9:00am (EST) continued…
The Dow skyrocketed 490 points, or 4.22%, to settle at 12,045. The index easily cleared 11,600; 11,800; and conquered 12,000 all in a single session. These levels should act as short-term support with 11,600 be the most crucial in holding by week’s end if the rally fades. Of course, the bulls will be looking for a continued push towards 12,200 followed by 12,350.
The S&P soared 52 points, or 4.3%, to finish at 1,246. The index almost pulled off our upper-target hat trick after clearing 1,200 and 1,225 but stopped just short of scoring 1,250. If cleared, expect a continued run up to 1,275 with a possible shot at 1,300. Support has been strong at 1,175 if 1,200 comes back into play.
The Nasdaq zoomed triple-digits, or 105 points (4.2%) and ended at 2,620. Tech easily took out 2,550 and 2,600 which we thought might take a week or two but instead it happened in a day. Next up is 2,650-2,700. If for some reason the market gets a curveball and retreats, we would like to see 2,550 hold.
Futures are flat as we head to press. Dow futures are down 16 points while the S&P futures are down 2 points. The Nasdaq futures are up a point.
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 “Trade Update” 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 but it is rare that we do.
Taiwan Semiconductor Manufacturing (TSM, $12.92, up $0.52)
January 12.50 calls (TSM120121C00012500, $0.85, up $0.25)
Entry Price: $0.80 (11/30/11)
Exit Target: $1.60+
Return: 6%
Stop Target: None
Action: We closed the December 12.50 calls for a decent profit and rolled into the January 12.50’s as we wanted to give this trade more time to develop. The 52-week high is $14.05 which, if busted, gets these options to at least $1.50-$1.60 for a double.
Microsoft (MSFT, $25.58, up $0.74)
January 25 calls (MSFT120121C00025000, $1.25, up $0.35)
Entry Price: $0.95 (11/29/11)
Exit Target: $1.90+
Return: 32%
Stop Target: None
Action: Our near-term target is $27 which would make these options worth at least $2.
Spreadtrum Communications (SPRD, $24.75, up $1.39)
January 29 calls (SPRD120121C00029000, $1.20, up $0.30)
Entry Price: $1.00 (11/29/11)
Exit Target: $2.00
Return: 20%
Stop Target: None
Action: Shares went out at their high yesterday after gaining 6%. The move above $24 represents a break of resistance. Short-term support is strong at $22 but we are expecting a push past $30 by yearend.
Clean Energy Fuels (CLNE, $13.10, up $0.94)
January 12.50 calls (CLNE120121C00012500, $1.35, up $0.40)
Entry Price: $0.70 (11/25/11)
Exit Target: $1.50
Return: 93%
Stop Target: None
Action: We have limit orders to close half of the trade at $1.50. Keep the order in place for today and hopefully we can exit the call options into strength.
Symantec (SYMC, $16.35, up $0.75)
January 16 calls (SYMC120121C00016000, $1.05, up $0.25)
Entry Price: $0.70 (11/25/11)
Exit Target: $1.40
Return: 50%
Stop Target: None
Action: Symantec’s VeriSign Trust seal is everywhere and cyber security is only going to grow in the coming years. Shares are currently forming a bottom and we are looking for a run back to $17.50 by January.
Eaton (ETN, $44.91, up $2.54)
January 47.50 calls (ETN120121C00047500, $1.30, up $0.55)
Entry Price: $0.55 (11/25/11)
Exit Target: $1.10 (closed half @ $1.40 on 11/30/2011)
Return: 145%
Stop Target: None
Action: We exited half of the trade at $1.40 yesterday and we were looking for a close above $45 on the stock. Our near-term price target is still $50 but we wanted to lock in gains to make it a risk-free trade.
Tesla Motors (TSLA, $32.74, up $0.99)
January 35 calls 2012 (TSLA120121C00035000, $1.20, up $0.10)
Entry Price: $1.10 (11/25/11)
Exit Target: $2.20
Return: 9%
Stop Target: None
Action: We have an aggressive target of $40 for Tesla which would get these call options to $5 if reached. We will stick with the trade as long as the $30 level holds.
Juniper Networks (JNPR, $22.71, up $1.86)
January 25 calls (JNPR120121C00025000, $0.75, up $0.35)
Entry Price: $0.65 (11/21/11)
Exit Target: $1.30
Return: 15%
Stop Target: None
Action: We got our pop back above $22 as shares surged 9% yesterday. This clears the way for a test to $25+.
Other 2011 Portfolio OPEN positions (10): These are trades that are still open in the portfolio that have longer expiration dates or 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 the options expire. Click on the 2011 Portfolio link in the Members Area to view ALL open/ closed trades.
Lufkin Industries December 80 calls (from September 2011)
JDSU Uniphase January 20 calls (from August 2011)
January 16 calls (from August 2011)
Alcoa December 13 calls (from October 2011)
Skyworks Solutions January 25 calls 2012 (from October 2011)
Rambus December 20 calls (from November 2011)
Las Vegas Sands December 52.50 calls (from November 2011)
JPMorgan January 36 calls (2012) (from November 2011)
iShares Russell 2000 December 79 calls (from November 2011)
PowerShares QQQ December 50 puts (from November 2011)
Newpark Resources December 10 calls (from November 2011)
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.
Freeport McMoran (FCX, $39.60, up $3.12)
January 44 calls (FCX120121C00044000, $1.05, up $0.35)
Thoughts: Watch for now.
Precision Cast Parts (PCP, $164.75, up $5.64)
December 170 calls (PCP111217C00170000, $2.10, up $1.10)
December 130 puts (PCP111217C00130000, $0.20, down $0.10)
Thoughts: We said shares were headed below $150 or they could push $160 on a rebound. With yesterday’s surge past $160, the calls have made enough to cover both sides of the trades and we would lock-in profits if you haven’t done so already.
SanDisk (SNDK, $49.31, up $3.16)
December 50 calls (SNDK111217C00050000, $1.55, up $1.00)
January 52.50 calls 2012 (SNDK120121C00052500, $1.95, up $0.85)
Thoughts: We nearly made this an official trade yesterday but we went with a couple of others instead. We are still watching these options as there could be more profit potential in them.
Polaris Industries (PII, $60.10, up $1.52)
December 62.50 calls (PPI111217C00062500, $1.25, up $0.25)
December 50 puts (PPI111217P00050000, $0.30, down $0.10)
Thoughts: Shares surged past $60 yesterday. This is another strangle option trade we are watching but we are more bullish than bearish on the stock.
Vivus (VVUS, $10.13, up $0.38)
December 10 calls (VVUS111217C00010000, $1.10, up $0.15)
March 14 calls 2012 (VVUS120317C00014000, $2.00, up $0.20)
Thoughts: Vivus looked strong yesterday but faces a test at $10.