9:00am (EST)
Johnny told his mama, hey, “Mama, I’m goin’ away. I’m gonna hit the big time, gonna be a big star someday”, yeah.
Mama came to the door with a teardrop in her eye. Johnny said, “Don’t cry, mama, smile and wave good-bye”.
Don’t you know that you are a shooting star, and all the world will love you just as long, as long as you are. – Bad Company
This classic was a nice fit for the current action on Wall Street and ahead of this morning’s opening bell as the bulls continue to push new highs. The bears were lingering throughout the day but a second half surge gave the bulls their fifth win in the past six sessions.
The Dow gained 65 points, or 0.4%, to finish at 16,698 on Thursday. The blue-chips tested 16,620 an hour into the session and easily held support at 16,600. The bulls fell 37 points short of the 52-week and all-time high but remain on track to push 16,800-17,000 once cleared.
The S&P 500 advanced 10 points, or 0.5%, to close at 1,920. The index held green throughout the session and went out at its high for the day. The bulls are close to triggering 1,925 and could push 1,950 on a close above this level. Support has moved up to 1,909-1,900.
The Nasdaq added 23 points, or 0.5%, to end at 4,247. Tech stayed positive throughout the day and came within striking distance of clearing resistance at 4,250. If topped, a run past 4,300 and up to 4,400-4,500 is possible.
The Russell 2000 skipped 3 points higher, or 0.3%, to settle at 1,140. The bears pushed 1,134 shortly after the open but the bulls cleared resistance into the close albeit by the slimmest of margins. Further hurdles remain at 1,150-1,160 and then 1,175. Support remains at 1,125.
The S&P 500 Volatility ($VIX, 11.57, down 0.11) was basically flat after trading in a range between 11.82-11.41. The bears are still trying to clear 12.50 while the bulls are eyeing single-digits.
Ahead of the open, futures look like this: Dow (-16); S&P 500 (-3); Nasdaq 100 (-4).
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, $77.66, up $0.41)
July 80 calls (CVS140719C00080000, $0.60, up $0.05)
Entry Price: $0.52 (5/28/2014)
Exit Target: $1.10
Return: 15%
Stop Target: None
Action: 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, $26.67, down $0.11)
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, flat)
Entry Price: $0.70 (4/28/2014)
Exit Target: $1.40 (limit order to close half)
Return: 0%
Stop Target: None
Action: The close below $27 and the 200-day MA opened the door for another test to $26. Yesterday’s low was $26.28. A break below $26 should lead to the low $20’s. Resistance is at $28.
Kirkland’s (KIRK, $17.40, down $0.11)
June 15 puts (KIRK140621P00015000, $0.15, flat)
Entry Price: $0.45 (5/20/2014)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: 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, $60.99, up $0.48)
June 60 puts (BBBY140621P00060000, $0.65, down $0.15)
Entry Price: $0.60 (5/14/2014)
Exit Target: $1.20
Return: 8%
Stop Target: None
August 55 puts (BBBY140816P00055000, $0.60, down $0.10)
Entry Price: $0.63 (5/14/2014)
Exit Target: $1.25
Return: -5%
Stop Target: None
Action: I would like to see a close below $60.50 today. 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, $34.00, up $0.23)
January 50 calls 2015 (TWTR150117C00050000, $1.50, up $0.15) LEAP option
Entry Price: $1.75 (5/8/2014)
Exit Target: $3.50-$5
Return: -14%
Stop Target: None
Action: Shares traded to a high of $35.14 yesterday. Resistance is at $35. Support has moved up to $32.
McDonald’s (MCD, $101.34, up $0.85)
July 95 puts (MCD140719P00095000, $0.30, down $0.10)
Entry Price: $0.70 (5/6/2014)
Exit Target: $1.40
Return: -57%
Stop Target: None
Action: The break below $101.50 was bearish and I’d like to see a close below $100 by the weekend. 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)