Option Investor
Newsletter

Daily Newsletter, Tuesday, 7/16/2013

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Speed Bump

by Jim Brown

Click here to email Jim Brown

The Nasdaq string of 14 positive days came to an end thanks in part to a collapse in Tesla.

Market Statistics

Tesla Motors (TSLA) ran out of power today and desperately needs a recharge. TSLA fell -14% to $109 after price targets were slashed by Goldman Sachs. Tesla was added to the Nasdaq 100 on Monday so it was not a bullish debut.

Goldman issued a report saying Tesla would likely fit into one of three scenarios. The average price for those scenarios is $84. The best case would be an eventual 3.5% share of the global market in its category with a total volume of 200,000 vehicles. Goldman's target price on that scenario would be $113. The worst case scenario would see sales of 105,000 vehicles including 50,000 Model S and 55,000 of the next generation model, which is expected to be cheaper. That would result in a target price of $58. Clearly Goldman did a hatchet job on Tesla and I would bet they had a large short position in the stock beforehand. I would expect Tesla to issue a rebuttal with earnings on August 7th if not before.

TESLA Chart

The market was weak without the impact of Tesla because of some earnings problems and the potential for market disruption from Bernanke's testimony on Wednesday. The economics were actually good but in this market good economic news is bad news for QE.

The industrial production for June rose +0.3% and the biggest gain in four months. April and May were also revised higher. Manufacturing rose +0.3%, durable goods rose +0.5%, motor vehicles +1.3%, high tech +1.2%, business equipment +0.5% and mining +0.8%. Capacity utilization rose only .1% to 77.8%.

While the June report was better than expected it is still a weak trend. For the entire second quarter industrial production rose only +0.6% compared to a +4.2% rise in Q1.

Industrial Production Chart

The NAHB Housing Market Index soared from 51 to 57 for July. That is the highest level since January 2006. All three subcomponents were up strongly. Current single family sales rose from 55 to 60. Six month expectations rose from 60 to 67 and the highest level since October 2005. Buyer traffic rose from 40 to 45. Sales and traffic are both up +15 points over the last three months alone. The NAHB said the number of respondents to the survey has declined from 402 to 281 indicating shrinkage in the number active builders. Building materials costs have begun to ease after two years of steady gains. Since mortgage rates have risen by more than 100 basis points over the last month the strong Housing Market Index suggests homebuilders are not seeing a material decline in buyers.

NAHB Index Chart

The Consumer Price Index (CPI) rose +0.5 in June compared to +0.1 in May and -0.4 in April. This moved the year over year rate to +1.8% compared to only +1.1% in April. However, energy spiked +3.4% and food +0.2%. Ex-food and energy the core inflation rate only gained +0.2%. The core rate was boosted by a +0.4% increase in medical care as insurers raise prices ahead of Obamacare. Apparel prices exploded higher by +0.9% and the biggest gain in two years.

CPI Chart

Foreign investors sold U.S. securities again last month with net outflows of -$27.2 billion. China remained the largest holder other than the Federal Reserve with $1.316 trillion. That was an increase of $25.2 billion. Japan was the second largest at $1.11 trillion but that was a decline of -$27.2 billion following a drop of -$21.8 billion the prior month. Foreign nongovernment investors sold a record $29 billion in Treasury bonds and notes. Net buying by official entities totaled $40.3 billion.

The chart says it all. With the Fed close to ending purchases of treasuries the number of buyers is shrinking. If the Fed halts QE the yield on treasuries is going to rocket higher simply because the biggest buyer in the market will be gone. Overseas investors, the largest buyers other than the Fed, are already cutting back on purchases and are net sellers of U.S. debt.

Moody's Capital Flows Chart

The economic calendar for Wednesday is headlined by the Bernanke testimony to the House and the Fed Beige Book. Something new is happening to the testimony. The House Financial Services Committee requested the text of Bernanke's comments ahead of the actual testimony so they could prepare questions. The Fed is going to release the Bernanke comments at 8:30 with the actual testimony to start at 10:00. I believe this is going to open Bernanke up to an onslaught of pointed questions that could produce some unwanted results.

