9:00 a.m. (EST)
The talking heads had their pompoms out on Wednesday as the bulls rebounded to clear the first waves of resistance. I mentioned there were a number of suit-and-ties panicking on the 2-day pullback but there were bullish signs the indexes would hold support and resume their push towards all-time highs.
The Dow gained 79 points, or 0.5%, to end at 16,985. The blue-chips traded to a high of 16,998 and nearly cleared 17,000. This level is still serving as resistance and a close above gets all-time highs back in play. Near-term support is at 16,900-16,800.
The S&P 500 jumped 9 points, or 0.5%, to settle at 1,972. The index reached a peak of 1,974 and came within a point of clearing 1,975. The bulls hurdled 1,970 but there is still risk to 1,960-1,950.
The Nasdaq added 27 points, or 0.6%, to finish at 4,419. Tech opened at 4,403 and above 4,400 which was a good sign further gains would come. The bulls reached 4,421 and I talked about 4,425-4,450 serving as near-term resistance. The bears are still shooting for a close below 4,400-4,375 this week.
The Russell 2000 advanced a over a point, or 0.1%, to close at 1,173.81. The small-caps pushed 1,177 intraday but could’t hold 1,175. Support at 1,170 held but there is further danger to 1,160-1,150.
The S&P 500 Volatility Index ($VIX, 11.65, down 0.33) simmered down after falling to 11.50 intraday. I have been highlighting the 11.50-12.50 area this week and it was no surprise to see the bears hold this level. I talked about a short-term top at 12.51 but the bulls are still walking on eggshells.
I could have a New Trade today as Fastenal (FAST, $49.01, down $0.49) reports earnings ahead of tomorrow’s open. I want to watch the option action before making an official recommendation so expect an update during the midday report.
Ahead of the open, futures look like this: Dow (-142); S&P 500 (-17); Nasdaq 100 (-34).
Closed Trades for 2014: 67-33 – the Weekly Wrap is 20-4 (83%) for 2014 (105-11, 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 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.
Fortinet (FTNT, $24.24, up $0.43)
September 28 calls (FTNT140920C00028000, $0.50, up $0.10)
Entry Price: $0.55 (6/30/2014)
Exit Target: $1.10
Return: -9%
Stop Target: None
Action: Shares traded to a high of $24.46 and held $24 into the close.
Earnings are due on July 23rd and I believe they will announce a blowout quarter. A close above $25 would be bullish for a run to fresh highs.
Rambus (RMBS, $14.15, up $0.09)
August 15 calls (RMBS140816C00015000, $0.45, flat)
Entry Price: $0.60 (6/30/2014)
Exit Target: $1.20
Return: -25%
Stop Target: None
August 16 calls (RMBS140816C00016000, $0.25, flat)
Entry Price: $0.33 (6/30/2014)
Exit Target: $0.65-$1
Return: -24%
Stop Target: None
Action: Yesterday’s high was $14.27. There is further risk to $13.75-$13.50 on a drop below $14 while a close above $14.25-$14.50 keeps $15 in play.
Earnings are tentatively scheduled for next week but there is no hard date listed. I believe the company will beat estimates so I don’t mind staying long.
General Motors (GM, $37.97, up $0.39)
September 32 puts (GM140920P00032000, $0.20, down $0.05)
Entry Price: $0.40 (6/23/2014)
Exit Target: $0.80-$1.20
Return: -50%
Stop Target: None
Action: I would like to see a close below $36 this week. Resistance is at $38.
Limelight Networks (LLNW, $2.85, down $0.01)
September 3 calls (LLNW140920C00003000, $0.35, flat)
Entry Price: $0.15 (6/4/2014)
Exit Target: $0.45 (closed 1/4 at $0.35 on 7/8/14)
Return: 133%
Stop Target: None
December 3 calls (LLNW141220C00003000, $0.45, flat)
Entry Price: $0.20 (6/4/2014)
Exit Target: $0.60 (closed 1/4 at $0.45 on 7/8/14)
Return: 125%
Stop Target: None
Action: I would like to see shares clear $3 again this week. Support is at $2.75.
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 – shares are on the verge of falling below $100 but the options are running out of time. If the stock is still above par by Friday, I may close the trade.
Apollo Group August 23 puts (from April 2014) – continue to hold – shares are below $30 and a drop under $28 would help get this trade rolling again.