Option Investor
Newsletter

Daily Newsletter, Thursday, 10/3/2013

Table of Contents

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

Market Wrap

Economy Faces New Threat

by Thomas Hughes

Click here to email Thomas Hughes
Introduction

Even though non-essential government agencies are currently shut-down they still released some data today. However, from what I have heard and read so far we will not get any data tomorrow. This includes the Non-Farm Payrolls and U.S. Unemployment rate. The numbers today were OK, not great and not bad, but they failed to support the markets in the face of the current state of politics. Futures trading was mildly positive ahead of the open but still below yesterday's fair value close. At the open the indices quickly fell into negative territory and were spurred lower by a statement from the Treasury Department. Apparently, the economy faces a new threat...a default by the U.S. Government. Duh. Isn't that what the current sell-off is all about?


The Treasury statement, released shortly after 10AM, predicts that a default could lead to a new financial crisis and recession. It warned that credit could freeze and that any disruptive event could cause the dollar to plummet. The statement, aimed at both sides of the argument, is a harsher version of Warren Buffets admonishments yesterday. He called the bickering “extreme idiocy” and I agree. Following the release markets fell to new lows with the S&P trading as low as 1670 before Speaker Boehner came and out and said he would reach an agreement to prevent a default. After his press conference the market regained more than half of the early morning losses.

Talk of the shut-down is dominating the news to the point that nearly nothing has been said about the two central banks meetings this week or the upcoming earnings season. The ECB and the BOJ both met and both released their policy statements. The ECB held steady on rates and comments, though positive on the state of the EU, left the door open for further support of the recovery if needed. The BOJ starts their meeting today. There is growing pressure on Abe to up stimulus in order to meet targets and alleviate the effects of next years upcoming sales tax hikes. For now, statements from the BOJ say they will act if needed but on hold until the 2nd quarter of 2014.

Earnings season starts in earnest next week. Alcoa reports on Tuesday, JP Morgan and Wells Fargo on Friday. Alcoa was recently downgraded based on aluminum prices and growth concerns. I am not expecting a lot from the report but think the statement and out look could mean a lot. JP Morgan and Wells are also expected to earn less than last quarter and again, the statements and future out look will be important. For now, the long term trend in the S&P is still up but that could change if the shut-down persists. The indices fell off just before the close. The S&P closed in the lower half of today's range, down -15 points.

The Economic Data

Until we hear of an end to the budget battle today's release of jobless claims is the last employment data we will get for a while. Today initial claims gained 1,000 from a small 2,000 claim upward revision. The moving average fell -3,750 to hit a five year low. The initial claims data looks good. So far there has not been any spike in claims due to the CA/NV hiccup of last month. However, the new uncertainty is how will the shut-down and furlough affect claims over the next few weeks. How long will the shut-down last, how many folks will file for unemployment and when it's all over, how many will go back to their government jobs? The ADP report this week was moderately good. 162,000 private jobs is in line with the trend and the trend is for moderate job growth. If the NFP number was equally good there is a good chance unemployment could drop again.


Continuing and total claims both climbed in this weeks data. The continuing claims by 104K and the total claims by 81K. Continuing claims has climbed for the last two weeks and could perhaps be where any irregularities in the CA/NV reporting could be showing up. The number is still well below the 3 million mark and in line with the longer term trend of declining unemployment. Total claims has also climbed for the past two weeks but by a much smaller margin. This number is still just above long term lows and in line with the down trend in unemployment. No states reported an increase in claims greater than 1,000, 7 states including CA, GA, NY and SC reported drops in claims greater than 1,000.



ISM and Factory Orders were released at 10AM, just before the Treasury Statements. ISM numbers, though still firmly expansionary, fell more than expected. September ISM came in at 54.4, the expectation was for 57.5, last month was 58.6. Last months number was an 8 year high so it is not to unexpected for there to be some decline this month. Factory orders, well, when I went to the Census Bureau website I got a message saying that “Due to the lack of Government funding....” .

The Gold Index

Gold continued it's wild ride. This week has seen the metal down nearly $40 one day, up nearly $30 the next and then today, down again. It looks like there are some buyers willing to get in around the $1300 level but the metal is indicated lower for now. The Gold Index is now breaking the lower boundary of the pennant formation I have been watching over the past few weeks. Momentum is weak but stochastic is breaking below the lower signal line, pointing to weakness in the market. Longer term momentum is still bullish but in decline. A confirmed break of the pennant would have a target at the full retracement of the previous bull market around 30 points lower from the current level. Gold could experience a lot of volatility over the next few days and weeks which could carry over into the Gold Index. The shut down/debt ceiling will have the most near term effect. Economic data and tapering won't matter if the country grinds to a halt.

The Gold Index

The Oil Index

Oil traded in a tight range today but held the gains made yesterday. The price of oil is now near the middle of the three month range and off the lows set earlier this week. The Oil Index traded down today but held at the newly forming support around 1,400 level. This level is a previous resistance line of mine and coincident with the 30 day moving average. Longer term indicators are weakly bullish at this time but highly divergent. Shorter term indicators are bearish but also weak. It looks as if the index is winding up into the point of a triangle formed by the long term trend line and my resistance line at 1430. The mixed nature of the indicators leaves potential direction once a break occurs very debatable. Until then, I expect the index to continue trading between the long term trend and upper resistance.

The Oil Index

The Dollar

The Dollar Index sank to a new 8 month low today. The fear of the long term impacts of government shut down on the U.S. recovery is causing investors to seek other havens. Further impacting the dollar are a string of data from the EU and Asia pointing to firming economic recovery in those regions. The dollar dropped versus the euro and the yen today. The EUR/USD climbed to reach an 8 month high. This pair is now near the top of a nearly 2 year trading range. Indicators on the daily charts are positive but diverging from the new highs.

EUR/USD

The USD/JPY fell in today's trading but found support at the 150 day moving average. The pair has now dropped below support at 97.50 and the top of the previously broken triangle pattern. Abenomics and dollar weakness are battling here. Abe and Kuroda need the yen to remain weak in order for their plans to work. With the mounting pressure on Abe to increase stimulus is seems like the current BOJ meeting would be a good time to do something. However, BOJ statements that it would hold-fast belie that sentiment. If this pair fails to regain the upper side of the triangle tomorrow or Monday the chance that it will fall below the long term moving average and possibly retest the 95 level come into play.

USD/JPY

Story Stocks

A few stocks made it into the headlines before the Capital Hill shooting took over the media. Tesla was first up this morning in an ongoing story. An incident with one of their cars resulted in a fire after hitting a “large object”, according to the report I read. No injuries were reported. This comes just after a major downgrade caused the stock to drop 10%. Today the fall was halted at the short term 30 day moving average. Trading volume was very high, forming a doji candle. The $173.50 level will be important, a drop below this level could take Tesla down to $150.

Tesla

With earnings just around the corner Alcoa and the big banks were also in the news. Alcoa reports on Tuesday and the market is not expecting much from it. Deutsche Bank downgraded the stock yesterday to a sell based on aluminum prices and demand. Last quarter the aluminum producer reported $0.07 last quarter and is expected to report less this time around. EPS projections for next year are much higher than for the current year so any guidance or forward looking statements will be important for the company and the overall economic outlook. The stock dropped 2% today and is now trading near the bottom of the long term range. Current support target exists around the $7.75 level.

Alcoa

The big banks begin reporting next Friday. Wells Fargo and JP Morgan are both currently trading near their 150 day moving averages. The two charts are similar but distinctly different, but each indicates potential support at their current levels. Their is some concern over growth hanging over the sector and the added burden of JP Morgans lingering troubles. The Banking Index is also trading at a potential support zone but much higher in relation to either Wells or JPM. The last time I checked into the BKX it had dropped down from a reversal and hit a potential support level, the one it is on now. In between then and now it has bounced up to test resistance and failed. The failure to break resistance is a concern but the MACD and stochastic also indicate support is growing at the current level. Earnings will be a big concern for the banks. Any weakness in the reports, or in the guidance, could send them crashing through support.

Bank Index

The S&P 500

The S&P bounced around a lot today, and in a fairly large range compared to the last few weeks. A lot of noise has entered the markets. There is a lot of uncertainty over the shut-down/debt ceiling even though Boehner has assured us the U.S. wont default. Adding to this is the economic condition, we need to know, we want to know, what the data is. I feel robbed of a crucial part of my month without the NFP tomorrow. There is also some uncertainty over earnings, even though the data over the last month has been in line with the trend of steady, moderate growth. The S&P 500 hit its low today shortly after 12PM, nearly 25 lower than yesterday's close. The drop took the index down to just above my support line at the previous all-time high around 1668. This is also just above the long term trend line. The indicators bearish at this time but momentum is very weak compared to previous peaks and helps confirm support along the trend line. If you are still of the buy the dip mentality, as I am, it is starting to look like it could soon be a pretty good time to get in again.

SPX Daily

In the longer term the SPX is still trending up. The indicators are currently bearish but weak. The stochastic could be forming a divergence but I would like to have some other confirmation of that signal such as a break of the trend line before acting on it. At this time the index appears to in a regular correction to trend and could begin to move back up over the next week or so. This would be in line with earnings season, provided the current weakness does not grow. The divergence is an additional warning sign but without a break of trend the long term trend is up.


However, there could be some lingering weakness. The shut-down, debt ceiling, economic data, earnings could individually or in combination change the over all out look. The effect of the shut-down will keep moving the market in the near term but will likely not do much to hurt the overall trend. Look to the data and the earnings for that.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Bucking The Trend

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Gulfport Energy - GPOR - close: 66.45 change: +1.48

Stop Loss: 63.95
Target(s): 72.50
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to GPOR's earnings in November
New Positions: Yes, see below

Company Description

Why We Like It:
GPOR is an energy company. They are involved in both the exploration and production of oil and natural gas properties. GPOR's latest earnings report back in August produced a big beat on both the top and bottom line. Shares actually sold off on its Q2 report but quickly recovered. GPOR's Q2 results sparked several bullish analyst comments and recommendations. Since then GPOR has rallied to a series of new all-time, record highs.

The last three weeks of September saw GPOR consolidating gains in the $60-65 zone. We just saw the stock breakout past resistance near $65 a few days ago. Traders bought the dip at new support (prior resistance) today.

The intraday high for GPOR is $67.00. I am suggesting a trigger to buy calls at $67.10. If triggered our target is $72.50. However, we need to keep in mind that the $70.00 level could prove to be round-number, psychological resistance.

Trigger @ 67.10

- Suggested Positions -

buy the NOV $70 call (GPOR1316K70) current ask $2.55

Annotated Chart:

Entry on October -- at $---.--
Average Daily Volume = 1.4 million
Listed on October 03, 2013



In Play Updates and Reviews

Treasury Comments Spook Stocks

by James Brown

Click here to email James Brown

Editor's Note:

The stock market accelerated lower on bearish comments from the U.S. treasury regarding the impact of a debt default (referencing the debt ceiling debate). The Treasury said the situation could worsen and be as bad or worse than the 2008 financial crisis.

Equities did manage to pare their losses by the closing bell.

BA has been removed. SFUN was stopped out. SOHU was triggered.


Current Portfolio:


CALL Play Updates

Actavis, Inc. - ACT - close: 144.49 change: -1.89

Stop Loss: 139.40
Target(s): 148.50
Current Option Gain/Loss: + 53.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03/13: ACT erased yesterday's gains with a -1.89% pullback today. The stock closed on its lows for the session and that doesn't bode well for tomorrow morning. More conservative traders may want to take profits now. If this weakness continues ACT could test support near $142.00. The next level of support would be $140.

- Suggested Positions -

Long Oct $145 call (ACT1319j145) entry $1.50*

09/30/13 new stop loss @ 139.40
09/28/13 new stop loss @ 137.75
09/25/13 new stop loss @ 135.75
09/21/13 Shares of ACT were volatile right at the closing bell on Friday (09/20/13). Expected more volatility on Monday morning
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on September 19 at $139.50
Average Daily Volume = 985 thousand
Listed on September 18, 2013


Anadarko Petroleum - APC - close: 92.98 change: -1.70

Stop Loss: 92.25
Target(s): 99.50
Current Option Gain/Loss: -59.6%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
10/03/13: APC reversed yesterday's gains with a -1.79% decline. The stock is once again testing support in the $92.50-93.00 zone. If the market continues to sink tomorrow we could see APC hit our stop loss at $92.25. Today's reversal seems to reaffirm the short-term, three-week trend of lower highs. I am not suggesting new positions.

- Suggested Positions -

Long Oct $95 call (APC1319j95) entry $3.05*

09/21/13 new stop loss @ 92.25
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on September 11 at $94.25
Average Daily Volume = 2.55 million
Listed on September 09, 2013


3D Systems - DDD - close: 53.93 change: -1.29

Stop Loss: 52.48
Target(s): 59.75 & 64.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks and two-to-three months
New Positions: Yes, see below

Comments:
10/03/13: DDD dipped towards Monday's low and its 30-dma before paring its losses today. Shares ended the session down -2.3%. If DDD doesn't improve soon we will likely remove it as a candidate. I don't see any changes from my earlier comments.

Earlier Comments:
DDD could see a short squeeze. The most recent data listed short interest at 33% of the 94.5 million share float. Tuesday's high was $56.23. We are suggesting a trigger to buy calls at $56.35. If triggered our short-term target is $59.75. Our longer-term target is $64.00. The Point & Figure chart for DDD is bullish with a $71 target.

Trigger @ 56.35

- Suggested Positions -

Buy the NOV $60 call (DDD1316k60)

- or -

Buy the 2014 Jan $60 call (DDD1418a60)

Entry on September -- at $---.--
Average Daily Volume = 4.1 million
Listed on September 24, 2013


Ecolab Inc. - ECL - close: 97.76 change: -1.75

Stop Loss: 97.75
Target(s): 105.00
Current Option Gain/Loss: Unopened
Time Frame: exit prior to earnings in late October
New Positions: Yes, see below

Comments:
10/03/13: ECL also underperformed the market's major indices. The stock fell -1.75% and is flirting with a breakdown from its recent two-week trading range. If ECL does not improve soon we will likely remove it as a bullish candidate.

We are suggesting a trigger to buy calls at $100.25. If triggered we'll use a stop loss at $97.75. Our target is $105.00. We will plan to exit prior to ECL's next earnings report due sometime in very late October.

Trigger @ 100.25

- Suggested Positions -

buy the NOV $100 call (ECL1316k100)

Entry on October -- at $---.--
Average Daily Volume = 877 thousand
Listed on October 01, 2013


iShares Russell 2000 ETF - IWM - close: 106.31 change: -1.10

Stop Loss: 103.40
Target(s): 110.95
Current Option Gain/Loss: + 6.1%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
10/03/13: The small cap IWM gave up more than -1.0% on Thursday. Shares did bounce twice near $105.60 midday. I am not suggesting new positions at this time. More conservative investors may want to consider raising their stop loss toward the $105 area.

Earlier Comments:
I'm suggesting the 2014 January $110 calls but you may want to use another month or strike that better suits your trading style.

- Suggested Positions -

Long 2014 Jan $110 call (IWM1418a110) entry $2.10

10/01/13 setting the bullish exit target at $110.95
09/30/13 buy-the-dip trigger hit at $105.25.

Entry on September 30 at $105.25
Average Daily Volume = 34.6 million
Listed on September 28, 2013


Ross Stores Inc. - ROST - close: 73.16 change: -0.85

Stop Loss: 69.95
Target(s): 77.50
Current Option Gain/Loss: Nov75c: - 2.6% & 2014jan75c: - 1.9%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
10/03/13: After a five-day rally ROST finally hit some profit taking as traders start to worry over the government shutdown. ROST held short-term support in the $72.50-73.00 zone. If this pullback continues the next likely support levels are $72.00 and $70.00.

There was an interesting note from the National Retail Federation today. The NRF released their 2013 holiday shopping forecast and expect overall retail sales in November and December to show +3.9% growth in 2013. That's above 2012's 3.5% growth rate and above the 10-year average of +3.3% growth. However, they also warned that the situation in Washington D. C. could impact consumer confidence if the lack of political cooperation persists. The government shutdown and concerns over the debt ceiling could hamper consumers' appetite to spend money.

Earlier Comments:
FYI: The Point & Figure chart for ROST is bullish with an $89 target.

NOTE: I'm listing our trade with an initial stop loss at $69.95 but more conservative traders may want to use a stop closer to $71.00 instead.

- Suggested Positions -

Long Nov $75 call (ROST1316K75) entry $1.13

- or -

Long 2014 Jan $75 call (ROST1418a75) entry $2.60*

*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on October 01 at $73.05
Average Daily Volume = 1.28 million
Listed on September 28, 2013


Starbucks Corp. - SBUX - close: 76.87 change: -0.32

Stop Loss: 75.75
Target(s): 79.75
Current Option Gain/Loss:(Oct75c:+ 93.2%) & 2014Jan75c: +52.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/03/13: Thursday's session for SBUX looks a lot like yesterday. Shares remain inside their $76.00-77.50 trading range.

Traders looking for a new entry point could use a breakout past $77.50 as a possible entry point (you'll need to adjust your stop and target).

- Suggested Positions -

Oct $75 call (SBUX1319j75) entry $1.18 exit $2.28 (+93.2%)

- or -

Long 2014 Jan $75 call (SBUX1418a75) entry $3.25

10/02/13 adjust final target to $79.75
09/28/13 new stop loss @ 75.75, consider taking profits early!
09/19/13 new stop loss @ 73.90
09/18/13 new stop loss @ 73.40, adjust exit to $79.00
this morning we closed the Oct. $75 calls at the open.
09/17/13 prepare to exit the October $75 calls at the open tomorrow
09/17/13 new stop loss @ 72.40
09/14/13 new stop loss @ 71.75
09/11/13 SBUX at new highs. Cautious traders may want to lock in some gains.

Entry on September 05 at $72.35
Average Daily Volume = 3.0 million
Listed on September 04, 2013


Schlumberger - SLB - close: 89.44 change: -0.41

Stop Loss: 88.25
Target(s): 94.75
Current Option Gain/Loss: Unopened
Time Frame: exit PRIOR to earnings on Oct. 18th
New Positions: Yes, see below

Comments:
10/03/13: SLB actually held up relatively well today. Profit taking was mild with a -0.4% pullback. There is no change from my prior comments.

Please note that we only have about two weeks. We do not want to hold positions over SLB's earnings announcement on October 18th. I am suggesting a trigger to buy calls at $90.25. If triggered our target is $94.75.

FYI: The Point & Figure chart for SLB is bullish with a $113 target.

Trigger @ 90.25

- Suggested Positions -

Buy the Nov $92.50 call (SLB1316K92.5) current ask $1.66

Entry on October -- at $---.--
Average Daily Volume = 6.3 million
Listed on October 02, 2013


Sohu.com Inc. - SOHU - close: 82.58 change: +2.30

Stop Loss: 76.75
Target(s): 88.50
Current Option Gain/Loss: +18.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03/13: Our new trade on SOHU has been opened. The stock hit our suggested entry point to buy calls at $80.75 within the first ten minutes of trading this morning. Shares faded from the $81 level and eventually bounced twice from the $78.75 area. The afternoon rebound lifted SOHU to a new 52-week high. Shares outperformed the market with a +2.8% gain.

Please note that I am raising our stop loss to $77.75.

NOTE: I do consider this a more aggressive, higher-risk trade because SOHU can be a volatile stock. I am suggesting small positions to limit risk.

*small positions* - Suggested Positions -

Long Nov $85 call (SOHU1316K85) entry $4.40

Entry on October 03 at $80.75
Average Daily Volume = 2.0 million
Listed on October 02, 2013


Tractor Supply Company - TSCO - close: 68.20 change: -0.53

Stop Loss: 65.75
Target(s): 74.00
Current Option Gain/Loss: + 0.1%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
10/03/13: TSCO hit a new high this morning before following the market lower. I am not suggesting new positions at this time. We are raising our stop loss to $65.75.

Earlier Comments:
It is possible that the $70.00 level could be round-number resistance but we're aiming for $74.00 between now and yearend. FYI: The Point & Figure chart for TSCO is bullish with an $87 target.

- Suggested Positions -

Long 2014 Jan $70 call (TSCO1418a70) entry $2.72

10/03/13 new stop loss @ 65.75
10/01/13 trade opened on gap higher at $68.04.
Trigger was $67.50

Entry on October 01 at $68.04
Average Daily Volume = 440 thousand
Listed on September 30, 2013


United Parcel Service - UPS - close: 90.10 change: -1.18

Stop Loss: 89.95
Target(s): 99.00
Current Option Gain/Loss: Unopened
Time Frame: exit prior to earnings on Oct. 25th
New Positions: Yes, see below

Comments:
10/03/13: Uh-oh! UPS appears to be breaking down from its recent sideways consolidation. Shares underperformed their peers in the transports with a -1.29% decline today. UPS settled on round-number support near $90.00. If the stock does not recover tomorrow then we will likely remove UPS as a bullish candidate.

Earlier Comments:
We are suggesting a trigger to buy calls at $92.25. If triggered our target is $99.00 but we will plan to exit prior to the earnings announcement on October 25th.

Trigger @ 92.25

- Suggested Positions -

buy the 2014 Jan $95 call (UPS1418a95)

Entry on October -- at $---.--
Average Daily Volume = 2.6 million
Listed on October 01, 2013


Workday, Inc. - WDAY - close: 82.40 change: -0.23

Stop Loss: 79.75
Target(s): 89.00
Current Option Gain/Loss: -19.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
10/03/13: It was a bumpy session for WDAY. Early gains faded and shares traded below short-term support at their 10-dma before recovering. I am cautious here given the market's continued weakness.

Earlier Comments:
The stock could see a short squeeze. The most recent data listed short interest at 18% of the 65.2 million share float.

- Suggested Positions -

Long Dec $90 call (WDAY1322L90) entry $2.85

Entry on September 27 at $82.75
Average Daily Volume = 1.2 million
Listed on September 26, 2013


PUT Play Updates

Energizer Holdings - ENR - close: 92.39 change: +0.05

Stop Loss: 94.65
Target(s): 88.00
Current Option Gain/Loss: -40.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03/13: Today's performance in ENR is somewhat concerning. We do not want to see our bearish candidates showing relative strength on a down day for the market. ENR bounced up to short-term technical resistance at its 10-dma before paring its gains.

- Suggested *Small* Positions -

Long Oct $90 PUT (ENR1319v90) entry $1.00

Entry on September 26 at $92.36
Average Daily Volume = 424 thousand
Listed on September 25, 2013


The Fresh Market, Inc. - TFM - close: 48.00 change: +0.21

Stop Loss: 48.75
Target(s): 42.00
Current Option Gain/Loss: -66.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
10/03/13: I am growing more concerned with our TFM put play. Shares displayed relative strength with a +0.4% gain on a down day for the market. Plus today's move is a bullish breakout above short-term technical resistance at both its simple 10-dma and simple 200-dma. More conservative traders may want to abandon ship immediately. I am not suggesting new positions and if TFM doesn't decline tomorrow we are likely to drop it.

Earlier Comments:
Our target is $42.00. I am suggesting we keep our position size small because TFM can be a little bit volatile. Plus the most recent data listed short interest at 13% of its small 40.1 million share float. FYI: The Point & Figure chart for TFM is bearish with a $39 target.

- Suggested *small* Positions -

Long Oct $45 PUT (TFM1319v45) entry $0.45

10/02/13 new stop loss @ 48.75

Entry on September 25 at $47.50
Average Daily Volume = 591 thousand
Listed on September 16, 2013



Longer-Term Play Updates



Chicago Bridge & Iron - CBI - close: 69.69 change: -1.09

Stop Loss: 64.00
Target(s): 79.00
Current Option Gain/Loss: +154.9%
Time Frame: 4 to 6 months
New Positions: see below

Comments:
10/03/13: CBI hit some profit taking (-1.5%) after its recent surge to new highs.

I am not suggesting new positions at this time.

*Small Positions* - Suggested Positions -

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

10/01/13 new stop loss @ 64.00, adjust target to $79.00
09/21/13 new stop loss @ 59.75
09/11/13 new stop loss @ 57.65
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: 54.58 change: -0.29

Stop Loss: 50.95
Target(s): 58.50
Current Option Gain/Loss: +13.8%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
10/03/13: The VGK is still struggling with short-term technical resistance at its 10-dma. If the stock market really starts to accelerate lower we could see VGK dip toward what should be support in the $53.00-53.50 zone. Although VGK is a European stock ETF so it should be somewhat insulated from the U.S. government shutdown.

I am not suggesting new positions at this time.

Earlier Comments:
We are taking a multi-month time frame with this trade. 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.

- Suggested Positions -

Long 2014 Mar $55 call (VGK1422L55) entry $1.80*

09/11/13 trade opens. VGK @ 53.60
*option entry @ 1.80 is an estimate. Ask closed at $1.75 yesterday
09/10/13 entry trigger met. open positions tomorrow.
09/10/13 new stop loss @ 50.95
08/24/13 adjust the option strike from 2013 Dec $55 to $2014 Mar $55.

Entry on September 11 at $---.--
Average Daily Volume = 3.0 million
Listed on August 10, 2013


CLOSED BULLISH PLAYS

Boeing Co. - BA - close: 115.24 change: -2.60

Stop Loss: 117.75
Target(s): 127.50
Current Option Gain/Loss: Unopened
Time Frame: Exit prior to Oct. 23 earnings announcement
New Positions: see below

Comments:
10/03/13: Worries over how the U.S. government shutdown might impact BA's aerospace and defense business sparked some selling today. The stock underperformed the market with a -2.2% decline. The breakdown under short-term support at $116.00 is short-term bearish. The next level of significant support is probably the $110 area.

Tonight we are removing BA as a candidate. Our suggested entry point is more than $5.00 away. However, I am suggesting that readers keep BA on your watch list. A dip into the $111-110 zone could prove to be a bullish entry point.

Trade did not open.

10/03/13 removed from the newsletter.
suggested trigger was $120.50

chart:

Entry on September -- at $---.--
Average Daily Volume = 4.5 million
Listed on September 26, 2013


SouFun Holdings - SFUN - close: 47.42 change: -4.30

Stop Loss: 47.90
Target(s): 57.50
Current Option Gain/Loss: -62.8%
Time Frame: exit prior to October expiration
New Positions: see below

Comments:
10/03/13: Ouch! Something happened to SFUN today but I can't find any news on it. Shares initially broke out higher this morning but the rally reversed at resistance near its early September highs (near $54). Once the rally failed SFUN shares accelerated lower to a -8.3% decline. The stock hit our suggested stop loss at $47.90.

Earlier Comments:
This is an aggressive, higher-risk trade. I am suggesting we use small positions to help limit our risk. The recent high near $53.50 could be resistance but we're aiming for $57.50. The Point & Figure chart for SFUN is bullish with a $63 target.

*small positions* - Suggested Positions -

Oct $55 call (SFUN1319j55) entry $1.75* exit $0.65 (-62.8%)

10/03/13 stopped out
09/24/13 trade opened on gap higher at $51.14. Trigger was 51.10
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on September 24 at $51.14
Average Daily Volume = 1.2 million
Listed on September 23, 2013