Option Investor
Newsletter

Daily Newsletter, Monday, 12/8/2014

Table of Contents

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

Market Wrap

Market Slips On Oil

by Thomas Hughes

Click here to email Thomas Hughes
Weak data from Asia and wildly declining oil prices had traders on edge but renewed support from the nations economists is pointing to increased growth in the US.

Introduction

The day started out with equities in the red and they never recovered the loss. The drop was due primarily to the decline in oil but was also impacted by other factors. At first it seemed like mixed economic signals would hold the bulls and the bears in check. Weaker than expected data from Japan and China plus an upgrade of US GDP expectations had a mixed effect on global trading. Asian market were largely higher while those in Europe and the US were both down. In Japan weak 3rd quarter GDP was revised lower, to -1.9%, adding pressure on both the government and the BOJ to do more to support the floundering economy. In China weak trade data shows that imports and exports declined in November. This is of course in the face of a strengthening US economy as demonstrated by the much stronger than expected NFP numbers last Friday.

Market Statistics

Global events had their impact but the real drag on the market comes down to two things; McDonald's and oil prices. McDonald's reported weak sales and weak same store comps, driving its share price down by close to -4%. Oil prices also fell nearly -4% and carried the oil complex with it; Exxon and Chevron, both Dow Components, were down -2% and -3% respectively.

The indices were indicated lower from the earliest. The SPX was indicated to open lower by about 5 points and that held steady until the bell. After the opening bell the market held steady for the fist 20 minutes or so and then moved up to test last weeks closing prices. Today's high had been reached by 10AM and then the market began to drift lower. A little after noon the market began to sell off and quickly fell to a new daily low. Selling persisted, led primarily by the aforementioned stocks and sector, into the afternoon before intr-aday bottom was hit. Today's declines were not recovered but the indices were able to close off of the low.

Economic Calendar

The Economy

There was no US economic data this morning but the latest survey from NABE reflects growing optimism over the economy. According to the National Association of Business Economist the consensus estimate for 2015 US GDP growth has risen to 3.1% from the previously estimated 2.1%. The latest survey also shows that unemployment is expected to fall to 5.4% by the end of next year. Inflation is only expected to rise a tenth, to 1.7%, while consumer spending is expected to gain a half percent. Housing and wages are both also expected to improve next with production levels the only area expected to see declines.

The government is scheduled to run out of money again this Thursday. According to the latest reports congress is close to reaching a deal to ensure there isn't a shut down similar to the one we had in October 2013.

According to Mark Zandi's latest report Moody's Survey of Business Confidence has risen to new, record, highs. In fact, the words he uses are “surged to record highs”. He goes on to say that confidence in the US is “booming” while it is only strong in Asia. Europe and South America are still struggling but at least in Europe they are “getting better”. He says that “US businesses are extraordinarily upbeat” and that “prospects into next year are especially strong”.

There is some important data coming up this week. Tomorrow look for whole sale inventories and the JOLTs report on job openings. One of the key metrics of the JOLTs report is the quits rate which measures the number of jobs open due to voluntary separation. It is considered a good indicator of labor market health as more people will leave their job when the labor market is strong because they are more confident of finding new and/or better work. Wednesday the Treasury Budget is the only release and then on Thursday jobless claims, retail sales, import/export prices and business inventories. Friday wraps the week with PPI and Michigan Sentiment. Retail sales are expected to rise by nearly a half percent to 0.7% while PPI is largely expected to remain unchanged.

The Oil Index

Oil prices continued to slide today as yet another major analyst lowered its outlook. Morgan Stanley issued a report stating its 2015 forecast for Brent crude price is around $53 a barrel. One major issue for the down grade is over supply which the company blamed on OPEC. Morgan Stanley says that without intervention from OPEC the market will become imbalanced and could push prices even lower. WTI and Brent both fell on the news, roughly 4%, to new 5 year lows. With little to support prices it is possible that WTI and Brent could keep sliding until it is obvious demand and supply are in balance.

The Oil Index fell -4% today as well, and broke through support at 1336. The index is approaching a 25% loss from its peak last summer and in danger of further declines. Low oil prices and high supply are a bad combination for the oil producers and could combine to drive them even lower. Assuming a down trend in the index, the indicators are in line with a bearish trend following signal. MACD is moving up to make a new bearish peak and stochastic is making a strong bearish crossover. One potential target for this move is about 75 points lower along a long term trend line dating back to a series of bottoms in 2010, 2011 and 2012.


The Gold Index

Gold prices firmed today and made their way back above $1200, closing the US session near $1203. There was some movement into the metal on the decline in equities as well as relative dollar weakness which both helped lift prices. Gold climbed about $20 from the low to trade just below $1210 before hitting resistance. Prices remain volatile and trading around $1200 with no clear fundamental factor driving them. Gold may be bottoming but it is not time to be chasing prices. Aside from day to day swings based on economic data and news the next major catalyst in this market may be the convergence of central bank meetings scheduled for next week.

The Gold Index fell today but bounced from support. The index bounced from the long term support line with a small candle and weakening indicators. It appears to be testing long term support and could continue to do so into the near term. Support is located at $66.59, the 100% retracement of the 2008-2011 bull market in gold. If support holds this would be the first confirmation of this level and could lead to a rise in price. If the retracement doesn't hold the index will likely move down to the long term set last month at least. This level would be the next target to find support but will depend on gold prices.


In The News, Story Stocks and Earnings

Three main stocks were the root cause in today's Dow drop. McDonald's, Chevron and Exxon. McDonald's fell nearly 4% in the premarket session. The global fast food mega giant reported sales were down 6% worldwide with noticeable declines in comp store sales and US sales. This is counter to expectations for the company to at least maintain sales volume and highlights the growing decline in old school fast food versus its competitors who are more conscious of consumer food trends. The stock dropped below potential support with bearish indicators. Watch the $93.85 level for signs of resistance with downside targets near $90. Next earnings is 1/22/2015.


Chevron and Exxon both fell with the drop and bear market in oil. Chevron fell 3.75% to hit support along the 106.75 level. This level is the low set in October and could be a bottom for the stock. Indicators are consistent with support but oil prices could sweep the stock lower if they keep falling. If Chevron breaks this level it will be a new 12 month low and could carry the stock lower.


Exxon fell less, only 2.25%, and is still well above the lows set in October. Shares of this stock are approaching support, about $1.50 below the current level, with the October low still $2.50 below that. If oil falls further, or persists at the current levels, Exxon could sink to this low, near $87.50. The indicators are suggestive of support but like with Chevron, won't hold up to much if oil prices keep tanking. At these levels both stocks are paying decent dividends, Exxon 3% and Chevron 4%, so could attract some buyers and add to volatility.


Diamond Foods released earnings after the bell today and reported much better than expected. The company reported $0.28 per share, 4 cents ahead of estimates, and sent share prices higher in after hours trading. Looking at the chart the stock has been trading sideways to down over the last two weeks, building up to today's report. Today, the stock broke down through the 30 day moving average, dropping from resistance at $30, with bearish indicators. MACD is peaking to the downside and stochastic is making a double bearish crossover, that is, it is crossing the lower signal line at the same time %K is crossing %D. The set up looked pretty bearish going into the close but may prove to be a decent entry point if the after hours action holds up tomorrow.


The Indices

The indices fell today, the biggest decline in weeks. The losses were led primarily by the energy sector but the broader market was not immune. Surprisingly, the Dow Jones Transportation Index had the largest decline of the major indices, falling 1.30%. The decline was halted at the 9,000 level, just above the short term 30 day moving average and a level looking like support. The indicators are still showing decline but so long as support keeps holding the declines are serving to alleviate technical overbought conditions. Both MACD and stochastic are consistent with support in the short term as well, with 9,000 the first most obvious target. A break below this level could bring the index down do 8,750.


The NASDAQ Composite fell only -0.84% but is looking a little more top heavy than the transports. The index is creating similar price action but the indicators are much weaker. Stochastic is dipping below the upper signal line and MACD momentum is gaining bearishness. The index is a little extended as well and could easily drop back down to the 30 day moving average, about 65 points lower. The short and long term trends are up but it is possible a near term crest has been reached. There is some data due out this week that could sustain prices but the next major economic event is the FOMC meeting in ten weeks.


The S&P 500 lost 0.73% today and is approaching potential round number support at 2,050. Today's action found support at 2,055 but the indicators are declining so further testing of support is likely. MACD is gaining momentum to the downside and stochastic is about to cross below the upper signal line. The index could continue lower based on the indicators alone but there is additional support just below in the form of the 30 day moving average and then below that along 2,020 near the September peak. The index could be cresting a peak, about to pull back or merely consolidating. It has made quite a substantial gain in the last 6 weeks and profit taking is never a bad idea, but how low a dip will go is very questionable. The trend is up and the economic data supports it so any dip that materializes now will be a buying opportunity for me.


The Dow Jones Industrial Average made the smallest decline today despite containing some of the hardest hit companies. The blue chips, as a whole, lost only 0.59% compared to the losses sustained by Chevron, Exxon and McDonald's. The index created a medium bodied black candle and formed a potential dark cloud cover pattern, similar to price action in the other indices. The indicators are also creating bearish signals and indicative of a test of support but there is no real reason I can see for one to occur, today's drop being driven by oil prices which are bad for oil companies but great for everyone eles. First target, on a decline, is the short term moving average about 300 points lower.


It looks like the indices are setting up to test support. Depending on which index you are looking at support could be just beneath current levels or up to 1.5% lower. Several reasons exist for such a pullback to occur but all boil down to locking in profits ahead of the upcoming triple shot of central bank meetings.

There is still important economic data between now and the FOMC meeting that could influence the market. This week is a little light but includes jobless claims, JOLTS, PPI, Michigan Sentiment and business/wholesale inventories. Next week is pretty full, aside from the FOMC there are nearly 2 dozen reports including reads on housing, manufacturing and leading indicators. The trends are up, as are the economic expectations, so any test of support will likely be a buying opportunity. Especially if they are driven by another decline in oil prices.

Until then, remember the trend!

Thomas Hughes

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New Option Plays

Stocks Slip Lower As Oil Plunges

by James Brown

Click here to email James Brown

Editor's Note:

The sell-off in crude oil accelerated on Monday. Energy-related stocks were crushed (again) and this weighed heavily on the entire market.

Major European markets, the U.S. markets, and Japan all closed lower today. China was the exception.

No one knows yet if this is just a one-day dip in the market's rally or the start of something deeper. Lately dips have been bullish entry points in the U.S. market.

Tonight we decided not to add any new trades. I suggest investors double check their stop loss placement. How will you fare if the market weakness continues tomorrow?




In Play Updates and Reviews

Good Bye, Costco

by James Brown

Click here to email James Brown

Editor's Note:

Our plan was to exit the COST trade at the closing bell today.

We also closed UA this morning. HBI has been removed.


Current Portfolio:


CALL Play Updates

Aetna Inc. - AET - close: 90.12 change: -0.50

Stop Loss: 85.75
Target(s): To Be Determined
Current Option Gain/Loss: +27.8%
Average Daily Volume = 2.45 million
Entry on December 03 at $88.65
Listed on December 02, 2014
Time Frame: Exit PRIOR to January expiration
New Positions: see below

Comments:
12/08/14: Stocks retreated on Monday. Shares of AET briefly hit a new high at $91.25 before succumbing to the market's widespread pullback. If this dip continues then AET should find support near $88.00 or at its simple 10-dma currently near $88.35. I am not suggesting new positions at this time.

Earlier Comments: December 2, 2014:
AET is in the healthcare sector. According to a recent press release, "Aetna is one of the nation's leading diversified health care benefits companies, serving an estimated 46 million people with information and resources to help them make better informed decisions about their health care. Aetna's customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups and expatriates."

If you study a one-year chart of AET the stock has definitely seen its ups and downs. That's because the healthcare industry has faced a number of issues. AET's CEO commented on this past year in their latest post-earnings conference call.

Mark T. Bertolini, Aetna chairman, CEO and president, said, "some of the challenges we face this year, including pricing solving for nearly $1 billion in ACA related industry fees and taxes, solving for the largest rate cuts to the Medicare Advantage program in our recent history, navigating a host of new regulatory requirements in our small group and individual businesses, managing through a turbulent launch in public exchanges and controlling pharmacy costs in a year where heavy priced Hepatitis C treatments first became available and treatment guidelines changed in unforeseen ways." (ACA stands for Affordable Care Act, a.k.a. Obamacare).

