Option Investor
Newsletter

Daily Newsletter, Monday, 11/24/2014

Table of Contents

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

Market Wrap

Holidays And Economic Data

by Thomas Hughes

Click here to email Thomas Hughes
This Thanksgiving market participants will be digesting a load of economic data as well as turkey dinners.

Introduction

Trading was quiet today. There was not much in the way of global news, earnings and no economic data. The only thing impacting early morning action was last weeks news and the international markets. Asian and European markets were still swooning from unexpected central bank and government policy action.

The positive vibe coming from Europe and Asia helped our markets to start the day off on a positive note. Futures trading was up from the very earliest and stayed that way up until the opening bell. At that time the indices moved into the green where and stayed there, for the most part. Techs led today, the NASDAQ Composite gained about 0.90%, while the blue chips lagged, barely closing in positive territory.

Market Statistics

There are several special factors impacting trading this weeek. First up is the Thanksgiving Holiday. The market will be closed on Thursday, and only open until 1PM on Friday. On top of that the OPEC meeting is also on Thursday and will likely fuel heavy speculation in oil. There is also quite a lot of economic data due out, including 3rd quarter GDP 2nd estimate.

Because of the holiday all of this weeks data will be coming out over the next two days. GDP I think will be most important but there are many important data points on the schedule. These include new home sales, pending home sales, Case-Shiller 20 city index, 3rd quarter GDP, ISM Index, durable goods, Michigan Sentiment and others. Not to mention that December 1st is next Monday which means there will be a new round of ADP, NFP and Unemployment figures.

Economic Calendar

The Economy

Moody's Survey of Business Confidence continues to indicate optimism and growth in the economy. This week's summary by Mark Zandi states that “U.S. business sentiment has been upbeat all year, consistent with an economy that is expanding above its potential. Hiring is robust and investment spending is strong. Expectations regarding the economy’s prospects through next spring are optimistic.” Which is contrasted by sentiment in South America and Europe which “remains in a funk”. The US portion of the survey is consistent with all the data and pointing to increasing momentum in the economy. I am very very curious to see the new GDP numbers. Current expectation is for GDP between 3.0% and 3.2%. I would not be surprised to see it higher.

The Oil Index

Oil prices continue to shuffle around while we wait to see what OPEC is going to do. The highly anticipated November meeting starts this Friday and could produce some fireworks, if the apparent division between members is not resolved. One one hand Iran and other members are calling for cuts, up to a million barrels per day, while the Saudis seem unwilling to give up market share. This afternoon WTI and Brent both fell after testing resistance earlier in the day. WTI lost more than -1.25% to fall below $76 while Brent lost about -1%, falling below $80. Today's mover most likely the extension of talks with Iran over its nuclear program along with the greater OPEC situation.

The Oil Index fell today as well, shedding about -0.75%. The index fell from a previous resistance and the 38.2% retracement of the October correction. At this time the index is still trapped within a post-correction consolidation zone but looks like it could break to the upside, provided oil prices move higher. The indicators are not strong, but momentum is bullish and on the rise while stochastic is making a weak bullish crossover. I think it more likely the index will remain trapped inside this range until after the OPEC meeting, at which time oil prices will be the main indicator of direction. Currently resistance is around 1,485 with support around 1,430.


The Gold Index

Gold traded in a tight range just below $1200, held in check by dollar strength. The long term down trend in gold may have bottomed, but a new up trend has not yet begun. Long term outlook for rising interest rates and rising inflation may be supporting gold, but near term outlook for stronger dollar is weighing it down and I think it will take a little more time for that combination of factors to play out. Until then economic data and central bank news could create volatility.

The Gold Index traded lower today, falling down to near $70. The index appears to have bounced back above the 100% retracement line, and to be finding support above that line, but I am still not convinced of a bottom. The indicators are bullish, and price action suggests a move up to $80 could happen, but with gold prices in question I have a hard time seeing the index following through. Current support is between $66.50 and $70 with potential resistance at or above the current level.


In The News, Story Stocks and Earnings

FactSet reports that 97% (487) of S&P 500 companies have reported so far. Of those, 77% have reported earnings above the average estimate of S&P companies while 59% have reported sales above the average estimate. As a whole, the S&P 500 has reported earnings growth of 7.9% for the quarter, well above the consensus estimates at the beginning of the reporting season. On a year-over-year basis 3rd quarter earnings growth is 4%, just ahead of the expected 3.8%. No S&P companies reported today.

Nuance Communications reported after the bell. The communications technology provider reported earnings and revenue above expectations. The results were driven by an increase in bookings which is expected to carry over into next year, and help the company return to growth. Shares of the stock traded higher during the day, by about a half percent, and then skyrocketed after the release, adding another 4% to today's closing price.


Workday also reported after the bell. The cloud solutions provider reported a smaller than expected but failed to spark a rally. The company reported earnings growth of over 68% from the comparable period last year, but only 54% growth is expected for the full year. The news was not what the market wanted to hear and sent the stock lower in after hours trading. Shares of WDAY lost more than -5.5% after the news.


Apple was one of today's top movers, driven by expectations for record sales of iPhones this Christmas. Shares of the stock gained over $2 today, extending the latest rally by 1.85%. The indicators are bullish and showing a late rally buy signal. MACD is ticking up after a dip and stochastic is firing a trend following bullish crossover; my only caution is that it is a holiday week and volume was very low.


Lions Gate Entertainment fell today after opening weekend results for MockingJay were released. The movie set a record as we could have expected but not as good a record as early Monday traders would have liked. The stock dropped in the premarket session but was able to reclaim most of the losses by the end of the day.


The Indices

Today's action was very light but the indices were able to set new highs, if barely. The Dow Jones Industrial Average barely squeaked above break even after a day spent in the red, closing with a gain of only 0.04%. The blue chips traded created the smallest candle as well as the smallest gain. The indicators remain bullish, but momentum is very low and stochastic is weakening within the upper signal range. This could be a warning but while the index is making new highs still a positive indication of consolidation, not reversal. Should the index fall back to support the first target is 17,500.


The S&P 500 gained only 0.29%, setting a new closing high, and nearly a new intraday high as well. The index is trending up, as is the Dow Jones Industrials, with indicators that are slightly better. MACD momentum is still weak, but flat and could easily rollover and increase, while stochastic is showing a weak bullish crossover. For now, it appears as if the index is drifting higher following a two week consolidation, although the consolidation is not well defined. Near term support, on a pullback, looks to be around 2,050 with 2,000 looking like firmer, longer term support.


The Dow Jones Transports gained 0.80% today, setting a new all time closing and intraday high. This index completed a more defined consolidation following the October/November rally and is now breaking out. The trannies are in an up trend and accompanied by indicators supportive of a continuation and in line with a trend following signal. MACD dipped into the red during the consolidation and is now making a bullish crossover as is stochastic. Current targets for this index are 9,250 and 9,500.


The NASDAQ Composite Index made today's largest gain, aided by the rally in Apple. The tech's rose 0.89% and also set a new high, although not an all time high as it is still under the shadow of the Tech Bubble. However, talking about today, the NASDAQ is moving higher and perhaps will be the market leader over the next few weeks. the indicators are bullish and creating a trend following signal. MACD is ticking higher and stochastic is firing a bullish crossover, both following a consolidation during a strong uptrend.


The market is moving higher and looks like it will continue doing so into the near term. There are of course reasons to be wary. There is quite a lot of economic data to be released this week and all at once, not to mention volume could be light all week because of the holiday, and the OPEC meeting.

The most important release may be the GDP numbers tomorrow, and since it is a holiday week market reaction could be amplified, and hard to predict. I think the data will be good, all the current trends are pointing to increasing momentum, but how good is the question. Will they be the same Goldilocks numbers we have been getting and spur on the rally, or so good they inspire fear of the Fed? In either event, the next month, and on into 2015 are still looking pretty good with no signs of change as yet.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Short Squeeze Candidate

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

The Greenbrier Companies - GBX - close: 66.43 change: +0.57

Stop Loss: 63.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 855 thousand
Entry on November -- at $---.--
Listed on November 22, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
GBX is in the services sector. The company manufacturers railroad freight cars and ocean-going barges. They also refurbish freight railroad cars. New rules by the White House on railroad tanker cars that carry crude oil should mean strong business for GBX as companies are forced to either buy new cars or refurbish old ones to meet the new requirements. The problem is that these rules have not been approved yet.

The White House has delayed the construction of the Keystone Pipeline for years and it is still in limbo as the last vote on the pipeline this month did not pass. The booming shale-oil industry in the U.S. has produced a massive surge in oil transport by rail. The number of rail cars used to transport crude oil in the U.S. was 9,500 back in 2008. That number had soared to more than 415,000 rail carloads by 2013 and continues to climb.

Naturally it comes down to money. Oil firms paying to transport this oil want to delay these safety updates because it will be expensive. Yet the massive increase in oil transported by rail has led to a rash of train derailments with potentially deadly consequences. A couple of years ago there was a derailment in Canada and the oil inside ignited and wiped out a small town.

It has been months since the DOT proposed new rules. Public comments on it closed back in September. It's expected that new regulations could be out in the next few months. It would appear that businesses are already planning ahead and biting the bullet to buy new tanker cars because business at GBX has been soaring. The fact that crude oil prices have fallen to four-year lows has had no impact on demand for new railcars.

Bloomberg recently noted that the order backlog for railcars hit its highest level ever in the third quarter of 2014. A lot of that business is going to GBX. Greenbrier's Q2 report in July beat Wall Street's estimates on both the top and bottom line and management raised their guidance.

GBX's most recent earnings report was October 30th. Analysts were expecting a profit of $1.03 a share on revenues of $626.3 million. GBX met estimates with a profit of $1.03. Revenues surged +28% from a year ago to $618.1 million. That missed Wall Street's estimate but was still a record quarter for revenues. GBX said their aggregate gross margin rose from 16.3% in their third quarter (calendar Q2) to 17.2% in their fourth quarter (calendar Q3).

GBX reported that their backlog rose 5,100 units. The company saw new orders for railcars of 10,400 units worth more than $1 billion. After the last quarter ended they received another order for an additional 11,400 railcars also worth more than $1 billion. Their total railcar backlog hit a record 31,500 units with an estimated value of $3.33 billion compared to a backlog of 26,400 units at the end of May 2014.

GBX's Chairman and CEO William Furman said, "We leveraged our integrated business model to achieve our best annual performance yet and are well positioned to continue to grow in 2015 and beyond. We are obtaining the highest level of new orders in Greenbrier's history."

The company raised their fiscal year 2015 earnings guidance into the $4.25-4.55 range, which is above Wall Street's estimate of $4.15. They also expect revenues to come in above $2.5 billion, which is in-line with analysts' estimates of $2.54 billion. GBX issued a new goal to raise their aggregate gross margins to 20% by the second half of 2016.

Traders have been buying the dips in GBX for weeks and now the stock has a bullish trend of higher lows. Shares recently broke through resistance near $65.00. The big bounce has produced a buy signal on the Point & Figure chart that is forecasting an $85 target.

If this rally continues GBX could see a short squeeze. The most recent data listed short interest at 23% of the very small 23.3 million share float.

Friday's intraday high (Nov. 21st) was $67.45. Tonight I am suggesting a trigger to buy calls at $67.55.

Trigger @ $67.55

- Suggested Positions -

Buy the March $70 call (GBX150320C70) current ask $4.70

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

Daily Chart:

Intraday Chart:



In Play Updates and Reviews

Another Good Day For Bullish Traders

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market's major indices were up across the board on Monday. The path of least resistance is higher.

ASML was stopped out.


Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 118.62 change: +2.15

Stop Loss: 113.25
Target(s): To Be Determined
Current Option Gain/Loss: +152.5%
Average Daily Volume = 55.5 million
Entry on November 12 at $110.25
Listed on November 08, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: AAPL is seeing quite a trend. It seems like every day the stock gets another price target upgrade. Today Susquehanna raised their AAPL price target from $120 to $135. The stock responded with a +1.85% gain. I am not suggesting new positions at this time.

Earlier Comments: November 8, 2014:
Love it or hate it AAPL always has Wall Street's attention. It has a cult-like following. The company's success has turned AAPL's stock into the biggest big cap in the U.S. markets with a current valuation of almost $640 billion.

The company is involved in multiple industries from hardware, software, and media but it's best known for its consumer electronics. The iPod helped perpetuate the digital music revolution. The iPhone, according to AAPL, is the best smartphone in the world. The iPad helped bring the tablet PC to the mass market. The company makes waves in every industry they touch with a very distinctive brand (iOS, iWork, iLife, iMessage, iCloud, iTunes, etc.) and they've done an amazing job at building an Apple-branded ecosystem. Now they're getting into the electronic payments business with Apple Pay.

The company's latest earnings report was super strong. AAPL reported its Q4 (calendar Q3) results on October 20th. Wall Street was expecting a profit of $1.31 a share on revenues of $39.84 billion. The company delivered a profit of $1.42 a share with revenues up +12.4% to $42.12 billion. The EPS number was a +20% improvement from a year ago. Gross margins were up +1% from a year ago to 38%. International sales were 60% of the company's revenues.

AAPL's iPhone sales exceeded estimates at 39.27 million in the quarter and up nearly 16% from a year ago. The only soft spot in their ecosystem seems to be iPad sales, which have declined several quarters in a row. The company hopes to rejuvenate its tablet sales with a refresh of the iPad models. More importantly AAPL management raised their Q1 (calendar Q4) guidance as they expect revenues in the $63.5-66.5 billion in the quarter. Recent news would suggest that AAPL might deliver an incredible 50 million iPhone 6s in 2014. That's not counting their new iPhone 6+.

The better than expected results and bullish guidance sent the stock to new highs. The rally has created a quadruple top breakout buy signal on its point & figure chart that is currently forecasting at $135 target. Shares have been outperforming the broader market and AAPL is currently up +36% year to date.

Currently AAPL is up three weeks in a row but it spent most of last week consolidating sideways and digesting its prior gains. As we approach the holiday shopping season AAPL is poised to benefit from what should be stronger than average consumer spending with the company's stable of new releases to tempt consumers to upgrade their older electronics.

The daily chart shows AAPL's intraday high to be $110.30 on November 3rd but that's actually a bad tick. The real intraday high is about $109.90. Tonight I am suggesting a trigger to buy calls on AAPL at $110.25. We will start with a stop loss at $106.45. More conservative traders may want to try a stop loss closer to last week's low near $107.70 instead.

- Suggested Positions -

Long 2015 Jan $110 call (AAPL150117c110) entry $3.90

11/22/14 new stop @ 113.25
11/12/14 triggered @ 110.25
Option Format: symbol-year-month-day-call-strike


CR Bard Inc. - BCR - close: 167.65 change: +1.15

Stop Loss: 163.35
Target(s): To Be Determined
Current Option Gain/Loss: - 1.1%
Average Daily Volume = 538 thousand
Entry on November 13 at $165.65
Listed on November 12, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: BCR continues to drift higher and posted a +0.69% gain on Monday. This is a new all-time closing high for the stock.

Earlier Comments: November 12, 2014:
BCR is in the healthcare sector. The company makes medical supplies. According to the company website, "C. R. Bard, Inc. is a leading multinational developer, manufacturer, and marketer of innovative, life-enhancing medical technologies in the product fields of vascular, urology, oncology, and surgical specialty. BARD markets its products and services worldwide to hospitals, individual health care professionals, extended care facilities, and alternate site facilities."

The company has been on a roll with its earnings reports. BCR has beaten Wall Street's estimates on both the top and bottom line the last four quarters in a row. The last couple of quarters have seen some pretty big beats and management has raised guidance.

BCR's most recent earnings report was October 22nd. Wall Street expected a profit of $1.87 a share on revenues of $818.8 million. BCR said earnings rose +28% from a year ago to $2.15 a share. Revenues were up +9% to $830 million. Inside the U.S. net sales were up +13%. Management raised their Q4 EPS guidance above analysts' estimates.

The stock has been struggling to breakout past major resistance near the $150-155 range but the October earnings results launched shares of BCR higher. The last couple of weeks have seen BCR consolidating sideways under resistance near the $165.00 level. We think it's about to break out. The point & figure chart is bullish and forecasting at long-term target of $194.00.

Tonight we are suggesting a trigger to buy calls at $165.60

- Suggested Positions -

Long 2015 Jan $170 call (BCR150117c170) entry $2.63

11/22/14 new stop @ 163.35
11/13/14 triggered @ 165.65, suggested entry was $165.60
Option Format: symbol-year-month-day-call-strike


Costco Wholesale - COST - close: 139.80 change: +0.08

Stop Loss: 137.25
Target(s): To Be Determined
Current Option Gain/Loss: +237.6%
Average Daily Volume = 1.9 million
Entry on October 30 at $132.25
Listed on October 29, 2014
Time Frame: Exit prior to earnings in December
New Positions: see below

Comments:
11/24/14: COST spent Monday's session consolidating sideways in the $139.20-140.00 zone. I am not suggesting new positions at this time.

Earlier Comments: October 29, 2014
COST is part of the services sector. The company runs a discount, membership sales warehouse. The company's latest earnings report said Costco currently operates 664 warehouses, including 469 in the United States and Puerto Rico, 88 in Canada, 33 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, six in Australia and one in Spain.

The company has struggled to hit Wall Street's bottom line estimates for over a year but steady improvement in their same-store sales have helped drive the stock higher. A strong back to school shopping season and higher membership fees fueled a better than expected quarterly report.

COST reported their Q4 numbers on October 8th. After missing estimates for five quarters in a row the company finally beat estimates. Analysts were expecting a profit of $1.52 a share on revenues of $35.3 billion. COST delivered $1.58 a share with revenues up +9.3% to $35.52 billion. The net profit number was up +13% and gross margins improved 15 basis points.

COST also reported that their e-commerce sales continue to grow at a brisk pace and their online sales rose +18% in their fourth quarter. Same-store (comparable store) sales remain a key metric to watch. COST's Q4 same-store sales were up +4% yet if you back out falling gasoline prices and currency effects their comparable store sales were up +6% for the quarter versus +4.5% a year ago. Membership renewal rates remain very strong at 91% in the U.S. and 87% globally. COST plans to open up to eight more locations before the end of the 2014 calendar year.

The company also recently announced their first foray into China. COST has entered the Chinese market with an online store through Alibaba Group's (BABA) Tmall Global platform.

The holiday shopping season is almost upon us with less than 60 days before Christmas. COST is poised to do well since the company caters to the higher-end more affluent customer.

Shares are hovering just below the $132.00 level. Tonight we are suggesting at trigger to buy calls at $132.25. We will plan on exiting positions prior to their December earnings report.

- Suggested Positions -

Long DEC $135 call (COST141220c135) entry $1.54

11/22/14 new stop @ 137.25
11/08/14 new stop @ 134.75
11/01/14 new stop @ 130.75
10/30/14 triggered @ 132.25
Option Format: symbol-year-month-day-call-strike


Deckers Outdoor Corp. - DECK - close: 95.45 change: +1.45

Stop Loss: 89.75
Target(s): To Be Determined
Current Option Gain/Loss: +15.7%
Average Daily Volume = 763 thousand
Entry on November 17 at $92.25
Listed on November 15, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: DECK bounced off the $94.00 level this morning and erased Friday's decline with a +1.5% gain. DECK failed to confirm Friday's bearish reversal pattern, which is great news.

Earlier Comments: November 15, 2014:
DECK is part of the consumer goods sector. The company owns a number of brands but for many Deckers means UGG. The iconic footwear line was started in 1978 in Southern California. Strength in the UGG line helped power the company's latest quarterly results.

According to the company website, "Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG, I HEART UGG, Teva, Sanuk, TSUBO, Ahnu, MOZO, and HOKA ONE ONE. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 130 Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally."

The most recent earnings report was October 23rd. Analysts were expecting a profit of $1.03 per share on revenues of $457.2 million. DECK beat estimates with a profit of $1.17 a share. That's a +23.2% increase from the same period a year ago. Revenues soared +24.2% to a record $480.3 million. U.S. sales rose +21.1% and international sales surged +29.2%. E-commerce sales soared +45%.

It was DECK's Q2 and their gross profit rose +34% while gross margins increased 340 basis points to 46.6%. This was above estimates of 45% and above their gross margin a year ago of 43.2%. Management said all brands delivered a strong performance.

The company lowered their Q3 guidance (current quarter) to below Wall Street estimates. They also raised their Q4 and 2015 guidance on both the top and bottom line. DECK expects 2015 to see revenues up +15%, earnings up +15.8%, and gross margins around 49%. Last quarter the S&P 500 saw earnings growth of about +6.9%. DECK is clearly outgrowing the market with +23% growth. The S&P 500 is expected to see +10-11% growth in 2015.

Technically shares are poised for a breakout on both the daily chart and the point & figure chart. Looking at the point & figure chart (not shown), a breakout past $92.00 would generate a new triple-top breakout buy signal. A breakout could also spark some short covering. The most recent data listed short interest at 17% of the small 33.6 million share float.

Tonight we are suggesting a trigger to buy calls at $92.25. Such a move probably signals a run toward resistance near $100.00.

- Suggested Positions -

Long 2015 Jan $95 call (DECK150117c95) entry $3.80

11/22/14 new stop @ 89.75
11/17/14 triggered $92.25
Option Format: symbol-year-month-day-call-strike


DineEquity, Inc. - DIN - close: 97.33 change: +1.26

Stop Loss: 93.85
Target(s): To Be Determined
Current Option Gain/Loss: +100.0%
Average Daily Volume = 154 thousand
Entry on November 05 at $91.55
Listed on November 04, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: DIN rallied off short-term support at its rising 10-dma and soared +1.3% to a new closing high.

I suspect the $99-100 area is resistance and that range would be a great place to exit.

I'm not suggesting new positions at the moment.

Earlier Comments: November 4, 2014:
Restaurant stocks were showing relative strength today. Better than expected earnings results from the likes of Red Robin (RRGB) and Bloomin Brands (BLMN) helped buoy the group. Additional stocks in this industry showing relative strength on Tuesday are: BWLD, PNRA, JACK, EAT, SONC, TXRH, KKD, DNKN, CAKE, DRI, and PBP. The one we like tonight is DIN.

According to a company press release, "Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,600 restaurants combined in 19 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-service restaurant companies in the world."

The company has seen success with a steady improvement in earnings. DIN has beaten Wall Street's estimates on both the top and bottom line three quarters in a row. Their most recent report was October 28th. Analysts were looking for a profit of $1.05 a share on revenues of $157.2 million. DIN served up $1.14 per share with revenues climbing to $162.85 million.

The company saw domestic system-wide same-store sales up +2.4% at IHOP and +1.7% at Applebee's. Management then raised their sales guidance on both Applebee's and IHOP. DIN also raised its dividend by 17% to $0.875 per share and they boosted their stock buyback program from $40 million to $100 million.

The restaurant industry should be a major beneficiary of the drop in oil prices. Lower gasoline prices at the pump mean consumers have more spending money and will likely burn a lot of that cash eating at restaurants.

Shares broke out to new highs on this earnings report and bullish guidance. Today the stock is at all-time highs. The point & figure chart is bullish and forecasting a long-term target at $118.00.

Tonight we are suggesting a trigger to launch bullish positions at $91.55.

- Suggested Positions -

Long DEC $95 call (DIN141220c95) entry $1.20

11/22/14 new stop @ 93.85
11/19/14 new stop @ 92.75
11/13/14 new stop @ 92.25
11/12/14 new stop @ 91.45
11/08/14 new stop @ 89.65
11/05/14 triggered @ 91.55
Option Format: symbol-year-month-day-call-strike


FedEx Corp. - FDX - close: 175.53 change: +1.07

Stop Loss: 169.85
Target(s): To Be Determined
Current Option Gain/Loss: +205.6%
Average Daily Volume = 1.5 million
Entry on October 17 at $155.50
Listed on October 15, 2014
Time Frame: Probably exit prior to earnings on Dec. 17th
New Positions: see below

Comments:
11/24/14: It was another strong day for the transport stocks and FDX set another closing high with today's +0.6% gain.

I am not suggesting new positions at this time.

Earlier Comments: October 15, 2014:
Last year a last minute surge of online shoppers overwhelmed the system and thousands of Christmas presents were delivered late. Part of the problem was terrible weather. The other challenge was the growth in online shopping. Amazon.com (AMZN) blamed UPS for the mass of delayed deliveries last year. You can bet that UPS' rival FDX has taken notice and plans to be ready this year.

Market research firm EMarketer is estimating that retail online shopping will surge +17% in 2014 to $72.4 billion. That might be under estimating the growth, especially this year as many consumers might opt to shop online instead of face the crowds and risk being a target for terrorism or catching Ebola. Granted neither a terrorist event inside the U.S. and a widespread outbreak of Ebola in the states has happened yet but people are already afraid with the daily headlines about the virus.

UPS and FDX hope to be ready. UPS is hiring up to 95,000 seasonal workers and FDX is hiring 50,000 holiday workers this year. That's 10K more than last year for FDX.

In addition to the surge in online shopping FDX should also benefit from the multi-year lows in oil prices. Low oil prices means lower fuel costs, one of FDX's biggest expenses.

It would appear that FDX has fine tuned its earnings machine as well. Their latest earnings report was September 17th. Wall Street was expecting a profit of $1.95 a share on revenues of $11.46 billion. FDX delivered a profit of $2.10 a share with revenues up to $11.7 billion. That's a +24% increase in earnings from a year ago and the second quarter in a row that FDX beat EPS estimates.

FDX chairman, president, and CEO Frederick Smith said, "FedEx Corp. is off to an outstanding start in fiscal 2015, thanks to very strong performance at FedEx Ground, solid volume and revenue increases at FedEx Freight and healthy growth in U.S. domestic volume at FedEx Express." Business has been strong enough that a few weeks ago FDX started raising prices on some services.

Since that September earnings report Wall Street analysts have been raising price targets. Some of the new price targets for FDX stock are $175, $180 and $183 a share.

The recent sell-off in the market and FDX could be an opportunity. FDX has already seen a -10% correction from its intraday high near $165 to today's low near $149. Right now FDX sits just below resistance near $155.

We're suggesting a trigger to buy calls at $155.50.

- Suggested Positions -

Long 2015 Jan $160 call (FDX150117c160) entry $5.30

11/17/14 new stop @ 169.85
11/15/14 new stop @ 168.40
11/08/14 new stop @ 165.50
11/01/14 new stop @ 163.45
10/28/14 new stop @ 162.65, traders may want to take profits now!
10/25/14 new stop @ 157.85
10/23/14 new stop @ 155.90
FDX is nearing resistance at $164.00. Traders may want to take profits now.
10/21/14 new stop @ 153.45
10/17/14 triggered @ 155.50
Option Format: symbol-year-month-day-call-strike


Northrop Grumman - NOC - close: 140.72 change: +1.59

Stop Loss: 135.90
Target(s): To Be Determined
Current Option Gain/Loss: -10.0%
Average Daily Volume = 1.0 million
Entry on November 21 at $140.25
Listed on November 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: Defense stocks continued to rally on Monday and NOC was leading the charge with a surge higher at the open. The stock is back above $140 and this move looks like a new bullish entry point to buy calls.

Earlier Comments: November 20, 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. This stock is currently up +20% in 2014 versus a +10.8% gain in the S&P 500.

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 four quarters in a row. They reported their Q3 results on October 22nd. It was NOC's eight consecutive quarter in a row of earnings growth. Wall Street was looking for a profit of $2.14 a share on revenues of $5.9 billion. NOC delivered $2.26 a share. That's up +6% from a year ago. Revenues beat estimates at $5.98 billion.

NOC management has been trying to diversify their customer base and international sales are expected to hit 13% of total revenue in 2014 compared to 10% last year. NOC's Q3 saw its total backlog soar +8% to $38.5 billion from the prior quarter.

Once again management has raised their guidance. NOC expects 2014 earnings in the $9.40-9.50 zone compared to prior guidance of $9.15-9.35. Wall Street was estimating $9.35.

Shares of NOC have spent the last three weeks consolidating gains in the $135-140 zone. The point & figure chart remains bullish and is forecasting at $158.00 target. Given the stock's bullish trend of higher lows NOC could see a breakout soon.

Tonight I am suggesting a trigger to buy calls at $140.25.

- Suggested Positions -

Long 2015 Jan $145 call (NOC150117c145) entry $1.50

11/21/14 triggered @ 140.25
Option Format: symbol-year-month-day-call-strike


NXP Semiconductors - NXPI - close: 76.18 change: +1.33

Stop Loss: 71.75
Target(s): To Be Determined
Current Option Gain/Loss: - 5.8%
Average Daily Volume = 3.9 million
Entry on November 24 at $76.05
Listed on November 22, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: Semiconductor stocks were showing relative strength today and NXPI definitely participated with a +1.7% gain. The stock has broken out to new highs and hit our suggested entry point at $76.05.

The company was making headlines today with news it had purchased the wearable and Bluetooth low energy IC business from Quintic today. The amount was not disclosed. NXPI also announced it was selling $1 billion in cash convertible senior notes due 2019.

Earlier Comments: November 22, 2014:
NXPI is in the technology sector. The company classified as part of the semiconductor industry but they make a host of electronic parts and components. The company describes itself on their website as follows, "The electronics industry is being driven by four mega trends that are helping shape our society: Energy Efficiency, Connected Devices, Security and Health. Connecting to these trends and enabling Secure Connections for a Smarter World, NXP Semiconductors N.V. (NASDAQ: NXPI) creates solutions for the Connected Car, Cyber Security, Portable & Wearable and the Internet of Things. Through our innovations, customers across a wide variety of industries – including automotive, security, connected devices, lighting, industrial and infrastructure – are able to differentiate their products through features, cost of ownership and/or time-to-market."

The company has seen a dramatic turnaround. NXPI was born in 2006 when Phillips Electronics sold its semiconductor business to private equity firms. By 2009 they were $6 billion in debt and losing money. Today they have cut their debt in half.

Investors business daily noted that companies like NXPI and its rival AVGO, another bullish looking stock, should both benefit thanks to a new trade deal with China. The U.S. and China have recently decided to remove some tariffs on almost $1 trillion worth of high-tech products.

As we approach the holidays shares of NXPI could get a boost thanks to Apple (AAPL). Investors expect AAPL to see a very strong fourth quarter with its new iPhone 6 and 6+ and AAPL is trying to revive its tablet business with a refresh of its iPad models. NXPI provides components to the iPhone, the iPad, and is rumored to produce equipment for AAPL's new Apple Pay technology.

NXPI's revenues have been strong all year. The company has actually beaten Wall Street's earnings estimates on both the top and bottom line the last four quarters in a row. Revenues were up +15.9%, +14.8%, +17.3% and in the most recent quarter +21.3%. NXPI's last earnings report was October 23rd. The company reported a profit of $1.35 a share, which was four cents above estimates. Revenues came in at $1.51 billion. Management issued bullish guidance on its Q4 EPS number while its revenue estimate was only in-line with Wall Street.

The stock received several price target upgrades in November. Recently as mutual funds issued their 13F filings it was unveiled that Appaloosa Management, the fund run by influential manager David Tepper, had initiated a new position in NXPI last quarter.

Technically shares of NXPI have been digesting gains in a sideways consolidation the last couple of weeks. Shares managed to end the week at a new all-time high. There looks like short-term resistance at $76.00. Tonight I'm suggesting a trigger at $76.05.

Please note this is a slightly more aggressive trade as NXPI appears to have potential resistance at a trend line of higher highs (see chart).

- Suggested Positions -

Long 2015 Jan $80 call (NXPI150117c80) entry $2.39

11/24/14 triggered @ 76.05
Option Format: symbol-year-month-day-call-strike


PriceSmart Inc. - PSMT - close: 96.57 change: +2.54

Stop Loss: 92.85
Target(s): To Be Determined
Current Option Gain/Loss: +36.6%
Average Daily Volume = 156 thousand
Entry on November 10 at $92.75
Listed on November 06, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: After churning sideways the last couple of weeks shares of PSMT were showing relative strength today. The stock surged +2.7% and closed above the $96.00 level for the first time in months. There is still some intraday resistance in the $97 area but today's move is very encouraging.

Earlier Comments: November 6, 2014:
PSMT is in the services sector. The company is essentially the Costco of Latin America. A company press release describes them this way, "PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 34 warehouse clubs in 12 countries and one U.S. territory (six in Costa Rica; four each in Panama, Trinidad, and Colombia; three each in Guatemala, the Dominican Republic, and Honduras; two in El Salvador; and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands)."

A lot of PSMT's locations are in fast growing countries. Honduras has an annual growth rate of +3.1%. Costa Rica's is +4.2%. Columbia & Guatemala are growing at +4.3%. Panama latest GDP was +6.3%. Yet a few countries are struggling. Trinidad's growth rate is -1.2% while the Dominican Republic's plunged to an annual pace of -13%. Overall the consolidate trend is positive for PSMT's environment and they're building new stores in Columbia.

The company's latest earnings report was mixed. Their 73-cent earnings missed estimates by one cent but revenues were up +6.3% for the year and above Wall Street's estimate. This was PSMT's fourth quarter and they ended their fiscal year with sales of $2.4 billion, a +9.2% increase. Overall same-store sales rose +4.8%. Management reported double-digit sales growth for the year in Columbia, Panama, Trinidad, and Aruba.

Technically the stock has been in a bear market after a sharp decline from its late 2013 highs near $125 a share. PSMT appears to have built a base in the $80-92 range over the last few months. Now shares are starting to breakout from this significant consolidation pattern. Today's rally is significant because it's a bullish breakout above technical resistance at the 200-dma. The point & figure chart is bullish and forecasting a target of $102.

The October 29th intraday high was $92.68. Tonight I am suggesting a trigger to buy calls at $92.75.

- Suggested Positions -

Long 2015 Jan $95 call (PSMT150117C95) entry $3.44

11/22/14 new stop @ 92.85
11/19/14 new stop @ 91.45
11/10/14 triggered @ 92.75
Option Format: symbol-year-month-day-call-strike


PowerShares QQQ (ETF) - QQQ - close: 104.68 change: +0.81

Stop Loss: 102.45
Target(s): To Be Determined
Current Option Gain/Loss: +74.4%
Average Daily Volume = 38.1 million
Entry on November 12 at $102.35
Listed on November 10, 2014
Time Frame: exit prior to December option expiration
New Positions: see below

Comments:
11/24/14: The NASDAQ outperformed its big-cap rivals with a +0.88% gain. The QQQ almost kept pace with a +0.77% gain. I don't see any changes from my prior comments.

Earlier Comments: November 10, 2014:
The QQQ is the exchange traded fund (ETF) that mimics the NASDAQ-100 index, which is the largest 100 non-financial stocks on the NASDAQ exchange, including both foreign and domestic companies.

The NASDAQ-100 has been outperforming its index brethren this year with the QQQ up +15.5% in 2014 compared to a +9.9% gain in the S&P 500, a +9.4% gain in the S&P 100, a +6.0% gain in the Dow Industrials, and a +0.8% gain in the Russell 2000.

This leadership should continue. Seasonally this is a very bullish time of year for stocks. November is the third best month of the year. We just started the best six months of the year. Midterm years perform even better than normal. Corporate earnings has been strong. Interest rates are low. The Fed remains cooperative. Japan's central bank just announced a massive new QE program that will send more money into U.S. stocks. Europe is on the verge of more QE. There are plenty of reasons to be bullish.

Most of the market does look short-term overbought with a massive bounce from the October 15th low. Yet the QQQ has spent the last several days consolidating gains in a sideways move under short-term resistance near the $102 area. That consolidation is narrowing and the Qs look poised to breakout higher.

Tonight we are suggesting a trigger to buy calls at $102.35.

- Suggested Positions -

Long DEC $102.63 CALL (QQQ141220C102.63) entry $1.49

11/22/14 new stop @ 102.45
11/12/14 triggered @ 102.35
Option Format: symbol-year-month-day-call-strike


The Sherwin-Williams Co. - SHW - close: 242.03 change: -0.02

Stop Loss: 238.25
Target(s): To Be Determined
Current Option Gain/Loss: + 89.9%
Average Daily Volume = 526 thousand
Entry on November 05 at $231.00
Listed on November 01, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: SHW did not participate in the market rally today. It is worth noting that traders bought the dip intraday near $240.50.

More conservative traders will want to seriously consider taking some profits here. SHW is overbought and up six weeks in a row.

I am not suggesting new positions at this time.

Earlier Comments: November 1, 2014:
It's not very often you see a company about to celebrate its 150th birthday. For SHW that will be the year 2016. The company has been in business since 1866. The Company's core business is the manufacture, distribution and sale of coatings and related products. SHW is headquartered in Cleveland, Ohio. They sell through over 4,100 company-operated stores. Their global group has sales in more than 115 countries. Sherwin-Williams is also a very well known dividend payer and has annually increased dividends since 1979.

The slow and steady economic improvement in the U.S. has been beneficial. The real estate market has also helped SHW. New homes need new paint. The pace of new home sales in the U.S. hit six-year highs last month. While home sales do tend to slow down a bit in the winter months SHW should benefit from lower input costs. Crude oil and natural gas are big components in the paint and coatings industry. The severe drop in oil the last few months is a blessing for SHW.

The company raised their earnings guidance back in July. They issued bullish guidance again in their latest quarterly report. SHW announced earnings on October 28th. Wall Street was expecting a profit of $3.22 per share on revenues of $3.18 billion. SHW said their earnings rose +31.4% to a record-setting $3.35 per share. Revenues were up +10.6% at $3.15 billion, which missed the estimate.

SHW's remodeling business saw growth. The real driver was paint sales. Their paint stores account for the lion's share of sales, which saw revenues up +20%. SHW also purchased 2.0 million shares of their stock last quarter and still have 6.8 million yet to buy in their stock buy back program.

Management was optimistic. SHW's Chairman and CEO MR. Christopher Connor, said,

"We are pleased to report record sales and earnings per share in the third quarter and first nine months of 2014 on the continued positive sales volume and strong operating results of our Paint Stores Group. The Paint Stores Group architectural volume growth was positive across all end market segments. The Comex acquisition continues to perform better than expected in the year. Our Consumer Group improved its operating results through higher volume sales and operating efficiencies. Our Global Finishes Group continues to improve its operating margins through improved operating efficiencies."

Management raised their 2014 EPS guidance above Wall Street's estimates. They also raised their revenue guidance but this was only in-line with consensus. SHW now expects Q4 sales in the +6% to +8% range. They expect earnings to be in the $1.30-1.40 range versus $1.14 in the fourth quarter of 2013.

The stock's relative strength has driven shares to new all-time highs and a +25% gain in 2014. The point & figure chart is bullish and forecasting at long-term target at $286.

Tonight we are suggesting a trigger to buy calls at $231.00.

- Suggested Positions -

Long 2015 Jan $240 call (SHW150117c240) entry $3.37

11/22/14 new stop @ 238.25
11/15/14 new stop @ 234.45
11/13/14 SHW is hitting potential resistance at $240. Traders may want to take profits now.
11/08/14 new stop @ 229.75
11/05/14 triggered @ 231.00
Option Format: symbol-year-month-day-call-strike


Semiconductor ETF - SMH - close: 54.13 change: +0.41

Stop Loss: 52.25
Target(s): To Be Determined
Current Option Gain/Loss: +290.9%
Average Daily Volume = 2.4 million
Entry on October 17 at $47.15
Listed on October 16, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: Semiconductor stocks were showing some relative strength today. The SMH added +0.76% and closed at a new multi-year high.

I am not suggesting new positions.

Earlier Comments: October 16, 2014:
It looks like the correction in the semiconductor stocks might be done.

The SMH is the Market Vectors Semiconductor Exchange Traded Fund (ETF) that tries to mimic the performance of the Market Vectors Semiconductor 25 index. Semiconductors as a group had been strong performers with the SMH up +73% from its late 2012 lows.

A few weeks ago the industry started to see some profit taking. MCHP issued an earnings warning last week that that sparked the massive plunge in the SMH. The SMH has witnessed a -15% correction from its 2014 closing high to the closing low on Monday this week. Now it has started to bounce. It's possible all the panic selling is over.

Intel (INTC), a much bigger company than MCHP, just reported earnings on October 14th and the results were better than Wall Street expected. More importantly INTC offered slightly bullish guidance.

Bloomberg noted that INTC said its PC-processor business rose +8.9% last quarter. Sales for INTC's chips for notebook computers soared +21%. Even chips for desktop PCs rose +6% in the third quarter.

The strong results from INTC have helped buoy the SMH, which is starting to rebound after testing (and piercing) long-term support on its weekly chart (shown below).

We suspect the worst might be over. However, this could be a volatile trade. There are a lot of semiconductor companies who have yet to report their results.

The SMH saw its rally stall under $47 and near its 200-dma. Tonight we are suggesting a trigger to buy calls at $47.15.

- Suggested Positions -

Long 2015 Jan $50 call (SMH150117c50) entry $1.10

11/22/14 new stop @ 52.25
11/20/14 new stop @ 51.40
11/12/14 new stop @ 50.85, readers may want to just take profits now!
11/01/14 new stop @ 48.85
10/25/14 new stop @ 47.85
10/21/14 new stop @ 46.35
10/17/14 triggered @ 47.15
Option Format: symbol-year-month-day-call-strike


Under Armour, Inc. - UA - close: 70.00 change: +0.70

Stop Loss: 67.90
Target(s): To Be Determined
Current Option Gain/Loss: -34.3%
Average Daily Volume = 2.6 million
Entry on November 21 at $71.05
Listed on November 19, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: One of the traders on CNBC was bullish on UA and suggested buying the stock on a breakout past resistance near $70.00. We agree although investors might want to wait for a rally past Friday's high of $71.19 before initiating positions.

Technical traders will note that UA did not confirm Friday's potential bearish reversal pattern but today's bounce really doesn't negate it either.

Earlier Comments: November 19, 2014:
UA is in the consumer goods sector. "Under Armour, the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. Under Armour's wholly owned subsidiary, MapMyFitness, powers one of the world's largest Connected Fitness communities. The Under Armour global headquarters is in Baltimore, Maryland." (source: company press release)

Apparel sales can be tricky as fashion fads come and go. Yet right now athletic wear has been gaining traction. Athletic wear sales are up +9% in the past year. Two giants in this industry, Nike (NKE) and Under Armour (UA), are outperforming the group.

NKE is the giant with annual sales of $28.8 billion. UA is a tenth the size of NKE at $2.87 billion a year in sales. It's not surprising to see UA outgrowing its rival. NKE managed +15% sales growth in the third quarter. UA delivered 30%. NKE reported gross margins of 46.6%. UA has gross margins of 49.6%. Both companies delivered earnings growth of more than 20% year over year.

UA is impressive because its apparel sales have been rising +30% for the last three quarters in a row. Apparel is important because it's 75% of UA's business. Currently UA only has 2% of the global athletic apparel market and many believe it has significant room to grow.

Investors were a little concerned when apparel sales only grew +25.6% in the third quarter. However, UA has been consistently beating Wall Street's earnings estimates on both the top and bottom line four quarters in a row. They have also raised guidance four quarters in a row.

Their most recent earnings report was October 23rd. UA delivered earnings of $0.41 a share with revenues up +29.7% to $937.9 million. Analysts were only expecting $0.40 on revenues of $925 million.

Management raised their Q4 guidance but they warned that growth would slow down to only +22% in 2015. It's worth noting that UA has a history of under promising and over delivering. The stock initially sold off on this guidance but investors quickly bought the dip. Shares of UA have broken through the two-month trend line of lower highs and technical resistance at the 50-dma. The point and figure chart is bullish and forecasting an $87 target.

The plunge in gasoline prices is a tailwind for retailers and it should be a strong holiday shopping season. Another bonus for UA could be the weather. Last year winter was colder than normal and UA had strong sales of their coldgear line. This year we could see the coldest winter in decades, which could also bode well for UA.

UA has spent the last few days consolidating sideways in the $68.00-70.00 range. Today saw UA showing relative strength (+1.6%) and breaking out past resistance at $70.00. The intraday high was $70.72. More aggressive traders may want to buy calls now. I am suggesting a trigger at $71.05 to buy calls.

- Suggested Positions -

Long 2015 Jan $75 call (UA150117c75) entry $1.60

11/21/14 trade opened on gap higher at $71.19
Option Format: symbol-year-month-day-call-strike


United Rentals, Inc. - URI - close: 115.74 change: +1.03

Stop Loss: 112.25
Target(s): To Be Determined
Current Option Gain/Loss: +13.3%
Average Daily Volume = 1.6 million
Entry on November 03 at $110.55
Listed on November 01, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: The action in URI today is encouraging for the bulls. Shares bounced at $113.75 this morning and the close above resistance at $115.00 is a good sign. I would be tempted to buy calls here. Keep in mind that the $120 level is the next area of resistance.

Earlier Comments: November 1, 2014:
URI is a company that is gaining market share. Traditionally the equipment rental business has been a very fragmented industry with a lot of mom and pop stores. URI has decided that being the biggest offers a better selection to their clients. Today URI is the biggest equipment rental company in the world.

Twenty years ago commercial construction clients only accounted for about 15% of the equipment rental market. Today that number is closer to 50%. The last few years have seen a strong trend of construction companies choosing to rent equipment instead of buy new equipment due to an uncertain economic outlook.

According to URI's website they were founded in 1997 and have grown into a network of 832 rental locations in 49 states and 10 Canadian provinces. Their rental fleet includes 3,100 classes of equipment.

Earnings are improving. The last couple of quarterly reports have been strong. In the July 16th report URI beat Wall Street estimates with a profit of $1.65 per share on revenues of $1.399 billion. That was a +47% improvement from a year ago and management raised their guidance.

The most recent report was October 15th. Again URI beat estimates. Analysts were looking for a profit of $2.12 per share on revenues of $1.51 billion. URI delivered $2.20 per share with revenues up +17.8% to $1.54 billion. This was a +34% jump in URI's earnings from a year ago. Margins hit a record +49.3% in the third quarter. They reaffirmed their guidance.

URI's CEO Mr. Michael Kneeland commented on his company's report and said,

"The third quarter provided further confirmation that our strategy and the North American construction recovery are both solidly on track. Our end markets are continuing to rally, creating numerous opportunities for well-managed, profitable growth. We reported a robust 16% increase in rental revenue for the quarter— and more importantly, the discipline behind that growth is evident in our record EBITDA margin and gains in volume, utilization and rates."

Technically the stock experienced a painful correction from $120 to $90 during the market's pullback in September-October. The bounce back stalled at resistance near $110 and its 100-dma and 50-dma. However, after a two-week consolidation in the $105-110 zone, shares of URI now look poised to breakout. Shares were showing relative strength on Friday with a +3.7% gain.

The 50-dma is directly overhead at $110.17 and the intraday high on Friday was $110.39. Tonight we are suggesting a trigger to buy calls at $110.55.

- Suggested Positions -

Long 2015 Jan $115 call (URI150117c115) entry $4.50

11/22/14 new stop @ 112.25
11/12/14 new stop @ 111.75
11/08/14 new stop @ 107.15
11/03/14 triggered @ 110.55
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

FMC Corp. - FMC - close: 56.73 change: +0.23

Stop Loss: 57.35
Target(s): To Be Determined
Current Option Gain/Loss: -51.2%
Average Daily Volume = 1.42 million
Entry on November 04 at $55.85
Listed on November 03, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: FMC managed a +0.4% bounce. The stock is not seeing any follow through when shares decline. We may want to consider an early exit soon.

I am not suggesting new positions at the moment.

Earlier Comments: November 3, 2014:
FMC is in the basic materials sector. They are a diversified chemical company with agricultural chemicals, minerals, and health and nutrition businesses.

It has been a rough year for shareholders as FMC peaked in March this year and has been sliding lower every since. That's because the earnings picture has been deteriorating. You can see on the daily chart below where FMC issued an earnings warning in June. Then when they reported earnings in late July they missed estimates. It's not great when you warn about earnings and still miss Wall Street's lowered estimates.

FMC's most recent earnings report was October 29th. The company missed on both the top and bottom line. Analysts were expecting a profit of 96 cents a share on revenues of $1.06 billion. FMC only delivered 95 cents with revenues of $1.02 billion. The biggest part of their business, the Agricultural Solutions, which represents nearly half of FMC's sales, reported a small +2% revenue growth from a year ago.

In the company press release, Pierre Brondeau, FMC president, CEO and chairman, said: "In the third quarter, market dynamics continued to affect our portfolio. Agricultural markets were impacted by multiple factors around the world, a softening of demand in China affected parts of our Health and Nutrition portfolio, and Argentina continued to weigh on Lithium's results." Brondeau also noted they are concerned over some beverage products in China that have seen two quarters in a row of declining demand.

The weakness in shares of FMC have produced a -24% decline in 2014 versus the S&P 500's +10% gain. Meanwhile FMC's point & figure chart is suggesting the selling will continue and is pointing to a $25.00 target.

Tonight we are suggesting a trigger to buy puts at $55.85. More conservative investors might want to wait for a breakdown under $55.00 instead.

- Suggested Positions -

Long 2015 Jan $55 PUT (FMC150117P55) entry $1.95

11/22/14 new stop @ $57.35
11/04/14 triggered @ $55.85
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

ASML Holding - ASML - close: 105.68 change: -0.23

Stop Loss: 103.65
Target(s): To Be Determined
Current Option Gain/Loss: - 3.4%
Average Daily Volume = 1.0 million
Entry on November 18 at $102.84
Listed on November 11, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
11/24/14: The semiconductor index continued to rally today but ASML did not participate. The company held its investor day today and evidently investors were not too excited with what they heard. The company outlined new long-term goals but the stock gapped open lower. Shares gapped down at $103.45 and underperformed with a -2.0% loss by the closing bell. The open was below our stop loss at $103.65.

- Suggested Positions -

2015 Jan $105 call (ASML150117c105) entry $2.90 exit $2.80 (-3.4%)

11/24/14 stopped out on gap down at $103.45
11/22/14 new stop @ 103.65
11/18/14 triggered on gap higher at $102.84, trigger was $102.75
Option Format: symbol-year-month-day-call-strike

chart: