9:00am (EST) continued…
The Dow gained 116 points, or 0.8%, to end right on 13,900. The blue-chips held green all day and reached a peak of 13,918 before the close. The bears will need to keep 13,800 in play while the bulls will make another bid at 14,000.
The S&P 500 jumped 9 points, or 0.6%, to finish at 1,496. We were looking for the bears to hold 1,495 and the one-point close above our target was a scratch considering 1,500 held as the high came in at 1,498.99. We said a close above 1,500 would favor the bulls and they will try again today while the bears still have their eyes on 1,475-1,450. The index did trade in the red shortly before Wall Street’s lunch break to 1,485.
The Nasdaq added 13 points, or 0.4%, to settle at 3,129. Tech had a solid day and kissed 3,135 but fell short of clearing 3,150 by a half-percent. We were looking for 3,125 to hold but the Nasdaq only made half the gains of the other indexes and remains the weakest link. The bears are trying to crack 3,100 which is still less than 1% away.
The Russell 2000 advanced 4 points, or 0.5%, to end at 900. There was a dip to 894 midday but the bulls pushed 902 and held 900 into the close.
Apple (AAPL, $448.97, up $6.17) will be in the news today as they are hosting a shareholder meeting that should hit Wall Street shortly after 1pm (EST). There were heavy rumors floating around yesterday the company would announce a stock-split but our dedicated subscribers have already heard of this “rumor” as we have been predicting a 10-to-1 or 5-to-1 stock-split for Apple for months now.
We aren’t sure if they actually will announce a stock-split but there is good news coming. Starting in mid-March, Apple will be one of the stocks that trade “mini” options” and we will have more on this story in the coming weeks. The other stocks that could trade mini options include Amazon.com (AMZN, $259.36, down $0.51)) and Google (GOOG, $790.13, down $0.64) as well as the S&P 500 Spider ETF (SPY, $150.02, up $1.02) and the Spiders Gold Trust ETF (GLD, $156.22, up $1.88).
We have room for more new trades and if the bears make another run lower, we will look to reestablish some index plays.
Futures are showing a slightly higher open for today’s session and look like this: Dow (+25); S&P 500 (+2); Nasdaq 100 (+4).
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).
Potash (POT, $38.93, up $0.33)
March 38 puts (POT130316P00038000, $0.45, down $0.13)
Entry Price: $0.50 (2/26/13)
Exit Target: $1.00
Return: -10%
Stop Target: None
Action: We have a near-term price target of $36 for Potash. If reached, these put options would be worth at least $2. These options expire in 17 days so we would like to see a close below $38 this week. A move above $40 might force us out of the position.
Cyberonics (CYBX, $46.24, up $0.04)
April 40 puts (CYBX130420P00040000, $0.90, up $0.25)
Entry Price: $0.75 (2/26/13)
Exit Target: $1.50
Return: 20%
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.
Allstate (ALL, $45.56, up $0.45)
April 43 puts (ALL130420P00043000, $0.60, up $0.10)
Entry Price: $0.60 (2/26/13)
Exit Target: $1.20
Return: 0%
Stop Target: None
Action: We have a near-term target of $42 for shares which should get us a double on the put options.
Powershares QQQ (QQQ, $66.56, up $0.25)
April 65 puts (QQQ130420P00065000, $1.15, down $0.15)
Entry Price: $1.00 (2/21/13)
Exit Target: $1.50-$2.00 (closed at $1.10 on 2/26/13)
Return: 10%
Stop Target: $1.10 (Hard Stop)
Action: The puts traded up to $1.38 and we were trying to get $1.50 for half of them. The QQQ’s gained a little strength in the afternoon session and our Hard Stop of $1.10 was triggered late in the day. We have listed the QQQ’s on the Watch List and may get back into them on another leg lower.
