Option Investor
Newsletter

Daily Newsletter, Tuesday, 8/13/2013

Table of Contents

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

Market Wrap

Double Trouble

by Jim Brown

Click here to email Jim Brown

Dennis Lockhart and Carl Icahn doubled up to rescue the market from a loss.

Market Statistics

Atlanta Fed President Dennis Lockhart rescued the markets from a losing position when he said he does not believe the Fed will have enough data by the September 17th FOMC meeting to take any action on reducing QE. He said the economic data is still volatile and does not show the sustained improvement necessary to make a change. "For that reason, I don't think a decision that commits the Fed to a full phase-out of asset purchases and lays out a precise, beginning to end path for doing so would be advisable." This immediately boosted the stock market to an intraday high at 15,504. The Dow had dipped -68 to 15,342 at the open but had rebounded to -31 before the comments.

Lockhart also warned of another "fiscal confidence shock" in the coming months as Congress fights over raising the debt ceiling. "I will need to get comfortable that the employment progress we have enjoyed is not stalling and that disinflation pressures are not building." The Fed has pledged to continue asset purchases until the labor market has improved "substantially." We can expect more Fedspeak headlines as we get closer to the September meeting.

The Lockhart headline helped to offset the negative impact of the July retail sales report. July sales rose +0.2% for the fourth consecutive monthly rise. June sales rose +0.6%, May +0.5% and April +0.2%. The lower July number was due to a slowdown in auto sales and housing-related retailers. Auto sales decline in late summer as buyers hold out for the new models being released in the fall. Dealers allow their inventory to decline so the choices left for active buyers also narrow. Home-related retailers saw sales decline because home sales weakened as interest rates rose. Also, home sales slow as the summer progresses because buyers are more active in the spring because they want to move over the summer and be settled before the kids go back to school.

The positive retail sales suggested the potential for QE tapering has increased. That drove interest rates higher with the ten-year yield rising to 2.715% and the second highest close since August 2011. This sent homebuilders and the equity markets into an early morning dive.

Ten-Year Yield Chart

The NFIB Small Business Survey for July rose from 93.5 to 94.1 to recover most of the June loss of -0.9 points. However, internal survey components were mostly unchanged. Sales were expected to improve modestly and companies were planning on a minor increase in employment. Only 6% of respondents expected the economy to weaken over the next six months. That was up from 4% in June. Seven percent of respondents said they expected the economy to improve. That was an increase of +2% over June.

The pace of economic reports will increase in the days ahead and the Philly Fed Manufacturing Survey on Thursday is still the most important. This will give us a clue as to what to expect from the rest of the regional Fed reports and the August ISM the first week in September.

Economic Calendar

About an hour after the Lockhart comments. Carl Icahn tweeted "We currently have a large position in Apple. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come. A second tweet said "Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly."Apple shares immediately blasted off above $470. A few minutes later Apple released a statement saying "CEO Tim Cook had a very positive conversation with Carl Icahn today." The stock jumped again to $494.

Apple recently announced a $100 billion buyback and dividend program over three years but evidently that was not enough for Icahn. Apple is spending $60 billion of that on buybacks.

His tweet and the +$22 spike that resulted added $20 billion to Apple's market cap. Apple has 908.5 million shares outstanding. Carl Icahn is not normally a tweeter. After today's gains where he made over $50 million according to one reporter, he may become an active tweeter.

You have to wonder how the SEC is going to react to the growing number of tweets that are basically the equivalent of touting stocks. The penny stock crowd has thousands of twitterites that pound the message boards relentlessly with stock twits. Now with Icahn and others joining the party the SEC has got to be bouncing off walls in frustration. Is it bad for a billionaire investor to tout his position? It definitely creates a lot of "follow me" trades.

Icahn is having a great year if you ignore the Dell battle. Some of his 19 positions have exploded and produced millions in profits. NetFlix (NFLX) is up +181% and Icahn has reportedly made $1 billion in that position alone. Federal Mogul (FDML) is up +113%, WedMD (WBMD) +131%, Herbalife (HLF) +97% and Chesapeake (CHK) +50%. Freightcar America (RAIL) has been a rough road and down -20% for the year. Dell remains a question mark but he will probably end up with a small profit there.

First there was the iPhone, then the iPad, now the iCahn.

Apple shareholders have Icahn to thank for a very nice payday today. I suspect Icahn is going to have a lot more followers after today. He has accumulated a $20 billion fortune making him the world's 26th richest person. Volume in AAPL shares tripled on the news to 31.2 million.

Apple is expected to announce an iPhone refresh on September 10th and a new iPad with a thinner bezel. Apple's market share in tablets has fallen from 60% to 32%. They are also expected to announce a cheaper iPhone to combat the market share they are losing to the inexpensive Android devices. They are also announcing a new iOS that is said to have many feature additions.

Apple Chart

Other news moving the market was the surprise announcement by the Justice Dept that they had filed suit to stop the $11 billion merger of bankrupt American Airlines (AAMRQ) and US Airways (LCC). The announcement caught everyone by surprise and the entire airline sector declined sharply. Normally when there are antitrust complaints the companies get together and divest some assets in certain areas to reduce their monopoly footprint. Analysts on the conference call today claimed there did not seem to be any common ground or hot spots the companies could cut out to push the merger through. Based on today's news this deal appears dead but we should never say never. Anything is possible if the companies are motivated.

Airlines in general are already less competitive after a surge in mergers and acquisitions over the last 8 years. US Airways and America West in merged in 2005. Delta and Northwest in 2008. United and Continental in 2010. Southwest and AirTran in 2011. The US Air and American deal would have taken the 3rd and 4th largest airlines and turned them into the largest so there is a lot of competitive edge in that deal.

The news caused a -13% decline in US Airways shares and a -45% decline in AMR shares.

US Airways Chart

American Airlines Chart

The JC Penny (JCP) board is breathing a lot easier tonight after activist investor Bill Ackman resigned his board seat. The resignation was part of a deal to resolve the very public battle between Ackman and JC Penny. You would have expected the stock to rise with their thorn removed but JCP shares declined on the loss of an activist intimately involved in trying to rescue the company.

Ackman bought into Penny around $25 and he is the largest shareholder with an 18% stake. He is not going to sell and he said he has had plenty of opportunities. He will be an outside activist monitoring developments on the board and in the stores. The departure will not have any impact on the chain's retail business. The board also reiterated support for CEO Ullman and named Ronald Tysoe as the director to fill Ackman's seat. Tysoe is former vice chairman of Federated Department Stores, which is now Macy's. Penny will name an additional director in the near future. JCP shares declined -4% on the news with $12.50 current support.

JCP Chart

YUM Brands (YUM) reported a -13% drop in July same store sales in China. The decline came after a report that ice cubes used in KFC, McDonalds and local fast food restaurants contained "severe" levels of bacteria and the water used to make ice was dirtier than toilet water. After the report the CEO of Yum's China division said the ice was retested and the incident was a one-time accident. Water quality is an ongoing problem in China. The chain said the year's extreme summer heat was also a factor with McDonalds and Burger King pushing cooler drinks and menu options, while KFC is primarily hot meals.

After 9 months of falling sales after a chicken quality incident in December the chain expects to post positive comps in the fourth quarter. Corn prices are down and wheat prices are falling which will help with food costs. YUM Shares declined -2% on the news.

YUM Chart

If you are an investor in biotech stocks you don't want to keep a profit stop sell order in place. Stop losses are fine but profit stops can be a killer. For instance Osiris Therapeutics (OSIR) reported today that wound treatment drug Graphix showed "overwhelming" effectiveness when used on chronic diabetic foot ulcers. A recent study showed 62% of patients had complete wound closure compared to 21% receiving the standard medical treatment. The drug also produced faster closure with fewer treatments. This is a breakthrough drug and the stock price broke through as well. Shares rallied +138% on the news.

OSIR Chart

Factory production in the 17-nation euro area rose +0.7% in June compared to a -0.2% decline in May. This was below estimates for a +1.0% gain but it was still a gain. This was the first gain in two years. Europe is starting to produce some green shoots as the two-year recession fades.

German investor confidence rose more than analysts expected in August as the country leads the Eurozone out of the recession. The ZEW index of investor expectations rose from 36.3 to 42.0 for July. Analysts were expecting a 39.9 reading. The ZEW current conditions index rose from 10.6 to 18.3 for July.

India raised the import tax on gold for the third time this year in an effort to curtail demand and support the rupee currency. The tax rose from 8% to 10% with the tax on silver imports rising from 6% to 10%. The Finance Minister said they planned on restricting gold imports this year to 850 metric tons to reduce the current account deficit. Dealers said raising the tax will simply force more smuggling and boost the price of gold products inside India. On July 22nd the government said importers may only supply gold to jewelers and to bullion businesses that sell to jewelers. Importers must keep the gold in bonded warehouses and cannot buy more until 75% of their imports have been distributed. Imports surged 87% to 383 tons in the four months ending in July from 205 tons in the same period in 2012. Silver shipments rose +300% to 127.9 billion rupees over the last four months from 42.8 billion in the year ago period. India accounted for 20% of global gold demand in 2012 with 845 tons of gold and 1,963 tons of silver.

Gold gave back a few bucks after four days of gains with a decline to $1321. Resistance remains $1341. Silver has outperformed gold and is very close to a significant test of resistance at $22. Silver is an industrial metal with the majority of annual demand used in making things like solar panels, flat screens, smartphones, computers, etc. When silver is used it is "used up" because very little of it comes back from recycling. If the global economy is accelerating the demand for silver will accelerate and we already consume more per year than is mined. That suggests the prices will go higher relative to gold.

Silver Chart

Gold Chart

The markets were weak in the morning and the Lockhart comments rescued the indexes from a losing day. The iCahn tweet on Apple powered the Nasdaq to a 14 point gain. Remove those two events and it would have been a different close.

Volume remains very light with Monday barely trading 5.0 billion shares. Today saw volume of 5.5 billion shares thanks to the short covering rebound or it would have been a lot less.

The S&P dipped below support at 1685 at the open to hit 1682 before the dip buyers appeared. This was another lower low but the headlines prevented another lower high. The market remains lackluster even after the headlines. Support is being tested on a daily basis and eventually there will be a negative headline that takes us below that 1680-1685 level.

S&P Chart

The Dow also made a lower low at 15,342 and the lowest tick since July 11th. The rebound to 15,500 was immediately sold. The Dow is weaker than the S&P and the gains today came from Boeing, United Technology and Johnson and Johnson. Financials have given up their leading role and we are just waiting for the headline that pushes us down to the next support level at 15,300.

Dow Chart

The spike in Apple pushed the Nasdaq to within one point of the 13 year high close at 3692 set on August 5th. The Nasdaq remains the strongest of the big cap indexes with support at 3650 and the price magnet at 3660. The afternoon spike saw some selling at the close to erase -7 points but the index closed with a 14 point gain.

Apple continued to rally after the close to $493.40 and that should give the index a positive open on Wednesday. Just remember, what goes up on headlines can go down on headlines or the lack thereof. If it were not for the pending announcement of new products on Sept 10th I would look for profit taking on Wednesday. However, with iCahn pushing for a faster share buyback operation we could see hedge funds chasing iCahn into the stock and holding the price up.

Nasdaq Chart

The Russell 2000 did not close in positive territory. That is a significant event. However, it did rebound from the lows to lose less than 2 points. Unlike the Dow the Russell had a higher low and higher high so technically even with the minor loss this was a positive day. The index closed right in the middle of its recent range (1040-1060) at 1050.

If the Russell were to violate that support at 1040 it would be a signal to sell.

Russell 2000 Chart

A lot of traders and analysts are looking for a correction in August-September. I am personally looking for a weaker market as a result of the calendar events in September but not necessarily a correction. Markets can correct without a big decline. It is called consolidation. What we are seeing right now with no real gains in the Dow since July 11th is consolidation.

We could see the markets drift lower as we approach the debt ceiling battle and FOMC meeting but they don't have to suddenly crash -10% to satisfy the expectations of some traders. We could see a 3-5% drift lower with a couple of high volatility days but traders don't seem to be worried about a big drop. The VIX is still hovering around 12 and the dip buyers are alive and well. When the dip buyers evaporate we should be worried.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email


New Option Plays

Healthcare & REITs

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Thermo Fisher Scientific, Inc. - TMO - close: 92.65 change: +0.47

Stop Loss: 91.25
Target(s): 98.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
TMO manufacturers various medically-related instruments and equipment for the healthcare industry. The company is currently in the process of acquiring Life Technologies Corp. (symbol: LIFE).

The stock has been a consistent winner. Shares continue to show momentum and are trading near all-time highs set just a few days ago. Believe it or not but shares of TMO are working on their eighth weekly gain in a row.

I am suggesting a trigger to buy calls at $92.75. if triggered our target is $98.50.

Trigger @ 92.75

- Suggested Positions -

Buy the Sep $95 call (TMO1321i95) current ask $1.10

Annotated Chart:

Entry on August -- at $---.--
Average Daily Volume = 1.57 million
Listed on August 13, 2013


NEW DIRECTIONAL PUT PLAYS

Digital Realty Trust - DLR - close: 54.58 change: -0.62

Stop Loss: 55.35
Target(s): 50.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DLR is a REIT. DLR focuses on technology-related companies and currently has 75 properties. The company's current sell-off started after its late-July earnings report. The results were relatively in-line with estimates but investors were unhappy with management's conference call. The stock plunged to new 18-month lows. Given the sell-off DLR now sports a 5.5% dividend yield but it doesn't seem to be helping. There is a lot of bearish sentiment toward this stock. The most recent data listed short interest at 22% of the 128.0 million-share float.

We like how the oversold bounce is already failing and DLR is flirting with another new low for the year. Today's low was $53.81. I am suggesting a trigger to buy puts at $53.75. If triggered our short-term target is $50.25. More aggressive traders may want to aim lower since the Point & Figure chart for DLR is bearish with a $42 target.

Trigger @ 53.75

- Suggested Positions -

buy the Sep $50 PUT (DLR1321u50) current ask $0.85

Annotated Chart:

Entry on August -- at $---.--
Average Daily Volume = 1.8 million
Listed on August 13, 2013



In Play Updates and Reviews

Tuesday's Triggered Trades

by James Brown

Click here to email James Brown

Editor's Note:

The market's afternoon rebound on Tuesday triggered multiple trades for us on the Option Investor play list. EBAY, JAZZ, PII, and QIHU have all been opened.
ILMN was stopped out.


Current Portfolio:


CALL Play Updates

CR Bard Inc. - BCR - close: 116.16 change: -0.56

Stop Loss: 114.65
Target(s): 119.75
Current Option Gain/Loss: -44.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: Profit taking in BCR occurred for the second day in a row. Shares are testing short-term support near $116 and its 10-dma. I am not suggesting new positions at this time.

- Suggested Positions -

Long Sep $120 call (BCR1321i120) entry $0.90

08/10/13 new stop loss @ 114.65

Entry on August 06 at $116.25
Average Daily Volume = 475 thousand
Listed on August 05, 2013


Conns Inc. - CONN - close: 68.05 change: +0.94

Stop Loss: 64.40
Target(s): 74.00
Current Option Gain/Loss: +11.1%
Time Frame: exit PRIOR to earnings in early September
New Positions: see below

Comments:
08/13/13: The rally in CONN continues with a +1.4% gain and another new high. There is no change from my earlier comments.

Earlier Comments:
If the rally continues CONN could see more short covering. The most recent data listed short interest at more than 18% of the small 24.1 million share float. Our short-term target is $74.00. However, more conservative traders may want to exit near $70.00, which might be round-number resistance.

- Suggested Positions -

Long Sep $70 call (CONN1321i70) entry $2.70

Entry on August 12 at $66.65
Average Daily Volume = 394 thousand
Listed on August 10, 2013


eBay Inc. - EBAY - close: 54.12 change: +0.84

Stop Loss: 52.75
Target(s): 57.00
Current Option Gain/Loss: - 1.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: EBAY displayed some relative strength today with an early morning surge higher. The stock has broken out past resistance near $54.00 and its 150-dma. Our trigger to buy calls has been hit at $54.15.

- Suggested Positions -

Long Sep $55 call (EBAY1321i55) entry $1.25

Entry on August 13 at $54.15
Average Daily Volume = 12.0 million
Listed on August 08, 2013


Jazz Pharmaceuticals - JAZZ - close: 81.57 change: -0.57

Stop Loss: 79.75
Target(s): 88.00
Current Option Gain/Loss: -24.4%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: JAZZ spiked higher at the open. Our trigger was hit at $82.35. Unfortunately the rally reversed near $83.00 and JAZZ posted a loss on the session. At the moment today's move looks like a potential bull-trap pattern. Nimble traders could try and buy calls on a dip or a bounce near $80.00 but I would suggest waiting for a new rally past $82.50 instead.

