Option Investor
Newsletter

Daily Newsletter, Thursday, 11/14/2013

Table of Contents

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

Market Wrap

Yellen Soothes Markets

by Thomas Hughes

Click here to email Thomas Hughes
Hopeful markets were reassured by Janet Yellen's dovish comments and pushed to make new highs.

Introduction

The global markets rallied in the overnight sessions. The rally in U.S. markets yesterday, driven by the unexpectedly dovish comments from Federal Chair Nominee Janet Yellen, spilled over into Asian and European markets. Asian indexes gained an average +1%, led by the Nikkei's 2.12% gain. In Europe the positive sentiment was a little muted as some weaker than expected data renewed concern over the strength of the current recovery. German GDP was reported as in line with expectations while France's expected return to growth was dashed by a -0.1% drop. While France really isn't that important for us, it is a major part of the EU economy and thereby does have some affect on the global economic picture.


U.S. futures trading was positive this morning and pointed to an open at a new all time intra day high for the S&P. Domestic economic data, in particular unemployment claims, was a little weaker than expected but did not seem to phase bullish sentiment. Neither did a few high profile earnings misses from the the likes of Wal Mart, Cisco and others. All eyes were on Capital Hill, awaiting the start of Yellen's confirmation hearing. Following the release of the data futures trading cooled off a little. The S&P 500, Dow and Nasdaq all opened near to flat from yesterday's closing prices. The first half hour of trading saw the indices bob and weave within a very tight range.

Once the hearings began the tone, statements, questions and answers were very soothing. Yellen supports the economic recovery, she believes a stronger recovery is needed before the taper starts, QE will continue for now until data shows it isn't needed and the markets took it all very well. The S&P and Dow extended gains made yesterday but the Nasdaq struggled to reach break even. A few disappointing earnings statements were the cause but it was able to move into the green.

The Data

We got a few bits of data today, nothing market moving and all in line with current trends. Unemployment claims fell by 2,000 from last week's upwardly revised figure to hit 339,000. Factoring in the revision this is a net gain of 3,000 from last week and within the expected range. The four week moving average was also revised up for last week, this week's figure fell nearly 6,000. This is the sixth week of decline since the California/Nevada spike was reported and well past the government shut down. It looks like neither had any long lasting affect on unemployment and that the slowly improving unemployment situation is still slowly improving. Only two states reported a drop in claims greater than 1,000, Oregon and California, for a net decline of -5,500. Four states reported an increase in claims greater than 1,000; MI, OH, NJ and MA for a net gain around 7,300.


Continuing claims held steady from last weeks mild upward revision. This makes a net increase around 20,000 claims from last weeks reported numbers. Looking at the table it appears as if there is no impact from the October events in the data, it also appears as if longer term unemployment is holding steady around the current level. This could negatively impact November unemployment figures even thought the long term trend is down and claims are near long term lows.


Total claims for unemployment fell this week by nearly 55,000 claims. This is 21.75% lower than last year's rate, in line with the 21-25% rate of decline I have observed over the past year or so. Total claims are retreating from the 4 million level and near to the long term low of 3.86. This figure also, when looking at the table, appears to be holding relatively stable over the past two months. Good because no serious impact from October but potentially bad for November employment figures. However, 3rd quarter GDP was much better than expected and October NFP was also a bit surprising so November could be surprising as well. Keep in mind that the Initial claims is for the week ending 11/9 while the other two figures are from the week prior to that.


Productivity and labor costs were also released today, both in line with expectations. Non Farm Productivity levels rose 1.9% from the previous month versus a gain of 1.8% for that time period. The consensus was around 2%. This increase was bolstered by an unexpected drop in labor costs. The consensus was for cost to increase by 0.5% but the actual was reported as -0.1%. The Trade Gap widened by 8%. This was blamed on the shut down and could negatively impact GDP in the fourth quarter. Tomorrow's calendar has 6 releases scheduled.


The Dollar Strengthens

Several factors combined to help strengthen the dollar. Unemployment data from home, GDP in Europe, Janet Yellen's support of economic recovery, the ECB rate cut last week and an impending meeting of the Bank of Japan to name a few. The EUR/USD dropped from a new resistance level at 1.35000. This level provide support for the pair on the way up to the most recent peak. In the longer term the pair has just crested above a 50% Fibonacci Retracement and now fallen back below it coincident with the ECB rate cut. In the short term weaker than expected data in the EU and semi-strength in the U.S could help to pressure this pair further. My current target is the next Retracement level around the 1.31250.