In spite of all these challenges shares of AET are outperforming the major indices with a +27% gain in 2014 compared to a +11% gain in the S&P 500. AET's strength is due to the company's earnings performance. They have beaten Wall Street's earnings estimates and raised guidance three quarters in a row.

AET's most recent quarterly report was October 28th. Analysts were expecting a profit of $1.58 a share on revenues of $14.7 billion. AET delivered a profit of $1.79 a share. Revenues were up +13% to match estimates. The company said they added 470,000 new medical insurance customers in the third quarter, putting the total at 23.6 million.

Bertolini commented on their results, "Aetna reported solid third-quarter results, including our 10th consecutive quarter of membership growth, record quarterly operating revenues, and continued high single-digit pretax operating margin."

The major healthcare companies are reaping the benefits of Obamacare as more people sign up. Management raised their full year 2014 earnings guidance into the $6.60-6.70 zone versus Wall Street's estimate of $6.57.

Just last month AET raised their quarterly dividend 11% to 25 cents a share and added $1 billion to its stock buyback program, up from $464 million. In the last two months the stock has received multiple price target upgrades into the $95-100 zone. The point & figure chart is bullish with a $112.00 target.

AET's bullish trend of higher lows has just produced a breakout past resistance to new all-time highs. Tonight we are suggesting a trigger to buy calls at $88.65.

- Suggested Positions -

Long 2015 Jan $90 call (AET150117C90) entry $1.76

12/03/14 triggered @ 88.65
Option Format: symbol-year-month-day-call-strike


CR Bard Inc. - BCR - close: 172.68 change: +0.31

Stop Loss: 165.85
Target(s): To Be Determined
Current Option Gain/Loss: +82.5%
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:
12/08/14: BCR managed to buck the market's trend today and post a gain. Yet shares of BCR spent almost the entire day fading lower from its morning spike higher. The $174.50-175.00 area remains overhead resistance. I'm 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

12/01/14 new stop @ 165.85
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


Deckers Outdoor Corp. - DECK - close: 98.30 change: -0.27

Stop Loss: 93.65
Target(s): To Be Determined
Current Option Gain/Loss: +47.4%
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:
12/08/14: DECK experienced some minor profit taking on Monday. Traders started buying the dip this afternoon. I don't see any changes from my weekend comments. I am not suggesting new positions. More conservative traders may want to plan on an exit in the $99.00-100 area.

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

11/29/14 new stop @ 93.65
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: 99.17 change: -0.11

Stop Loss: 96.85
Target(s): To Be Determined
Current Option Gain/Loss: +258.3%
Average Daily Volume = 154 thousand
Entry on November 05 at $91.55
Listed on November 04, 2014
Time Frame: Exit PRIOR to December 20th option expiration
New Positions: see below

Comments:
12/08/14: DIN held up pretty well. Shares only suffered a small decline. Our call option actually rose in value.

The stock looks poised to breakout past resistance at the $100 level soon. Yet more conservative traders may want to take profits now since our December options expire in two weeks.

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

12/06/14 only two weeks left on our December options
11/29/14 new stop @ 96.85
11/26/14 new stop @ 94.85, traders may want to take profits here!
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


The Walt Disney Co. - DIS - close: 93.80 change: +0.04

Stop Loss: 88.65
Target(s): To Be Determined
Current Option Gain/Loss: +11.7%
Average Daily Volume = 6.5 million
Entry on December 01 at $92.63
Listed on November 29, 2014
Time Frame: exit prior to February expiration
New Positions: see below

Comments:
12/08/14: Shares of DIS started the day with gains thanks to bullish analyst coverage. Eventually shares faded lower with the broader market and closed virtually unchanged on the session.

I'm not suggesting new positions at current levels. A dip near $92.00, which should be support, would be a better entry point.

Earlier Comments: November 29, 2014:
Disney is an American icon. The company is over 90 years old. They have grown into a massive content generating giant. Today DIS runs five business segments. Their media networks include broadcast, cable, radio, publishing, and digital businesses headlined by their Disney/ABC television group and ESPN Inc. DIS' parks and resort business includes Disneyland, Disneyworld, plus theme parks in Tokyo, Paris, Hong Kong, Shanghai, and a cruise line.

The company's products division licenses the company's horde of names, characters, and intellectual property to a wide range of products. They've also jumped into the online world with their Disney Interactive division. Last but not least is the Walt Disney Studios segment. Disney started making movies 90 years ago. Today their studio business includes Disney animation, Pixar Animation, Disneynature, Disney Studios Motion Pictures, Disney music group, Touchstone Pictures, and Marvel Studios.

Their movie business has been a money maker over the years with huge hits like the Pirates of the Caribbean franchise, Tangled, Wreck-it Ralph. Last year they released the animated film "Frozen", which has turned into the largest grossing animated movie of all time. Pixar has a stable of successful movies that have grossed almost $9 billion. DIS is also mining gold in Marvel Entertainment's library of over 8,000 characters of comic book history. Marvel had two big hits this year Captain America: Winter Soldier and Guardians of the Galaxy.

Back in 2012 Disney purchased Lucasfilm and all the Star Wars properties from George Lucas for $4 billion. The company is busy filming the next three episodes of the Star Wars franchise. This weekend DIS released the teaser trailer for episode 7, The Force Awakens. It has been shocking to see just how much hype and buzz this teaser has generated. There are stories and links to this trailer just about everywhere you go on the Internet this weekend. It has reawakened fan interest in the Star Wars story and DIS has a whole year to feed the hype until episode seven's release in December 2015. Analysts are already predicting that "The Force Awakens" will generate $1.2 billion at the global box office.

I expanded on the movie business above because it was Disney's studio segment that really drove earnings last quarter. DIS has been beating Wall Street's estimates on both the top and bottom line four quarters in a row. The most recent earnings report was November 6th (DIS' Q4). Analysts were expecting a profit of $0.88 a share on revenues of $12.37 billion. DIS reported $0.89 a share with revenues rising +7.1% to $12.39 billion. The movie division saw its quarterly revenues soar +18% to $1.8 billion. Altogether the company reported record-breaking revenues for all five businesses in 2014.

The correction in DIS' stock from the September highs to the October lows was painful but shares have come roaring back. Now after consolidating sideways between $88.75 and $92.00 this last month the stock is rested and ready to run. The breakout past resistance at $92.00 looks like an entry point to buy calls.

I suspect the $100.00 level could be round-number, psychological resistance but the point & figure chart is very bullish and forecasting a long-term $119.00 target. Tonight we are suggesting traders buy calls on Monday morning at the opening bell.

- Suggested Positions -

Long 2015 Feb $95 call (DIS150220C95) entry $1.80

12/01/14 trade begins. DIS opens at $92.63
Option Format: symbol-year-month-day-call-strike


FedEx Corp. - FDX - close: 181.53 change: -0.50

Stop Loss: 176.65
Target(s): To Be Determined
Current Option Gain/Loss: +313.2%
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:
12/08/14: Another big decline for crude oil initially helped fuel gains for FDX. Yet the market's widespread decline probably sparked some profit taking. FDX eventually closed in negative territory.

I am not suggesting new positions. FDX is very short-term overbought and due for a correction. More conservative investors may want to lock in potential gains now.

NOTE: FDX is scheduled to report earnings on December 17th. We will likely exit prior to the report to avoid holding over the announcement.

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

12/02/14 new stop @ 176.65
11/29/14 new stop @ 174.25
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 Hain Celestial Group, Inc. - HAIN - close: 115.28 change: -0.05

Stop Loss: 109.85
Target(s): To Be Determined
Current Option Gain/Loss: +88.9%
Average Daily Volume = 615 thousand
Entry on November 26 at $110.25
Listed on November 25, 2014
Time Frame: Plan on exiting PRIOR to the stock split
New Positions: see below

Comments:
12/08/14: HAIN is another stock that hit new highs this morning only to see those highs fade. Shares eventually closed around unchanged. If the market dip continues we could see HAIN slip toward its 10-dma near $112.50.

Keep in mind that HAIN's 2-for-1 stock split is December 30th. Yet the shareholder record date for the split is December 12th and we suggesting investors turning more defensive on the record date with a higher stop loss. We will plan on exiting prior to the split on Dec. 30th.

I am not suggesting new positions at this time.

Earlier Comments: November 25, 2014:
"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.

- Suggested Positions -

Long 2015 Jan $115 call (HAIN150117c115) entry $1.80

11/29/14 new stop @ 109.85
11/26/14 triggered @ $110.25
Option Format: symbol-year-month-day-call-strike


The Home Depot - HD - close: 100.43 change: +0.79

Stop Loss: 97.25
Target(s): To Be Determined
Current Option Gain/Loss: + 8.3%
Average Daily Volume = 6.4 million
Entry on December 08 at $100.25
Listed on December 06, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/08/14: HD ignored the market's weakness and continued to rally on Monday. It didn't hurt that shares were upgraded with a new $110 price target before the opening bell.

HD pushed past resistance near $100 and hit our suggested entry point to buy calls at $100.25. I would still consider new positions now at current levels. However, traders may want to make sure the broader market is not accelerating lower on Tuesday morning before initiating positions.

Earlier Comments: December 6, 2014:
Shares of HD ended the week at an all-time closing high, just below the $100 mark. The company had a bit of a rough start to 2014. They missed estimates on both the top and bottom line when they reported back in February and management lowered their forward guidance. They missed estimates again in May. Momentum changed with their August earnings report as HD beat Wall Street's bottom line estimate and raised their 2015 guidance.

HD appears to be benefitting from the growing U.S. economy. Falling unemployment means more people are working. Homebuilders are feeling confidence. The U.S. is seeing strong housing starts. Consumers are remodeling their homes. The do-it-yourself trend remains strong. HD is starting to see growth in the "connected home" concept, which is part of the Internet of Things (IoT) with remote control garage doors, home monitoring, thermostats, and light fixtures.

HD is in the services sector. According to the company website, "The Home Depot is the world's largest home improvement specialty retailer, with 2,269 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. In fiscal 2013, The Home Depot had sales of $78.8 billion and earnings of $5.4 billion. The Company employs more than 300,000 associates."

Investors were keenly focused on the company's latest earnings report, HD's Q3 report, which came out on November 18th. Analysts wanted to know if the massive data breach reported by HD in September would negatively impact sales. It looks like the data breach has been overlooked by most if HD's customers.

Wall Street was looking for Q3 results of $1.14 per share on revenues of $20.47 billion. HD said their earnings per share rose +21% to $1.15 (up from $0.95 a year ago). Revenues improved +5.4% to $20.52 billion. The company said their overall comparable store sales were up +5.2% while inside the U.S. comps were up +5.8%. Online sales surged +40%.

HD gave relatively bullish guidance. They still expect +21% earnings growth in 2015. However, they noted that current guidance does not include any probable losses from the data breach. Last year Target (TGT) was a high-profile company that confessed to a huge data breach where millions of customer credit card data was stolen. This year Home Depot has been another high-profile company targeted by hackers.

HD said approximately 56 million cards may have been compromised. They have since plugged the hole in their cyber security. HD did confess in a recent SEC filing that they are facing 44 civil lawsuits in U.S. and Canada in response to the data breach. In spite of all the bad news investors continue to bid the stock higher.

Since HD's earnings report in November the stock has received several price target upgrades. The point & figure chart is also bullish and forecasting at $110 target.

Friday's November jobs report shows that the U.S. economy could be picking up speed, which would be bullish for HD. It looks like shares are going to breakout past significant round-number, psychological resistance at the $100 level.

Tonight we are suggesting a trigger to buy calls at $100.25.

Interesting factoid: HD's last stock split was a 3-for-2 split back in 1999 in the $90-100 range. I'm not predicting they will announce a new split but you never know.

- Suggested Positions -

Long FEB $105 CALL (HD150220C105) entry $1.21

12/08/14 triggered @ 100.25
Option Format: symbol-year-month-day-call-strike


Northrop Grumman - NOC - close: 146.57 change: -1.12

Stop Loss: 144.85
Target(s): To Be Determined
Current Option Gain/Loss: +193.3%
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:
12/08/14: After big gains on Friday is wasn't surprising to see a little profit taking in NOC on Monday. Shares slipped -0.75%, which was in-line with the S&P 500's pullback today.

Tonight we are raising the stop loss to $144.85. I am not suggesting new positions.

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

12/08/14 new stop @ 144.85
12/06/14 new stop @ 143.85
12/01/14 NOC has broken short-term support and looks poised to hit our stop loss
11/29/14 new stop @ 138.65
11/21/14 triggered @ 140.25
Option Format: symbol-year-month-day-call-strike


Red Robin Gourmet Burgers - RRGB - close: 72.38 change: +0.76

Stop Loss: 67.35
Target(s): To Be Determined
Current Option Gain/Loss: +28.8%
Average Daily Volume = 214 thousand
Entry on December 02 at $70.55
Listed on December 01, 2014
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
12/08/14: Falling oil prices mean cheaper gas at the pump and that means more money for consumers to spend on restaurants. Shares of RRGB recovered from its intraday lows and outperformed the market with a +1.0% gain on Monday.

Earlier Comments: December 1, 2014:
RRGB is part of the services industry. They operate a chain of casual dining restaurants. According to a company press release, "Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., is the Gourmet Burger Authority, famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries in a fun environment welcoming to guests of all ages. There are more than 500 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements."

After big gains in 2013 the stock has had a rocky year in 2014. They beat earnings back in February but revenues missed the estimate. The stock rallied anyway. In May they reported earnings that beat both the top and bottom line estimates and shares soared. Then in August the stock reported its Q2 numbers that missed Wall Street's estimates by a wide margin. You can see the plunge lower on the daily chart.

It would appear that August may have been a one-quarter anomaly. RRGB reported their latest quarterly results on November 4th. Analysts were expecting a profit of $0.34 a share on revenues of $267.65 million. RRGB delivered earnings of $0.50 a share. That's a +56% increase from a year ago. Revenues missed estimates by a small margin at $267.4 million but that's still a +16% increase. The company said their number of guests were down -2.3% but the average bill was up +3.2%. Management expects comparable sales to rise +3% for fiscal 2014 and they believe RRGB will see operating profit margins of 21.3%. The stock soared on this report.

Casual dining stocks should see a big benefit from lower crude oil prices. Lower oil means lower gasoline prices at the pump. Gas prices have fallen to four-year lows in recent weeks. That means more disposable income for consumers to spend. After the OPEC decision last week we could see depressed oil prices for a long time.

Currently shares of RRGB have been consolidating gains in a sideways pattern under resistance near $70.00 the last couple of weeks. A breakout past $70.00 could spark some short covering. The most recent data listed short interest at 12.7% of the very small 13.8 million share float. Currently the Point & Figure chart is very bullish with a long-term target of $115.00.

The November intraday high was $70.45. Tonight I am suggesting a trigger to buy calls at $70.55.

- Suggested Positions -

Long 2015 Jan $70 call (RRGB150117c70) entry $2.95

12/02/14 triggered @ 70.55
Option Format: symbol-year-month-day-call-strike


The Sherwin-Williams Co. - SHW - close: 249.50 change: +2.63

Stop Loss: 238.25
Target(s): To Be Determined
Current Option Gain/Loss: +220.5%
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:
12/08/14: SHW was showing relative strength again with a +1.0% gain on Monday. The stock is on the verge of breaking out past round-number resistance at the $250.00 mark.

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: 55.76 change: -0.77

Stop Loss: 53.85
Target(s): To Be Determined
Current Option Gain/Loss: +390.9%
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:
12/08/14: Semiconductor stocks hit some profit taking today with the SMH down -1.3%. Yet the ETF did not even tag its rising 10-dma before starting to pare its losses.

I don't see any changes from my prior comments. The path of least resistance is up but the SMH is very overbought and due for a correction. Investors will want to strongly consider taking profits now. I am not suggesting new positions at this time.

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

11/29/14 new stop @ 53.85
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


Zebra Technologies - ZBRA - close: 75.28 change: -1.21

Stop Loss: 74.75
Target(s): To Be Determined
Current Option Gain/Loss: -39.0%
Average Daily Volume = 489 thousand
Entry on December 05 at $76.90
Listed on December 04, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
12/08/14: The market-wide profit taking today sparked a -1.5% drop in ZBRA. Shares did trade under what should be support at $75.00 and almost hit our stop loss at $74.75 before paring its losses. If the market decline continues tomorrow we could see ZBRA hit our stop. Otherwise, a bounce from current levels would be a new bullish entry point to buy calls. In the prior update I also suggested an alternative entry - a breakout past $77.30.

Earlier Comments: December 4th, 2014:
ZBRA is in the industrial goods sector. They specialize in barcode, receipt, kiosk, and RFID printers and supplies. The company's equipment is used by the vast majority of Fortune 500 companies. They recently purchased Motorola Solutions Enterprise business.

Today the company is focusing on the Internet of Things (IoT). ZBRA's CEO, Mr. Anders Gustafsson, said, "Over the last two years, there has been a growing need for organizations to obtain a full picture of their business operations. I believe that with these survey results, it is clear that enterprises in key industries globally are adopting Internet of Things solutions to arm themselves with the real-time data and intelligence to become smarter and more connected. At Zebra, we believe that IoT and visibility solutions can help businesses reach new levels of efficiency and deliver greater value for customers."

ZBRA has zero debt and has been consistently beating Wall Street's earnings estimates. Their latest report was November 4th. Analysts were looking for a profit of $0.87 a share on revenues of $292 million. ZBRA delivered $0.93 a share, which is a +22.9% increase from the same quarter a year ago. Revenues were up +15% to $303.3 million.

The company said its sales rose in all geographic regions and hit a record quarterly revenues. Sales in Asia were up +9%, in Latin America +11%, in North America +16%, and in Middle East and Africa sales were up +19%. ZBRA also reported that its gross margins improved from 48.8% in 2013 to 50.0% in the recent quarter. Gustafsson said, "Favorable business momentum is continuing into the fourth quarter."

The stock has spent almost a month consolidating sideways in the $70-75 zone. The last couple of days have seen a bullish breakout through key resistance. Traders were buying the dip today. If this rally continues we want to hop on board. The point & figure chart is bullish and forecasting a long-term target of $105.00.

Tonight we are suggesting a trigger to buy calls at $76.85.

- Suggested Positions -

Long FEB $80 CALL (ZBRA150220C80) entry $2.95

12/05/14 triggered on gap open at $76.90, suggested entry was $76.85
Option Format: symbol-year-month-day-call-strike




PUT Play Updates


Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

Costco Wholesale - COST - close: 142.33 change: -0.92

Stop Loss: 141.25
Target(s): To Be Determined
Current Option Gain/Loss: +364.3%
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 10th
New Positions: see below

Comments:
12/08/14: Our plan was to exit the COST trade today at the closing bell. Earnings are coming up on December 10th and we do not want to hold over the announcement.

- Suggested Positions -

DEC $135 call (COST141220c135) entry $1.54 exit $7.15 (+364.3%)

12/08/14 planned exit at the close
12/06/14 prepare to exit on Monday at the close
12/06/14 new stop @ 141.25
11/29/14 new stop @ 138.65
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

chart:


Hanesbrands Inc. - HBI - close: 113.17 change: +1.30

Stop Loss: 111.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 786 thousand
Entry on December -- at $---.--
Listed on December 02, 2014
Time Frame: Exit prior to 2015 January option expiration
New Positions: see below

Comments:
12/08/14: HBI is not cooperating. The bounce from support near $110 has rolled over under a new short-term trend of lower highs. The stock underperformed the broader market today with a -2.4% decline. Our trade has not opened yet. Tonight we are removing HBI as a candidate.

Trade did not open.

12/08/14 removed from the newsletter, suggested entry was $115.05
12/04/14 down sharply in reaction to GIL's earning miss and warning
Option Format: symbol-year-month-day-call-strike

chart:


Under Armour, Inc. - UA - close: 68.63 change: -0.80

Stop Loss: 68.85
Target(s): To Be Determined
Current Option Gain/Loss: -59.4%
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:
12/08/14: We have been growing concerned with UA's performance lately. In the weekend newsletter we decided to exit this trade early on Monday morning. Shares opened at $69.38 then spiked up toward its 10-dma, but like last week the 10-dma remains overhead resistance. UA eventually underperformed the broader market with a -1.1% decline. The stock looks poised for more weakness.

- Suggested Positions -

2015 Jan $75 call (UA150117c75) entry $1.60 exit $0.65 (-59.4%)

12/08/14 planned exit at the opening bell.
12/06/14 prepare to exit on Monday morning (Dec. 8th)
11/21/14 trade opened on gap higher at $71.19
Option Format: symbol-year-month-day-call-strike

chart: