1:20pm (EST)
For the Wall Street pros that took an early vacation, welcome back.
I often mention the slick talking pros like to take extra days off ahead of holiday weekends and often times they find themselves on the wrong side of a trade once they get back.
The action from last week turned decisively bullish midweek and by Friday, the signs were there that today would be a breakout day.
The bears were hoping the violence in Ukraine would spook Wall Street but Russia is acting the part and trying to defuse the situation following the weekend elections.
While it is too early to chase today, the charts are showing the bulls could rally into mid-June if current support holds. The March fluff targets I have given for the major indexes are back in play and this summer will be crucial in determining if my yearend targets trigger, or not.
Of course, there is a lot of time between now and then but so far the road map has been fairly accurate with all of the major averages coming fairly close to my fluff targets.
The Dow is currently up 62 points to 16,668 while the S&P 500 is higher by 9 points to 1,909. The Nasdaq is surging 35 points to 4,220 and the Russell 2000 is advancing 12 points to 1,138.
Subscribers, check the Members Area for the updates and stay locked-and-loaded into the close for a possible New Trade. There are a few bullish plays I like but I’m still doing the chart work and math to find the best options for us to trade on the breakout to new highs.
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.
Apollo Group (APOL, $27.11, down $0.17)
June 25 puts (APOL140621P00025000, $0.50, flat)
Entry Price: $0.55 (4/28/2014)
Exit Target: $1.10 (limit order to close half)
Return: -9%
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 200-day MA is at $27 and where I’d like to see a close below this level this week. There is risk to $28 and then $30 on a back test as a few analysts defended the stock following the plunge from $30 to $26 last week but I like today’s action.
Kirkland’s (KIRK, $18.05, up $0.13)
June 15 puts (KIRK140621P00015000, $0.15, flat)
Entry Price: $0.45 (5/20/2014)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: This was an earnings trade that hasn’t worked out as planned as there is risk to $20. A close below $17.50 should lead to a test to $15. The longer-term chart shows a test to the low teens is possible.
iShares Russell 2000 (IWM, $113.21, up $1.24)
June 103 puts (IWM140621P00103000, $0.20, down $0.10)
Entry Price: $0.68 (5/20/2014)
Exit Target: $1.40
Return: -68%
Stop Target: None
Action: Although the position is down, I like the “protection” this trade offers over the next month. There is further risk to $114 with support moving up to $112.
Bed, Bath & Beyond (BBBY, $61.38, up $0.02)
June 60 puts (BBBY140621P00060000, $0.60, flat)
Entry Price: $0.60 (5/14/2014)
Exit Target: $1.20
Return: 0%
Stop Target: None
August 55 puts (BBBY140816P00055000, $0.65, flat)
Entry Price: $0.63 (5/14/2014)
Exit Target: $1.25
Return: 3%
Stop Target: None
Action: Support is at $60 and a break below this level will likely lead to $57.50-$55. Resistance is now at $62.50.
Twitter (TWTR, $30.82, up $0.32)
January 50 calls 2015 (TWTR150117C00050000, $0.90, flat) LEAP option
Entry Price: $1.75 (5/8/2014)
Exit Target: $3.50-$5
Return: -49%
Stop Target: None
Action: Near-term resistance is at $32 and a move above this level would be bullish. Support is at $30. This is a longer-term option that gives the trade until next January for this story to play out. Twitter is the source for global news the instant it happens and this is worth a premium.
McDonald’s (MCD, $102.70, up $0.70)
July 95 puts (MCD140719P00095000, $0.30, down $0.05)
Entry Price: $0.70 (5/6/2014)
Exit Target: $1.40
Return: -57%
Stop Target: None
Action: Shares are dancing with the uptrend line and a break below $101.50 would be bearish. 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 (0): 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.