MomentumOptionsTrading.com Weekly Wrap for 6/23/13

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MomentumOptionsTrading.com Weekly Wrap for 6/23/13

11:30pm (EST)

1. Market Summary

2. Is Google (GOOG) the New Apple (AAPL)?

3. Earnings

4. Weekly Wrap Portfolio Update

5. Week Ahead

(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section.)

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1. Market Summary

“There were a number of streaks that were in play last week as the bears made another attempt at cracking major support. The Dow’s Tuesday loss streak reached 2-straight after 20-straight wins and was sandwiched in between the bears first 3-day win streak against the index.

We mentioned mid-week the test to the lows was the fourth attempt by the bears this year to crack major support and the second in 2 weeks. We have talked about the current trading range for weeks but the charts are showing more important technical developments.

As you can see from the red lines on our chart work, sSymmetrical triangles are forming and they are often points of indecision. The indexes have been making lower highs and lower lows in recent weeks off the May highs and the attempts to push higher have been met with selling pressure.

This week, the indexes will need to push higher highs and higher lows on heavier volume as there is a tendency for weak volume while symmetrical triangles take shape. The good news is that these patterns or formations usually lead to an explosive move in the direction of the trend which has been bullish all year. Of course, technical patterns can fail and a series of lower highs and lower lows again this week could push the indexes out of their symmetrical triangles the other way.

The Friday/ Monday closes also turned bearish as the Dow ended both days lower last week. A lower M/F close this week would show more money is moving to the sidelines. The Dow has not finished lower on three-straight M/F sessions this year so it will be important for the bulls to get off to a good start this week and finish in positive territory.

The headlines from the upcoming week should be enough to rattle the indexes out of their current technical patterns with the FOMC meeting and some noteworthy earnings announcements. The Fed will release their decision on interest rates on Wednesday and there is little to no chance in a change in policy. Ben Bernanke will once again be the focal point of the news and with all of the tapering talk, he will need to soothe the fears that the Fed isn’t still fully committed.

We aren’t sure how or why there is such a tapering tantrum going on because Big Ben has said he doesn’t plan on cutting quantitative easing until the unemployment rate reaches 6.5%. We believe the Fed won’t taper or cut back their $85 billion monthly tab until at least 2014 and if Benny were to say this, the market would explode higher.

Bernanke has done well playing his poker hand and while he may not say this, he will say something bullish because he cannot afford to let the market go into a tailspin.

As far as earnings, FedEx (FDX, $99.12, down $0.46), Jabil Circuit (JBL, $19.42, down $0.29), Micron Technology (MU, $12.76, down $0.15), Red Hat (RHT, $45.81, down $0.04), Oracle (ORCL, $33.77, down $0.48) and Darden Restaurants (DRI, $52.54, down $0.74) will confess their numbers to Wall Street.

June option expiration is this Friday and it will also be mark quadruple expiration. This is when stock index futures, stock index options, stock futures and stock options all expire at the same time and can lead to extreme volatility.

Over the past 15 years, the Dow ended lower on the opening Monday 9 times. This puts the odds at 60% the bears take the session but June option expiration week is usually bullish in bull markets. In recent years, on Friday June expiration weeks, the market has finished split with the bears and. Bulls winning 7 apiece. Given the history it wouldn’t be surprising to see a flat week with the bears winning the first half and the bulls taking the back half.

We are still in the bullish camp but we mentioned last Thursday if major support is broken then we would put on our Bear hats and start nibbling on put options. The levels to go short are: Dow 12,800; S&P (500) 1,595; Nasdaq 3,375; and Russell (2000) 960.

All of these levels are just below the prior week’s lows and should trigger the next wave of support we covered with the indexes, or the 100-day MA’s. A close above resistance before the Fed comments would be bullish.” (from 6/16/2013 Weekly Wrap)

The bulls got back-to-back triple-digit wins to start the week but gave it all back on Ben Bernanke’s comments midweek. The major indexes triggered our bullish targets on Tuesday for a possible run to new highs but as we have often seen with trading ranges, they can give false breakout (and breakdown) signals.

The bears did some damage on Wednesday as the indexes fell over 1% but support at the 50-day MA’s held. The bears had tried 4 previous attempts to get the indexes below these major support levels and we mentioned the 100-day MA’s could come into play on a break below these levels.

