9:00am (EST)
The bears got their first victory in 5 after snapping a 4-session losing streak on Wednesday. No damage was done as the bulls easily held support but the suit-and-ties were once again flip-flopping as there was no follow through to higher highs.
The Dow dipped 42 points, or 0.3%, to finish at 16,633. The blue-chips traded to a low of 16,620 on the open and stayed in the red throughout the session. Support at 16,600 held. There was a final hour push to get back to even by the bulls that fell short by a point before the bears took over.
The S&P 500 slipped 2 points, or 0.1%, close at 1,909. The index tested 1,907 in early trading before spending much of the second half in positive territory. The bulls pushed a high of 1,914 before folding like a cheap lawn chair. A close below 1,900 could spook Wall Street. Resistance is now at 1,915-1,925.
The Nasdaq dropped a 12-pack, or 0.3%, to settle at 4,225. The bears pushed support at 4,225-4,200 after the open as Tech traded down to 4,216. The bulls went green by a point to 4,238, briefly, before losing steam.
The Russell 2000 fell 5 points, or 0.5%, to end at 1,136. The small-caps struggled from start to finish and bottomed at 1,132. Near-term resistance at 1,140-1,150 remains with support at 1,125.
The S&P 500 Volatility Index ($VIX, 11.68, up 0.16) edged higher for the second-straight session after trading up to 11.86. I’m watching for a close above the 12.50 level to confirm a possible short-term top for the market.
The portfolio is more bearish than bullish at the moment with another possible payday coming this week.
Heading into the open, futures look like this: Dow (+5); S&P 500 (+1); Nasdaq 100 (+1).
Closed Trades for 2014: 48-28 – the Weekly Wrap is 14-3 for 2014 (99-10, 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 our 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. We will send out a “Profit Alert” or “New Trade” if we 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, we will usually give you a heads-up if we think we are going to send an email outside of these time frames.
CVS Caremark (CVS, $77.25, up $0.08)
July 80 calls (CVS140719C00080000, $0.55, up $0.05)
Entry Price: $0.52 (5/28/2014)
Exit Target: $1.10
Return: 6%
Stop Target: None
Action: Shares traded to a 52-week high of $77.75 yesterday before a flat finish. I’m expecting a run past $80 over the next 2 months. If shares reach $81 these options will be worth at least $1-$1.05, for a 100% return. Short-term support is at $76.50.
Apollo Group (APOL, $26.78, down $0.71)
June 25 puts (APOL140621P00025000, $0.45, flat)
Entry Price: $0.55 (4/28/2014)
Exit Target: $1.10 (limit order to close half)
Return: -18%
Stop Target: None
August 23 puts (APOL140816P00023000, $0.70, up $0.05)
Entry Price: $0.70 (4/28/2014)
Exit Target: $1.40 (limit order to close half)
Return: 0%
Stop Target: None
Action: Shares closed below $27 and the 200-day MA yesterday after testing resistance near $28. The drop below support sets up another test to $26 and a break below this level should lead to the low $20’s.
Kirkland’s (KIRK, $17.51, down $0.74)
June 15 puts (KIRK140621P00015000, $0.15, flat)
Entry Price: $0.45 (5/20/2014)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: Yesterday’s low checked-in at $17.43. A close below $17.50 should lead to a test to $15. The longer-term chart shows a test to the low teens.
Bed, Bath & Beyond (BBBY, $60.51, down $0.94)
June 60 puts (BBBY140621P00060000, $0.85, up $0.30)
Entry Price: $0.60 (5/14/2014)
Exit Target: $1.20
Return: 42%
Stop Target: None
August 55 puts (BBBY140816P00055000, $0.70, up $0.10)
Entry Price: $0.63 (5/14/2014)
Exit Target: $1.25
Return: 11%
Stop Target: None
Action: Support is at $60 and a break below this level will likely lead to $57.50-$55. Resistance is at $61.50-$62.50.
Twitter (TWTR, $33.77, up $3.26)
January 50 calls 2015 (TWTR150117C00050000, $1.35, up $0.45) LEAP option
Entry Price: $1.75 (5/8/2014)
Exit Target: $3.50-$5
Return: -23%
Stop Target: None
Action: Shares surged 11% after an analyst upgrade. After 10-straight days of losses and a penny gain on Tuesday, it was a no-brainer. Resistance is at $35. Support has moved up to $32.
McDonald’s (MCD, $101.30, down $1.06)
July 95 puts (MCD140719P00095000, $0.40, up $0.10)
Entry Price: $0.70 (5/6/2014)
Exit Target: $1.40
Return: -43%
Stop Target: None
Action: Shares are dancing with the uptrend line and a break below $101.50 would be beàrish. There is risk to $105. These options have 2 months before they expire so there is plenty of time for the trade to play out.
Other 2014 Portfolio OPEN positions (1): 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 we would not open any new positions. We are still keeping track of the trades and we will record the results accordingly, when we close them or if the options expire. Click on the 2014 Portfolio link in the Members Area to view ALL open/ closed trades.
iShares Russell 2000 June 103 puts (from May 2014)