Spider S&P 500 (SPY, $150.02, up $1.02)
April 142 puts (SPY130420P00142000, $1.70, flat)
Entry Price: $1.15 (2/21/13)
Exit Target: $1.80-$2.30 (closed at $1.35 on 2/26/13)
Return: 17%
Stop Target: $1.35 (Hard Stop)
Action: The puts traded to a high of $1.75 and we set limit orders to exit half of the trade at $1.80 yesterday. We missed our close by a nickel but we also had a $1.35 Hard Stop that was triggered into the close yesterday as the puts kissed $1.33. We have also listed the Spiders again on our Watch List and we may get back into some S&P puts if there is another leg lower.
Cree (CREE, $44.40, up $0.93)
March 42 puts (CREE130316P00042000, $0.60, down $0.30)
Entry Price: $0.85 (2/21/13)
Exit Target: $1.70
Return: -29%
Stop Target: None
Action: We are looking for a back test to $38 and the 50-day MA. A break below $38 would get $34 in play as there is a huge gap to fill following the breakout in January. There is risk to $45 but we are expecting resistance to hold.
Keryx Biopharmaceuticals (KERX, $6.60, down $0.02)
June 10 calls (KERX130622C00010000, $0.40, flat)
Entry Price: $0.70 (2/12/13)
Exit Target: $1.50
Return: -43%
Stop Target: None
Action: Earnings are due out today.
Other 2013 Portfolio OPEN positions (5): 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) – Continue to hold
Apache March 90 calls (from February 2013)– Continue to hold
ADT March 50 calls (from January 2013)– Continue to hold
MGM Resorts International June 15 calls (from January 2012)
Taiwan Semiconductor April 20 calls (from January 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.
Baidu (BIDU, $89.73, up $1.72)
March 82.50 puts (BIDU130316P00082500, $0.60, down $0.30)
April 75 puts (BIDU130420P00075000, $0.60, down $0.10)
Thoughts: We wanted to free up the April 80 trade to see if we can get into the March 82.50’s or some lower priced April put options. We would like to see a push to $90-$91 then another back test to possible new lows.
iShares Dow Jones Transportation Average (IYT, $103.59, up $0.20)
March 100 puts (IYT130316P00100000, $0.75, up $0.10)
Thoughts: Over 2,000 contracts traded hands yesterday and we like this trade a lot. We have covered the Transports on the way up and it was a good clue for us to use in calling the market’s direction from December. Now, with the bulls slowing down, the Transports could lead the next leg lower.
Powershares QQQ (QQQ, $66.56, up $0.25
April 64 puts (QQQ130420P00064000, $0.90, down $0.05)
Thoughts: We will likely add these options on a break below $66 buy we may get in early if $67 holds.
Spider S&P 500 (SPY, $150.02, up $1.02)
April 141 puts (SPY130420P00141000, $1.25, down $0.30)
Thoughts: We like these options on a break back below $149.
iShares Russell 2000 (IWM, $89.37, up $0.35)
March 89 puts (IWM130328P00089000, $1.80, down $0.20)
March 87 puts (IWM130322P00087000, $0.90, down $0.10)
Thoughts: We may add the March 87 puts on further weakness on the Russell 2000. They are WEEKLY options so if we do add them make sure you add the ones that expire on March 22. For those of you in the 89’s, start protecting profits.
Mellanox Technologies (MLNX, $51.68, up $0.12)
March 47 puts (MLNX130316P00047000, $0.65, up $0.10)
Thoughts: A break below $50 would be bearish for a trip to the mid to low $40’s.
DeVry (DV, $29.96, down $0.65)
March 30 puts (DV130316P00030000, $0.85, up $0.35)
Thoughts: These options got a nice pop on the close below $30. The open interest in the March 30 puts has exploded over the past few weeks as they are above 10,000 contracts.
Caterpillar (CAT, $89.95, up $0.79)
March 85 puts (CAT130316P00085000, $0.45, down $0.25)
March 87.50 puts (CAT130316P00087500, $0.95, down $0.40)
April 80 puts (CAT130420P00080000, $0.65, down $0.15)
Thoughts: We got our back test to $90 so let’s see if it holds.
Ironwood Pharmaceuticals (IRWD, $14.56, up $0.06)
May 15 calls (IRWD130518C00015000, $1.05, flat)
Thoughts: We have been mentioning shares could retest resistance at $15 and a break above this level could lead to $20 down the road.