Remember, Bernanke is assumed to be a lame duck whose term expires on January 31st. He really has nothing to lose by being blunt in his comments over the country's fiscal problems. He has been blunt in the past about the amount of drag the government is inflicting on the economy. This could turn into a hostile testimony since lawmakers have 90 minutes for their staff to come up with questions designed to embarrass Bernanke and give the lawmaker a sound bite to use in his next election campaign.

Traders will also get an hour to digest the comments before the market opens for trading. This could produce a very volatile open.

Advertise for Option Investor

The Fed Beige Book will be released at 2:PM and that contains the latest economic updates from all 12 Fed regions. That is always a key report for the month since this data is used by the FOMC to determine monetary policy two weeks later.

Economic Calendar

The earnings calendar for Wednesday is also critical. BAC, AXP, IBM, INTC and EBAY will headline earnings for Wednesday. These companies could set the tone for the rest of the earnings cycle.

Earnings calendar

Earnings out on Tuesday succeeded in roiling the market although the earnings were not that bad. Coca Cola (KO) reported earnings that fell -4% on a -3% drop in revenue. The company blamed bad weather, global economic weakness, a consumer credit squeeze in Brazil, health issues related to soft drinks and currency translation issues for the disappointing earnings. Sales of carbonated beverages were flat but noncarbonated sales rose +6%. That means Cokes were flat but water products were rising. Adjusted EPS came in at 63 cents and in line with analyst estimates but that was the end of the good news. Revenue fell from $13.09 billion to $12.74 billion. Foreign exchange rates from the strong dollar knocked -2% off the revenue. Sales volume declined -1% in North America and -4% in Europe. Coke said early monsoons in India and flooding in Europe depressed sales in those areas. It sounds like a kitchen sink quarter to me.

KO Chart

Mosaic (MOS) reported earnings of $1.14 compared to analyst estimates for $1.13 but revenue declined -4.5% to $2.69 billion on weak fertilizer prices. Sales volume hit the top of Mosaic's forecast range but the weak prices caused the decline in revenue. The company guided analysts to potash sales of 1.8 to 2.1 million tonnes in Q3 compares to 1.8 million in Q3-2012 and 2.6 million in the quarter just ended. Phosphate sales are expected between 2.9 to 3.3 million tonnes compared to 2.9 million in the year ago quarter. This suggests business is good but the global competition is weighing on prices. MOS shares declined -3.6%.

Mosaic Chart

Business bank and financial products provider Comerica (CMA) reported earnings of 76 cents compared to estimates of 70 cents but the stock declined on weak loan growth. The company said economics in California and Texas were positive with job growth in most markets above the U.S. average. Comerica operated primarily in Texas, Arizona, California, Florida and Michigan. The problem for Comerica was the slowing loan growth. Loans grew only +3% in Q2 compared to +8% in Q2-2012. That says a lot about business conditions. JP Morgan also reported slower loan growth last week. CMA shares were down slightly despite the earnings beat.

CMA Chart

Goldman Sachs (GS) profits more than doubled thanks to investment gains and a lower tax rate. Unfortunately traders questioned whether that could be repeated in future quarters and shares declined nearly $3. Goldman's investment segment produced more than seven times as much revenue as in the comparison quarter. With the new rules on how much of a bank's capital can be invested in risk assets the future performance may not be as strong. Goldman's tax rate declined from 32% to 27% because Goldman decided to leave international investment profits permanently offshore. CFO Schwartz said the money earned more in overseas ventures. The CFO told analysts on the call the low tax rate would not be repeated. Earnings rose to $1.86 billion or $3.70 per share. Analysts were expecting $2.82. Net revenue rose +30% to $8.61 billion. They produced their most revenue in fixed income, currency and commodity trading. Revenue there rose +12% to $2.4 billion.

Goldman Chart

CSX Corp (CSX), the biggest railroad in the eastern U.S. reported earnings of 52 cents compared to estimates of 47 cents. The railroad said higher volume in shipments of coal to domestic utilities rose for the first time since 2010. Surprise, surprise! High natural gas prices do make coal a better fuel.

Coal was the biggest cargo for CSX and total tonnage shipped to utilities in the U.S. increased +9%. Total coal shipped including that destined for export fell -6.3% but that was better than the -10% decline in Q1. Revenue rose +1.9% to $3.07 billion and well over the $3.03 billion estimate. Shipments of oil and chemicals rose +11% and fertilizers +8.9%. Minerals like stone and gravel for construction rose +7.1%. Guidance for full year earnings changed to "roughly flat" from "slightly down" in the last update. Shares of CSX rallied to $25.15 in afterhours trading.

CSX Chart

Yahoo (YHOO) reported earnings after the close that disappointed investors. Earnings came in at 35 cents compared to estimates for 30 cents but revenues were light. Revenues of $1.7 billion fell below estimates of $1.8 billion. Ad rates declined along with ad volume. Ad rates fell -12% after falling -2% in the prior quarter. Ad volume has declined for 8 consecutive quarters. Ad revenue declined -11%. Yahoo repurchased $653 million shares of stock in the quarter and that increase their earnings per share. The company plans to buy an additional $1.9 billion in shares.

Yahoo guided analysts to $1.06 to $1.1 billion in revenue in Q3 and cut expectations for full year revenue as well. CEO Marissa Meyer's fairy tale may be ending. Yahoo has been taking the cash from the sale of Alibaba assets and using it to renovate Yahoo and make some acquisitions. That cash will eventually come to an end and Yahoo will have to be increasing ad revenue sequentially or the story is going to have an unhappy ending. Shares are up +70% in the year since Meyer took over but without some positive metrics soon those stock gains are going to evaporate. Yahoo shares declined to $26.45 in afterhours trading.

YHOO Chart

The Nasdaq 100 winning streak was stopped at 14 and the S&P streak ended at 8. The amount of the declines on the major indexes were minimal. The NDX only lost -2 points, S&P -6 and Dow -32. It was hardly a decline and barely even a speed bump. This was simply caution ahead of the potential Bernanke storm.

The seemingly weekly change in his posture from dove to hawk and back again makes you wonder who is going to show up for the public testimony on Wednesday. Investors were simply taking profits from that long streak of gains rather than leave them exposed on the chopping block.

The S&P closed at 1676 and light support from late last week. Several market technicians see the 1675 level as critical for the market to overcome if there is going to be a more to test 1700 before the seasonal late summer slowdown. If earnings continue to come in weak as we have seen so far this cycle that market slowdown could be sooner rather than later.

Wednesday's earnings from IBM, Intel, SanDisk and Ebay could set the stage for the rest of the cycle.

On a larger note if the current rally survives Bernanke, earnings and the Fed Beige Book on Wednesday we should be good to go for another leg higher. This could be a pivotal day in the cycle. However, some technicians view a pullback to 1650 as positive and a launch point for a late summer rally.

S&P Chart

The Dow struggled from the opening tick on weakness in Boeing and Coke. Boeing rebounded on Monday when it appeared the fire in the 787 at Heathrow may have been started by a Honeywell component. On Tuesday the official comments said there were many components being questioned but the fire had been so hot that all the elements in question were difficult to determine blame. Apparently everything in the area was melted and burned. Also, several suits were filed relating to the Asiana 777 crash and Boeing was a target. Obviously if they can draw Boeing into the suit they will have some deep pockets other than Asiana. A 777 was halted just before takeoff in San Francisco after an engine oil leak was discovered. This was the second 777 halted in the last month for engine oil leaks in San Francisco. I have confidence Boeing will weather the storm. Engine oil leaks for planes in service for several years are maintenance issues not a Boeing issue. The engines are made by someone else.

The Dow has stalled at the May highs right at 15,500 for four consecutive days. This is round number resistance that I pointed out in the weekend newsletter as a potential trouble spot. If Bernanke wears his dove mindset to the testimony on Wednesday we could see a relief rally that takes us over that 15,500 level. Otherwise it will continue to be a challenge on weak earnings news.

Dow Chart

The Nasdaq has benefitted from a resurgence in Apple to the $430 level, up from $390 in lare June, but round number resistance at 3600 is proving to be a tough level to cross. With tech earnings a highlight on Wednesday the stalemate should be broken in one direction or the other. IBM, INTC, SNDK and EBAY should provide a direction for the rest of the week. Nasdaq futures are trending down after the Yahoo earnings but only marginally. All the index futures are basically flat overnight at 9:PM so everyone is waiting on the Wednesday events and they don't appear to be too worried.

Nasdaq Chart

The prior paragraph said it all. Some traders took profits today ahead of the testimony and others are just sitting tight and waiting for the next move higher. Let's hope that bullish confidence is not misplaced. Volume the last three days has been very anemic. Monday managed only 4.8 billion shares and today was 5.5 billion. There is no rush for the exits and nobody chasing prices higher. Everyone is waiting to see how the week plays out.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email


New Option Plays

Consumer Goods

by James Brown

Click here to email James Brown


NEW DIRECTIONAL PUT PLAYS

Green Mountain Coffee Roasters - GMCR - close: 72.01 change: -1.18

Stop Loss: 76.01
Target(s): 65.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
GMCR is a popular momentum play for traders both long and short. The stock made headlines yesterday as Wall Street speculated if GMCR was about to launch a new product that would compete with SodaStream (SODA). It looks like yesterday's rally may have been a one-day pop and a knee-jerk reaction by the shorts. There are a lot of shorts in GMCR. The most recent data listed short interest at 34% of the 129.3 million share float. That's going to keep GMCR shares volatile with the tug of war between bears and the bulls.

It does look like the trend is favoring the bears. GMCR peaked in May. It produced a bull-trap pattern with the higher high in mid June that quickly reversed lower. Now GMCR has been sinking the last few weeks while the broader market has been in rally mode. Today's rally pierced resistance at several moving averages, including the 50-dma, and it traded above round-number resistance at $75.00. Yet the rally today failed as GMRC reversed lower.

I am suggesting new bearish positions at the opening bell tomorrow. We will want to keep our position size small to limit our risk. Our short-term target is $65.50. More aggressive traders could aim for the $61-60 zone instead since $60 looks like stronger support. FYI: The Point & Figure chart for GMCR is bearish with a $57 target.

- Suggested (Small) Positions -

buy the Aug $65 PUT (GMCR1317T65) current ask $3.75

Annotated Chart:

Entry on July -- at $---.--
Average Daily Volume = 4.0 million
Listed on July 16, 2013



In Play Updates and Reviews

Stocks Dip Ahead of Bernanke

by James Brown

Click here to email James Brown

Editor's Note:

The stock market snapped a multi-day winning streak. Investors took some money off the table ahead of Fed Chairman Bernanke's testimony before congress tomorrow.

FLS and MDSO were stopped out. TM was closed as planned. VC and LL were triggered.


Current Portfolio:


CALL Play Updates

Automatic Data Processing - ADP - close: 72.30 change: -0.06

Stop Loss: 70.95
Target(s): 74.00
Current Option Gain/Loss: + 69.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
07/16/13: ADP dipped toward prior resistance and now new support near $72.00 this morning. More conservative traders may want to tighten their stops closer toward $72.

- Suggested Positions -

Long Aug $70 call (ADP1317H70) entry $1.65

07/15/13 new stop loss @ 70.95
07/11/13 new stop loss @ 69.85
07/10/13 new stop loss @ 69.40
07/06/13 new stop loss @ 68.40
06/27/13 new stop loss @ 67.90

Entry on June 18 at $69.25
Average Daily Volume = 1.8 million
Listed on June 17, 2013


Ameriprise Financial - AMP - close: 85.40 change: -0.93

Stop Loss: 84.65
Target(s): 89.25
Current Option Gain/Loss: -19.6%
Time Frame: exit PRIOR to earnings on July 24th
New Positions: see below

Comments:
07/16/13: No surprises here. I warned readers last night that AMP was likely heading back toward $85.00. Look for a bounce before considering new positions.

Earlier Comments:
If triggered our target is $89.25. However, we will plan to exit prior to the earnings report on July 24th.

- Suggested Positions -

Long Aug $85 call (AMP1317H85) entry $3.30

07/15/13 new stop loss @ 84.65
07/11/13 trade opened on gap open at $86.17. Trigger was $85.25.

Entry on July 11 at $86.17
Average Daily Volume = 1.25 million
Listed on July 09, 2013


Borg Warner - BWA - close: 87.21 change: -1.60

Stop Loss: 86.40
Target(s): 93.00
Current Option Gain/Loss: -35.7%
Time Frame: exit PRIOR to earnings on July 25th
New Positions: see below

Comments:
07/16/13: I cautioned readers that BWA would likely dip toward the $87.50 zone yesterday. The stock overshot that level and fell to $86.83. Today's move briefly traded below the rising 10-dma before closing on this moving average. Traders could use a bounce from current levels as a new bullish entry point.

Earlier Comments:
It is possible that $90.00 could be round-number resistance but we're aiming for $93.00. Please note that we will plan on exiting positions prior to the earnings report on July 25th. FYI: The Point & Figure chart for BWA is bullish with a $114 target.

- Suggested Positions -

Long Aug $90 call (BWA1317H90) entry $2.10*

07/15/13 new stop loss @ 86.40
07/11/13 trade opened on gap higher at $88.28. Trigger was $87.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on July 11 at $88.28
Average Daily Volume = 860 thousand
Listed on July 10, 2013


Eastman Chemical Co. - EMN - close: 73.59 change: -0.61

Stop Loss: 73.49
Target(s): 79.75
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on July 29th
New Positions: Yes, see below

Comments:
07/16/13: EMN continues to churn below resistance near $75.00. It is worth noting that today's session has created a bearish engulfing candlestick reversal pattern. I don't see any changes from my earlier comments.

Earlier Comments:
Shares of EMN have been consolidating sideways for the last four and a half months. The rally this month has pushed shares back toward major resistance in the $74-75 zone. A breakout past $75.00 would be a new all-time high.

I am suggesting a trigger to buy calls at $75.25. If triggered our target is $79.75. However, we will plan on exiting positions prior to the earnings report on July 29th. FYI: The Point & Figure chart for EMN is bullish with a $91 target.

Trigger @ 75.25

- Suggested Positions -

Buy the Aug $75 call (EMN1317H75)

Entry on July -- at $---.--
Average Daily Volume = 1.3 million
Listed on July 11, 2013


Energizer Holdings - ENR - close: 105.03 change: -1.76

Stop Loss: 104.65
Target(s): 109.50
Current Option Gain/Loss: + 27.2%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/16/13: ENR saw a second day of profit taking with a -1.6% decline. Shares seemed to find some support near the $105.00 level. If there is any follow through lower tomorrow then we will likely see ENR hit our new stop loss at $104.65.

I am not suggesting new positions.

- Suggested Positions -

Long Aug $105 call (ENR1317H105) entry $2.75*

07/15/13 new stop loss @ 104.65
07/13/13 new stop loss @ 102.75. Adjust exit target from $109.75 to $109.50
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on July 09 at $103.25
Average Daily Volume = 497 thousand
Listed on July 01, 2013


Harman Intl. Industries - HAR - close: 54.49 change: -0.83

Stop Loss: 54.40
Target(s): 59.75
Current Option Gain/Loss: Unopened
Time Frame: Exit PRIOR to earnings on August 6th
New Positions: Yes, see below

Comments:
07/16/13: HAR is retreating from resistance near $56.00. Today the stock closed below its 10-dma, which is short-term bearish. We are waiting for a breakout past resistance near $56.00.

I am suggesting a trigger to buy calls at $56.10. If we are triggered at $56.10 our target is $59.75. However, we will plan on exiting positions prior to the company's earnings report on August 6th. FYI: The Point & Figure chart for HAR is bullish with a long-term $81 target.

Trigger @ $56.10

- Suggested Positions -

Buy the Aug $57.50 call (HAR1317H57.5)

Entry on July -- at $---.--
Average Daily Volume = 785 thousand
Listed on July 13, 2013


Noble Energy - NBL - close: 63.07 change: -0.48

Stop Loss: 62.45
Target(s): 68.50
Current Option Gain/Loss: -22.2%
Time Frame: Exit PRIOR to earnings on July 25th
New Positions: see below

Comments:
07/16/13: NBL produced a bearish reversal looking candlestick yesterday. The weakness continued today with a -0.75% decline. Yet shares managed to close on technical support at its 10-dma. The low today was $62.76. Our new stop is at $62.45. More conservative traders may want to abandon ship right here.

Earlier Comments:
We will plan on exiting positions prior to NBL's earnings report on July 25th. More aggressive traders may want to aim higher. This past week has generated a new triple-top breakout buy signal on the point & figure chart with a $74.00 target.

- Suggested Positions -

Long Aug $65 call (NBl1317H65) entry $1.35

07/15/13 new stop loss @ 62.45
07/13/13 new stop loss @ 61.40

Entry on July 09 at $63.05
Average Daily Volume = 1.9 million
Listed on July 06, 2013


Prudential Financial - PRU - close: 77.33 change: -0.20

Stop Loss: 75.90
Target(s): 79.00
Current Option Gain/Loss: +54.1%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
07/16/13: PRU held up reasonably well today. Traders were buying the dip before shares could reach the 10-dma. The stock does look vulnerable to more profit taking and readers may want to exit now to lock in gains.

- Suggested Positions -

Long Aug $75 call (PRU1317H75) entry $2.40

07/15/13 new stop loss @ 75.90, readers may want to exit now.
07/09/13 new stop loss @ 74.75, adjust exit target to $79.00
07/02/13 new stop loss @ 72.40

Entry on July 01 at $73.65
Average Daily Volume = 3.1 million
Listed on June 29, 2013


Visteon Corp. - VC - close: 64.95 change: -1.32

Stop Loss: 64.40
Target(s): 72.50
Current Option Gain/Loss: -53.5%
Time Frame: Exit PRIOR to earnings on Aug. 8th
New Positions: see below

Comments:
07/16/13: Ouch! Our new VC trade has been triggered but the play is off to a sour start. The stock gapped open higher at $66.89. Since our trigger to buy calls was $66.75 our trade opened immediately. Unfortunately, VC immediately reversed lower. The stock underperformed the market with a -1.99% decline. This may have been a reaction to news that Goldman Sachs had downgraded the U.S. auto sector today.

The low today was $64.44. Our stop is at $64.40. If there is any follow through lower tomorrow we will see VC hit our stop loss.

- Suggested Positions -

Long Aug $70 call (VC1317H70) entry $1.40

07/16/13 triggered on gap open higher at $66.89
suggested trigger was $66.75

Entry on July 16 at $66.89
Average Daily Volume = 484 thousand
Listed on July 13, 2013


PUT Play Updates

Lumber Liquidators - LL - close: 85.27 change: -1.03

Stop Loss: 88.25
Target(s): 80.25
Current Option Gain/Loss: + 1.7%
Time Frame: exit PRIOR to earnings on July 24th
New Positions: see below

Comments:
07/16/13: Our new LL put play is off to an okay start. Shares underperformed the market with a -1.19% decline. Our plan was to buy puts if shares hit $85.75. The play has been triggered. I would still consider new positions now. More conservative traders may want to wait for a drop below the simple 50-dma instead.

Earlier Comments:
I want to point out that this is a higher-risk, more aggressive trade. Shares are up three weeks in a row (just like the market) and there is a high amount of short interest. The most recent data listed short interest at almost 25% of the small 26.2 million share float. That does pose a risk of a short squeeze.

Our short-term target is $80.25 but more aggressive traders could aim for the 100-dma instead. Keep in mind this is short-term trade as well. We do not want to hold over the earnings report on July 24th.

*use Small Positions* - Suggested Positions -

Long Aug $80 PUT (LL1317T80) entry $2.80

Entry on July 16 at $85.75
Average Daily Volume = 840 thousand
Listed on July 15, 2013




Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 61.65 change: -0.44

Stop Loss: 53.75
Target(s): 74.50
Current Option Gain/Loss: +37.2%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
07/16/13: CBI saw some profit taking today but traders were buying the dip midday near $61.00. I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

Long 2014 Jan $65 call (CBI1418A65) entry $2.55

06/29/13 CBI might be poised to dip into the $57-55 zone again.
06/24/13 triggered @ 56.75
06/22/13 adjust entry trigger to $56.75
06/15/13 entry strategy change: change the breakout trigger at $65.25 to a buy-the-dip trigger at $56.50. Adjust the stop loss to $53.75.
Adjust the option strike to the 2014 Jan. $65 call

Entry on June 24 at $56.75
Average Daily Volume = 1.8 million
Listed on June 01, 2013


CLOSED BULLISH PLAYS

Flowserve Corp. - FLS - close: 55.18 change: -0.11

Stop Loss: 54.65
Target(s): 59.00
Current Option Gain/Loss: - 45.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/16/13: FLS hit our stop loss today.

We've been worried about FLS' recent weakness and yesterday we raised the stop loss to $54.65. Today the stock broke down below its 50-dma and dipped to $54.59 before paring its losses.

- Suggested Positions -

Oct $60 call (FLS1319J60) entry $1.20* exit $0.65** (-45.8%)

07/16/13 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
07/15/13 new stop loss @ 54.65
*07/08/13 entry price on the option is an estimate since the option did not trade when our entry trigger was hit.

chart:

Entry on July 08 at $55.60
Average Daily Volume = 665 thousand
Listed on July 06, 2013


Medidata Solutions - MDSO - close: 81.74 change: +0.86

Stop Loss: 79.45
Target(s): 84.85
Current Option Gain/Loss: - 32.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
07/16/13: MDSO was showing promise yesterday after hitting new all-time highs. Something changed today and I cannot find the catalyst behind today's sell-off. Shares opened higher and then collapsed with a -6.8% decline. Our stop loss was hit at $79.45.

- Suggested Positions -

Aug $85 call (MDSO1317H85) entry $2.60 exit $1.75* (-32.6%)

07/16/13 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
07/15/13 new stop loss @ 79.45
07/11/13 Warning! The action in MDSO is not bullish.

chart:

Entry on July 11 at $81.25
Average Daily Volume = 190 thousand
Listed on July 08, 2013


Toyota Motor Corp. - TM - close: 128.91 change: -0.73

Stop Loss: 124.00
Target(s): 130.00
Current Option Gain/Loss: +22.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
07/16/13: After coming within one cent of our exit target yesterday we decided to exit positions this morning at the opening bell. Shares of TM gapped down at $129.38 before closing with a -0.5% decline. Sadly the option saw a 40-cent gap down this morning, which cut into our potential gains.

- Suggested Positions -

Aug $130 call (TM1317H130) entry $2.80 exit $3.43 (+22.5%)

07/16/13 scheduled exit
07/15/13 prepare to exit at the open tomorrow morning
07/11/13 new stop loss @ 124.00
07/02/13 trade opened on gap higher at $124.70, trigger was 123.65

chart:

Entry on July 02 at $124.70
Average Daily Volume = 694 thousand
Listed on July 01, 2013