Option Investor
Newsletter

Daily Newsletter, Monday, 9/22/2014

Table of Contents

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

Market Wrap

Fed Hangover

by Thomas Hughes

Click here to email Thomas Hughes
Fear of global weakness weigh on markets.

Introduction

Fear of global slow down grew today in the wake of last weeks FOMC meeting and Friday's triple witching expiration. Starting in Asia, China is expecting the September reading of flash PMI tomorrow with most anticipating a decline. Asian market moved lower by 1.5% on average with EU markets slightly less negative around -0.5% on average. Fears of an Asian slowdown are also to blame for much of the EU's decline with comments from ECB chief Mario Draghi adding to the sentiment. He told the EU committee of economic affairs that the EU economy was losing momentum and that he expected inflation to remain low into the end of 2015 and possibly into 2016. The negative vibe carried into the open of early trading here at home with the major indices indicated lower by about a quarter percent.

Market Statistics

The opening was a little weak with the SPX down about -0.40%. This held for the first half hour or so until the existing home sales data was released. The data was a little less than expected but still above the critically watched 1 million level. Trading picked up slightly at that time, lifting the SPX off the morning low but this did not last long. Soon after, the indices started to drift lower, quickly gaining momentum, carrying them down to new intraday lows. By noon the SPX was close to -1% off Friday's close with the NASDAQ Composite off more than -1.25%. The low levels held for the day as the indices traded along support with a slight rise in prices going into the open.

Economic Calendar

The Economy

Today was pretty light on economic as most Monday's are. Aside from Moody's Survey Of Business Confidence there was but one report; Existing home sales. Existing home sales dropped -1.8% versus an expected gain of 0.4%, not too surprising since last week's permits and starts were also down and below expectations. On an annualized basis the rate of sales is 5.05 million, cool but above the 5 million level viewed by economists as showing strength. The previous month was also revised lower. This is the first month in the last five in which sales have declined and remain at the second highest level of the year, although still below last years levels. Within the report Lawrence Yun, chief economist for the National Association of Realtors, says that sales remain strong and that last months drop is due in large part to a decline in cash purchases. He also says that the market is becoming better for first time buyers and that “they have a better chance of purchasing a home now...”.

Moody's Survey of Business Confidence remains strong. The summary, prepared by Mark Zandi, remains positive. He says that “US businesses remain upbeat”, “hiring intentions remain strong” and are at an all time high for the survey. He also says that lay off's also remain low and that expectations into the end of the year and next are strong.

Data remains light the rest of the week. Tomorrow is the FHFA Housing Price Index, Wednesday is New Home Sales, Thursday is jobless claims and durable goods with the 3rd revision to 2nd quarter GDP and Michigan Sentiment on Friday. Housing data will be very important but I expect to see some small misses based on today's existing home sales and last weeks starts/permits data.

The big mover for the week will probably be GDP on Friday. The current expectations are for it to be revised higher, again, by 0.40% to over 4.6%. The upward revision is bullish, in retrospect, but will lead to speculation of how much growth to expect this quarter. The higher 2nd quarter GDP is, the harder it will be for the 3rd quarter to show significant growth on a comparative basis. Surely the 3rd quarter grew, but it is not likely that it accelerated significantly from the 2nd. The most current estimate I could find for the 3rd quarter is calling for 3.5% and then 3.0% in the fourth, which would put full year GDP right around 2.25% and in line with general expectations.

Additional economic news, or news affecting the economy, included the announced planned retirement of Federal Reserve President Charles Plosser. Plosser is one of the more hawkish members of the reserve and a frequent dissenter of the current QE and low interest rate FOMC policies. His retirement is scheduled for March of next year.

The Oil Index

Oil prices fell again today on rising supply and a lack of market moving news over the weekend. Last week's knee jerk move higher was caused by the Saudi's announcing they had cut some of their production and fears that OPEC may cut more in an attempt to raise prices. While this is still a possibility words from OPEC put the event off until sometime next year. WTI fell more than -0.75% in early trading and extended that loss to over -1.0% later in the day.

The Oil Index also traded lower and broke through the long term trend line for the second time in two weeks. Out of ten S&P sectors nine were in the red today, led by the energy sector. The Oil Index is suffering from the fall in the underlying commodity but has so far found support along the 1,600 level. This level is coincident with the bottom of the flag pattern the index broke out of in the early part of the summer but today's move calls it into question.

Even though the index broke through the line it is still exhibiting some sign of support. There is some lower wick, not much but some, and there is divergence in near term momentum consistent with a pull back to support. Oil prices will continue to affect index direction but it still looks as if the longer term uptrend wants to hold and the next few days could provide more technical clues. Watch for support between 1590 and 1,600 with a break below that possibly taking the index as low as 1,550-1,525 in the near to short term.


The Gold Index

Gold prices began the day in negative territory but reversed to move higher by a dollar or two mid day. The reverse was due in part to the decline in stocks but also to the weaker than expected data, as well as possible profit taking on the steep decline in prices over the past two months. Gold prices are now more than -9% off their mid-summer highs and only 2.5% above the long term low of $1285 ( this was an intraday low, the closing low that day was $1206). There may be a near to short term pause but Gold prices are moving lower with the long term low in sight.

The Gold Index is also moving lower and also has the long term low in sight. The index fell another +2% today and is approaching the $85 level. The indicators are bearish and momentum is building although divergence persists in the MACD. This suggest that the move is losing steam and the long term low could provide support once it is reached. $85 is the first target for possible support with $82.50 and the long term low the next target once that is broken. A break below $82.50 wouldn't find support until reaching the $65-$70 range and a full 100% retracement of the 2008-2011 bull market in gold/gold index

Not to say that we are approaching the bottom in gold, or that this is the bottom in the gold index, but it is a highly likely place for a short term to long term bounce to begin, based on the two previous bounces. However, gold prices and/or hopes for gold company profits could continue to drag the index down while the economy is recovering and rising interest rates are coming down the pipe. A question I have now is, just how discounted is the impending rate hike and how will it really affect gold prices once it is here? Not to mention that in the near to short term lower oil prices will help improve margins for gold miners offsetting revenue lost to low gold prices. Earnings aren't going to be great but they might not be that bad.


In The News, Story Stocks and Earnings

Earnings reports are light for the week although we are approaching the next earnings season. Alcoa is scheduled to report three weeks from now, heralding the official season. This week there are about 125 or so reports with a few of note. Tuesday Carmax, Wednesday KB Home, Thursday Micron and Nike followed up by BlackBerry on Friday. Carmax will be indicative of the secondary auto market and the consumer.

KB Home of course will represent the housing sector, and based on last week's report from Lennar could be a positive surprise. KB Home constructs single family homes and condominiums in the metropolitan areas of several western states. The company is expected to report $0.38 per share, a 40% increase over the previous quarter. Shares of the stock sold off today on the existing home sales news, as did the sector. Shares of the stock lost -2.5% in today's session but are basically flat for the year. The indicators show some support at this level but there is no real signs of bullishness yet.


Apple releases sales figures for the new iPhone 6. Sales set a record, topping 10 million units sold in the first weekend. This, plus the added revenue from the Pay service will surely have a positive impact on the bottom line that won't be fully appreciated for several quarters at least. However, the larger iPhone 6+ may weigh on sales of the smaller iPad models in the near term. The iWatch I have yet to form an opinion on. Personally, the only use I can see wanting it for is using it for GPS and tracking my bike rides. Shares of the stock fell today, after opening higher, to lose about a quarter percent. Today's action brings the stock down to just above long term support in the form of the previous all-time split-adjusted high. The indicators are consistent with support at this level with some near term weakness present.


Autozone reported today, beating EPS estimates but falling short on revenue. The company reported a 2.1% increase in same store sales that resulted in revenue growth of only 0.6%. EPS beat by a nickel or 0.4%. Shares of the stock fell -4.25% today, dropping to an 8 month low. The fall today was stopped by long term support set last February on a break to new highs. Since then the stock has been trading in a range between $550 and $500, today's low. The indicators are weak and look like the market could keep this one down at support, if not test or break it.


After energy, consumer discretionary was the hardest hit of the sectors today. The S&P Consumer Discretionary Spyder XLY fell by -1.5% today, hurt by the home builders among others. According to FactSet earnings growth for Q3 is estimated to be 6.2% with consumer discretionary the only sector projected to produce a decline, led by the home builders and Pulte Group. Today's decline has brought the ETF down to longer term support with weak indicators. Near term indications are bearish but longer term the ETF is trending up with the potential for a bounce from support. The stochastic has produced an early, weak, trend following signal already but yet to confirmed by MACD. Today's move set's it up for a follow up, provided support levels hold. A break below the current level could take the index down as far as the long term moving average around $67.50. A bounce from support could find some near term resistance around $69-$69.50.


The Indices

The market fell today in the wake of triple witching and last week's Fed meeting. The Dow Jones Transportation Average leading the fall, dropping -1.38 in today's session. The drop was steady throughout the day, closing at today's low and potential support consistent with the all time high set in July and then broken above at the start of September.

The divergence I noted last week panned out and has been confirmed by a bearish crossover in the MACD and a drop below the upper signal line on the stochastic. There is likely going to be a further test of support but I think it, support, will be fairly strong. A drop below the current level could take the index down to the long term trend line, about 250 points below this level, and set us up for another possible trend bounce.


The NASDAQ Composite was runner up in the race to support today. The tech heavy index fell -1.14% today after hitting a new high on Friday. It too is sitting on support formed by the July highs showing support over the short to long term. In the near term the indicators are still weak and point to a further test of support over the next few days to a week. 4,500 looks good for support right now with a break taking the index down to 4,400 in the near term. If support holds and the index moves higher there is resistance around 4,600 with a target around 4,700 on the break.


The S&P 500 is next up with a loss of -0.80% in today's session. The broad market index fell 16 points at the close, with today's candle resting firmly on support. Support is consistent with the previous all time highs as well as the 30 day short term EMA. Today's action brought the index right down to the 1990-1995 region, indicated as support, where it then proceeded to trade sideways the rest of the day. The indicators are weak and pointing to further testing of support at this time but also consistent with the set up leading to the 2nd and stronger trend following signal. If the 1990-1995 level doesn't hold stronger support is around 1950 and 1925.


The Dow Jones Industrial Average was the laggard today, falling only -0.61%. This index is also sitting on support in the form of the previous all time high set in July and then broken this month. The indicators are weak in the near term but still bullish short term, contrary to the rest. Support, however, will likely be tested along with the rest regardless of how the indicators look now. A break below 17,170 could take the blue chips down to 17,000 in the near term with strong, long term support, above 16,750.


The indices pulled back to support today and as a group are sitting on the highs set at the peak of the summer rally. This I guess is not surprising in hindsight as this is the level the market was holding before the summer trading holiday and the level at which protective positions would have been based on at that time; and expiration for those positions, a triple witching expiration, was just this past Friday. What this means now, in my view, is that the market is sitting on support with economic growth in the forecast and a whole lot of data, not this week but next.

This could be a challenging week. The candles from Friday and today are not pretty, unless you're a bear, and could lead to some more testing of support. Adding to this is data that I expect to be a little weak. Tomorrow and particularly Wednesday's New Home sales could be less than expected and help push the indices lower. However, on the flip side Thursday's unemployment claims could be more good news and then the GDP on Friday, expected to be revised higher, could also be good.

Next week is the end of the month which means there will be a tidal wave of economic data. ADP employment, Challenger Job Cuts, NFP, Unemployment top the list.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Industrials & Services

by James Brown

Click here to email James Brown


NEW DIRECTIONAL PUT PLAYS

Cummins Inc. - CMI - close: 136.04 change: -1.85

Stop Loss: 140.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.26 million
Entry on September -- at $---.--
Listed on September 22, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
CMI is in the industrial good sector. The stock has been in a long-term albeit choppy up trend since mid 2012.

Company describes itself as, CMI, "a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins currently employs approximately 48,000 people worldwide and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 6,800 dealer locations. Cummins earned $1.48 billion on sales of $17.3 billion in 2013."

CMI is actually developing a bullish trend of beating Wall Street's estimates and raising guidance. Unfortunately investors seem to have forgotten about this growth. Shares have been underperforming since CMI peaked in June. It's been a steady trend of lower highs.

It does not help that Dow-component Caterpillar (CAT), considered a competitors for CMI, recently warned of slowing sales around the world.

Technically CMI's recent oversold bounce just failed at the $140.00 level. The stock has also broken down below a long-term trend line of support (see the weekly chart below).

Last week's low was $134.77. Tonight we're suggesting a trigger to buy puts at $134.65. We are not setting an exit target yet but the point & figure chart is bearish with a $114.00 target.

Trigger @ $134.65

- Suggested Positions -

Buy the DEC $135 PUT (CMI141220P135) current ask $5.30

Option Format: symbol-year-month-day-call-strike

Daily Chart:

Weekly Chart:


Starbucks Corp. - SBUX - close: 74.60 change: -1.47

Stop Loss: 76.51
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.6 million
Entry on September -- at $---.--
Listed on September 22, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
Summer is over and fall is officially here. That has many consumers thinking of hot coffee and seasonal fare like SBUX's pumpkin spice lattes. Unfortunately Wall Street doesn't appear too keen on SBUX, if you're looking at the share price action.

This company is in the services sector. They are a global power house as a specialty retailer of what some might consider overpriced coffee and sugary drinks with too many calories. After 30 years in business they have grown to more than 20,000 stores and over 180,000 full time employees.

The stock peaked in late 2013. It looked like the correction was over back in April this year and SBUX did rally from $68 to $79 by July. Yet the stock has been dead money the last several weeks and now it's starting to underperform the market.

That spike you see on the daily chart was a reaction to its Q2 earnings results. The recent breakdown under $76 is bearish and the oversold bounce just failed near this level. Today's intraday low was $74.33. We're suggesting a trigger to buy puts at $74.25.

Trigger @ $74.25

- Suggested Positions -

Buy the NOV $72.50 PUT (SBUX141122P72.5) current ask $1.50

Option Format: symbol-year-month-day-call-strike

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

Update Your Stop Loss

by James Brown

Click here to email James Brown

Editor's Note:

Last Friday's weakness continued today and we are seeing a number of bearish reversals.

Tonight we have updated several stop losses.

We closed our CNQR trade this morning.

CW, FFIV, FLT, and SPLK hit our stop loss.

LII and TUP hit our bearish entry triggers.


Current Portfolio:


CALL Play Updates

Amgen Inc. - AMGN - close: 142.18 change: -1.83

Stop Loss: 139.65
Target(s): To Be Determined
Current Option Gain/Loss: + 6.0%
Average Daily Volume = 3.0 million
Entry on September 17 at $140.25
Listed on September 08, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: AMGN gave back most of Friday's rally with some profit taking today. Shares pared their losses to -1.2% by the closing bell. I would use a dip closer to $140.00 as a new entry point. We are also going to try and reduce our risk by moving the stop loss up to $139.65.

Earlier Comments: September 8, 2014:
Biotech stocks have been leading the market higher this year. The BTK biotech index is up +32.5% year to date. The IBB biotech ETF is up +19.1%. AMGN is up +20.8% versus the S&P 500's +8% gain in 2014.

The company describes itself as focusing "on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be the world's largest independent biotechnology company, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential."

They are one of the first major biotech firms to go public. Today the California-based company has grown to 20,000 employees with a presense in more than 75 countries. Annual revenues are set to hit $19.5 billion this year. The company invests near $4 billion in R&D every year. AMGN has is a combination of mature drugs and a new stable of treatments working through their pipeline.

The company recently received good news after the FDA granted priority review to AMGN's Ivabradine treatment for chronic heart failure. Wall Street is also eager for AMGN's new cholesterol drug, which could be its next multi-billion blockbuster. This new cholesterol drug, Evolocumab, is a PCSK9 inhibitor to lower LDL cholesterol for patients that can't use statin drugs. AMGN recently filed some key regulatory paperwork with the FDA as it races against rival Regeneron to be the first mover in this new field of cholesterol treatments.

Enthusiasm for AMGN's new pipeline should continue. In addition to Evolocumab and Ivabradine, AMGN should see progress on Kyprolis, Talimogene laherparepvec, Blinatumomab, Trebananib, Brodalumab, and AMG 416 in the next six months.

The company's last earnings report was better than expected. AMGN reported on July 29th. Wall Street was looking for earnings of $2.07 a share on revenues of $4.9 billion. The company reported $2.37 a share with revenues up +10.7% to $5.18 billion. Management also guided higher and raised estimates for 2014 earnings growth and revenue growth. Several analysts have raised their price targets and the point & figure chart is bullish and currently forecasting at $152 target.

Tonight we're suggesting a trigger to buy calls at $140.25.

- Suggested Positions -

Buy the 2015 Jan $150 call (AMGN150117C150) entry $3.30*

09/22/14 new stop @ 139.65
09/20/14 new stop @ 138.25
09/17/14 triggered @ 140.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike


Tableau Software, Inc. - DATA - close: 72.07 change: -1.19

Stop Loss: 69.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.5 million
Entry on September -- at $---.--
Listed on September 16, 2014
Time Frame: 4 to 12 weeks
New Positions: Yes, see below

Comments:
09/22/14: DATA flirted with the $74.00 level this morning but never rallied past it. We are still on the sidelines. Our suggested entry point is $74.25.

Earlier Comments: September 16, 2014:
"Put together an Academy Award-winning professor, a brilliant computer scientist at the world's most prestigious university, and a savvy business leader with a passion for data. Add in one of the most challenging problems in software - making databases and spreadsheets understandable to ordinary people. You have just recreated the fundamental ingredients for Tableau's products." That's how DATA introduces itself on the company website.

"Tableau Software helps people see and understand data. Tableau helps anyone quickly analyze, visualize and share information. More than 21,000 customer accounts get rapid results with Tableau in the office and on-the-go. And tens of thousands of people use Tableau Public to share data in their blogs and websites."

The company's business is growing. Back in May this year the company reported earnings that beat estimates on both the top and bottom line. Management then raised their guidance. They did it again in July. DATA reported its Q2 results on July 31st. Analysts were expecting a loss of $0.04 a share on revenues of $79.4 million. DATA delivered a profit of $0.05 with revenues soaring +81.8% to $90.7 million.

According to the company's earnings release they saw license revenues up +80% year over year to $60.4 million. They added over 2,200 new customers, which surpassed their four-quarter average of 1,650. They also closed 157 deals worth more than $100,00 each, which is a +96% increase from a year ago. Management then raised their 2014 revenue guidance well above Wall Street's estimates.

On September 16th a Credit Suisse analyst adjusted their rating from "neutral" to "outperform" and bumped their DATA price target from $87.50 to $100 thanks to the company's technology advantage and strong international sales. The point & figure chart is eve more positive with a $119.00 target.

Bears should be worried, The recent breakout past technical resistance at its simple 200-dma is bullish. Traders just bought the dip near this moving average today. The most recent data listed short interest at 11% of the small 41.1 million share float. That might be enough to spark some short squeezes.

Tonight we're suggesting a trigger to buy calls at $74.25. I'm listing both the October calls and the 2015 January calls. Which one depends on your time frame.

Trigger @ $74.25

- Suggested Positions -

Buy the OCT $75 call (DATA141018C75)

- or -

Buy the 2015 Jan $80 call (DATA150117C80)

Option Format: symbol-year-month-day-call-strike


Lockheed Martin - LMT - close: 178.99 change: -1.75

Stop Loss: 177.25
Target(s): To Be Determined
Current Option Gain/Loss: +27.5%
Average Daily Volume = 1.1 million
Entry on September 08 at $175.55
Listed on September 06, 2014
Time Frame: 10 to 14 weeks
New Positions: see below

Comments:
09/22/14: After a rally every day last week shares of LMT hit some profit taking with a -0.9% pullback. We are going to try and reduce our risk with a new stop loss at $177.25.

Earlier Comments: September 6, 2014:
A few years ago the word "sequestration" was a buzzword in politics and the defense industry. The defense cuts were supposed to be so bad that it would force the democrats and republicans to work together and prevent the Budget Control Act of 2011 from becoming law. Well we all know how that worked out. Politics won and the budget cuts were enacted. The U.S. is supposed to be cutting $500 billion in defense spending from 2012-2021.

Yet these drastic cuts have not slowed the defense stock's performances. The group had a banner year in 2013 with big stock market gains. They continue to show leadership in 2014. Shares of LMT are up +17.4% in 2014 versus a +8.6% gain for the S&P 500.

According to a company press release LMT describes itself as, "Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 113,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation’s net sales for 2013 were $45.4 billion."

The company has continued to capture a number of big government contracts including a $915 million deal to build a "space fence" for the U.S. Air Force.

It is worth noting that LMT is the U.S. government biggest defense contractor and just over 80% of LMT's revenues come from the U.S. government. The company is being proactive in trying to broaden their customer base and hope to achieve 20% of sales from outside the U.S. At the moment LMT already has sales in 70 different countries. The plan seems to be working with 25% of the company's backlog coming from international orders.

Many believe that LMT's F-35 joint strike fighter program will be a key revenue driver in the future. The F-35 Joint Strike Fighter (JSF) is already the world's most expensive weapons system with a price tag near $400 billion. Earlier this year the JSF program suffered a setback after its engines, built by a subcontractor, caught fire. LMT believes they have solved the engine problem and the JSF program is getting closer to completion with over 19,500 hours of flight time. LMT already has 11 countries planning to purchase the new F-35 JSF planes.

LMT's earnings have been strong in spite of the sequestration. Back in April they report their Q1 results that beat estimates. Wall Street expected a profit of $2.53 a share on revenues of $10.89 billion. LMT beat the bottom line estimate with $2.87 per share but missed the revenue estimate at $10.65 billion for the quarter. However, management gave an optimistic outlook and raised their 2014 guidance on both net profits and revenues. When LMT reported earnings again in July they deliver a profit of $2.76 a share on revenues of $11.31 billion. That beat Wall Street's estimate of $2.66 and revenues of $11.15 billion. Management raised their EPS guidance again. The company has beaten analysts estimates four quarters in a row.

The company is shareholder friendly with a strong stock buyback program and a dividend yield of 3.2%. The point & figure chart is bullish and forecasting at $200 price target. Tonight we're suggesting a trigger to buy calls at $175.55.

- Suggested Positions -

Long DEC $180 call (LMT141220C180) entry $3.45*

09/22/14 new stop @ 177.25
09/20/14 new stop @ 173.75
09/08/14 triggered @ 175.55
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike


Mallinckrodt Public Limited Co. - MNK - close: 88.95 change: +0.13

Stop Loss: 85.65
Target(s): To Be Determined
Current Option Gain/Loss: + 0.0%
Average Daily Volume = 4.85 million
Entry on September 17 at $87.25
Listed on September 11, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: MNK held up pretty well today and managed to eke out another gain. We are raising our stop loss up to $85.65. I am not suggesting new positions at this time.

Earlier Comments: September 11, 2014:
MNK is considered a drug maker but the stock is outperforming its peers in both the drug industry and the biotech industry. The S&P 500 is up about +8% in 2014. The pharmaceutical index (DRG) is up +13.1%. The biotech index is up +34.8% thus far in 2014. Yet MNK is up +64.4%.

The company describes itself as "a global specialty pharmaceutical and medical imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and medical imaging agents."

"Areas of focus include analgesics and central nervous system drugs for prescribing by office- and hospital-based physicians, and autoimmune and rare disease specialty areas like neurology, rheumatology, nephrology and pulmonology. The company's core strengths include the acquisition and management of highly regulated raw materials; deep regulatory expertise; and specialized chemistry, formulation and manufacturing capabilities."

"The company's Specialty Pharmaceuticals segment includes branded and specialty generic drugs and active pharmaceutical ingredients, and the Global Medical Imaging segment includes contrast media and nuclear imaging agents. Mallinckrodt has more than 5,500 employees worldwide and a commercial presence in roughly 65 countries. The company's fiscal 2013 revenue totaled $2.2 billion."

The company had seen a few key milestones this year. They recently finished their $5.6 billion acquisition of Questcor. In August the stock was added to the S&P 500 index. MNK's earnings report in May was better than expected and management raised their guidance. Their latest earnings report was August 7th. Wall Street expected a profit of $0.85 a share on revenues of $610 million. MNK delivered a profit of $1.20 a share with revenues up +14.6% to $653 million. Management raised their guidance again for both their 2014 EPS and revenue estimates.

MNK's Chief Executive Officer and President, Mark Trudeau, commented on their quarterly results saying,

"This has been another exceptionally strong quarter in what is shaping up to be a very promising year for Mallinckrodt. This performance is being driven by the strength of our Specialty Pharmaceuticals segment in both Brands and Specialty Controlled Substance Generics, as well as streamlined costs from our on-going restructuring initiatives, leading to meaningful top-line and bottom-line growth. We continue to be pleased with the performance of our base business and recently added OFIRMEV, and look forward to closing the acquisition of Questcor in the coming weeks."

The current rally in MNK stock has lifted shares to all-time highs. The September 5th move looked like a potential bearish reversal yet there was no follow through lower. Instead MNK has been consolidating sideways. If shares continue to march higher it could spark some short covering. The most recent data listed short interest at 29.3% of the small 53.9 million share float.

We are not setting a target tonight but the point & figure chart is forecasting at $90.00 target. We are suggesting a trigger to buy calls at $87.25.

*consider smaller positions* - Suggested Positions -

Long OCT $90 call (MNK141018C90) entry $3.00*

09/22/14 new stop @ 85.65
09/20/14 new stop @ 84.65
09/17/14 triggered @ 87.25
Option Format: symbol-year-month-day-call-strike


Nike, Inc. - NKE - close: 80.71 change: -1.10

Stop Loss: 79.85
Target(s): To Be Determined
Current Option Gain/Loss: - 5.1%
Average Daily Volume = 2.8 million
Entry on September 05 at $80.50
Listed on September 04, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: The stock market's drop today sent NKE tumbling back toward support near $80.00. If you're going to exit prior to the earnings report on Thursday we don't have much time left.

I am not suggesting new positions at this time.

Earlier Comments: September 4, 2014:
Nike made headlines earlier this week when there was a bit of a bidding war for NBA star Kevin Durant. Durant's endorsement contract with NKE was coming to an end and rival Under Armour (UA) was trying to steal Durant away from NKE with a $200 million deal. In the end NKE outbid its rival and offered the 25-year old Durant a $300 million deal over the next ten years. Some of suggested that it could be worth a total of $350 million over the next 20 years. While I personally find numbers like these outrageous it's pocket change for NKE, which is sitting on $5.14 billion in cash and brings in a net profit of $2.7 billion a year on revenues of almost $28 billion annually.

Meanwhile the winds of fashion seem to be blowing in NKE's favor. There's a new trend being called "athleisure" where activewear and fashion intersect. Last year apparel sales fell -1%. Yet sales of activewear rose +7%. The activewear market now accounts for 16% of the U.S. market and has grown to almost $34 billion.

NKE's most recent earnings report was better than expected. Wall Street was looking for a profit of $0.75 on revenues of $7.34 billion. The company beat estimates with $0.78 on revenues of $7.42 billion. Gross margins improved 170 basis points to 45.6 percent. Management reported that they spent $912 million on buying back 12.3 million shares of stock last quarter as part of their $8 billion stock buyback program.

Technically shares of NKE have been stuck under major resistance at the $80.00 level since December 2013. Investors have been slowing buying the dips and now the stock looks poised to breakout past resistance. The point & figure chart is bullish and currently forecasting at $98 target.

Tonight I'm suggesting a trigger to buy calls at $80.50. Shares of NKE do not move super fast so we'll use the 2015 January calls.

- Suggested Positions -

Long 2015 Jan $85 call (NKE150117C85) entry $1.95*

09/20/14 new stop @ 79.85
09/20/14 FYI: NKE earnings are coming up on Sept. 25th.
09/16/14 new stop @ 79.40
09/05/14 triggered @ 80.50
Option Format: symbol-year-month-day-call-strike


Northrop Gruman - NOC - close: 131.90 change: -1.76

Stop Loss: 130.85
Target(s): To Be Determined
Current Option Gain/Loss: +12.6%
Average Daily Volume = 870 thousand
Entry on September 15 at $130.55
Listed on September 13, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: NOC did not escape the market wide pullback today and shares lost -1.3%. The next level of support could be the 10-dma near $131.10. We are upping our stop loss to $130.85.

Earlier Comments: September 13, 2014:
One might have assumed that when Washington politics cut $500 billion from the U.S. defense budget over the 2012-2021 time frame it would have been bearish for defense sector stocks. Yet the group has been an outperformer in the stock market and delivered amazing gains last year. The defense-related juggernauts like NOC continue to perform well in 2014.

According to their company website, "Northrop Grumman is a leading global security company providing innovative systems, products and solutions in unmanned systems, cyber, C4ISR, and logistics and modernization to government and commercial customers worldwide." What does that mean? It means NOC makes bombers, unmanned drones, cyber security solutions, and logistics. If you're curious, C4ISR stands for command, control, communications, computers, intelligence, surveillance, and reconnaissance.

The fact that the world seems to be growing more dangerous, not less dangerous, should be a bullish undercurrent that lifts the defense sector. NOC should benefit because the American public does not have the stomach for another war. That means the U.S. will use more and more unmanned technology like NOC's drones.

The company has been performing well this year and NOC has raised guidance the last three quarters in a row. NOC's most recent earnings report was July 23rd. Wall Street was looking for a profit of $2.22 a share on revenues of $5.97 billion. NOC delivered $2.37 a share with revenues hitting $6.04 billion. Management then raised their EPS guidance and revenue guidance for 2014. NOC's backlog is currently at $35.6 billion.

Technically shares have a bullish trend of higher lows that just recently blossomed into a breakout to new all-time highs. NOC is testing the $130.00 level. At the moment the point & figure chart is bullish with a $158.00 target.

Tonight we're suggesting a trigger to buy calls at $130.55.

- Suggested Positions -

Long NOV $135 call (NOC141122C135) entry $1.82*

09/22/14 new stop @ 130.85
09/20/14 new stop @ 128.95
09/15/14 triggered @ 130.55
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike


Union Pacific Corp. - UNP - close: 108.50 change: -0.86

Stop Loss: 106.90
Target(s): To Be Determined
Current Option Gain/Loss: - 4.1%
Average Daily Volume = 2.5 million
Entry on September 17 at $108.25
Listed on September 16, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: The transportation stocks, leaders last week, were underperformers today. The $TRAN index lost -1.38%. UNP slipped -0.78%. The $108.00 level should be short-term support. I would wait for a bounce before considering new positions.

Earlier Comments: September 16, 2014:
If you believe the U.S. economy is getting better then transports should perform well. Dow Theory suggests we can't have a significant rally without the transports. Thus far the group has shown leadership this year with the Dow Jones Transportation average up +15.1% in 2014. The railroads have been a strong part of that leadership.

UNP is one of the biggest. The company has been around for 150 plus years. They have over 46,000 employees, more than 8,200 locomotives, and pull nine million carloads a year.

According to the company website, "Union Pacific operates North America's premier railroad franchise, covering 23 states in the western two-thirds of the United States. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner."

Believe it or not but the shale gas and shale oil energy boom in the U.S. has played a part in the railroad strength. U.S. energy production has soared with the Energy Information Administration reporting U.S. crude oil production at 8.5 million barrels a day in June. That's the highest production since July 1986. A lot of that crude oil gets moved by train.

Back in 2008 only 9,500 carloads a year were crude oil. Today that has surged to over 407,000 railcars of crude oil a year.

The railroad group continues to see strong traffic in 2014. The upcoming harvest will also put more demand on the railroads. American farmers are looking at a record-breaking crop this year.

Currently shares of UNP Have been consolidating sideways at all-time highs just under the $108.00 level. Tonight we're suggesting a trigger to buy calls at $108.25.

- Suggested Positions -

Long NOV $110 call (UNP141122C110) entry $2.15*

09/20/14 new stop @ 106.90
09/17/14 triggered @ 108.35, gap higher. Trigger was $108.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Autoliv, Inc. - ALV - close: 96.54 change: -1.01

Stop Loss: 98.25
Target(s): To Be Determined
Current Option Gain/Loss: - 6.0%
Average Daily Volume = 392 thousand
Entry on September 16 at $98.45
Listed on September 15, 2014
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
09/22/14: Shares of ALV are nearing new six-month lows with today's -1.0% decline. We are adjusting our stop loss down to $98.25.

Earlier Comments: September 15, 2014:
The auto part makers have been a bright spot in the market over the past year and a half or so. It looks like the group is starting to diverge. Stocks like DLPH, TRW, and LEA still look relatively strong. Yet BWA and ALV have broken down.

Who is ALV? According to their website, "For over 60 years, Autoliv has focused on one very important issue: saving lives. Our innovative products save 30,000 lives every year and prevent 10 times as many injuries. We are first and foremost a safety technology company. In the world of automotive occupant safety, we were the first to introduce the two- and three-point seat belt system and airbags for front and side impacts. We were also the first to launch pyrotechnic belt pretensioners and pedestrian protection systems. We develop, manufacture and market airbags, seatbelts, steering wheels, passive safety electronics and active safety systems such as radar, night vision and camera vision systems. We also produce anti-whiplash systems, pedestrian protection systems and integrated child seats. Autoliv Inc. is the result of a merger in 1997 of the Swedish company Autoliv AB, and the U.S. company Morton ASP."

Earnings momentum may have peaked. The company's most recent earnings report back in July was a miss. Wall Street expected a profit of $1.55 a share but ALV only delivered $1.45 with profits falling -2% from a year ago. Revenues did come in above expectations at $2.38 billion. Yet the sell-off on earnings may have started the current correction in ALV stock.

Technically shares look bearish. ALV produced a double top with the peaks in June and July. The bullish breakout past resistance near $104 in early September proved to be a bull trap. Now ALV is breaking support at its simple 200-dma and its long-term bullish trend (see weekly chart below).

Tonight we're suggesting a trigger to buy puts at $98.45.

- Suggested Positions -

Long OCT $95 PUT (ALV141018P95) entry $1.65*

09/22/14 new stop @ 98.25
09/16/14 triggered @ 98.45
Option Format: symbol-year-month-day-call-strike


Chart Industries - GTLS - close: 61.87 change: -0.51

Stop Loss: 63.65
Target(s): To Be Determined
Current Option Gain/Loss: +52.0%
Average Daily Volume = 617 thousand
Entry on August 29 at $65.60
Listed on August 28, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: GTLS hit new lows for the year near $61.00 this morning. The stock spent most of today churning sideways near $62.00. We are moving our stop loss down to $63.65.

Earlier Comments: August 28, 2014:
If you have seen the 1986 movie Top Gun then you know that Tom Cruise's character "Maverick" and his RIO "Goose" fly through the jet wash of another aircraft and their plane enters a flat spin that Maverick is unable to pull out of. Spoiler - their plane crashes.

Both the stock price and the earnings results for GTLS appear to be in a flat spin that they cannot pull out of. According to the company website, "Chart Industries, Inc. is a leading independent global manufacturer of standard and custom engineered products and systems for a wide variety of cryogenic and gas processing applications. Our equipment is used in the production, storage, distribution and end-use of atmospheric and industrial gases as well as natural gas itself."

A growing portion of their business is natural gas. "Major equipment designed and manufactured by Chart is used in the liquefaction, distribution and storage of LNG, plus we also supply LNG fueling stations and vehicle fueling systems." Considering the huge surge of natural gas demand you might think GTLS business would be booming. Yet the company seems to be struggling.

Shares of GTLS delivered an amazing rally in 2013. That is until late October. GTLS reported earnings in late October 2013 that missed profits estimates, missed the revenue estimate and management lowered guidance. When GTLS reported earnings in February 2014 they missed estimates, missed the revenue number and lowered guidance. In April 2014 they missed estimates, missed the revenue number and lowered guidance. Are you seeing a trend here? Their latest earnings report was July 31st, 2014 and guess what? GTLS missed the EPS estimate, missed the revenue estimate, and lowered guidance.

Technically the oversold bounce from its August lows has completely reversed. Today is worth noting since GTLS has broken down to a new closing low for 2014. This trend will likely continue.

Today's intraday low was $65.70. I am suggesting a trigger to buy puts at $65.60.

- Suggested Positions -

Long OCT $65 PUT (GTLS141018P65) entry $2.50*

09/22/14 new stop @ 63.65
08/29/14 triggered @ 65.60
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike


Herbalife Ltd. - HLF - close: 40.21 change: -4.62

Stop Loss: 44.25
Target(s): To Be Determined
Current Option Gain/Loss: +125.7%
Average Daily Volume = 1.5 million
Entry on September 09 at $47.90
Listed on September 08, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: Monday was rough for HLF investors. The stock crashed more than -10% thanks to rumors that Carl Icahn was unwinding his position. The stock hit $38.63 at its low this afternoon before paring its losses.

We are adjusting our stop loss down to $44.25. I am not suggesting new positions at this time.

Earlier Comments: September 8, 2014:
HLF calls itself a nutrition company. Most see it as a multi-level marketing firm. Its detractors would call HLF a pyramid scheme.

According to the company's website, "Herbalife is a global nutrition company that has been changing people’s lives with great products since 1980. Our nutrition, weight-management, energy and fitness and personal care products are available exclusively to and through dedicated Independent Herbalife Members in more than 90 countries. We are committed to addressing the global obesity epidemic by offering high-quality products, one-on-one coaching with an Herbalife Member and a community that inspires customers to live a healthy, active life. The company has over 7,400 employees worldwide, and its shares are traded on the New York Stock Exchange (NYSE: HLF) with net sales of $4.8 billion in 2013."

HLF's biggest opponent is influential hedge fund manager Bill Ackman. Ackman's Pershing Square Capital Management has famously bet $1 billion that HLF is an illegal pyramid scheme and once the facts come to light the government will shut it down. Unfortunately for Bill this is a fight he has been waging since late 2012. It has definitely generated a roller coaster ride in HLF's stock price.

Back in July Ackman promised to deliver a death blow to HLF in an over hyped presentation. Unfortunately, Wall Street failed to see the smoking gun and shares of HLF surged about 25% in one day. Yet there hasn't been any follow through. In fact shares of HLF have reversed and are trading near their 2014 lows.

The latest earnings report did not help. HLF reported earnings in late July and missed both the top and bottom line estimates. Management lowered their 2014 guidance. The company seems to be having trouble retaining their independent salesmen. At the same time there is a growing scrutiny of MLMs overseas, especially in big markets like China and India.

The stock is hovering above support near $48.00. A breakdown would look very bearish for HLF. The Point & Figure chart is already bearish and forecasting a $28.00 target. A drop under $48.00 would generate a new triple-bottom breakdown sell signal on the P&F chart.

I do want to caution investors that this should be considered a more aggressive, higher-risk trade due to the high amount of short interest. The most recent data listed short interest at 44% of the 60.0 million share float. I suggest limiting your position size to reduce risk.

(small positions) Suggested Positions -

Long Oct $45 PUT (HLF141018P45) entry $2.37

09/22/14 new stop @ 44.25
09/09/14 triggered @ $47.90
Option Format: symbol-year-month-day-call-strike


iShares Russell 2000 ETF - IWM - close: 112.37 change: -1.60

Stop Loss: 114.35
Target(s): To Be Determined
Current Option Gain/Loss: +40.3%
Average Daily Volume = 29.0 million
Entry on September 10 at $114.85
Listed on September 08, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: Small caps continue to drag the market lower. The IWM gapped down at the open and fell to the $112.00 level. This ETF underperformed the market with a -1.4% decline.

Tonight we're moving the stop loss down to $114.35.

Earlier Comments: September 9, 2014:
The S&P 500 made it 14 days in a row without a move of more than 0.5% on a closing basis. Jonathan Krinsky at MKM Partners noted this occurrence yesterday. Krinsky said the last time we saw a streak this long was 1995. To find a streak longer than 14 days you have to go back to 1969, which saw a run of 20 days in a row. Today would have been the 15th day but stocks started to move and the direction was down. Small cap stocks were leading the way with the Russell 2000 falling -1.1% versus the -0.6% drop in the S&P 500.

Market watchers were blaming the rising dollar and new fears that the Federal Reserve might raise rates sooner than expected. There is speculation that the Fed might drop its "considerable time" guidance for low rates in its policy statement at the Fed meeting scheduled for next week.

Whatever the reason small caps look vulnerable and underperformed on above average volume today. We want to hedge our bullish bets with a put position on the IWM just in case the market does start to correct lower. Investors might be growing nervous about the 9/11 anniversary on Thursday. You could call this put a little 9/11 market insurance.

Tonight we are suggesting a trigger to buy puts at $114.85.

- Suggested Positions -

Long OCT $115 PUT (IWM141018P115) entry $2.70

09/22/14 new stop @ 114.35
09/10/14 triggered @ 114.85
Option Format: symbol-year-month-day-call-strike


Lennox Intl. - LII - close: 78.76 change: -1.07

Stop Loss: 82.51
Target(s): To Be Determined
Current Option Gain/Loss: -15.3%
Average Daily Volume = 391 thousand
Entry on September 22 at $79.25
Listed on September 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: Right on cue shares of LII continued to sink and hit our suggested entry point to buy puts at $79.25. Tonight we're adjusting the stop loss to $80.75.

Earlier Comments: September 20, 2014:
LII is in the industrial goods sector. Unfortunately for shareholders the stock is significantly underperforming with a -6.1% decline in 2014. That compares to a +4.1% gain in the XLI industrials ETF and a +4.2% gain in the Dow Industrials.

This is a simple momentum trade. After a three-year rally from its 2011 lows near $25 the stock traded near $95.00 in early 2014. Shares have since been struggling. Traders started selling the rallies. Now LII has broken down below its simple 200-dma and its long-term up trend (see weekly chart below). The last few days have seen LII create a "death cross" with the 50-dma crossing under the 200-dma.

This past week saw the oversold bounce in LII fail near prior support near $82.00 and its 300-dma. Friday's low was $79.33. I'm suggesting a trigger for bearish positions at $79.25. Potential support looks like $75.00 and $70.00. Currently the Point & Figure chart is suggesting at $68.00 target.

- Suggested Positions -

Long DEC $80 PUT (LII141220P80) entry $3.90

09/22/14 triggered @ 79.25
Option Format: symbol-year-month-day-call-strike


Las Vegas Sands - LVS - close: 60.24 change: -2.09

Stop Loss: 62.65
Target(s): To Be Determined
Current Option Gain/Loss: +236.6%
Average Daily Volume = 4.6 million
Entry on August 27 at $67.40
Listed on August 26, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: The reversal lower in shares of LVS accelerated today thanks to another downgrade. Shares gapped open lower and then plunged -3.3% toward round-number support near $60.00.

Tonight we're moving the stop loss to $62.65.

Earlier Comments: August 26, 2014:
The high-speed growth in the world's biggest gambling hub is slowing down. Investors are taking notice. It used to be that when the world wanted to gamble the came to Las Vegas. Today the biggest gambling center in the world is Macau, a city in southern China.

LVS describes itself as "the world's leading developer and operator of Integrated Resorts. Our collection of Integrated Resorts in Asia and the United States feature state-of-the-art convention and exhibition facilities, premium accommodations, world-class gaming and entertainment, destination retail and dining including celebrity chef restaurants, and many other amenities." LVS has properties in Vegas, Pennsylvania, Singapore, and Macau.

Macau has been the major focus for casino companies the last few years. The coastal strip of Macau is the only place in China where gambling is legal. Forbes described Macau as "Vegas on steroids." Macau overtook Vegas as the world's biggest gambling center back in 2006 with Chinese tourists accounting for nearly 66% of its traffic.

After years of booming growth in Macau the area is facing a few hurdles. One of them is rising wage costs. Current laws force casino operators to hire locals. This has driven unemployment in Macau down to 1.7%. Employees are unhappy. They make less than half that their counterparts in Vegas make. There has been a number of demonstrations as casino workers demand higher wages. There is currently the threat of a labor strike on August 28th this year.

Macau is also suffering from an economic slowdown in China. The country has been slowing grinding down for years. China is still expected to grow more than +7% this year but that's a multi-year low. Another issue has been China's crackdown on corruption this year. This new pressure from Beijing has thrown a wet blanket on VIP traffic to Macau. Yet another challenge for Macau is growing competition from foreign destinations. Other countries are starting to add gambling resorts, which could pressure traffic to Macau.

Analysts have been adjusting their earnings and revenues estimates lower for the casino stocks. That's not surprising given the recent reports of slowing revenue numbers. Macau's gambling regulators said gross gaming revenues dropped -3.7% in June and -3.6% in July. Morgan Stanley just slashed their 2014 Macau estimates from +12% to +6%.

Technically shares of LVS are bearish. The stock has broken significant support near $70.00. The oversold bounce is starting to roll over under resistance. The point & figure chart is bearish and forecasting at $56.00 target.

Tonight we are suggesting a trigger to buy puts at $67.40.

- Suggested Positions -

Long OCT $65 PUT (LVS141018P65) entry $1.50*

09/22/14 new stop @ 62.65
09/06/14 new stop @ 64.65
09/02/14 new stop @ 68.25
08/27/14 triggered @ 67.40
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike


Pentair Plc - PNR - close: 67.07 change: -0.83

Stop Loss: 68.65
Target(s): To Be Determined
Current Option Gain/Loss: +13.8%
Average Daily Volume = 2.0 million
Entry on August 26 at $68.90
Listed on August 23, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: PNR slipped -1.2% on Monday. If shares see any follow through lower we might see a new bearish entry point soon. At the moment I am still cautious on launching positions.

Earlier Comments: August 23, 2014:
Pentair is considered part of the industrial goods sector. They manufacture industrial equipment across the globe. According to the company website, "Pentair is a global water, fluid, thermal management, and equipment protection partner with industry leading products, services, and solutions. Pentair reports the performance of its business within four reporting segments that focus on five primary verticals."

Long-term the stock has had a strong 2012 and 2013 performance. The rally appears to have peaked in 2014 when the market started pulling back in March this year. If you recall many of the momentum names and higher-growth stocks were hammered lower starting in March. PNR doesn't really qualify as a big momentum name or a high-growth name but shares have been unable to recover anyway. Shares have trended lower from the March peak, currently down -16% from its 2014 highs and down -10.6% year to date.

PNR's earnings results have not helped the stock's performance. Back in April they beat estimates but missed the revenue number and then guided lower for the second quarter. Their most recent earnings report was July 31st. Depending whose estimate you use PNR either reported in-line profits or managed to just beat by a penny. Revenues disappointed again. PNR missed the revenue estimate with a -2.7% decline from a year ago to $1.91 billion. Management lowered guidance again but they also announced they were exiting their struggling water transport business.

PNR collapsed on this late July earnings news and lowered guidance with a drop toward $64. Shares have spent three weeks with an oversold bounce that is just now starting to roll over under resistance. PNR appears to have resistance near $70-71 and its 50-dma and 300-dma (see daily chart below). The point & figure chart is bearish and currently forecasting at $61 target.

Tonight we are suggesting a trigger to buy puts at $68.90.

- Suggested Positions -

Long Nov $70 PUT (PNR141122P70) entry $3.60*

09/06/14 new stop @ 68.65
08/26/14 triggered @ 68.90
Option Format: symbol-year-month-day-call-strike


Tupperware Brands Corp. - TUP - close: 71.61 change: -0.94

Stop Loss: 74.35
Target(s): To Be Determined
Current Option Gain/Loss: -7.3%
Average Daily Volume = 399 thousand
Entry on September 22 at $71.75
Listed on September 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: Our brand new trade on TUP is now open. The stock broke down under its July lows and closed at new lows for the year. Our trigger was hit at $71.75. We are going to adjust our stop loss down to $72.80.

Earlier Comments: September 20, 2014:
TUP was founded back in 1946 and over the last 60 years the company has grown from their plastic food prep and storage line into multiple brands.

According to the company website, "Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method through an independent sales force of 2.9 million. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands."

Unfortunately this year has not been the best for TUP's stock price. The company missed earnings expectations and lowered guidance back in January. You can see the market's reaction with the big drop in late January on the chart.

It took three months but TUP slowly clawed its way back toward resistance near $85 and its simple 200-dma. That area proved to be a lid on the stock price. Then in July the company disappointed again. It's Q2 earnings report disclosed that profits fell -38% to $47.6 million, down from $76.3 million a year ago. Management then lowered its full year guidance when they reported earnings and shares plunged again.

The weekly chart has produced a bearish head-and-shoulders pattern. The daily chart doesn't look healthy either. The Point & Figure chart is bearish and suggesting at $58.00 price target.

There is short-term support near $72.00. I'm suggesting a trigger to buy puts at $71.75.

- Suggested Positions -

Long 2015 Jan $70 PUT (TUP150117P70) entry $2.59

09/22/14 new stop @ 72.80
09/22/14 triggered @ 71.75
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

Concur Technologies - CNQR - close: 127.03 change: + 0.21

Stop Loss: 104.90
Target(s): To Be Determined
Current Option Gain/Loss: +327.7%
Average Daily Volume = 576 thousand
Entry on August 19 at $100.50
Listed on August 16, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: Our plan was to exit our CNQR calls on Monday morning. The stock gapped open higher +18 cents to $127.00.

- Suggested Positions -

NOV $105 call (CNQR141122C105) entry $5.05* exit 21.60** (+327.7%)

09/22/14 planned exit
**option exit price is an estimate since the option did not trade at the time our play was closed.
09/20/14 prepare to exit our CNQR calls on Monday morning
09/18/14 CNQR to be acquired by SAP for $129 a share. Stock should gap open near $129.00 on Friday morning.
Prepare to exit on Friday (see details above)
09/17/14 CNQR looks vulnerable here. Traders may want to take profits
09/03/14 new stop @ 104.90
08/27/14 CNQR is not moving. Investors may want to exit now. We are moving the stop loss up to $98.40
08/19/14 triggered @ 100.50
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

chart:


Curtiss-Wright Corp. - CW - close: 69.50 change: -1.53

Stop Loss: 69.25
Target(s): To Be Determined
Current Option Gain/Loss: -58.0%
Average Daily Volume = 187 thousand
Entry on September 19 at $73.55
Listed on September 18, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: The profit taking in shares of CW continued on Monday. Shares actually gapped down at $70.38 and quickly broke through the $70.00 level. Our stop was hit at $69.25.

- Suggested Positions -

DEC $75 call (CW141220C75) entry $3.10 exit $1.30* (-58.0%)

09/22/14 stopped @ 69.25
*option exit price is an estimate since the option did not trade at the time our play was closed.
09/19/14 triggered @ 73.55
Option Format: symbol-year-month-day-call-strike

chart:


F5 Networks, Inc. - FFIV - close: 122.20 change: -2.64

Stop Loss: 121.95
Target(s): To Be Determined
Current Option Gain/Loss: -61.5%
Average Daily Volume = 855 thousand
Entry on September 11 at $126.25
Listed on September 10, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: FFIV has confirmed Friday's bearish reversal with another decline today. The stock is off almost $6.00 from the Friday morning high. Momentum names, especially on the NASDAQ, were hit hard today and FFIV was no exception. Our stop loss was hit at $121.95.

- Suggested Positions -

OCT $130 call (FFIV141018C130) entry $2.68* exit $1.03 (-61.5%)

09/22/14 stopped @ 121.95
09/11/14 triggered @ 126.25
Option Format: symbol-year-month-day-call-strike

chart:


FleetCor Technologies - FLT - close: 138.46 change: -3.59

Stop Loss: 139.75
Target(s): To Be Determined
Current Option Gain/Loss: -37.3%
Average Daily Volume = 564 thousand
Entry on September 18 at $145.55
Listed on September 17, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: FLT was caught up in the market's widespread decline today. The story hasn't changed. I would keep this stock on your watch list for another entry point. Unfortunately our stop was hit at $139.75.

- Suggested Positions -

NOV $150 call (FLT141122C150) entry $4.95* exit $3.10** (-37.3%)

09/22/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
09/18/14 triggered @ 145.55
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

chart:


Splunk, Inc. - SPLK - close: 54.59 change: -1.62

Stop Loss: 53.95
Target(s): To Be Determined
Current Option Gain/Loss: -35.2%
Average Daily Volume = 4.3 million
Entry on September 17 at $57.25
Listed on September 13, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
09/22/14: SPLK traded down to new two-week lows and briefly traded under the $54.00 level. Our stop loss was hit at $53.95.

*smaller positions, higher risk* Suggested Positions -

NOV $60 call (SPLK141122C60) entry $4.25* exit $2.75** (-35.2%)

09/22/14 stopped @ 53.95
09/17/14 triggered @ 57.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
09/15/14 Strategy update: Change the entry point trigger from $61.55 to $57.25 and change the stop loss from $57.90 to $53.95
Adjust the strike price from Nov. $65 to Nov $60 call
Option Format: symbol-year-month-day-call-strike

chart: