9:00am (EST) continued…
The S&P slipped a point, or 0.1%, to settle at 1,514. The index kissed a high of 1,525.34 but failed to hold this level into the close. We have said 1,550 is possible if the bulls can plant the flag on the hill but a close below 1,510-1,500 would be bearish going into Monday morning’s open.
The Nasaq gave back 2 points, or 0.1%, to finish at 3,160. The bulls were trying to clear 3,175 on the close but after trading up to 3,182, Tech also faded in the final minutes as well. Resistance at 3,200 remains a brick wall and the bears would like to get the action back below 3,150 before the weekend.
The Russell 2000 was up a point and ended at 911.11. We aren’t sure if this was a subliminal message for the bulls or bears to call for help but it could be if there is a breakout or breakdown in the coming weeks. The small-caps traded up to 915.89 but never really challenged 920. The bears will be trying to get a close below 900 today.
The S&P Volatility Index ($VIX, 15.51, up 0.78) finished above 15 after trading down to 14.16. We said to watch 14.75, which was holding into the close, and 15 as warnings signs and the bears cleared both in the final 10 minutes of trading.
The crazy close lower shocked Wall Street and the blame was placed on indexes reshuffling for month end but it wasn’t pretty no matter how you spin it. There could be an inflow of new money today so the bears will have to guard against the barrage of cash still on the sidelines.
Futures are showing a lower open as we head to press and look like this: Dow(-55); S&P 500 (-8); Nasdaq 100 (-12).
MEMBERS AREA
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 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. Closed Trades for 2013: 23-7, for a 77% win rate, including the Weekly Wrap that is 6-1).
iShares Dow Jones Transportation Average (IYT, $106.67, up $0.03)
April 100 puts (IYT130420P00100000, $0.90, flat)
Entry Price: $0.90 (2/27/13)
Exit Target: $1.80
Return: 0%
Stop Target: None
Action: There is risk to $110+ on a continued breakout but we are looking for a drop below $100 by mid-April. A finish below $105 today would be bearish.
Potash (POT, $40.09, up $0.31)
March 38 puts (POT130316P00038000, $0.15, down $0.05)
Entry Price: $0.50 (2/26/13)
Exit Target: $1.00
Return: -70%
Stop Target: None
Action: We are looking for $40 to hold but shares traded up to $40.29 and cleared short-term resistance. Let’s see where we are at in our midday update.
Cyberonics (CYBX, $45.75, down $0.55)
April 40 puts (CYBX130420P00040000, $0.85, flat)
Entry Price: $0.75 (2/26/13)
Exit Target: $1.50
Return: 13%
Stop Target: None
Action: We have a near-term target of $40 for the stock with a shot at the mid-$30’s coming into play. Resistance is at $48 and yesterday’s high was $46.75.
Allstate (ALL, $46.02, down $0.03)
April 43 puts (ALL130420P00043000, $0.40, down $0.05)
Entry Price: $0.60 (2/26/13)
Exit Target: $1.20
Return: -33%
Stop Target: None
Action: We have a near-term target of $42 for shares which should get us a double on the put options. There is risk up to $47 and yesterday’s high was $46.34.
Cree (CREE, $45.23, down $0.06)
March 42 puts (CREE130316P00042000, $0.40, down $0.05)
Entry Price: $0.85 (2/21/13)
Exit Target: $1.70
Return: -53%
Stop Target: None
Action: There is risk to $47 and yesterday’s peak was $46.04. We would like to see a close below $44.75 today which was last Friday’s close.
Keryx Biopharmaceuticals (KERX, $6.43, down $0.10)
June 10 calls (KERX130622C00010000, $0.35, flat)
Entry Price: $0.70 (2/12/13)
Exit Target: $1.50
Return: -50%
Stop Target: None
Action: Still no news on earnings.
ADT (ADT, $47.89, down $0.10)
March 50 calls (ADT130316C00050000, $0.25, flat)
Entry Price: $0.90 (1/28/13)
Exit Target: $0.90
Return: -54%
Stop Target: None
Action: We wanted to see close above $48 as shares traded up to $48.40 but the low of $47.30 after the open was also bearish. We have two weeks with the March options so we may have to cut this one loose if shares fall below $47 today.
Taiwan Semiconductor (TSM $18.25, up $0.07)
April 20 calls (TSM130420C00020000, $0.15, flat)
Entry Price: $0.25 (1/3/13)
Exit Target: $0.50
Return: -40%
Stop Target: None
Action: We were looking for a close above $18.50 and that was yesterday’s high but shares still were able to finish in positive territory. These are April options and while there could be a pullback over the near-term we do feel shares will make a run past $20 by mid-April. These options were only a quarter when we entered the trade so we still like the risk/ reward the trade offers.
MGM Resorts International (MGM, $12.49, up $0.01)
June 15 calls (MGM130622C00015000, $0.25, flat)
Entry Price: $0.40 (1/2/13)
Exit Target: $0.80
Return: -38%
Stop Target: None
Action: We would like to see a close above $12.75 today and the talking heads are all over the online gambling story. Of course, we have been talking this chatter for months now and we expect more states to join the party over the next few months. These are June options so we still have plenty of time for this trade to play out.
Other 2013 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 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 2013Portfolio link in the Members Area to view ALL open/ closed trades.
Vivus March 17 calls (from January 2013)
Apache March 90 calls (from February 2013)
WATCH LIST SECTION
These trades are NOT recommendations. They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices. We try not to have more than 12-15 open trades at any one time which is why we created a Watch List. We will not list entry prices because these stocks are on the verge of breaking out or they could sell off but these are the trades we are watching as new candidates.
Apollo Group (APOL, $16.87, down $0.25)
April 15 puts (APOL130420P00015000, $0.56, up $0.08)
Thoughts: Look who’s back and making new lows. We have said shares could be headed to the low teens but it has taken way longer than we have anticipated. We have had some success trading the options on Apollo but we have also had some losers. We may dig up our overall track record over the years on Apollo and if we are up we may roll the dice again. We have always played this one to the downside as we continue to warn subscribers of the $1 trillion in student debt that continues to grow.
Baidu (BIDU, $90.76, up $1.41)
March 85 puts (BIDU130316P00085000, $0.55, down $0.20)
April 80 puts (BIDU130420P00080000, $1.00, down $0.15)
Thoughts: We got our push to $90-$91 so let’s see how shares act today.
Powershares QQQ (QQQ, $67.10, down $0.14)
March 67.50 calls (QQQ130322C00067500, $0.90, down $0.10)
April 65 puts (QQQ130420P00065000, $0.80, down $0.05)
Thoughts: We have added some calls in case the Nasdaq breaks out.
Spider S&P 500 (SPY, $151.61, down $0.30)
April 142 puts (SPY130420P00142000, $0.90, up $0.10)
Thoughts: Watch for now.
iShares Russell 2000 (IWM, $90.48, up $0.17)
March 89 puts (IWM130322P00089000, $1.00, flat)
March 88 puts (IWM130322P00088000, $0.75, flat)
Thoughts: Watch for now.
Mellanox Technologies (MLNX, $52.73, up $1.09)
March 50 puts (MLNX130316P00050000, $0.80, down $0.50)
Thoughts: A break below $50 would be bearish for a trip to the mid to low $40’s.
DeVry (DV, $29.98, down $0.03)
May 25 puts (DV130518P00025000, $0.55, flat)
Thoughts: We are expecting a test to $25 as long as $30 holds as resistance.
Caterpillar (CAT, $92.37, up $0.12)
March 87.50 puts (CAT130316P00087500, $0.30, down $0.10)
April 85 puts (CAT130420P00080000, $0.90, flat)
Thoughts: Shares could test $95 again on continued strength.
Ironwood Pharmaceuticals (IRWD, $14.93, up $0.20)
May 15 calls (IRWD130518C00015000, $1.30, up $0.10)
Thoughts: The 52-week high is at $15.14 and a break above this level could lead to $20 down the road.