EUR/USD

The yen lost some ground to the dollar today as well. The USD/JPY pair moved up from just above the short term moving average to test the 100 level. This level has provided significant resistance in the past and could do so again now. Momentum is bullish but weak and stochastic is bullishly crossing over the upper signal line. The short term analysis is cautiously bullish contingent on a solid move above 100. This move could hinge on the BOJ meeting next week (release of policy statement on Thursday). I haven't heard or read anything to the effect but I suspect there may be some expectation the BOJ will make some dovish indication in support of Abenomics behind some of this weeks rise in the pair. Recent changes to fundamentals that could influence the BOJ decision is the lack of tapering by the FOMC and the ECB rate cut. Regardless of the cause the 100 level is the one to watch, at least until after next Thursday.

USD/JPY

The Gold Index

Gold got a big lift from Janet Yellen's statements. Her support of QE while the economic recovery is still so “fragile” added $20 to the spot price. Gold is now trading back up toward the $1300 level which is looking like it might provide some resistance. The bounce in gold prices was enough to keep the Gold Index from breaking down through the lower boundary of the long term pennant formation. Indicators are bearish but weakly so. There is some support for the index along the lower edge of the boundary but it may be fading. I think it is going to take some positive change in the expectation for profits to lift this index out of the pennant and I don't see that happening while gold prices remain at such low levels.

Gold Index

The Oil Index

Oil gained about a quarter percent on renewed hopes driven by Yellen. This is after oil prices hit an intraday low more than 1% below yesterday's closing prices. Oil has now been trading below $95 for over two weeks with a real chance it could go lower. Talks with Iran, although stalling over some key points, is relieving some tensions and helping to take some premium out of the price at the same time increasing supplies are doing the same. The Oil Index traded to the upside today, extending a bounce from the 30 day moving average. The potential short term H&S I pointed out last week did not carry through. Bearish momentum is in decline and the peak analysis suggests support along the current trend line. Lower oil prices may be bad for oil production companies but it is good for the economy, gas consumers, gas retailers and in the end oil producers so it may be a diamond in disguise. Current resistance is around 1,480 with support along the 30 day EMA around 1450.

Oil Index

Earnings Roundup

About 100 or so companies reported today. The biggest news I saw was from the retail sector. Several names such as Wal Mart, Kohls and others reported revenue and earnings misses. Wal Mart reported a small increase in revenue for quarter and $1.14 EPS. This was ahead of the previous quarter's $1.08 but well below the expected $1.35. Guidance for the fourth quarter was projected in a range that includes the average estimate of $1.58. Full year guidance was revised to a dime below the estimated $5.21-$5.31 from the last quarters statement. The quarter included all of October and could have been impacted by the shut down despite the stronger than expected economic data. Comp sales in October were down by 0.3%. The stock fell in early trading, opening more than 1% lower than yesterday's closing price. Shares of WMT quickly found support however and were driven up to make a new 6 month high. Momentum is bullish but weak and the stock is extremely overbought. It is possible that Wal Mart is at the top of a range. Current resistance is just above the current level at $80 with near term support at $77.50.

WMT

Anybody trading yesterday's doji on the Kohl's chart got a happy surprise today indeed. Anyone bullish on that stock did not. Today's release of earnings was far below the general expectation. The company reported a much larger than expected drop in quarterly sales versus the same period last year resulting in a cut to full year guidance. The company says that the fourth quarter will be as expected but reduced the full year range by $0.12 to $4.08-$4.23. The stock lost more than 7% in early trading, gap down at the open. Some buying came in at the low prices but not enough to regain the days losses.

KSS

The Retail Spyder (XRT) is looking rather bullish despite the less than stellar reports from the sector today and this week. There is some speculation that the shopping season could be better than expected already and if the better than expected economic strength from the third quarter carries into this one then I can see it happening. The sector has been trending up over the last 12 months and recently broke out to new highs. Previous resistance was tested as support and then in a text book move the ETF is now bouncing up off the 30 day EMA. Momentum is bullish and comparing the two peaks since the break to new highs is convergent with higher prices. Stochastic is bullish and crossing above the upper signal line. This ETF looks like it is in rally mode and could keep moving higher.

XRT

The S&P 500

The S&P 500 opened just above the flat line today, bobbing over and under for the first half hour of trading. Some stocks were moving, particularly the ones releasing earnings, but for the most part the markets were awaiting Janet Yellen. Her remarks, released to the market yesterday, provided some relief and her performance during the hearing today reinforced that feeling. As soon as she began to speak the markets began to lift, reaching an early high just before 11:30AM. The middle part of the day saw the index, and the other major indices, fall back some before retesting the early high in late afternoon trading. On the short term daily charts the index is indicating a buy. MACD hit zero today and is crossing over to the bullish side at the same time stochastic has pointed up. This signal has resulted in 50-100 points of up side each time it has happened over the last 12 months.

SPX daily

The long term charts of weekly prices echo the bullish signals displayed on the daily charts. Momentum is bullish and on the rise while stochastic is also bullish and crossing above the upper signal line. While at this time the long term divergences we have all been tracking over the past 6 months are still present they may soon be erased. The current long term bull wave is still on the rise and could move another 50-100 points higher in the short term and as much as 100-300 points higher in the longer term provided nothing emerges to reverse the long term trends.

SPX Weekly

Janet Yellen gave the market a soothing balm. Her position was one of support for the economy and continued QE. She want's it to end, but she supports it now and until the “fragile” recovery is strong enough to stand on here own. Perhaps more soothing than here words was here demeanor. She was confident, relaxed and had her answers ready to hand. A much different impression than the one I get from Ben Bernanke and that little waver in his voice. For now QE is still in place and is still data dependent. Targets for unemployment are still around the 6.5% level which, based on the current rates of decline, we will achieve in the early spring. While money is flowing in the markets are likely to flow up. It is possible that only a change to the underlying fundamentals in the form of reduced stimulus can turn the markets now.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Entertainment & Oil Services

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:

(bullish ideas)
KMB, BA, GRA, WLP, TMO, APA, HON, LII, SM, DWRE, TRIP, QCOM, SIVB, CHKP, DLTR, AXP, COP, EMR, DD, MDT, TYL, KORS, SSYS, HSIC, ADP, WDC, MCD, CVS, WAG, ETN, ZMH, HAR, AYI, WHR, MHK, SI, MCK, MAN.



NEW DIRECTIONAL CALL PLAYS

The Walt Disney Co. - DIS - close: 70.02 change: +1.05

Stop Loss: 67.00
Target(s): 77.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Media and entertainment giant DIS has recovered from its post-earnings dip. Now shares are on the verge of a breakout past resistance near $70.00. The stock closed at a new all-time high today. We want to hop on board. I am suggesting a trigger to buy calls at $70.25. If triggered our multi-week target is $77.50. More aggressive investors could aim higher. The Point & Figure chart for DIS is bullish with an $83 target.

Trigger @ 70.25

- Suggested Positions -

buy the 2014 Jan $70 call (DIS1418a70) current ask $1.80

Annotated Chart:

Entry on November -- at $---.--
Average Daily Volume = 6.6 million
Listed on November 14, 2013


National Oilwell Varco, Inc. - NOV - close: 83.56 change: +1.14

Stop Loss: 81.25
Target(s): 88.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
NOV is in the basic materials sector. The company provides equipment to the oil and gas drilling and oilfield services industries. Traders bought the dip at rising technical support this morning. Shares surged to a new 52-week high. Oil-related stocks have not been hindered by the pullback in oil prices. It looks like NOV could make a run toward the $90 area.

Today's high was $83.60. I am suggesting a trigger to buy calls at $83.75. If triggered our multi-week target is $88.50.

Trigger @ 83.75

- Suggested Positions -

buy the 2014 Jan $85 call (NOV1418a85) current ask $2.10

Annotated Chart:

Entry on November -- at $---.--
Average Daily Volume = 3.0 million
Listed on November 14, 2013



In Play Updates and Reviews

Yellen Keeps The Rally Going

by James Brown

Click here to email James Brown

Editor's Note:

During her Federal Reserve chairman nomination hearings Janet Yellen's dovish comments helped keep the U.S. market rally alive.

ATK and UPS hit our entry triggers.
EQIX and GMCR were stopped out.


Current Portfolio:


CALL Play Updates

The Andersons, Inc. - ANDE - close: 83.41 change: +0.74

Stop Loss: 79.40
Target(s): 88.00
Current Option Gain/Loss: +11.6%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
11/14/13: ANDE hit another new high on Thursday. I am raising our stop loss to $79.40.

Earlier Comments:
FYI: The Point & Figure chart for ANDE is bullish with an $89 target. NOTE: I am suggesting we keep our position size small. ANDE does not see a lot of volume in its stock or its options. The option spreads are a little wide.

*small positions* - Suggested Positions -

Long 2014 Mar $85 call (ANDE1421C85) entry $3.85*
11/14/13 new stop loss @ 79.40
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on November 13 at $81.10
Average Daily Volume = 117 thousand
Listed on November 12, 2013


Aon Plc. - AON - close: 80.81 change: +0.64

Stop Loss: 78.75
Target(s): 85.00
Current Option Gain/Loss: - 8.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/14/13: Today's bounce in AON outperformed the major indices but shares are still trading below their highs from Monday. I am not suggesting new positions at this time.

- Suggested Positions -

Long 2014 Jan $82.50 call (AON1418a82.5) entry $1.70

11/13/13 new stop loss @ 78.75

Entry on November 08 at $80.50
Average Daily Volume = 2.3 million
Listed on November 06, 2013


Alliant Techsystems Inc. - ATK - close: 117.21 change: +0.86

Stop Loss: 113.90
Target(s): 120.00
Current Option Gain/Loss: + 5.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/14/13: As expected the rally in ATK continued on Thursday and shares broke out to new highs. Our entry trigger was $116.55 but shares gapped open higher at $116.80 this morning.

Earlier Comments:
You could certainly argue that ATK is overbought with a multi-week rally but thus far the momentum does not seem to be slowing down. The stock does have potential resistance at its 2007 highs in the $120.50-121.00 zone. I am setting our target at $120.00. More aggressive traders could aim higher.

FYI: ATK will begin trading ex-dividend on November 18th, 2013. The quarterly cash dividend should be 26 cents.

- Suggested Positions -

Long DEC $120 call (ATK1322L120) entry $1.80

11/14/13 trade opened on gap higher at $116.80. trigger was 116.55

Entry on November 14 at $116.80
Average Daily Volume = 321 thousand
Listed on November 13, 2013


Cardinal Health, Inc. - CAH - close: 64.51 change: +0.58

Stop Loss: 61.40
Target(s): 67.50
Current Option Gain/Loss: +66.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/14/13: CAH has extended its rally to five days in a row. The stock might see potential round-number resistance near the $65.00 mark. I would not be surprised to see a little profit taking after tagging $65. More conservative traders may want to just take profits early. Look for support near $62.00.

- Suggested Positions -

Long 2014 Jan $65 call (CAH1418a65) entry $0.84

11/13/13 new stop loss @ 61.40

Entry on November 11 at $62.50
Average Daily Volume = 3.8 million
Listed on November 09, 2013


Costco Wholesale - COST - close: 123.74 change: +0.57

Stop Loss: 119.40
Target(s): 129.00
Current Option Gain/Loss: + 94.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/14/13: COST kept pace with the rally in the S&P 500 today but shares struggled with new short-term resistance near the $124.00 mark.

- Suggested Positions -

Long 2014 Jan $125 call (COST1418a125) entry $1.30

11/09/13 new stop loss @ $119.40

Entry on November 06 at $120.50
Average Daily Volume = 1.9 million
Listed on November 02, 2013


Cognizant Technology - CTSH - close: 93.44 change: +0.61

Stop Loss: 89.25
Target(s): 99.00
Current Option Gain/Loss: +34.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/14/13: Another day, another new all-time high for CTSH. Shares might see potential round-number resistance at the $95.00 mark. Do not be surprised to see CTSH trade near $95 and then pull back.

Our target is $99.00. More aggressive traders may want to aim higher. The Point & Figure chart for CTSH is bullish with a $107 target.

- Suggested Positions -

Long 2014 Jan $95 call (CTSH1418a95) entry $2.15

Entry on November 12 at $91.25
Average Daily Volume = 2.1 million
Listed on November 11, 2013


GNC Holdings - GNC - close: 58.85 change: -0.82

Stop Loss: 57.95
Target(s): 64.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
11/14/13: GNC underperformed the market today with a -1.3% retreat from resistance near $60.00. If shares don't improve and breakout higher soon we will remove GNC as a candidate.

Currently our plan is unchanged with a suggested trigger to buy calls at $60.50.

Trigger @ 60.50

- Suggested Positions -

Buy the DEC $60 call (GNC1322L60)

Entry on November -- at $---.--
Average Daily Volume = 1.5 million
Listed on November 05, 2013


Lockheed Martin - LMT - close: 138.29 change: +1.03

Stop Loss: 134.90
Target(s): 148.50
Current Option Gain/Loss: + 2.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
11/14/13: There were a lot of headlines for LMT today. The biggest one was probably news that LMT is closing four plants and cutting 4,000 jobs, or 3.4% of its workforce. The company claims the reduction is a response to a decline in U.S. government defense spending. That news failed to stop the rally in LMT shares, which set a new all-time closing high.

Earlier Comments:
I would not be surprised to see LMT paused at the $140 level, which might be temporary round-number resistance.

- Suggested Positions -

Long 2014 Jan $140 call (LMT1418a140) entry $2.20

11/13/13 new stop loss @ 134.90

Entry on November 07 at $137.25
Average Daily Volume = 1.5 million
Listed on November 06, 2013


Pall Corp. - PLL - close: 82.56 change: -0.40

Stop Loss: 79.75
Target(s): 86.00
Current Option Gain/Loss: +13.6%
Time Frame: Exit PRIOR to earnings on Nov. 26th
New Positions: see below

Comments:
11/14/13: It was an odd day for PLL. The stock failed to participate in the market's broad-based rally on Thursday. Shares just drifted sideways and eventually closed in the red. There could be short-term support near $82.00 if the dip continues.

Earlier Comments:
Our target is $86.00. However, we will plan to exit prior to PLL's earnings report in late November (not date set yet). FYI: The Point & Figure chart for PLL is bullish with a long-term $113 target.

- Suggested Positions -

Long DEC $85 call (PLL1321L85) entry $1.10

11/06/13 new stop loss @ 79.75

Entry on October 28 at $80.50
Average Daily Volume = 551 thousand
Listed on October 23, 2013


SPX Corp. - SPW - close: 95.43 change: +1.39

Stop Loss: 91.75
Target(s): 99.00
Current Option Gain/Loss: + 6.5%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
11/14/13: The rally in SPW picked up some speed today. Shares outperformed the market with a +1.4% gain. More importantly shares rallied poast potential resistance near $95.00. This could be used as a new bullish entry point.

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

- Suggested Positions -

Long DEC $95 call (SPW1322L95) entry $2.30

Entry on November 11 at $94.25
Average Daily Volume = 304 thousand
Listed on November 09, 2013


United Parcel Service - UPS - close: 100.97 change: +0.55

Stop Loss: 98.45
Target(s): 108.00
Current Option Gain/Loss: -12.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
11/14/13: That's not a typo. UPS closed at $100.97 with a +0.55 gain. Yet the stock closed at $101.04 yesterday. The odd pricing would suggest that UPS began trading ex-dividend today but I can't find any record of it. More importantly traders bought the dip this morning and UPS continues to look poised for more gains.

The stock did hit our suggested entry point at $101.25 intraday. Our trade is open and I would still consider new positions here.

- Suggested Positions -

Long 2014 Jan $105 call (UPS1418a105) entry $0.98

Entry on November 14 at $101.25
Average Daily Volume = 3.8 million
Listed on November 13, 2013


PUT Play Updates

SPDR Gold ETF - GLD - close: 124.27 change: +1.42

Stop Loss: 124.25
Target(s): 115.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Comments:
11/14/13: Nearly everything was in rally mode today. Gold was no exception. There is no change from my prior comments.

Traders may want to limit their position size to limit risk.

I am suggesting a trigger to buy puts at $121.00. If triggered our target is $115.50. More aggressive traders may want to aim lower since the Point & Figure chart for GLD is bearish with a $110 target.

Trigger @ 121.00

- Suggested Positions -

Buy the 2014 Jan $115 PUT (GLD1418m115)

Entry on November -- at $---.--
Average Daily Volume = 7.0 million
Listed on November 12, 2013


Garmin Ltd. - GRMN - close: 46.33 change: +0.44

Stop Loss: 47.25
Target(s): 43.50
Current Option Gain/Loss: -12.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/14/13: Bearish plays have been tough to trade in this bull market. Today saw GRMN outperform the market with a +0.9% gain and a close back above its 50-dma. More conservative traders might want to exit early. I am adjusting our stop loss down to $47.25.

Earlier Comments:
I do consider this an aggressive trade. GRMN has obviously been volatile the last couple of days. Plus the most recent data listed short interest at 13% of the 121 million share float.

Our target is $43.50. At this point GRMN should be nearing significant support in the $43.00 area and we might switch directions and buy calls.

*Small Positions!* - Suggested Positions -

Long DEC $45 PUT (GRMN1322X45) entry $1.08

11/14/13 new stop loss @ 47.25
11/13/13 new stop loss @ 48.05
11/06/13 new stop loss @ 48.55

Entry on November 01 at $46.82
Average Daily Volume = 1.2 million
Listed on October 31, 2013



Longer-Term Play Updates



Vanguard FTSE Europe ETF - VGK - close: 56.41 change: +0.15

Stop Loss: 53.90
Target(s): Sell half @ $58.00, sell the rest at $63.00
Current Option Gain/Loss: +38.8%
Time Frame: exit PRIOR to 2014 March option expiration
New Positions: see below

Comments:
11/14/13: The bounce continued in the VGK for a second day and shares closed above their simple 10-dma.

Earlier Comments:
Don't forget that we have two exit targets for this trade! More conservative traders could lock in gains now with our option up +94%.

We are taking a multi-month time frame with this trade. FYI: The Point & Figure chart for VGK is bullish with a $63 target.

- Suggested Positions -

Long 2014 Mar $55 call (VGK1422C55) entry $1.80*

10/22/13 Strategy Update: Plan to exit half @ $58.00 and exit the rest at $63.00. New stop loss @ 53.90
10/19/13 new stop loss @ 52.75
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 BEARISH PLAYS

Equinix, Inc. - EQIX - close: 162.24 change: +4.41

Stop Loss: 160.55
Target(s): 150.50
Current Option Gain/Loss: -34.9%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
11/14/13: I cautioned readers last night that Wednesday's session in EQIX looked like a bullish reversal pattern. Another high for the market today helped fuel the bounce in EQIX. The stock surged from almost $158 to nearly $165 intraday. Our stop was hit at $160.55.

Earlier Comments:
Please note that I am suggesting small positions to limit our risk. The most recent data listed short interest at 28% of the relatively small 39.0 million share float. That raises the risk of a short squeeze.

*small positions* - Suggested Positions -

Long DEC $150 PUT (EQIX1322X150) entry $3.15* exit $2.05** (-34.9%)
11/14/13 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
11/13/13 new stop loss @ $160.55
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on November 08 at $159.00
Average Daily Volume = 1.1 million
Listed on November 07, 2013


Green Mountain Coffee Roasters - GMCR - close: 60.67 change: +0.85

Stop Loss: 61.00
Target(s): 51.50
Current Option Gain/Loss: -33.1%
Time Frame: Exit PRIOR to earnings on Nov. 20th
New Positions: see below

Comments:
11/14/13: GMCR spiked higher this morning and tested overhead technical resistance at its 20-dma before reversing all of its gains. Unfortunately our stop loss would have been hit early this morning at $61.00. Shares actually gapped open higher at $61.01.

Earlier Comments:
I am suggesting we keep our position size small to limit our risk. The most recent data listed short interest at more than 40% of the 130 million share float. That does raise the risk of a short squeeze if the market bounces. Our target is $51.50.

*small positions* - Suggested Positions -

Long Dec $55 PUT (GMCR1322x55) entry $4.22 exit $2.82 (-33.1%)

11/14/13 stopped out on gap higher at $61.01
11/13/13 warning! GMCR has produced a potential bullish reversal pattern. Traders might want to exit immediately. New stop loss @ 61.00

chart:

Entry on November 07 at $58.25
Average Daily Volume = 4.7 million
Listed on November 07, 2013