, with 30% of the float sold short. Analysts are expecting a terrible quarter, but the company has beaten estimates two of the past four quarters.

This is a sapphire play that has until December before the trade expires. These were “cheap” options, so stay patient as a big payday could be coming.


Trades on Hold — other 2014 Portfolio Open positions (3): 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 Open Trades and Closed Trades pages to see all open and closed positions.

S&P 500 Spiders September 180 puts (from August 2014) — These options will expire worthless today. The bid/ask is $0.00/$0.01, so there is no need to do anything unless the S&P falls 200 points today, or 10%. This trade from early August was left open for “protection” following a drop below 1,909, but it is still a loser and I got it wrong. However, I felt “safe” holding insurance, as I did predict the mini-pullbacks then and this week. They just weren’t big enough for this position to be profitable, and the premium got zapped on the break back above 1,950 in late August.

AKS Steel Holding October 12 calls (from August 2014) and January 13 calls (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 a month before they expire — Continue to hold.