Thursday’s massive selloff knocked Wall Street back 2% as volatility spiked to its highest level of the year and the bulls failed to hold the 50-day MA’s. Although the bulls held the 100-day MA’s on Thursday, they were tested again on Friday before a slight rebound ahead of the weekend. (read more…)

The Dow gained 41 points, or 0.3%, to finish at 14,799 on Friday. The blue-chips made another run at 15,300 and cleared this level with Tuesday’s push to 15,340 and the close at 15,318. Wednesday’s drop to 15,112 and the close below 15,200 was a great clue 15,000-14,800 would be tested. Thursday’s low was 14,732 and the close at 14,758 opened the door for a test to 14,600. Friday’s rebound at the open, faded, as the Dow tested a low of 14,688. The 100-day MA is at 14,646. A close below this level could get 14,000 and the 200-day MA in play. If the bulls can reclaim 15,000 and the 50-day MA they could push new highs in July. The Dow started the week at 15,070 and fell 271 points, or 1.8%, by Friday’s close. For the year, the blue-chips have advanced 1,695 points, or 12.9%.

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The S&P 500 added 4 points, or 0.3%, to end at 1,592. The index made another run at 1,650 to start the week and closed at 1,651 on Tuesday after kissing 1,654. The bulls were looking to test 1,675 but the swoon began with Wednesday’s drop to 1,628. Although 1,625 held, we knew 1,600 would be tested and said a break below this level could lead to 1,575. Thursday’s low was 1,584 and the bears pushed 1,577 and the 100-day MA on Friday. It was a textbook rebound but we have said a close below this level could lead to 1,550. A break below there could lead to 1,500 and the 200-day MA. If the S&P can clear 1,600 and then 1,625, or the 50-day MA, the bulls would be back in control. The S&P 500 came into Monday’s session at 1,626 and gave back 34, or 2.1%, for the week. For 2013, the index is up 166 points, or 11.7%.

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The Nasdaq fell 7 points, or 0.2%, to settle at 3,357. Tech cleared 3,450 to start the week and we mentioned a close above 3,475 could lead to a test of 3,500 again. Tuesday’s peak was 3,488 and the close above 3,475 to 3,482 looked bullish. We also warned another close below 3,450 would lead to 3,400 and that a dip below this level could lead to 3,350-3,300. Wednesday’s close at 3,443 was the warning sign as Thursday’s free fall to 3,355 got these levels in play. Friday’s low was 3,326 and a break below the 100-day MA could lead to 3,200 and the 200-day MA. A close back above 3,400 and the 50-day MA would be bullish. The Nasdaq began the week at 3,423 and declined 66 points, or 1.9%, by Friday’s closing bell. Year-to-date, Tech has advanced 338 points, or 11.2%.

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The Russell 2000 popped 3 points higher, or 0.3%, to close at 963. The small-caps traded to 991 to start the week and cleared 1,001 on Tuesday’s peak. It was the fifth time the index has traded above 1K but we said the close at 999.99 looked funny. Wednesday’s high was 999.27 and we had a feeling when the index didn’t push green ahead of Bernanke’s speech there would be a pullback. Wednesday’s trip back below 990 to 986 and the finish at the lows was a warning sign 975 would be tested. We said a drop below this level would lead to 950. Thursday’s 2.6% drubbing and low of 957 was as far as the bears got but they pushed 951 on Friday. The 100-day MA at 946 could be tested on further weakness and a break below this level could lead to 900 and the 200-day MA. The Russell 2000 was at 981 before Monday’s open and was down 18 points, or 1.8%, for the week. YTD, the small-caps are up 114 points, or 13.5%.

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The S&P 500 Volatility Index ($VIX, 18.90, down 1.59) deflated 8% after closing above 20 for the first time all year on Thursday’s panic. There was a lot of VIX talk last week for the first time in months and most of them and the Wall Street pros ignore the index until it spikes. We have been all over the volatility and said it would be increasing a few weeks ago as the trading range expanded. We warned of the prior week’s test to 17.50 and mentioned 20 could come into play on further weakness in the S&P. Thursday’s wild ride pushed the VIX to a high of 21.32 and Friday’s peak was 20.93. If the bears push the 200-day MA on the major indexes, the VIX could trade up to 30, or higher. This would probably be a capitulation point in the market although Thursday’s selloff has the same feel. A close back below 17.50 and then 15 would be bullish but the volatility will likely continue into the summer with the global markets in a tailspin and more fireworks here at home expected.

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The market suffered its worst 2-day stretch and worst one-day drop in 18 months during last Wednesday and Thursday’s pullback. The Dow’s drop from Tuesday’s high of 15,340 to Friday’s low of 14,688 represented a 652-point pounding, or 4%. The S&P 500 made a 77-point swing from its peak at 1,654 to 1,577, or 5%. The Nasdaq swung 162 points on its downward spiral from 3,488 to 3,326, or 5%, while the Russell 2000 back-peddled 50 points, or 5%, from its Tuesday high of 1,001 to Friday’s bottom at 951.

Ben Bernanke was really in a no-win situation after the President said both would agree that the Fed Head has stayed longer wanted. The Charlie Rose interview was Obama’s way of saying there will be change coming as he talked about Big Ben in past tense. This set the stage for Bernanke to throw his own curveball as he said the Fed could begin to cutback on its monetary policies later in the year. He also hinted QE (quantitative easing) could end by mid-2014 if the tapering began.

If the President would have kept his pom-poms on for an extension, perhaps Bernanke would have said something different but he now knows he will be out as Fed Head by January and he wants to cement his legacy on his own terms. We have talked about how no government has ever printed its way out of debt and the Fed’s balance sheet could approach $4 trillion from all of the bond buying it has done through QE 1,2 and 3.

Uncle Ben has said the Fed would target a 6.5% unemployment rate and steady job growth before turning off the money printing presses but his hand is being forced. While the economy continues to show fits and starts and could be improving, we still believe Obamacare will play a major role on where the market will be at year’s end and not what the Fed does. Bernanke has hinted numerous times the zombies in the Whit House need to do more and Obamacare is killing job growth.

These concerns whacked the 10-year yield on treasuries as it closed at 2.51% on Friday. The 2.5% level was the trigger point for a selloff as it was the worst week for treasuries in more than 50 years. A continued climb in the 10-year treasuries will result in higher interest rates across the board for mortgages, auto, business, and personal loans.

Gold finally broke down like a rented mule and we saw the crack on Wednesday before the flood came. We have been telling you a test to new lows would come and following a tight 2-week trading range it was a breathtaking fall. From our 6/9 Weekly Wrap:

“Gold traded in a tight range for much of the week before Friday’s 2% hit. The yellow metal tried to clear resistance at $1,425 and was holding $1,400 before falling $28 to close at $1,384. We mentioned last week another close below this level could lead to $1,350 and our downside target remains $1,250 an ounce at some point this year. A close above $1,425 would be bullish but we would wait for $1,450 to trigger to confirm the selling pressure is over.

Silver tested $23 all week before dropping a whopping 4% on Friday. The poor man’s gold got hit for 86 cents to settle at $21.66. The close below $22 opens the door for another possible test to $20 and our downside target and back-the-truck up buy could come at $17.50.” (END)

Gold fell $73 to close at $1,277 on Thursday’s 5.4% slide as the low checked in at $1,275. Friday’s dip to $1,268 was the low for the week and the back test to $1,300 was classic. A close below $1,250 could lead to $1,100-$1,000 and while we would be surprised to see Gold fall this low, we would be shocked.

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Silver got rocked for 8% on Thursday’s pullback to finish at $19.57 with the low checking in at $19.51. Friday’s bottom was $19.31 and like we have been warning, there is risk to $17.50 over the summer, possibly $15.

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The Banking sector took a hit despite possible higher interest rates being a good thing for them. The short-term pain will be a long-term gain as the cheap money they have on their books can make more money on the larger spreads. We like to follow the Spiders Financial Select Sector (XLF, $19.11, up $0.02) as a measure on where the Banking stocks are headed and with the XLF testing support, it will be important for the bulls to hold current levels. The close below the 50-day MA and the low of $18.89 could lead to a test of the 100-day MA, or $18.50 over the near-term. If the major indexes sink another 5% there could be risk down to $17.50-$17.

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The Monday/ Friday closes are still giving mixed signals as the bulls recovered from the prior week’s down M/F closes to get a win last Monday and again on Friday. The gains were decent as they averaged 1% overall for both sessions but the technical damage is outweighed the positive closes. However, if the indexes can close back above the 50-day MA’s and we still see green M/F’s, last week’s dip could have been the buying opportunity everyone and Wall Street wanted to see. The dips have been bought aggressively all year long but there seems to some fear with sticking the toes back into water this time around.

The next few weeks will be quiet on the earnings front as the current quarter winds down this week with the close of June. There a few notable reports this week from the companies on “off” cycles but from now thru the first week of Jul is usually the time frame where companies will slip in 2Q earnings warnings, hoping Wall Street doesn’t notice and their stock doesn’t get hammered in the process. We have said this upcoming earnings season could be one of the most important in years because Wall Street will be looking for yearend guidance as well as good numbers from the recently ended quarter. With growth being questioned around the world, US companies could become more of a “safe haven” if numbers come in ahead of expectations.

We have said trading ranges can be difficult to navigate and at times, they can get stretched to create a false breakout or breakdown. Last week we got both and we can expect volatility to stay throughout July and possibly the rest of the summer and year. As options traders, we LOVE volatility because the price swings can yield even fatter profits. The important thing to remember is that profits need to be taken quicker no matter how good a position looks as the goal is to hit as many quick-and-runs as you can while keeping your emotions in check.

We did some quick chart work on Thursday night and the downside targets we gave to our Daily readers were 14,000-13,800 on the Dow; S&P (500) 1,525-1,500; Nasdaq 3,200-3,175; Russell (2000) 900-875. This was based on the 2-year charts and where the bottom uptrend channels lie. Friday’s rebound was good to see and these targets are “worse-case-scenario” on a continued breakdown of 5%-7%. It will take a lot for the bulls to recover from last week’s bear blows to clear resistance and push new highs and they will need a major catalyst to do this. Without Bernanke being the wingman, 2Q earnings will be that much more important and the market will want to see revenue beats and higher guidance. If not, and earnings come in below the bar with lowered outlooks, the bears will likely push the 200-day MA’s.

Both of our Daily and Weekly Wrap portfolios are light and we have made tremendous gains for our subscribers in both of them. While we still want to be aggressive, we need to be careful and make sure we wait for the market to give us the clues to stay long or possibly go short. The short-term outlook looks bearish and the test to the 100-day MA’s spooked a lot of investors out of the market.

We want to remind you that buying put options in down markets is just as rewarding as buying call options in bull markets. Buying both in trading ranges can be beneficial as traders try to protect themselves from missing the next breakout or breakdown. The last week of June has been bearish in recent years and the bulls will need a big comeback to save the month. They bulls will either throw in the towel and wait for a possible July rebound, or they hold current levels this week and mount their comeback early. We are prepared for both.

As we head to press: Dow futures are down 3 points to 14,708 while the S&P 500 futures are lower by a point to 1,583. The Nasdaq 100 futures are up a point to 2,866.

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Key of Technicals Used In Following Articles

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2. Is Google (GOOG) the New Apple (AAPL)?

By Michael Bryant

Obviously, Google (GOOG, $880.93, down $3.81) is already too big to have a run like Apple (AAPL, $413.50, down $3.34) did in 2003, where it had risen over 5,500% but could Google be following in Apple’s footsteps? To do this, we must investigate Apple, and then compare it to where Google is to see if Google can become or is the new Apple?

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When Jobs was growing up, his father worked as a mechanic and a carpenter, and taught him how to take apart and rebuild electronics such as radios and televisions. While in high school, Jobs met Steve Wozniak, who started building a little computer board in 1969. In 1972, Jobs enrolled in Reed College in Portland, Oregon, but due to the high cost, he dropped out after just 6 months. However, he did manage to drop in on classes such as calligraphy, which Jobs credits for helping him develop multiple typefaces and proportionally spaced fonts in later Apple computers.

In late 1973, Jobs took a job as a technician at Atari, where he was assigned to create a circuit board for the arcade video game Breakout. He asked Wozniak to help him, since he knew little about circuit boards. During his free time, Wozniak designed low-cost digital boxes that allowed free long-distance calls. Jobs decided that they could make money selling it.

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As mentioned in the graph above, a conflict with Apple’s CEO John Sculley, who was lured from Pepsi-Cola (PEP), caused Jobs to resign in October of 1985. In 1995, Apple started licensing the Mac OS operating system and Macintosh ROMs to 3rd party manufacturers who started making Macintosh clones. But in late 1996, Apple bought NeXT Computer, which Jobs co-founded, for $427 million. Jobs was formally named interim CEO in September of 1997. To concentrate on returning Apple to profitability, Jobs terminated a number of projects. In the coming months, many employees feared they might lose their job. Jobs also changed the licensing program for Macintosh clones, making it too costly for the manufacturers to continue making machines.

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The products would also start other manufacturers to follow Apple’s lead, and cause an ecosystem to develop around the products, with third-parties producing accessories.

In 2005, Steve Jobs gave a speech at Stanford University where he spoke about three important decisions he had made. Dropping out of college was one of the best things he did, since it allowed him to stop taking the required classes that did not interest him, and begin dropping in on the ones that looked interesting. These classes he dropped in did not seem relevant at the time, but became invaluable later in life, such as the calligraphy course mentioned earlier. Thus, he stressed that you have to trust your guts that the dots will fall in place later in life. He also states to do what you love and keep looking until you find it, because the only way to do great work is to love what you do. Lastly, he says to live like you are going to die tomorrow, to change it if you are not happy with what you are doing today, and not to live your life based on what others think. “Have the courage to follow your heart and intuition.”

Interestingly, he mentioned Google at the end of his speech, but not about the company itself but as a comparison for one of his examples. Google began in January 1996 as a research project by Larry Page and Sergey Brin when they were both PhD students at Stanford University. While conventional search engines ranked results by how many times the search terms appeared on the page, the two theorized about a better system that analyzed the relationships between websites. Thus, Google was founded on September 4, 1998. The two wanted to make information easily accessible and useful to the world.

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Google makes its money with their pay-per-click network, Google Adwords. Advertisers purchase clicks, one click at a time, in a modified, keyword-based auction. In 2011, Adwords accounted for at least 95% of the company’s income.

Over the years, the company has expanded outside of search. In 2004, it formed a charitable philanthropic wing, Google.org, giving it $1 billion in seed funds. The mission of the organization was to address climate change, global public health, and global poverty. But it was also for-profit, allowing it to fund start-ups, form partnerships with venture capitalists, and even lobby Congress. Among its first projects was to develop a viable plug-in hybrid electric vehicle that can attain 100 miles per gallon.

In 2005, it started Google Earth from a start-up it acquired in 2004. On September 28, 2005, the company partnered with NASA to build a 1,000,000-square-foot Research and Development center at NASA’s Ames Research Center. In 2006, it acquired popular video site Youtube. In 2007, it beat AOL as a key partner and sponsor of the NORAD Tracks Santa program. Google Earth was used for the first time to give visitors to the website the impression that they were following Santa Claus’ progress in 3-D. And in January 2013, Google announced a partnership with Kia Motors and Hyundai. The partnership integrates Google Maps and Place into new car models to be released later in 2013.

The founders dreamed of making services free for all. It started Google Apps, which competes with Microsoft Office. The apps include a word processor and a spreadsheet that can be uploaded through the web browser. Gmail gives 15 gigabytes of free email space. The company even is testing a service for giving free WiFi service by launching several large helium balloons with receivers attached. Google WiFi, which is a collection of some 500 routers connected to telephone poles, already serves Mountain View with free WiFi services when logging on to a Google account.

Google Mobile extends its products and services to mobile device users. Google Local provides local information. Google Chrome OS is an open source Linux-based operating system, and Google Chrome is a Web browser. Google+ is a social network designed to compete with Facebook (FB). Google TV is similar to Apple TV. Its Android mobile operating system has easily captured the top smartphone global market share. As of May 2013, Android accounts for 75% of the worldwide smartphone market share, with the iPhone coming in second at 17.3% market share.

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The company has come under fire as the government looks bump up surveillance. France and Spain has already said they could sue Google millions of euros for violating privacy laws of its citizens. The U.S. National Security Agency under the Prism surveillance program secretly gathered user data from nine U.S. companies, including Google, to track people’s movements and contacts. The measure is supposed to counter terrorism. Still, this could jolt the stock, but we do not expect a major fall.

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The top two graphs are the revenue and expenses of Apple. The bottom two graphs are the revenue and expenses of Google. The three-year graph of Google’s revenue looks similar to the revenue of Apple from 2007 to 2010.

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At $880.93, the stock is between its low target of $790.00 and its mean target of 942.09 made by the 33 analysts recorded by Thomson/First Call. Mean target is $955.00, and high target is $1,100.00. Using a scale of 1.0 as a strong buy and 5.0 as a sell, the average rating of the stock was 2.1, unchanged from a week ago.

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	Current Month	Last Month	Two Months Ago	Three Months Ago
Strong Buy	10	10	11	11
Buy	18	18	18	15
Hold	12	12	12	12
Underperform	0	0	0	0
Sell	0	0	0	0

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3. Earnings

The companies in BOLD, we are looking at as possible trades and we may list call or put options on them in our Daily Newsletter. If they become official recommendations, we sent out Trade Alerts or include them in our 9am and 1pm updates that come out during the week (Quotes are from 6/21/13 close)

By Catherine Tierney

Monday

1st United (FUBC, $6.53, Flat), Accretive (AH, $10.82, up $0.09), American Greetings (AM, $18.38, up $0.03), American Residential (ARPI, $17.66, down $0.26), Ennis (EBF, $17.04, up $0.53), GenCorp (GY, $16.30, up $0.08), Greenbrier Companies (GBX, $23.10, down $0.90), HB Fuller (FUL, $39.17, down $0.07), Mercury Systems (MRCY, $9.44, up $0.08), MSC Industrial (MSM, $78.21, down $0.23), Park Electrochemical (PKE, $24.51, up $0.46), Sonic (SONC, $14.30, down $0.21)

Tuesday

AeroVironment (AVAV, $19.61, up $0.19), Apogee Enterprises (APOG, $22.85, down $0.81), Barnes & Noble (BKS, $18.97, up $0.53), Carnival (CCL, $33.43, down $0.01), Lennar (LEN, $35.25, up $0.31), Phoenix Companies (PNX, $43.49, up $0.28), Smith & Wesson (SWHC, $9.64, down $0.23), SYNNEX (SNX, $42.11, down $0.45), Walgreen (WAG, $48.71, up $0.37)

Wednesday

Bed Bath & Beyond (BBBY, $69.99, up $0.47), General Mills (GIS, $48.64, up $0.43), Herman Miller (MLHR, $27.65, Flat), Lindsay (LNN, $76.63, down $0.37), Monsanto (MON, $103.19, down $0.26), Paychex (PAYX, $37.17, up $0.43), Progress Software (PRGS, $21.56, down $0.10), Tallgrass Energy (TEP, $21.25, down $0.36), UniFirst (UNF, $95.30, up $0.60)

Thursday

CalAmp (CAMP, $13.43, down $0.14), Commercial Metals (CMC, $13.96, down $0.27), ConAgra Foods (CAG, $33.25, up $0.42), KB Home (KBH, $19.82, up $0.04), McCormick (MKC, $71.44, up $1.44), Nike (NKE, $60.57, down $0.21), OMNOVA (OMN, $7.69, down $0.26), Schnitzer Steel (SCHN, $24.63, down $0.12), Winnebago (WGO, $20.49, up $0.41), Worthington (WOR, $32.72, down $0.34)

Friday

AZZ (AZZ, $41.70, up $0.20), Finish Line (FINL, $21.28, up $0.64), BlackBerry (BBRY, $13.78, down $0.20)

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4. Weekly Wrap Covered Call Portfolio Update (Closing prices as of 6/21/13)

Our Weekly Wrap Closed Trade Track Record for 2013 is 24-2 (68-4, overall since the start of 2011).

Riverbed Technology (RVBD, $16.00, down $0.09) was called away at $16 and returned 7% while Scientific Games (SGMS, $10.93, flat) was also closed for a slight profit.

Blackberry (BBRY, $13.78, down $0.21)

Original Entry Price: $13.70 (6/11/13)

Lowered Price from Selling Options: $13.70

Exit Target: $15+

Return: 1%

Stop Target: $10, raise to $13.75

Action: Shares made a run to start the week, reaching $15.00 and clearing the major MA’s on Tuesday before falling to $13.95 on Wednesday’s pullback. Thursday’s low was $13.82 and Friday’s print of $13.68 was a test to near-term support at $13.50. The company will announce their earnings on Friday and there is risk down to $12 on a miss or weaker guidance. If the company comes in with higher revenues (we believe they will) and raises guidance going forward shares could blow past $15 with ease.

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Exact Sciences (EXAS, $13.04, up $0.44)

Original Entry Price: $13.55 (6/11/13)

Lowered Price from Selling Options: $13.55

Exit Target: $16+

Return: -4%

Stop Target: $10

Action: We were looking for a close above $13.50 last week and by Wednesday shares reached $13.16 before closing at $12.90. The test to support and the bottom uptrend line at $12.50 held on Thursday and Friday’s dips to $12.47 and $12.41. There is further risk to $12 followed by the major MA’s at $10.50 on further weakness. A close back above $13.50 this week would be bullish.

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Pizza Inn Holdings (PZZI, $5.15, down $0.04)

Original Entry Price: $5.40 (6/11/13)

Lowered Price from Selling Options: $5.40 (no options listed)

Exit Target: $10+

Return: -5%

Stop Target: $2

Action: Shares traded up to $5.49 midweek but tested support at $5 on Thursday and Friday. There is risk down to $4 on a break below $4.50 but we like this stock for the long haul as the company continues to develop its award-winning Pie Five Pizza concept. A close above $5.50 again could lead to a quick run to $6+.

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Bank of America (BAC, $12.69, down $0.20)

Original Entry Price: $13.15 (6/11/13)

Lowered Price from Selling Options: $13.15

Exit Target: $15+

Return: -3%

Stop Target: $10

Action: Shares held $13 all week before Thursday’s drop below this level to a low of $12.80 and the close at $12.89. We expected the test to $12.75 on Friday and we said a break below this level could lead to $12.25. Friday’s low was $12.31 and there is further risk down to $11.50, or the 200-day MA. if investors throw the baby out with the bathwater. A close back above $13 and then $13.25 would reverse the trend.

Petrobras(PBR, $13.80, down $0.27)

Original Entry Price: $18.77 (5/14/13)

Lowered Price from Selling Options: $18.77

Exit Target: $25

Return: -26%

Stop Target: $12.50 (Hard Stop)

Action: We had a feeling our Stop Target of $15 would come into play last week following the lower highs and lower lows over the past few weeks and now we have a decision to make. Shares fell to a low of $13.88 on Thursday and finished at $14.07 before Friday’s drop to $13.66. We have set a Hard Stop at $12.50 that represents the next level of support and where we throw in the towel. If stopped out we would take a hit of 33%. A close back above $15 would be bullish but is a near-term long shot following the technical breakdown over the past few weeks. We may use put options in our Daily to play a continued downside slide to try and recoup some of these losses but we got fooled on the false breakout back in May.

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Genworth Financial (GNW, $10.98, up $0.03)

Original Entry Price: $9.88 (4/2/13)

Lowered Price from Selling Options: $9.48

Exit Target: $15+

Return: 16%

Stop Target: $8, raise to $10.50 (Hard Stop)

Action: The June 11 calls expired just outside the money and we can now sell another call options to lower our cost basis even further. Support is at $10.50 and there would be risk down to $10 and the 100-day MA on a break below this level. We have said we feel shares could trade to the mid-teens in 2013 but we want to protect our profits in case $10.50 does trigger and where we have set a Hard Stop. If shares can clear $11 again and push $12, we will write a deep in-the-money call to take advantage of the move.

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We recommended buying Genworth Financial at $9.88 on 4/2/13.

On 5/1/13 we sold the June 11 calls for $0.40, which lowered our cost basis to $9.48.

Dendreon (DNDN, $3.88, down $0.01)

August 6 calls (DNDN130817C00006000, $0.12, flat)

Original Entry Price: $4.91 (4/2/13)

Lowered Price from Selling Options: $4.36

Exit Target: $8+

Return: -11%

Stop Target: $2

Action: Dendreon tried to hold $4 all week but succumbed to the pressure with Wednesday’s close of $3.99. There was a dip to $3.85 on Thursday and Friday’s rebound back above $4 was short-lived and keeps the recent trading range in play. A close below $3.75 would be bearish and could lead to $3.50-$3. We would like to see a close above resistance at $4.25 to clear the way for a run to $5+. We believe the company is also a takeover target down the road so we don’t mind waiting this one out.

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We recommended buying Dendreon at $4.91 on 4/2/13. We also sold the August 6 calls for 55 cents which lowered our cost basis to $4.36. If we are called-away at $6 in mid-August, the trade will make 38%.

Trades on HOLD (6): DryShips (DRYS, $1.79, up $0.02), AKS Steel Holding (AKS, $3.33, down $0.08), Rare Element Resources (REE, $1.80, down $0.01), Rambus (RMBS, $8.65, up $0.04), Bebe Stores (BEBE, $5.39. flat), Vivus (VVUS, $13.84, up $0.15).

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5. Week Ahead

Here is a chart of the events for the week ahead: