Option Investor
Newsletter

Daily Newsletter, Tuesday, 11/25/2014

Table of Contents

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

Market Wrap

Crude Reality

by Jim Brown

Click here to email Jim Brown

Oil prices collapsed today and nearly took the market down ahead of Thursday's OPEC meeting.

Market Statistics

Crude oil rose to $76.50 at the open on hopes for a production cut when OPEC meets on Thursday. The rally did not last long once the Rosneft CEO said a drop in Brent prices to $60 would not cause Russia to cut production. There had been rumors that Russia was willing to join with OPEC on a joint production cut so the comments quickly ended that speculation.

Russia produces 9.0 mbpd and given the drop in oil prices they are losing a lot of money that Putin depends on to fund his military aggression and pay the government's bills. Every day Russia loses $315 million dollars because of the drop in crude prices from the June levels. If you do the math that is roughly $2.2 billion a week. That would buy a lot of military arms, ammo and vodka.

A week ago analysts were evenly split on the chance for a production cut but that has moved to favor a cut today. OPEC is expected to either "announce" a 1.0 mbpd cut or claim they are going to enforce existing quotas of 30.0 mbpd, which would be about a 900,000 bpd cut. Neither option will actually reduce the amount of oil because OPEC cheats on production. They will claim one thing and do another. They need the money and with prices so low they actually need to produce more to offset the lack of revenue.

If they were to announce some sort of coordinated action with Russia and Mexico as has been rumored the price of crude would go ballistic on Friday in a thin market.


The drop in oil prices erased the opening gains in the equity markets but by noon stocks were rebounding back into positive territory. Helping to push them higher was a strong bounce in the Q3 GDP. The first revision of the Q3 number rose from 3.55% to 3.9%. That is still below the huge snapback to +4.59% in Q2. If you average the last four quarters of 3.5%, -2.11%, 4.59% and 3.9% to erase the impact of the polar vortex you get a trailing GDP of 3.29% and that is not bad.

However, the estimate for Q4 is only +2.7%. The range of estimates is from 1.2% to 4.2% so there is a significant difference of opinion. Some examples are Deutsche Bank at 4.2%, Goldman Sachs 2.7%, Morgan Stanley 1.7% and Moody's 1.2%.

Q3 revisions were negative for the Q4 outlook. Inventories were revised higher and import/exports were revised lower. Profits rose only +2.1% after rising +8.4% in the prior quarter. However, consumer spending rose from 1.2% to 1.5% in the revision. That was still lower than the +1.75% in Q2.

If the Q4 consensus at +2.7% is correct then the Fed will continue to remain on hold for the foreseeable future. They will worry that the European weakness is weighing on the U.S. economy and they will want to see a couple quarters of above trend growth before hiking rates.


One indicator moving in the opposite direction was consumer confidence for November. The headline number fell from 94.5 to 88.7 and a five-month low. Analysts had been expecting a rise to 97.8. The present conditions component declined from 94.4 to 91.3 and the expectations component declined from 93.8 to 87.0. More than 17.6% of respondents said they saw weaker business conditions over the next six months. That also dimmed expectations for employment. Only 16% of respondents felt that jobs were plentiful.

The decline in confidence was unexpected and especially so since gasoline prices have declined about 50 cents over the last six months. If consumers are losing confidence then the holiday shopping season could fall flat.


Another shocking report was the drop in the Richmond Fed Manufacturing Survey. The headline number fell from October's 20 to 4 for November and the biggest monthly decline in 8 years. New orders collapsed from 22 to 1 and the biggest drop in a decade. Backorders fell from 9 to contraction territory at -2. The only component to rise was inventories from 15 to 20 and that is negative for future growth. The gap between new orders and inventories fell from +7 to -19 and deep into contraction and the largest drop on record. Capex spending plans declined from 25 to 17 and that is down from a high of 38 in September.

This was a significant change in direction and outlook for the Richmond region. They blamed the stronger dollar for weakness in exports and the drop in new orders. The corresponding services survey fell from 27 to 25 and showed that the weakness was only in manufacturing.


The sharp drop in the Richmond Fed survey sent investors running to the bond market. The yield on the ten-year treasury fell to a five-week low at 2.26%. There were some huge block trades to break below the support at 2.3%. One analyst theorized fund managers that had strong gains in the equity market were moving money to treasuries with equities at record highs and the year coming to an end.



After the bell Hewlett Packard (HPQ) reported earnings of $1.06 that was in line with estimates. However, revenue of $28.41 billion missed estimates of $28.76 billion. The guidance for Q4 was for 89 to 93 cents and analysts were looking for 93 cents. For 2015 the company guided for earnings of $3.83-$4.03 compared to estimates for $3.73 so that was very positive. Shares immediately declined to $36 from the $37.83 close.


Who knew a store full of tourist novelties and some greasy country cooking would suddenly be an investor favorite. Cracker Barrel Old Country Store (CBRL) spiked +3% to a new high after posting earnings of $1.42 per share compared to estimates for $1.29. Revenue rose +5% to $683.4 million. Same store sales rose +3.3% thanks to lower gasoline prices that boosted highway traffic. More than 85% of their stores are on interstate highway exits. They raised full year guidance to a range of $5.95-$6.10 compared to prior guidance of $5.80-$5.95. Analysts were expecting $6.02. The company expects to serve 1.4 million meals for Thanksgiving using 24,000 cases of turkey breast. I stop there whenever I am traveling for a decent meal and books on CD to make the drive go faster. If you buy them at one store you can sell them back at another store once you have listened to them. It is as cheap way to pass the time and a novel marketing idea to get repeat traffic for Cracker Barrel.


Tiffany (TIF) posted +4% rise in same store sales but the rest of the earnings were lackluster. Sales in the U.S. rose +10% but sales in Japan fell -12%. Tiffany reported adjusted earnings of 76 cents compared to estimates for 77 cents. Revenue of $959.6 million also missed estimates of $968.9 million. The company cut full year guidance because of the strength in the dollar. Revenue is expected to rise mid to high single digits compared to high single digits in the prior guidance. Since they missed on earnings and revenue and cut guidance you would have expected the stock to decline. However, shares rallied 2.5% on the news.


Tivo (TIVO) reported earnings of 6 cents which missed estimates of 7 cents. Revenue was in line with estimates. Shares declined about 20 cents in afterhours.

Ctrip.com (CTRP) reported adjusted earnings after the bell of 36 cents on revenue of $347 million. The only estimate I could find was 21 cents, which would mean a huge beat but the stock crashed -3.50 after the report.


Analog Devices (ADI) a maker of analog communication chips reported earnings of 69 cents compared to estimates for 68 cents. Revenue rose to $814 million. They guided for revenue in the current quarter to rise +21% to a range of $745-$775 million. The board approved a 37 cent dividend to be paid on December 16th to holders on December 5th. Shares rose more than $1 in afterhours.


After the close the CEO of Herbalife said he was executing 750,000 options that were due to expire in December. The value of the stock at today's close would be about $31.5 million. This could be viewed as vote of confidence in Herbalife. Michael Johnson said he would hold the shares except for those required to pay transaction costs and taxes. Herbalife shares rallied about $2 on the news but then gave it all back.


Twitter (TWTR) was rumored to be in acquisition talks with Shots.com, a selfie sharing social network for Android and iPhones. Shots is backed by Justin Bieber. The app only allows the user to use the front view cameras and you can only take pictures through the app. You can't upload pictures previously taken that exist on the camera. Users can send messages directly to other users.


After the close Hain Celestial (HAIN) announced a 2:1 stock split payable on December 29th to holders of record on December 12th. Shares were up +$1.50 in afterhours. The $109.30 level has been resistance and shares were trading at $110 in afterhours. If it breaks out over $110 I think we could see some short covering and possibly a split run.


Markets

The market rally stumbled on the Richmond Fed Manufacturing Survey, the drop in consumer confidence, the sharp uptick in GDP and falling oil prices. The GDP spike brought back worries about the Fed and rate cuts but the Richmond disaster immediately ended those worries and sent cautious investors into treasuries instead of equities.

When oil prices crash it knocks out one of the biggest sectors in the S&P at 11%. With energy down the S&P will always struggle to make any real gains. With oil down -2% for the day that was a huge anchor for the S&P.

Add in the confusion over the economic numbers and the very low volume in a holiday week and there just was not enough buyers to propel the market higher. We were fortunate the declines were not worse. The Nasdaq big caps continued to lead but they closed well off their intraday highs with only a +4 point gain. The Dow lost -3 points and the S&P gave back -2 points. You could hardly call is a landmark day. Even the Russell 2000 traded flat with only a 0.6 point drop. When the Russell is perfectly flat you know there was no volume and no sense of direction.

The S&P extended its record to 28 consecutive daily closes over the 5-day average. That is the most dating back to 1928 when records began. This is eventually going to bite us in the tail when the trend finally ends. We are setting up for a serious dip at some point in the future. Those kinds of gains typically retrace very quickly when the dive klaxon sounds.


There are rarely any major moves to the downside in Thanksgiving week. This is also month end so the bias should remain to the upside. Once into December we could hit a minefield. I still believe fund managers will chase prices over the next couple weeks but they could be overwhelmed if the market trips over some more economic headlines.

The S&P has used 2,065 as support for the last two days so that is our first warning signal if that level breaks. The 2,035-2,040 level would be backup support but I doubt we will see that this week or early next week because of the month end bias.


The Dow ran into resistance at 17,850 for the last three days and came to a dead stop. There is a pattern of slightly higher lows so there are some buyers nibbling on the dips but the resistance is strong. The Dow was handicapped by losses in Exxon and Chevron as well as Goldman and Home Depot. Visa and United Technology helped to overcome those losers.

Intraday support is close at 17,800 with the likely target for the next several days at 18,000.



The Nasdaq 100 squeezed out a minor gain of +4 points to continue leading the broader market. The index hit round number resistance at 4,300 at the open and was immediately knocked back to 4,280. While the spike was sold the dip was also bought and traders fought it out in a 9 point range the rest of the day.


The same story is true for the Nasdaq Composite with another minor gain to a 14 year high. The 4,800 level is the target for the next several days and could be round number sentiment resistance. The gain since the October lows is continuing but the breadth is shrinking. Fewer stocks are participating. Real support is well back at 4,650 so any material selling could knock off a lot of points in a hurry.



The Russell 2000 managed to punch through resistance at 1,180 last week and then stalled at the prior week's high at 1,188. That level may have caused a problem today but I think the next move higher takes it out. I was very encouraged that the Russell held its gains today. That could be a positive sign for the rest of the week. Support is now the prior 1,180 resistance level.


The next two days are historically bullish. Nothing is guaranteed but retail investors tend to shop in the market on these days instead of at the malls. Early next week there should be a positive bias because of month end money but after Tuesday I would expect some profit taking.

Black Friday weekend is expected to lure 140 million shoppers to the malls. Analysts are expecting the best shopping holiday in 3 years. The National Retail Federation is expecting a +4.1% rise in holiday retail sales and the biggest increase since 2011.

Macy's, JC Penny, Walmart and Best Buy will start their holiday specials Thanksgiving afternoon. Best Buy will offer a Samsung 4K super HD 55 inch TV for $899, down from $1,400.

Forty-six million turkeys will be consumed this weekend out of 235 million for the entire year. Doctors warn that eating turkey and drinking wine is a fatal combination if you are driving home immediately after. The combination causes severe drowsiness.

The average person will consume about 3,000 calories at the actual Thanksgiving meal and another 1,500 on snacks and drinks before the meal. Anyone going back for seconds later in the day can pack on another 2,000 calories. That is 6,500 calories and 45% of them come from fat. With that kind of calorie intake everyone needs to go walk the malls over the weekend. A 155 pound person walking at a leisurely 2.5 mph window browsing pace burns about 200 calories an hour. That means you need to shop for 32.5 hours to burn off those 6,500 calories.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email

 


New Option Plays

Better For You Foods

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

The Hain Celestial Group, Inc. - HAIN - close: 108.57 change: +1.90

Stop Loss: 106.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 615 thousand
Entry on November -- at $---.--
Listed on November 25, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
"Our business continues to benefit from strong growth trends in the organic and natural, better-for-you segment of consumer packaged goods."

That quote is from HAIN's CEO after the company reported its latest earnings results in early November. He's right. Consumers are choosing healthier foods and it looks like a major trend change that could benefit HAIN for a long time.

The company website describes HAIN as, "The Hain Celestial Group, headquartered in Lake Success, NY, is a leading natural and organic food and personal care products company in North America and Europe. Hain Celestial participates in almost all natural food categories with well-known brands that include Celestial Seasonings, Terra, Garden of Eatin', Health Valley, WestSoy, Earth's Best, Arrowhead Mills, DeBoles, Hain Pure Foods, FreeBird, Hollywood, Spectrum Naturals, Spectrum Essentials, Walnut Acres Organic, Imagine Foods, Rice Dream, Soy Dream, Rosetto, Ethnic Gourmet, Yves Veggie Cuisine, Linda McCartney, Realeat, Lima, Grains Noirs, Natumi, JASON, Zia Natural Skincare, Avalon Organics, Alba Botanica and Queen Helene."

HAIN's results have definitely confirmed the trend in consumer spending. They have beaten Wall Street's estimates and guided higher in three out of the last four earnings reports.

The Q4 report in late August this year saw revenues up +26% to $583.8 million. Management raised their guidance as they now expect sales growth of +27% to +30% in 2015.

The company reported their 2015 Q1 numbers on November 6th and sales are accelerating. Wall Street was expecting a profit of $0.67 on revenues of $640.27 million. HAIN delivered a profit of $0.68, which is a +31% increase from a year ago. Revenues were up +34.6% to $642.6 million. These are really impressive results when you consider that includes a voluntary recall of their HAIN nut butters back in August.

Commenting on their Q1 results, Irwin Simon, Founder, President, and CEO of the company said, "We are pleased with another strong start to our fiscal year across all of our segments on a worldwide basis with the highest quarterly net sales in the Company's history."

"Our diverse portfolio of brands and products across multiple categories and our customer base across various channels of distribution enabled us to deliver double-digit sales growth even with the impact of the nut-butter recall initiated in August."

Accompanying these results their Board of Directors also approved a 2-for-1 stock split but shareholders needed to approve an increase in the number of shares outstanding first. The company's annual meeting was a few days ago and shareholders did approve the stock split. That headline came out tonight, after the closing bell.

The 2-for-1 stock split will occur in December. The shareholder record date is December 12th, 2014. The ex-dividend date is expected to be December 29th (this is when HAIN will begin trading post-split).

Shares of HAIN have been consolidating sideways beneath resistance at $110 for the last three weeks. The stock displayed relative strength today and looks poised to breakout past this resistance. The 2-for-1 stock split news could be the catalyst it needed. After hours tonight shares are trading around $110.50. We are expecting HAIN to gap open higher tomorrow morning. I'm suggesting a trigger to buy calls on HAIN if shares trade at $110.25 or higher.

We are not setting an exit target tonight but I will point out that the point & figure chart is bullish and forecasting a long-term $131.00 target.

Trigger @ $110.25 or higher

- Suggested Positions -

Buy the 2015 Jan $115 call (HAIN150117c115) current ask $1.30

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

Daily Chart:



In Play Updates and Reviews

Apple (AAPL) Hits $700 Billion

by James Brown

Click here to email James Brown

Editor's Note:

One of the big stories today was shares of AAPL hitting a record-breaking $700 billion market cap, on an intraday basis.

$700 billion is massive. The next biggest market cap in the U.S. is Exxon Mobil (XOM) around $400 billion. Microsoft (MSFT) is about $391 billion.

Meanwhile a better than expected read on Q3 GDP did not do much for stocks.


Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 117.60 change: -1.03

Stop Loss: 115.85
Target(s): To Be Determined
Current Option Gain/Loss: +130.7%
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:
11/25/14: Shares of AAPL traded up towards $120 per share. The company briefly had a market cap of more than $700 billion. What is becoming a daily trend the stock received yet another price target upgrade with another firm raising their AAPL target to $130.

Momentum is higher but AAPL is clearly overbought. Eventually the stock will see some profit taking. Was today's move a failed rally at round-number resistance near $120? We will not know until it's in the rearview mirror.

Tonight we're moving the stop loss to $115.85. More conservative traders may want to just take profits now.

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

11/25/14 new stop @ 115.85
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: 166.45 change: -1.20

Stop Loss: 163.35
Target(s): To Be Determined
Current Option Gain/Loss: -10.6%
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:
11/25/14: BCR displayed some relative weakness today with a -0.7% decline. The stock closed right at technical support on its 10-dma. If this dip continues we could see BCR testing the $165.00 level. I am not suggesting new positions at this time.

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: 138.87 change: -0.93

Stop Loss: 137.25
Target(s): To Be Determined
Current Option Gain/Loss: +205.1%
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:
11/25/14: I am urging caution on our COST trade. Investors may want to take profits now. The stock underperformed the major indices with a -0.6% decline. Today's move also looks like a potential bearish engulfing candlestick reversal pattern. COST closed on short-term technical support at its 10-dma. If the 10-dma fails then prior resistance near $138.00 could be new support.

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

11/25/14 Caution: investors may want to take profits now
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: 95.99 change: +0.54

Stop Loss: 89.75
Target(s): To Be Determined
Current Option Gain/Loss: +21.0%
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:
11/25/14: DECK shot higher this morning and briefly hit new multi-week highs. Shares pared their gains but still outperformed the major indices with a +0.5% gain.

I am not suggesting new positions at this time.

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: 97.30 change: -0.03

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:
11/25/14: DIN tagged another new high this morning and briefly traded above $98.00. Shares eventually closed flat on the session. If the recent action is any guide then I would expect a dip back toward $96.00-96.25 soon.

The $99-100 area could be overhead resistance and traders may want to consider an early exit in this range.

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: 174.86 change: -0.67

Stop Loss: 169.85
Target(s): To Be Determined
Current Option Gain/Loss: +190.5%
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:
11/25/14: FDX has spent the last couple of days just consolidating sideways on either side of the $175.00 mark. Should the market see any pullback then FDX should find support at prior resistance near $173.00 and then at $170.00.

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


The Greenbrier Companies - GBX - close: 66.22 change: -0.21

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

Comments:
11/25/14: GBX spent today's session treading water on either side of the $66.00 level. There is no change from last night's new play description.

Earlier Comments: November 24, 2014:
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 $4.50

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


Northrop Grumman - NOC - close: 141.56 change: +0.84

Stop Loss: 135.90
Target(s): To Be Determined
Current Option Gain/Loss: + 6.6%
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:
11/25/14: NOC continues to shoot higher and shares outperformed the market with a +0.59% gain on Tuesday. If you're looking for an entry point I'd consider waiting for a new dip near $140.00.

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: 76.15 change: -0.03

Stop Loss: 71.75
Target(s): To Be Determined
Current Option Gain/Loss: -10.0%
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:
11/25/14: The SOX semiconductor index spent today's session drifting sideways in a very narrow range. NXPI was showing some relative strength this morning and almost hit $78 but the rally faded. NXPI closed almost flat on the day.

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: 96.05 change: -0.52

Stop Loss: 92.85
Target(s): To Be Determined
Current Option Gain/Loss: +25.0%
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:
11/25/14: After big gains yesterday PSMT experienced some profit taking today with a -0.5% decline. Trading was pretty light on Tuesday. Early morning strength quickly faded but PSMT bounced near the 10-dma. Prior resistance near $97 and its simple 300-dma continues to be an obstacle for PSMT.

I am not suggesting new positions at this time.

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: 104.84 change: +0.16

Stop Loss: 102.45
Target(s): To Be Determined
Current Option Gain/Loss: +84.5%
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:
11/25/14: The QQQ eked out a small gain but all the strength was this morning. Shares of this ETF traded sideways in a very narrow range most of the session. Any market weakness probably sees the QQQ dip to its 10-dma near $103.50.

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: 239.82 change: -2.21

Stop Loss: 238.25
Target(s): To Be Determined
Current Option Gain/Loss: + 63.2%
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:
11/25/14: Is this a top in shares of SHW? It's only Tuesday but SHW is poised to break its string of six up weeks in a row. Shares underperformed the market's major indices with a -0.9% decline. The MACD indicator on the daily chart has gone negative for the first time in weeks. Prior resistance near $240.00 is holding up as support for the moment but SHW looks ready to break down tomorrow. We could see SHW hit our stop loss at $238.25.

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: 54.09 change: -0.04

Stop Loss: 52.25
Target(s): To Be Determined
Current Option Gain/Loss: +281.8%
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:
11/25/14: Tuesday proved to be a pretty quiet day for the SMH. If stocks see any pullback the SMH will probably drop to short-term support in the $52.50-53.00 zone pretty quickly.

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: 70.67 change: +0.67

Stop Loss: 67.90
Target(s): To Be Determined
Current Option Gain/Loss: -25.0%
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:
11/25/14: Shares of UA outperformed the broader market on Tuesday with a +0.9% gain. The stock is testing last week's intraday highs. Investors might want to wait for a rally past Friday's high of $71.19 before initiating positions.

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: 119.02 change: +3.28

Stop Loss: 112.25
Target(s): To Be Determined
Current Option Gain/Loss: +53.3%
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:
11/25/14: URI soared today with a +2.8% gain thanks to bullish analyst comments. A Wall Street firm raised their price target on URI to $135.00. This stock is now approaching round-number and prior price resistance near $120.00.

I am not suggesting new positions at this time.

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: 56.21 change: -0.52

Stop Loss: 57.35
Target(s): To Be Determined
Current Option Gain/Loss: -43.5%
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:
11/25/14: FMC is retreating from technical resistance at its 50-dma, which is directly overhead. Once again the stock is poised for a breakdown to new relative lows. Last week's intraday low was $55.81. I would use a drop to $55.75 as a new entry point to buy puts.

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