Option Investor
Newsletter

Daily Newsletter, Thursday, 3/13/2014

Table of Contents

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

Market Wrap

China, Ukraine and Improving Data

by Thomas Hughes

Click here to email Thomas Hughes
Weak data from China, simmering politics in the Ukraine and improving U.S. economic data combine to drive equity prices lower.

Introduction

When I first woke up and saw that Chinese economic data was worse than expected I then expected to see Asian and European markets largely in the red. Surprisingly that was not the case. Asian markets were mixed, as were those in the EU, with only the Nikkei and Hang Send indices closing in negative territory. Chinese industrial production fell to +8.6% from 9.7%, retail sales fell to 11.8% from 13.%. Both were below expectation. Other news in the Asia/Pacific region helped to temper any bearishness caused by the data. For one, Chinese regulators are in the process of approving the issuance of 1st preferred shares by Chinese companies, a move met with applause. For another, the central bank of New Zealand raised interest rates, the first country to do so during the current round of global economic stimulus.


European markets were trading near to the flat line, that is, until the U.S. markets turned negative. The release of today's economic data helped to keep U.S. index futures trading in the green during the early hours, also boosting EU markets but they turned negative before the close of the trading day. Weak Chinese data, the fear of economic slow down in China and the as yet unresolved trouble in the Ukraine all taking their toll on outlook.

U.S. futures trading was largely positive ahead of and after the release of jobless claims, retail sales and later, import prices. Trading was positive going into the open, which was rather calm and quiet. It wasn't until the afternoon that the major markets lost most of their ground as concern over Crimea took hold of the market.

The materials and financial sectors were early leaders but were unable to keep the indices in the green. By lunch time the SPX was down about -6 points with the Dow down about -65. Later in the afternoon it was comments from John Kerry and Mario Draghi, unrelated, that really drove the markets lower. The S&P lost close to 25 points on an intra-day basis with the Dow down more than 200 points. Selling, or at least weak trading, could continue tomorrow on Ukraine fear if no solution develops before then. The economic calendar is light tomorrow but is full next week with the FOMC meeting on Wednesday.


The Economy

Initial claims for unemployment fell this week, opposite the expectation for a mild rise in claims. Initial claims fell by -9,000 from a mild upward revision for a net drop of -10,000. Adjusted claims this week are 315,000, the lowest level since mid November 2013. The four week moving average also fell from a mild upward revision to 330,500 and 3 month low. On an unadjusted basis claims fell by just over -15,000 to 302,218. Initial claims are trying really hard to move lower and could be signaling an improvement in labor conditions. This is now the second week of declines in this figure and with last weeks surprise NFP make the chances for a spring uptick in employment look a lot better. On a longer term basis claims are down but still hovering near to the levels seen just last year. State by state there were 6 reporting a drop in claims greater than -1,000 led by California's -5,765 for a total near -20,000. Four states reported an increase in claims, led by New York with a gain of +18,709 for a total near 23,500.


Continuing claims, those filing for a second week, also fell. This number fell by -48,000 from a mild downward revision to 2.85 million. This is a three month low and just above the long term low set last year. This is the 6th straight week of steady declines and helps make the declines in initial claims look a little more long lasting. With these two figures on the decline I expect to see total claims begin to drop in the next week or two providing there actually is an improvement in labor markets as the data is suggesting.


Total claims ticked up this week by 12,282 to 3.450 million. This is the 7th week of relatively flat total claims numbers following the sharp drop due to the expiration of long term unemployment benefit extensions. I think that it is safe at this time to assume that that effect has passed. I have heard nothing else about it since the first of the year. That being said total claims are holding fairly steady but may begin to move lower should the declines in initial and continuing claims continue. These number are not really a forward look at March jobs number yet since they lag by at least a week but they do confirm, at least somewhat, the unexpectedly large NFP number. Taken together the unemployment claims data is mildly bullish and supports expected economic improvement this month and this spring. A late day deal in the Senate paved the way for a reinstatement of the expired benefits, if passed in full there will be a jump in total unemployment claims to match the dip at the start of the year.


Retail sales climbed slightly more than expected due to a stronger second half of February, as reported by a few of the retailers. U.S. retail sales grew by 0.3%, ex-auto 0.3% and ex-auto and gas 0.3%. This is slightly ahead of the expected 0.2% rise. January sales were revised lower to -0.6%. In general, the retailers are expecting March sales to pick up as the weather gets warmer.

Import prices surged by 0.9%, twice their expected gain, in February. This is also the largest monthly gain in the past 12 months but still down on a year over year basis. Business inventories also gained in February. Inventories rose by 0.4%, in line with expectations and an important part of first quarter GDP. Ex-auto's inventories rose by 0.6%, slightly ahead of expectations. This is the biggest gain since July 2013 but its affect on GDP could be hurt by weak sales and new orders in the same period.

The Oil Index

Prices for bench mark West Texas Intermediate crude bounced back from the lows set yesterday. Prices climbed by about a quarter during the days trade. Nat Gas prices fell on a smaller than expected draw down of inventories. Nat Gas fell by more than a full percent after data showed that inventories were higher than expected. With the turn of the seasons at hand traders are speculating on the need for heating fuel now and the expected need for AC fuel in the near future. Also impacting oil prices at this time are the weak numbers out of China, unsettled tension in the Ukraine and U.S. data.

Out of the nine major S&P 500 sectors the energy sector was today's worst performer. The Oil Index traded to the downside but is still near long term high levels. The index is at a crucial juncture between the long term up trend started in 2009 and the long term resistance set during the declines of 2008. At this time the trend is still up and the index is finding support at and above the short term 30 day EMA and the long term up trend line. The indicators are bullish but have growing divergences which give reason to pause. It looks like the index may could enter a near term period of bearishness and retest support at the trend line. A break below the trend line would be bearish and could take the index down to the 1425 level. A confirmation of support at the trend line would be bullish in the near term but there is still serious long term resistance to higher prices at this time. Until there is a strong catalyst for prolonged higher oil prices this index could remain range bound between 1400 and 1500. Watch oil prices for more clues to the direction of this index.


The Gold Index

Gold prices held fairly steady after yesterday's massive climb to a new 6 month high. After an initial drop following the release of today's economic data gold prices got their footing and advanced to another new high. Gold prices are now sitting just above the $1373 level. The Gold Index has responded as expected in the face of higher gold prices. The index has moved higher and broken back into the previous pennant formation on a tear to retest the 78.6% Fibonacci Retracement of the 2009-2012 bull market in gold stocks. Today's move is an extension of yesterday's bounce from the 30 and 150 day EMA and a possible continuation signal. Caution is in order though due to the possibility that Ukraine tension will ease and that U.S. economic data will continue to improve. There is also the FOMC meeting next week to consider. Gold prices and the gold index have been tied together for a long time and will likely to remain that way. Technical resistance lies just ahead that may coincide with the FOMC meeting. Resistance is just above at the $110 level, support just below around the $100 level.


The Dollar

The dollar had a volatile trade versus the euro and yen. The euro had at first extended it's rally versus the dollar but comments mid day from John Kerry quickly reversed that move. The EUR/USD set a near 2 and a half year high against the dollar, approaching the 1.4000 level. However, the upcoming referendum vote in the Crimea on whether to join Russia has traders on edge. Kerry said that there would be a U.S.-EU response on Monday if the vote went ahead and backed Russia. Adding to the pressure were cautious comments from Mario Draghi. He said that the banks outlook for interests rates would curb appetite for the euro, for sure his comments did. After them the euro tanked in favor of the dollar and the dollar tanked in favor of the Swiss Franc and the Japanese Yen. Up until today the eur/usd pair had been in an uptrend driven by improving economic data but the risk of deflation has the ECB ready to act in order to curb the strengthening euro.


The yen gained strength against the dollar, dropping more than a full yen to come to rest at support. This pair has been in an uptrend driven by Abenomics, a plan to devalue the yen. There has been speculation that the BOJ would have to increase QE in order to reach the goals set by them and by Abenomics but as of yet have not done so. A strengthening of the yen due to the Crimea situation could force their hand if left unresolved or if it escalates. Should the situation end peacefully the pair could snap back to the recent highs near 103. Until then I think the uptrend is on pause. Support exists at the previous levels around 101.70 with resistance just to the upside around 102.75.


Story Stocks

GM is making headlines. The car maker is dealing with a recall and government investigation of possible criminal negligence in it's handling. The issue involves ignition switches and goes back as far as 2001 and carries over the next 6-8 years. The news has GM shares down but may not have as long a lasting impact as some may think. The good news is that most of the problems are before the government bail out and restructuring of the company which should shield it from some of the fall-out. Additionally, the new CEO has clean hands in terms of this scandal and can address it full faced. Shares of GM fell more than 1% today and are now trading near the long term support level around $34-$35.


Amazon announced an increase in membership fees for its Prime program. For those of you unfamiliar with Prime it is a yearly subscription that enables users to receive free two day shipping and have access to online streaming video and a free Nook Library. The previous cost was $79 and had not been changed since it's inception nearly ten years ago. The new price of $99 is less than the previously discussed $119 price target and well received by the market. Shares of Amazon popped 2% in the premarket trading, gapped open, moved up another 2% or so and then fell back giving up most of today's gains along with the rest of the market. Today's move took Amazon share price above resistance but the late day sell-off confirmed that resistance was still there. Amazon may trade in a range between $350 and $375 until another catalyst takes over.


The S&P 500

The major U.S. indices fell hard today. Despite the somewhat positive economic data geo-political and economic events weighed heavily on today's trading. Weak Chinese data added to fear of a massive slow down in the country that has been growing for some time. On top of that the situation in the Ukraine is coming to a head. The referendum scheduled for Sunday is expected to result in a vot for Crimea to join with Russia. This result will cause a combined U.S.-EU response on Monday according to John Kerry. Both are most likely near to short term blips on the radar provided neither one disrupts U.S. and EU recovery prospects.

Today's data, while not robust, great or even that good were better than expected and help to paint a picture of renewed economic activity. Joblessness as portrayed through jobless claims fell this week to new lows, confirming the NFP data from last week. This is the second week of noticeable, if not significant, declines in claims that along with jobs creation could lead to further reduction in the unemployment rate, increased earnings, a stronger consumer and a more robust economy. This view is in line with the long term trend and the current economic outlook for 2014. The dip in the first quarter was expected, it's depth perhaps not as much but that was likely helped by the weather. An uptick in the second quarter is also expected and that is what today's data could be leading too.


The S&PP 500 fell more than a full percent today, breaking the support of the previous all time highs set in December/January. Today's move was halted by the short term moving average but this near term support may not hold going into the weekend and first of next week. Of course, changes in the Ukraine situation could occur at any time so there is a lot risk associated with that going into the weekend. The long term trend is still up but the index has some room to move down in the near term. Looking at the indicators the index is bullish in the longer term but a nearer term divergence and MACD that has just entered a bearish wave suggest that there will be some more downward pressure. A break below the short term 30 day EMA could easily take the index back to trend over the next couple of days. That being said I am still in a buy-on-the-dips mode and expect the index to bounce back and set new highs this spring.


Economically there isn't much going on tomorrow to move the market. PPI data and Michigan sentiment could ordinarily do so but with Ukraine and China in the mix maybe not this time. On Monday the calendar heats up again with Empire Manufacturing, TIC flows, numerous housing data and on Wednesday the all important FOMC meeting. Even with the Ukraine situation resolved the FOMC meeting could keep stock prices in check. I think the big mover of stock prices tomorrow and at the beginning of next week will be the Crimea referendum and political posturing from involved parties. I think that Crimea will pass soon and the markets will rebound

Until then, remember the trend.

Thomas Hughes


New Option Plays

Broken Hearted

by James Brown

Click here to email James Brown


NEW DIRECTIONAL PUT PLAYS

Charter Communications - CHTR - close: 125.72 change: -1.55

Stop Loss: 127.05
Target(s): 1st target: 120.50, 2nd target: $116.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 5 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
CHTR is in the services sector. The company is a cable company providing cable TV and Internet services. The company had been contemplating a bid to buy Time Warner Cable (TWC) but Comcast ending up the winning suitor for TWC and shares of CHTR plunged on the news. Since that announcement between TWC and Comcast shares of CHTR have been volatile. Technically it looks like a bearish double top with CHTR's peaks in October and January. The recent bounce just failed near $130 and its 200-dma. CHTR could be in a new bearish trend of lower highs and lower lows.

Today's low was $125.05. I am suggesting a trigger to open bearish positions at $124.60. If triggered I am setting two different targets. Our conservative target is $120.50, the February low. Our more aggressive target is $116.00. FYI: The Point & Figure chart for CHTR is bearish with a $110 target.

Trigger @ 124.60

- Suggested Positions -

Buy the APR $120 PUT (CHTR1419P120) current ask $1.90

Annotated Chart:

Weekly Chart:

Entry on March -- at $---.--
Average Daily Volume = 2.5 million
Listed on March 13, 2014



In Play Updates and Reviews

One-Two Punch

by James Brown

Click here to email James Brown

Editor's Note:

Economic worries over China and geopolitical worries over Ukraine proved to be a powerful one-two punch for the U.S. stock market on Thursday.

BWA has been removed. FB and IFF were stopped out. VMC was closed this morning. WDAY has been triggered.

NOTE: March options only have six trading days left.


Current Portfolio:


CALL Play Updates

Chicago Bridge & Iron - CBI - close: 82.30 change: -0.66

Stop Loss: 80.90
Target(s): 89.50
Current Option Gain/Loss: -50.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: CBI ricocheted between overhead resistance at its 10-dma and short-term support at its 20-dma. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $89.50. More aggressive investors could aim higher since the Point & Figure chart for CBI is bullish with a $111 target.

- Suggested Positions -

Long Apr $85 call (CBI1419D85) entry $2.80

03/04/14 triggered @ 84.50

Entry on March 04 at $84.50
Average Daily Volume = 1.16 million
Listed on March 01, 2014


Centene Corp. - CNC - close: 63.62 change: -0.79

Stop Loss: 61.75
Target(s): 67.75
Current Option Gain/Loss: -68.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/13/14: CNC suffered a -1.2% decline and settled near short-term support at its 10-dma. We are quickly running out of time on our March calls. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $67.75. More aggressive investors may want to aim higher since the Point & Figure chart for CNC is bullish with a $78 target.

- Suggested Positions -

Long Mar $65 call (CNC1422C65) entry $1.25

03/01/14 new stop loss @ 61.75
02/24/14 triggered @ 63.60

Entry on February 25 at $63.60
Average Daily Volume = 656 thousand
Listed on February 24, 2014


Greenbrier Companies - GBX - close: 45.89 change: -0.25

Stop Loss: 44.30
Target(s): April call target: $49.85, June call target: $53.50
Current Option Gain/Loss: Apr$50c: -22.2% & Jun$50c: -12.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: Our new play on GBX held up reasonably well. Shares opened at $46.25. The stock rallied toward its recent high near $47 before succumbing to the market's widespread decline. Shares settled with a 25-cent loss. Considering the market's performance today I would wait for a new rise above $46.30 before initiating new positions.

Earlier Comments:
Please note that I am setting two targets. If you choose the April calls then plan to exit at $49.85. If you choose the June calls then we're aiming for $53.50.

- Suggested Positions -

Long Apr $50 call (GBX1419D50) entry $0.90

- or -

Long Jun $50 call (GBX1421F50) entry $2.00

03/13/14 opened at $46.25

Entry on March 13 at $46.25
Average Daily Volume = 608 thousand
Listed on March 12, 2014


Lockheed Martin - LMT - close: 162.83 change: -1.03

Stop Loss: 159.90
Target(s): 169.75 & 174.75
Current Option Gain/Loss: -35.7%
Time Frame: exit prior to April option expiration
New Positions: see below

Comments:
03/13/14: LMT dipped toward yesterday's lows and settled with a -0.6% decline. If the market continues to sink then we'll likely see LMT testing the $160 area. I am not suggesting new positions at this time.

We have two different targets. Our conservative target is $169.75. Our more aggressive target is $174.75. FYI: The Point & Figure chart for LMT is very bullish with a $221 target.

- Suggested Positions -

Long Apr $165 call (LMT1419D165) entry $4.20

03/04/14 triggered @ 164.35

Entry on March 04 at $164.35
Average Daily Volume = 2.3 million
Listed on March 03, 2014


Spirit Airlines - SAVE - close: 59.36 change: -0.48

Stop Loss: 57.25
Target(s): 65.00
Current Option Gain/Loss: -32.8%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
03/13/14: SAVE also held up reasonably well with a dip toward its 10-dma. While the trend is still up I am not suggesting new positions at this time.

- Suggested Positions -

Long Apr $60 call (SAVE1419D60) entry $3.20

03/11/14 triggered @ 60.50

Entry on March 11 at $60.50
Average Daily Volume = 1.0 million
Listed on March 10, 2014


Constellation Brands Inc. - STZ - close: 82.27 change: -0.84

Stop Loss: 81.45
Target(s): Target for March calls @ $84.50
Target(s): Target for April calls @ $88.00
Current Option Gain/Loss: Mar$80c:+ 41.1% & Apr$80c: +24.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
03/13/14: I am starting to regret not exiting our March calls on Monday with STZ at $84.00. Shares ended today's session sitting near short-term support at $82.00. Any further weakness will likely hit our stop loss at $81.45. I am not suggesting new positions at this time.

Our target to exit the March $80 calls is STZ at $84.50.
Our target to exit the April $80 calls is STZ at $88.00.

- Suggested Positions -

Buy the MAR $80 call (STZ1422C80) entry $1.70

- or -

Buy the APR $80 call (STZ1419D80) entry $3.30

03/08/14 new stop loss @ 81.45
move the target to exit the March calls to $84.50
move the target to exit the April calls to $88.00
03/01/14 new stop loss @ 79.65
02/25/14 new stop loss @ 78.75
02/22/14 new stop loss @ 77.80
02/18/14 new stop loss @ 77.40
02/13/14 new stop loss @ 76.40
02/12/14 triggered @ 79.00

Entry on February 12 at $79.00
Average Daily Volume = 1.5 million
Listed on February 11, 2014


Varian Medical Systems - VAR - close: 84.09 change: -0.66

Stop Loss: 83.40
Target(s): 89.75
Current Option Gain/Loss: -42.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: VAR is still churning sideways in the $84-85 zone. However, today's move has created a bearish reversal candlestick pattern that needs to see confirmation. I am not suggesting new positions at this time.

The Point & Figure chart for VAR is bullish with a $91 target.

- Suggested Positions -

Long Apr $85 call (VAR1419D85) entry $2.08

03/11/14 triggered @ 85.05

Entry on March 11 at $85.05
Average Daily Volume = 573 thousand
Listed on March 08, 2014


VMware, Inc. - VMW - close: 103.97 change: -2.90

Stop Loss: 99.75
Target(s): 114.00
Current Option Gain/Loss: + 2.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: Bullish analyst comments on VMW this morning helped the stock hit new relative highs at $107.86 today. Unfortunately VMW sacrificed all of today's gains and most of yesterday's rally with a sharp sell-off thanks to the market's plunge. I am not suggesting new positions at this time.

Earlier Comments:
Our target is $114.00. More aggressive traders could aim higher. The point & figure chart just produced a brand new triple-top breakout buy signal this month and is forecasting at $121 target.

- Suggested Positions -

Long Apr $105 call (VMW1419D105) entry $3.50

03/11/14 triggered on gap higher at $104.08, suggested entry was $103.55

Entry on March 11 at $104.08
Average Daily Volume = 2.0 million
Listed on March 10, 2014


Workday, Inc. - WDAY - close: 101.21 change: -1.42

Stop Loss: 98.70
Target(s): 110.00-115.00
Current Option Gain/Loss: -36.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: WDAY also erased most of yesterday's gains. Unfortunately the stock rallied first this morning. Shares actually gapped open higher at $103.82 and then sprinted to short-term resistance near $105 and its 10-dma before reversing lower. WDAY was bouncing along round-number support at $100.00 before the day was over.

Our plan was to buy calls at $103.25 so the gap open higher triggered our play. If you're looking for an entry point now I would wait for a rise past $102.00.

Earlier Comments:
Our target is the $110-115 zone. We will tentatively set an exit target at $110.00 for now. The stock could move quickly. The most recent data listed short interest at 20% of the 80.2 million share float.

- Suggested Positions -

Long Apr $105 call (WDAY1419D105) entry $4.30

03/13/14 triggered on gap higher at $103.82. plan was a trigger @ 103.25

Entry on March 13 at $103.82
Average Daily Volume = 1.9 million
Listed on March 12, 2014




PUT Play Updates

Akamai Tech. - AKAM - close: 59.03 change: -1.41

Stop Loss: 61.25
Target(s): 55.10
Current Option Gain/Loss: - 2.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
03/13/14: AKAM tried to rally this morning but failed at technical resistance near its 10-dma and 20-dma. Shares reversed into a -2.3% decline and a new two-week closing low. Today's move looks like a new bearish entry point.

- Suggested Positions -

Long Apr $57.50 put (AKAM1419P57.5) entry $1.42

03/11/14 triggered @ 58.95

Entry on March 11 at $58.95
Average Daily Volume = 3.0 million
Listed on March 10, 2014


Green Mountain Coffee Roasters - GMCR - cls: 106.16 chg: -2.44

Stop Loss: 112.25
Target(s): 101.00
Current Option Gain/Loss: + 91.8%
Time Frame: Exit prior to March option expiration
New Positions: see below

Comments:
03/13/14: GMCR gapped open higher this morning and briefly traded above the $110 level before reversing. By the closing bell GMCR had erased yesterday's gains. More conservative traders could lower their stop loss closer to today's high ($110.41).

Forbes had an interesting article on GMCR today. They discussed how coffee prices have doubled from their November lows. Coffee retailers like Starbucks (SBUX) and Dunkin' Donuts (DNKN) are likely to weather the rise in coffee futures relatively well since the actually price of coffee is such a small cost in each cup they sell. Yet for GMCR it's a different story since coffee prices make up a much larger chunk for each k-cup they sell.

Don't forget that we only have six trading days left on our March options.

Earlier Comments:
GMCR can be a volatile stock so we consider any trades to be more aggressive and higher risk. Use small positions to limit risk.

*small positions* - Suggested Positions -

Long MAR $110 PUT (GMCR1422o110) entry $2.58*

03/08/14 new stop loss @ 112.25
03/06/14 our put has doubled in value. Traders may want to take some money off the table.
03/05/14 new stop loss @ 113.55
03/01/14 new stop loss @ 115.05
02/27/14 triggered @ 114.65
*option entry price is an estimate since the option did not trade at the time our play was opened.

Entry on February 27 at $114.65
Average Daily Volume = 6.7 million
Listed on February 26, 2014


Twitter, Inc. - TWTR - close: 53.57 change: -0.93

Stop Loss: 56.15
Target(s): 50.25
Current Option Gain/Loss: - 2.7%
Time Frame: 3 to 5 weeks
New Positions: see below

Comments:
03/13/14: The bounce attempt in TWTR this morning failed near its trend of lower highs. The stock underperformed the broader market with a -1.7% decline. The stock is on the verge of hitting new four-week lows.

Earlier Comments:
TWTR currently has 544.7 million shares outstanding. There is a major lock up expiring on May 6th when another 474 million shares will come available for sale by insiders. It seems unlikely that TWTR is going to rally ahead of such a massive lock up expiration.

TWTR can be a volatile stock. Therefore we are suggesting small positions to limit risk.

- Suggested Positions -

Long Apr $50 PUT (TWTR1419P50) entry $1.80

03/12/14 trade opens at $54.25

Entry on March 12 at $54.25
Average Daily Volume = 11.4 million
Listed on March 11, 2014


The ExOne Company - XONE - close: 41.18 change: -0.71

Stop Loss: 45.10
Target(s): 40.25
Current Option Gain/Loss: +48.1%
Time Frame: exit PRIOR to earnings on March 19th
New Positions: see below

Comments:
03/13/14: Hmm... XONE traded down toward yesterday's lows and then started to bounce this afternoon. We only have six trading days left on our March options. Readers may want to consider an early exit here.

Earlier Comments:
I do consider this an aggressive, higher-risk trade. The 3D printing stocks can be very volatile. Furthermore XONE has very high short interest. The most recent data listed short interest at 43% of the very, very small 7.9 million share float. That raises the risk of a short squeeze. This trade also has a short time frame. XONE is scheduled to report earnings on March 19th. We do not want to hold over the report.

*Small Positions - Aggressive Trade*

Long MAR $40 PUT (XONE1422o40) entry $1.08

03/13/14 readers may want to consider an early exit here
03/12/14 new stop @ 45.10
03/06/14 triggered @ 44.40

Entry on March 06 at $44.40
Average Daily Volume = 444 thousand
Listed on March 05, 2014



CLOSED BULLISH PLAYS

BorgWarner Inc. - BWA - close: 60.70 change: -0.68

Stop Loss: 59.90
Target(s): 67.50
Current Option Gain/Loss: Unopened
Time Frame: exit prior to April expiration
New Positions: see below

Comments:
03/13/14: BWA remains inside its $60-62 trading range in spite of the market's weakness. After three weeks of churning sideways in this zone we are temporarily giving up on BWA as a breakout play. Our trade has not opened yet so tonight we're removing BWA as a candidate. We can revisit the stock on a breakout past $62 or a dip to what could be support near the $57 area.

Trade did not open.

03/13/14 removed from the newsletter, suggested trigger was $62.25
03/05/14 corrected some numbers on the entry point, target and stop loss.
Use a trigger @ 62.25. Use a stop at $59.90. Target 67.50

chart:

Entry on March -- at $---.--
Average Daily Volume = 2.0 million
Listed on March 04, 2014


Facebook, Inc. - FB - close: 68.83 change: -2.05

Stop Loss: 68.40
Target(s): 77.50
Current Option Gain/Loss: - 34.5%
Time Frame: exit prior to April expiration
New Positions: see below

Comments:
03/13/14: FB has been one of the better performing stocks this year. When the market started to sell off today shares of FB hit some profit taking with a -2.89% plunge and a breakdown below its 10-dma, 20-dma and the $70.00 level again. Our stop was hit at $68.40.

- Suggested Positions -

Apr $75 call (FB1419D75) entry $2.00 exit $1.31 (-34.5%)

03/13/14 stopped out
03/10/14 triggered on gap higher at $70.77, trigger was $70.75
03/08/14 adjust entry trigger from $71.25 down to $70.75

chart:

Entry on March 10 at $70.77
Average Daily Volume = 58 million
Listed on March 06, 2014


Intl. Flavors & Fragrances - IFF - close: 92.74 change: -1.32

Stop Loss: 92.95
Target(s): 99.50
Current Option Gain/Loss: -20.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: Our plan to give IFF more room to move and widen the stop loss a bit backfired today with the market in sell-off mode. Shares of IFF actually opened higher and briefly traded above its 10-dma before reversing. Shares did reverse sharply and closed down -1.4%, hitting our stop at $92.95 this afternoon.

- Suggested Positions -

Apr $95 call (IFF1419D95) entry $1.50 exit $1.20* (-20.0%)

03/13/14 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
03/12/14 new stop loss @ 92.95, Readers may want to just exit early now!
03/11/14 new stop loss @ 93.40
03/08/14 new stop loss @ 92.80
03/04/14 new stop loss @ 92.40
02/28/14 triggered @ 93.65

chart:

Entry on February 28 at $93.65
Average Daily Volume = 410 thousand
Listed on February 27, 2014


Vulcan Materials - VMC - close: 65.79 change: -1.14

Stop Loss: 66.25
Target(s): 74.50
Current Option Gain/Loss: -51.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
03/13/14: It's been a rough week for VMC shares. The stock was down another -1.7% today. In last night's newsletter we decided to exit positions at the opening bell today. The small gap open at $67.35 probably helped our exit this morning.

- Suggested Positions -

APR $70 call (VMC1419D70) entry $2.35* exit $1.15** (-51.0%)

03/13/14 planned exit
**option exit price is an estimate since the option did not trade at the time our play was closed.
03/12/14 prepare to exit tomorrow morning!
03/04/14 triggered on gap higher at $69.31. Suggested trigger was $68.75
*option entry price is an estimate since the option did not trade at the time our play was opened.

chart:

Entry on March 04 at $69.31
Average Daily Volume = 1.1 million
Listed on March 03, 2014