- Suggested Positions -

Long Sep $85 call (JAZZ1321i85) entry $2.45*
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on August 13 at $82.35
Average Daily Volume = 700 thousand
Listed on August 12, 2013


Lockheed Martin Corp. - LMT - close: 124.06 change: +1.06

Stop Loss: 123.45
Target(s): 129.75
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/13/13: LMT is bouncing from short-term technical support at its 10-dma. More aggressive traders may want to buy calls now and use a stop loss near the $123.00 level. The newsletter is suggesting investors wait for a breakout and buy calls at $125.25.

Trigger @ 125.25 *small positions*

- Suggested Positions -

buy the Sep $125 call (LMT1321i125)

Entry on August -- at $---.--
Average Daily Volume = 1.6 million
Listed on August 07, 2013


Polaris Industries - PII - close: 116.39 change: +3.27

Stop Loss: 113.40
Target(s): 119.75
Current Option Gain/Loss: - 6.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: PII was a strong performer with a +2.89% gain and a breakout to new highs. Shares churned sideways inside the $113-114 zone for a few hours before surging in the latter half of the session. Our suggested entry trigger to buy calls was hit at $116.25.

- Suggested Positions -

Long Sep $120 call (PII1321i120) entry $1.65

Entry on August 13 at $116.25
Average Daily Volume = 829 thousand
Listed on August 06, 2013


Qihoo 360 Technology - QIHU - close: 70.46 change: +1.59

Stop Loss: 66.49
Target(s): 74.50
Current Option Gain/Loss: + 0.0%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
08/13/13: Our new trade on QIHU has been triggered. The stock outperformed the market with a +2.3% gain and a bullish breakout past round-number resistance at the $70.00 mark. Our trigger to buy calls was hit at $70.25.

Earlier Comments:
This is an aggressive, higher-risk momentum trade. What makes QIHU even more risky is the time frame. The company is expected to report earnings sometime in the August 20-24th time frame. There is no confirmed date yet. We do not want to hold over the announcement. That gives us about ten to fourteen days for this trade to work.

We are suggesting small positions. If triggered our short-term target is $74.50. Traders could obviously aim higher. The Point & Figure chart for QIHU is bullish with an $84 target.

*small positions, higher-risk trade* - Suggested Positions -

Long Sep $75 call (QIHU1321i75) entry $4.10

Entry on August 13 at $70.25
Average Daily Volume = 2.2 million
Listed on August 10, 2013


Shire plc - SHPG - close: 110.74 change: +0.61

Stop Loss: 109.40
Target(s): 118.50
Current Option Gain/Loss: -40.3%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/13/13: We are growing more cautious on SHPG and its sideways consolidation. More conservative traders may want to exit immediately. I am suggesting we give SHPG one more day to break past the short-term trend of lower highs. If that doesn't happen then we'll likely drop SHPG tomorrow night.

Earlier Comments:
The plan was to keep our position size small to limit risk.

*small positions* - Suggested Positions -

Long Sep $115 call (SHPG1321i115) entry $2.60

08/10/13 new stop loss @ 109.40

Entry on August 02 at $111.50
Average Daily Volume = 347 thousand
Listed on August 01, 2013


Under Armour, Inc. - UA - close: 74.07 change: +0.14

Stop Loss: 69.25
Target(s): 74.75
Current Option Gain/Loss: +83.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: UA spent Tuesday's session consolidating sideways near the $74.00 level. Readers may want to go ahead and take profits now. Our exit target is $74.75. Naturally more aggressive traders could aim higher.

Currently the bid on our option is at $3.40.

- Suggested Positions -

Long Sep $72.50 call (UA1321i72.5) entry $1.85

08/12/13 readers may want to take profits now
option bid at $3.30
08/10/13 new stop loss @ 69.25

Entry on August 08 at $70.50
Average Daily Volume = 1.3 million
Listed on August 06, 2013


United Technologies - UTX - close: 106.80 change: +1.26

Stop Loss: 104.45
Target(s): 109.75
Current Option Gain/Loss: +20.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: UTX produced a strong midday rally and managed to outperform most of the industrials with a +1.19% gain. Traders may want to raise their stop loss closer to $105.00. Don't be surprised to see shares gap down by 53 cents tomorrow morning thanks to the dividend.

FYI: UTX will begin trading ex-dividend on August 14th. The quarterly dividend should be 53.5 cents.

*small positions* - Suggested Positions -

Long Sep $105 call (UTX1321i105) entry $2.40

08/10/13 new stop loss @ 104.45

Entry on August 07 at $105.55
Average Daily Volume = 3.2 million
Listed on August 03, 2013


PUT Play Updates

iShares Russell 2000 ETF - IWM - close: 104.45 change: -0.14

Stop Loss: 106.05
Target(s): 97.00
Current Option Gain/Loss: -37.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/13/13: The small cap indices and ETF underperformed the large caps today. The IWM posted a minor loss.

I am not suggesting new bearish positions at this time.

- Suggested Positions -

Long Sep $100 PUT (IWM1321u100) Entry $1.48

08/03/13 readers may want to consider an early exit

Entry on July 30 at $103.69
Average Daily Volume = 31 million
Listed on July 29, 2013


Monsanto Co. - MON - close: 97.10 change: +1.42

Stop Loss: 96.25
Target(s): 90.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/13/13: It looks like the bulls were not done buying the dips in MON. Shares rebounded from technical support near its 300-dma today. The stock outperformed the major indices with a +1.48% gain. Yet the rally was unable to breakout past short-term resistance near $98.00.

We are on the sidelines waiting for a breakdown. I am suggesting a trigger to buy puts at $94.40. If triggered our short-term target is $90.25 but more aggressive traders could aim lower. The point & figure chart is suggesting an $84 target.

Trigger @ 94.40

- Suggested Positions -

buy the Sep $90 PUT (MON1321u90)

Entry on August -- at $---.--
Average Daily Volume = 3.1 million
Listed on August 12, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 59.37 change: -0.28

Stop Loss: 55.75
Target(s): 74.50
Current Option Gain/Loss: -25.4%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
08/13/13: It's whale watching season on Wall Street as big investors file their positions with the SEC. As the filings become public they can move individual stocks. I heard tonight that a big investor had started or increased positions in CBI. This could push shares to gap open higher tomorrow morning.

I remain cautious here and we're not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

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

07/20/13 new stop loss @ 55.75
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


Vanguard FTSE Europe ETF - VGK - close: 53.15 change: +0.33

Stop Loss: 51.25
Target(s): 58.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to 2013 December option expiration
New Positions: Yes, see below

Comments:
08/13/13: Europe continues to garner bullish comments from Wall Street. The VGK delivered a bounce with today's +0.6% gain. More aggressive traders might want to start positions now.

Earlier Comments:
We are taking a multi-month time frame with this trade. I am suggesting we wait for the VGK to close above $53.50 and then buy calls the next morning. If we are triggered our target is $58.50 but we'll adjust it as the trade progresses.

FYI: The Point & Figure chart for VGK is bullish with a $63 target.

Trigger: Wait for a close above $53.50, then buy calls the next morning.

- Suggested Positions -

Buy the 2013 Dec $55 call (VGK1322L55)

Entry on August -- at $---.--
Average Daily Volume = 3.0 million
Listed on August 10, 2013


CLOSED BEARISH PLAYS

Illumina Inc. - ILMN - close: 79.64 change: +0.92

Stop Loss: 79.65
Target(s): 75.25
Current Option Gain/Loss: -35.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/13/13: Our ILMN trade has been stopped out. Last night we adjusted our stop loss down to $79.65 since ILMN had been consolidating sideways below the $79.50 level. The market's afternoon rally helped push ILMN toward $80 and closed our trade.

*small positions* - Suggested Positions -

Sep $75 PUT (ILMN1321u75) entry $2.00 exit $1.30 (-35.0%)

08/13/13 stopped out
08/12/13 new stop loss @ 79.65
08/06/13 new stop loss @ 80.25

chart:

Entry on August 01 at $79.50
Average Daily Volume = 1.2 million
Listed on July 31, 2013