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Daily Newsletter, Wednesday, 5/20/2015

Table of Contents

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

Market Wrap

Another New All-Time High

by Keene Little

Click here to email Keene Little
Repeated headlines of a "New All-Time High" for the S&P 500 index or Dow Industrials, which missed by only a point today, is good for pulling in more investors but the market is struggling to get these new highs and we're seeing some worrisome deterioration in the market's internals.

Wednesday's Market Stats

Between the Dow Industrials and S&P 500 we're getting new all-time highs this week and that's great for the headlines. If you're not watching the market as carefully as we are those headlines keep you thinking that everything is great with the economy (even if you personally don't feel that way). It is in this way that the Fed and government have been attempting to use the stock market to foster a "wealth effect" but it's apparent that it's starting to backfire as more and more consumers now understand how disconnected Wall Street is from Main Street. Instead of feeling the wealth effect they're now feeling poorer because they haven't participated in the "new highs." How much longer this can continue is anyone's guess but my guess is that there won't be a happy ending for the stock market.

There were no economic reports of significance this morning and the market was listless for most of the day. There was a sell program at the open but the selling was over by 10:00 and that was followed by some buy programs that lifted the indexes right back up to where they were at the open. The message was clear -- no bears allowed here and once the indexes were back to the flat line by 10:30 there was very little action that followed until the FOMC minutes were released at 14:00. Following the FOMC minutes there were some buy programs that finished by 14:30 (it seems these buy and sell programs have an expiration time of 30 minutes) and then sell programs kicked in and dropped the indexes back to the flat line (marginally red for the blue chips) and into the close. Day traders got a little activity today but for everyone else it was just a consolidation (doji) day.

The FOMC minutes highlighted the fact that most of the Fed heads believe the first-quarter slowdown was just an anomaly and that things would improve from there. "Transitory" is their favorite word for data they don't like and believe it will be reversed in the next quarter. While the economic slowing in Q1 keeps the Fed's finger off the button to raise rates at this time, they believe an improving economy will give them the leeway they need to start raising rates. What the market first liked is the fact that the Fed is unlikely to raise rates in June. We already knew that but for some reason the market reacted as though it was startlingly good news. And then by 14:30 the reaction seemed to recognize that in fact we learned nothing new from the minutes.

I continue to believe the Fed will not be "blessed" with good economic news this year to help them in their desire to start raising rates. Keep in mind that the Fed and most mainstream economists have a batting average of zero when it comes to economic forecasting. The number of correct predictions is zero, nada, zip, none. They are so wrong that you can reliably take the other side of their trade and win 100% of the time. Before rates are raised I believe they'll be forced to launch QE5, 6, 7, ... since they have no other tools left to use when the market again becomes unglued and banks start failing. They've tried just about everything and it's all been a miserable failure for the economy when you consider how much debt has been incurred to help the banks, I mean economy. And of course all the debt is exactly the problem -- the economy will remain sluggish as long as there's a debt overhang to deal with. We still haven't worked off the huge credit expansion of the previous decades.

Wall Street has benefitted mightily from the Fed's policies and money creation but the water landing on the backs of Wall Streeters hasn't rolled off onto the poorer people who also thirst for that water. Companies are buying back stock instead of investing in capital improvements to build their businesses, which would then create more jobs, etc. The failure to improve the situation for the 99% has only created more divisiveness in our country (helped by Obama's "us vs. them" mentality) and the spread between the rich and poor is now greater than even the 1920s leading up to the 1929 stock market crash and Great Depression that followed. That comparison is used for a reason.

Yesterday's marginal new high for SPX (1 point) was followed today by another marginal new high (another 1 point) and the choppy climb looks like an ending pattern to the upside. These can go on and on but the danger is that when the rally finishes it's usually followed by a decline that retraces the rally in far less time than it took to build it. In this case the rally from last December (a little more than 5 months), which tacked on 160 points, will probably be retraced in a matter of weeks instead of months. That's the risk for anyone still trying to buy recent highs -- unless they use good stop management I suspect there could soon be real pain felt by many traders/investors who have been buying the "improving economy" assurances.

SPX remains a good proxy index for the broader market, practically mirroring the much larger index, the Wilshire 5000. So I'll start off with the SPX charts to show how it has been slowly chopping its way higher, really since December and especially since the March 11th low. This is typically how rallies finish -- a choppy pattern to the upside is indicative of waning momentum from the buyers while the selling starts to get a little stronger and eventually takes over. These choppy ending patterns tend to be followed by a strong breakdown as all the late-to-the-party bulls are suddenly forced out of their positions while the bears become more aggressive.

The SPX weekly chart below shows weakening rally with the smaller weekly candles since the March low. The waning momentum can be seen on the MACD and RSI, which has clearly been just a warning but not a trade signal. But now the waning momentum combined with the smaller candles adds another reason to stay very cautious about the upside and start thinking how you'd like to play the downside. It's important to recognize how important this top could be since it fits very well (from an EW perspective) as the conclusion to the rally from 2009 and that calls for the start of the next cyclical bear market to finish the secular bear.

S&P 500, SPX, Weekly chart

The choppy rally off the March low is bound by the two bold blue lines on the daily chart below and this afternoon's high tagged the top trend line. We could see a breakout to the upside but at the moment I'm not seeing enough internal strength to suggest that's the higher-odds scenario. Instead, it's possible this afternoon's high put the final touch on the rally and from here we'll see the start of the next big decline.

S&P 500, SPX, Daily chart

Key Levels for SPX:
- bullish above 2136
- bearish below 2085

The 60-min chart below shows the projection at 2135.33 for two equal legs up from May 6th, which I'm calling an a-b-c to complete the 5th wave of the move up from March, which completes the final leg of the rally from March 2009. It is for this reason that I believe looking for a shorting opportunity here could pay off handsomely down the road. But all big moves start off small and right now I'm attempting to identify the first signs of a reversal and today's high at 2134.72 might have been close enough for government work as relates to the 2135.33 target price. There could be another attempt to make a new high (and nab more stops above the trend line) but it's not something I'd be willing to bet on here. However, if the buyers keep this going and SPX closes above 2136, and hold above it, I see the potential for a rally up to 2150 and then up to 2170 if 2150 gives way.

S&P 500, SPX, 60-min chart

While the broader market indexes have been pushing to new highs (except for the laggard techs and small caps at the moment), we continue to see a deterioration in the market's condition. Looking at the car sitting in the lot, all nice and shiny, hides what's under the hood. The Fed and government policies/intervention have made the market nice and shiny but a look under the hood shows worn mechanical parts, leaking seals and frayed wiring. The group of charts below shows the SPX new highs but then below that chart you can see the decline in the 10-dma of the number of new 52-week highs, which is dropping even faster since March, and the steady decline in the 10-dma of the advance-decline line since last October. But don't worry and just pay attention to the top chart -- she's a beaut. Just remember that once you drive it off the lot it's yours and you might not find another sucker, I mean buyer, to pay you equal value should you decide to sell.

SPX vs. 52-week new highs and Advance-Decline line, Daily chart

The DOW has been pushing up against an internal broken uptrend line from October 2014 - February 2015 (gray line on the daily chart below) and still has a little more upside potential to 18397 where the rally off the May 6th low would have two equal legs up (equivalent to the 2135 projection for SPX). The DOW's high so far is yesterday's at 18351. There's higher bullish potential, such as to the top of its rising wedge that has contained the choppy price action since last December (bold blue lines), near 18550. And if the buyers keep going from there I'd look for a rally up to the trend line along the highs from December 2013 - December 2014, near 18800 by early June. The risk is that the choppy move higher could end at any time and with rising wedges on multiple timeframes I think the decline, when it comes, will be very fast. It's been consolidating this week on top of the March 2nd high at 18288 (it closed at 18285 today) so a firm break below that level would be a bearish sign. A stronger signal of a top in place would be a drop below its May 8th high at 18205, which was a test of its March 23rd high at 18206. If you trade the long side I'd keep one foot holding the exit door open so you can be one of the first ones out the door (with an acceptable exit price).

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 18,400
- bearish below 17,925

Typically at significant market tops we find the techs and small caps making final highs later than the blue chips as the last of the animal spirits in the bulls plays out in the riskier stocks. But since the May 6th lows we're seeing a reluctance to buy the higher-beta names and it's possible this is an early sign of risk-off behavior. At the moment NDX has a lower high below its April 27th high and it might finish that way with a truncated completion to its rally. This is not uncommon in a rising wedge pattern, which it's been in since its February 2nd low, but if it does manage to rally up to the top of the wedge we could see 4600 before the rally completes.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- bullish above 4600
- bearish below 4380

The RUT is in the same position as NDX by not making a new high above its April 27th high but in this case I have not been expecting a new high. The RUT's pattern has had me thinking it put in a top at the April 27th high since the decline into the May 6th looks impulsive, which suggests a trend change to the downside. The bounce off the May 6th low is a 3-wave (a-b-c) bounce correction and has so far retraced a little less than 78.6% of its decline, which is a high correction but that kind of retracement has been very common in the past couple of years. There's no confirming evidence yet that the bounce has completed and it too could continue higher into early June and make it up to the 1290-1300 area but at the moment I think the higher-odds scenario is for a turn back down and if it's to be a 3rd wave decline we should see a very strong move lower (one where the 200-dma near 1187 will be a mere speed bump on its way down to the January-February lows near 1150).

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 1250
- bearish below 1218

The banks have been relatively strong since January as the broader indexes traded mostly sideways. And now BKX is pressing up against the top of its expanding triangle (the trend line along the highs from March-December 2014) and it continues to push up against its broken uptrend line from March 2009 - October 2011, which so far is just a back-test. But there are hints of bullishness, such as the breaks of the downtrend lines on MACD and RSI, shown on the weekly chart below, so the upside potential needs to be respected here. If BKX can sustain a rally above 78 and pull back no lower than about 75 in the coming weeks I'll turn more bullish the banks and in turn the broader market. But at the moment, with ending patterns galore in other indexes and BKX up against strong resistance, I don't believe this is a good time to be betting on the long side. If the bearish expanding triangle is the correct pattern then we should soon see a strong move back down to the bottom of it, currently near 63.30, before attempting another bounce. This bearish pattern also fits well as the top of the 2009-2015 correction to its 2007-2009 decline (the "bounce" is between a 50% and 62% retracement of its decline).

KBW Bank index, BKX, Weekly chart

The home builders continue to look more bearish than bullish to me. Yesterday's morning spike up on better-than-expected housing starts and permits was quickly reversed after the home construction index (DJUSHB) tagged its broken 50-dma. From an EW perspective, the April-May decline looks impulsive to the downside and the bounce off the May 6th low is so far a 3-wave correction to the decline, retracing 50% with yesterday morning's spike up. It could turn into something more bullish if the April-May decline was the completion of a larger a-b-c pullback from the February 25th high, but at the moment the bearish interpretation of the pattern calls for a strong decline (3rd wave) as the next move.

DJ U.S. Home Construction index, DJUSHB, Daily chart

Is the Dow Theory dead? This is a question many are now asking since the TRAN and INDU are supposed to support one another. When they diverge it's always been a good reason to remain suspicious of the broader market's current trend. But because the TRAN has been divergent since last November's high it has many now saying that it's different this time. Very dangerous words to use for the market. It could be different this time but from a fundamental perspective I think it makes sense to see the Trannies in decline. The economy has been slowing and anyone who thinks otherwise is simply not paying attention to the warning signs. Demand for commodities has been in decline and transportation of commodities has been slowing (the Baltic Dry Index remains near its lows seen in 2008 and 2012).

We know the broader indexes have had a helping hand for a long time and with the plethora of ETFs it's easy to simply buy "the market" without picking individual stocks and that's been keeping the broader indexes rising. But we've also seen deterioration in the participation of stocks in this year's highs, as indicated with the chart of 52-week highs and the advance-decline, shown following the SPX charts above. Fewer stocks are above their 50-day moving averages than there were at February's highs. Fewer are above their 200-day MAs than there were at April's highs. To say the TRAN's bearish divergence should be ignored because it's different his time is pure hogwash. It's not different this time and those who believe it is will be the ones saying "no one could have predicted this decline" when the INDU follows the TRAN lower.

Today's decline in the TRAN, while the DOW was attempting to make another new high, is significant divergence at this time. The TRAN dropped below price-level support near 8580 and closed below it today. Not a good sign for the bulls. But, I can also see a way to look at this as a bullish setup -- I drew a trend line across the lows from December, showing the potential for an end to a choppy decline from March and an end to the large sideways/down consolidation off its November high. It's even showing bullish divergence since its April 6th low. Therefore I think the bears need to see the TRAN below its uptrend line from March 2009 - November 2012, near 8420 (about another 80 points lower) before this can be declared bearish. If the bullish consolidation pattern is correct then we're about to see a strong rally follow. I'm not quite ready to go there but bears need to see the potential.

Transportation Index, TRAN, Daily chart

Last week I had pointed out on the U.S. Dollar's weekly chart that it had pulled back to the top of a shallow parallel up-channel from 2008, near 93.50, and that it should act as support if the dollar is only going to consolidate before heading higher. Last Thursday and Friday it dropped marginally below 93.50 and it was looking like it might break down further but this week it has bounced strongly and support is holding. Until I see evidence to the contrary, I'm looking for a multi-month sideways consolidation between 93.50 and 100 before the dollar resumes its rally.

U.S. Dollar contract, DX, Weekly chart

When gold rallied strongly last week I thought it had a pretty good chance of rallying up to a 1251 projection for two equal legs up from March 17th but yesterday's strong decline now puts that upside projection in jeopardy. If we do get one more leg up I'm wondering if it will be able to reach 1244 for a 62% retracement of its January-March decline. It might pull back a little further and then give us one more rally to complete a rising wedge pattern off its March 17th low but at this point it's not clear what gold will likely do next. Once the bounce completes, and it might already be with Monday's high at 1232, we should see a resumption of selling in gold.

Gold continuous contract, GC, Daily chart

When I'm not sure what gold's next move is likely to be I check silver for some clues. Its bounce off the March 11th low did achieve two equal legs up by tagging 17.70 on Monday. That could be it for the bounce correction and now we'll see silver head lower from here. It's hard to see on the squished weekly chart below, but Monday's high at 17.77 also tagged its 50-week MA at 17.64. The sharp decline Tuesday morning followed by today's choppy bounce has it looking like it's going to head lower from here and if it drops below support near 15.25 it will likely be followed by a decline toward 12 where it could set up a longer-term buying opportunity (it would be the first time in a long time to evaluate that potential).

Silver continuous contract, SI, Weekly chart

Last week's chart of oil was a daily chart to show the rising wedge pattern for the leg up from March 18th and how it broke down from the wedge and then back-tested it last Wednesday. The decline since that back-test left a bearish kiss goodbye and the bearish potential is for oil to start back down. The 3-wave bounce off the January low could be the completion of the 4th wave correction in the move down from August 2013 (it even shows alternation with the relatively flat bounce correction from November 2013 to June 2014). If we do get a 5th wave down from here I think it will be basically a retest of the March low near 42 but would become more bearish below 40. The other possibility is that we'll see oil chop sideways for most of this year before heading back down. At this point oil would turn more bullish above last week's high at 62.58.

Oil continuous contract, CL, Weekly chart

Tomorrow's economic reports include unemployment data, existing home sales, Philly Fed and Leading Indicators, none of which will likely move the market much. The Philly Fed at 10:00 could cause a little reaction if it comes in much different than expectations for a slight improvement over April.

Economic reports and Summary

Conclusion

Last week through this week has been a target window for a top in the market and there's a good possibility this afternoon's highs completed the rally. For weeks I've been looking for a new high for SPX and specifically up to 2135, which was missed by less than a point today. It has a nice ending pattern but we don't have any evidence yet that a reversal is here. SPX back below price-level support near 2120 with an impulsive (sharp 5-wave) decline would strongly suggest a top of importance is in place but until then there remains additional upside potential. For SPX that would be up to 2150-2170 by early June.

The current risk, as I see it, is that upside potential is dwarfed by downside risk. The move higher has been very choppy on waning momentum and declining participation, which is a classic topping signal. It's also typically followed by a strong decline once it breaks. I would expect to see several mornings start with large gaps to the downside, forcing traders on both sides to chase the move lower (something the HFT players love to trade).

There's definitely upside potential and that's why bears need to be very disciplined in their approach to the short side. We all know the market has a helping hand and trying to short the market has generally been an exercise in frustration. But this has also created a sense of complacency among the bulls and when they wake up and smell the coffee with a DOW decline of -500 points it will catch their attention and panic will follow. Selling typically creates a much stronger move than a rally and it's one reason why it can be fun to catch a ride on the southbound bus. Catching that ride can be a challenge but done properly it can easily make up for several small stop-outs.

Good luck and I'll be back with you next Wednesday.

Keene H. Little, CMT

In the end everything works out and if it doesn't work out, it is not the end. Old Indian Saying


New Option Plays

Services & Industrial Goods

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Euronet Worldwide - EEFT - close: 62.04 change: +0.68

Stop Loss: 59.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 335 thousand
Entry on May -- at $---.--
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The main driver behind share price appreciation is supposed to be earnings growth. That isn't always the case in the stock market but for EEFT they are delivering on the earnings front. EEFT is in the services sector.

According to the company, "Euronet Worldwide is an industry leader in processing secure electronic financial transactions. The Company offers payment and transaction processing solutions to financial institutions, retailers, service providers and individual consumers. These services include comprehensive ATM, POS and card outsourcing services, card issuing and merchant acquiring services, software solutions, cash-based and online-initiated consumer-to-consumer and business-to-business money transfer services, and electronic distribution of prepaid mobile phone time and other prepaid products.

Euronet's global payment network is extensive - including 20,364 ATMs, approximately 69,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 47 countries; card software solutions; a prepaid processing network of approximately 681,000 POS terminals at approximately 306,000 retailer locations in 33 countries; and a consumer-to-consumer money transfer network of approximately 243,000 locations serving 134 countries. With corporate headquarters in Leawood, Kansas, USA, and 54 worldwide offices, Euronet serves clients in approximately 160 countries."

EEFT's earnings history has been strong. They have beaten Wall Street's earnings estimates on both the top and bottom line three out of the last four quarters. It would have been four quarters in a row but their most recent report missed analysts' revenue estimate.

EEFT delivered its 2015 Q1 results on April 28th. Analysts were expecting a profit of $0.54 a share on revenues of $403.75 million. EEFT results saw earnings per share rise +22% from a year ago to $0.56. Revenues were up +12% to $395.2 million. It's worth noting that 70% of EEFT's revenues are outside the U.S. The rise of the dollar last quarter was significant. On a constant currency basis EEFT's revenues were up +25%.

Here's an excerpt from EEFT's earnings press release:

"For the first quarter, we delivered 55% constant currency operating income growth and 22% adjusted cash EPS growth - the ninth consecutive quarter we have achieved double-digit, year-over-year adjusted cash earnings per share growth," stated Michael J. Brown, Euronet's Chairman, Chief Executive Officer and President. "Each segment delivered strong constant currency operating results. Money transfer had another outstanding quarter benefiting from continued organic growth, the launch of the Walmart-2-Walmart product and the acquisition of HiFX. epay contributed double-digit operating income growth for the second consecutive quarter driven by continued expansion of non-mobile content. And, EFT further expanded its ATM and POS networks across Europe and India."
The stock has been building on a bullish trend of higher lows. Today shares are poised to breakout past resistance at $62.00. The point & figure chart is bullish and forecasting at $75.00 target. Tonight we are suggesting a trigger to open bullish positions at $62.25.

Trigger @ $62.25

- Suggested Positions -

Buy the AUG $65 CALL (EEFT150821C65) current ask $2.35
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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

Daily Chart:

Weekly Chart:


Roper Technologies - ROP - close: 176.89 change: +0.28

Stop Loss: 173.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 441 thousand
Entry on May -- at $---.--
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
2015 is shaping up to be a record-setting year for ROP with profits on track for a new high. Investors have pushed the stock to new highs as well. ROP is up +12.8% year to date versus a +3.3% gain in the S&P 500.

ROP is in the industrial goods sector. The company just recently changed their name from Roper Industries to Roper Technologies.

According to the company, "Roper Technologies is a diversified technology company and is a constituent of the S&P 500, Fortune 1000, and the Russell 1000 indices. Roper provides engineered products and solutions for global niche markets, including software information networks, medical, water, energy, and transportation."

Their most recent earnings report was April 27th. ROP reported its 2015 Q1 results. Earnings per share rose 5% from a year ago to $1.55. Analysts were expecting $1.52. Revenues were up +3.7% to $865 million. That actually missed estimates of $873 million but the market didn't seem to care. ROP said their adjusted gross margin hit a new high, rising 140 basis points to 60.0%.

Management did lower their Q2 guidance but they raised their full year 2015 guidance. Again, traders seemed to look past the short-term lowered guidance in favor of the long view. ROP is forecasting 2015 earnings in the $6.75-6.95 range, up from $6.40 per share in 2014.

Barclays reiterated their overweight rating on the stock and raised their price target to $193.00. The point & figure chart is even more optimistic and currently forecasting at $209.00 target.

Shares of ROP hit new highs last week and have managed to hover there in the $175.00 region. The stock looks poised to push higher and we want to buy calls if ROP can trade at $177.75.

Trigger @ $177.75

- Suggested Positions -

Buy the AUG $180 CALL (ROP150821C180) current ask $4.90
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

OCR Could Pop Tomorrow

by James Brown

Click here to email James Brown

Editor's Note:

Shares of Omnicare Inc. (OCR) will likely gap open higher tomorrow morning. After the closing bell tonight Bloomberg reported that the company is in advanced talks to be acquired by CVS Health Corp. (CVS).

Meanwhile trading today was very lackluster with most of our candidates drifting sideways.

GPN hit our stop loss.


Current Portfolio:


CALL Play Updates

Anthem, Inc. - ANTM - close: 163.57 change: -0.87

Stop Loss: 154.85
Target(s): To Be Determined
Current Option Gain/Loss: -3.4%
Average Daily Volume = 1.8 million
Entry on May 18 at $162.00
Listed on May 16, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: ANTM snapped a five-day winning streak with today's minor decline (-0.5%). If this dip continues I would watch for support near $160.00 as a potential entry point.

Trade Description: May 16, 2015:
One in nine Americans is covered through one of Anthem's affiliated medical plans. The company is only getting bigger. Previously known as Wellpoint (WLP) they officially changed their name to Anthem (ANTM) in December 2014.

Initially both Wall Street and the healthcare industry were worried about Obamacare. Yet the Affordable Care Act has been a strong tailwind for many of the large healthcare insurers adding millions of new customers. Now that the major players have ironed out a lot of the wrinkles any negative impact from the ACA seems to be fading.

If you're not familiar with ANTM they are in the healthcare sector. According to the company, "Anthem is working to transform health care with trusted and caring solutions. Our health plan companies deliver quality products and services that give their members access to the care they need. With nearly 71 million people served by its affiliated companies, including more than 38 million enrolled in its family of health plans, Anthem is one of the nation’s leading health benefits companies."

Looking ANTM's earnings over the past year the company's results have been a little hit or miss. Yet one thing they have consistently done is raise guidance. Since the stock market is always looking forward this bullish outlook from ANTM has helped drive the stock to new all-time highs.

Their most recent earnings report was April 29th. ANTM reported their 2015 Q1 results. Wall Street was looking for $2.69 per share on revenues of $19.28 billion. The company delivered $3.14 per share, which is a +29.8% improvement from a year ago. Revenues were up +6.8% to $18.85 billion (a miss). Management raised their guidance above analysts' estimates for the fourth quarter in a row.

The company has an active stock buyback program. In the first quarter they spent $774 million buying back 5.7 million shares. As of March 31st, 2015 they still had about $4.9 billion left on their board-approved share repurchase program.

Technically the stock has been churning sideways in the $150-160 zone for the last several weeks. ANTM threatened to breakdown under support near its 50-dma and the $150 level in late April but managed to reverse course and now it's breaking out past resistance in the $160 area. Tonight we are suggesting a trigger to buy calls at $161.65.

- Suggested Positions -

Long SEP $170 CALL (ANTM150918C170) entry $4.40

05/18/15 triggered on gap open at $162.00, trigger was $161.65
Option Format: symbol-year-month-day-call-strike


Caterpillar Inc. - CAT - close: 87.93 change: +0.69

Stop Loss: 86.45
Target(s): To Be Determined
Current Option Gain/Loss: -30.5%
Average Daily Volume = 6.2 million
Entry on May 05 at $88.10
Listed on May 02, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: CAT is starting to bounce. Shares just ended a three-day losing streak with a +0.79% bounce. Unfortunately shares seemed to struggle with short-term resistance near $88.00 today.

No new positions at this time.

Trade Description: May 2, 2015:
Have shares of CAT found a bottom? It's starting to look that way. CAT is still down -21% from its 2014 highs but it's up +12% from its Q1 lows with a steady trend of higher lows as traders buy the dips.

CAT is in the industrial goods sector. According to the company, "For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2014 sales and revenues of $55.184 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment."

Earnings results and guidance has been a moving target for CAT. The combination of a slowing global economy, volatile currency fluctuations, and weakness in commodities have generated big swings in their business. In July 2014 CAT lowered guidance. Three months later they raised guidance. The next quarter they lowered guidance. Today the company has raised guidance again.

CAT's most recent earnings report was April 23rd. They announced a Q1 profit of $1.72 a share. That was +16% higher than a year ago and almost +40% above Wall Street estimates. Revenues fell -4% from a year ago but sales of $12.7 billion were still above analysts' expectations.

CAT's Q1 results were all about North America, which saw gains almost across the board. Overall construction sales for CAT in North America were up +9% from a year ago. Unfortunately, this was overshadowed by declines everywhere else. Asia, Europe, Latin America - just about every other region CAT does business saw double-digit sales declines. Yet it appears that investors seem to be willing to look past this weakness.

CAT's CEO commented on their 2015 outlook, "We had a solid first quarter, which led to raising the profit outlook for 2015. However, we continue to face headwinds and uncertainty in 2015, and our outlook for the year reflects that. We expect sales and profit in each of the remaining three quarters of 2015 to be lower than the first quarter. We expect sales for oil applications to decline starting in the second quarter, and from a profit perspective, the first quarter included the gain on the sale of our remaining interest in the logistics business and that won't repeat. The first quarter is usually the most seasonally favorable of the year for costs, and we don't expect the rest of the year to be as favorable."

Most of the major oil and gas companies have reduced their capex spending plans for 2015 and this should be negative for CAT. The stock's reaction is suggesting all the bad news is already priced in.

CAT's management raised their 2015 guidance and adjusted their estimate from $4.65 to $4.75, excluding their restructuring costs they raised their estimate from $4.75 to $5.00. Wall Street's estimate was $4.75 per share. CAT reaffirmed their sales estimate for $50 billion this year.

A couple of analysts with Stifel are bullish on CAT. They believe the combination of the company's big stock buy back program (about $10 billion), a strong dividend (more than 3%), and a healthy North American construction market will buoy CAT's stock while investors wait for a turnaround in commodities.

Technically the stock has been showing relative strength the last few weeks. The point & figure chart has turned bullish and is currently forecasting a long-term target of $108.00. Today CAT is hovering below potential resistance near $88.00. We are suggesting a trigger to buy calls at $88.10.

- Suggested Positions -

Long JUL $90 CALL (CAT150717C90) entry $2.00

05/19/15 new stop @ 86.45
05/12/15 new stop @ 85.75
05/05/15 triggered @ 88.10
Option Format: symbol-year-month-day-call-strike


Carlisle Companies - CSL - close: 98.84 change: -1.13

Stop Loss: 97.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 417 thousand
Entry on May -- at $---.--
Listed on May 19, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/20/15: CSL retreated from round-number resistance near $100. The stock slipped -1.1% but remains just above its 10-dma and 20-dma. We are on the sidelines. Our suggested entry point to buy calls is $101.00.

Trade Description: May 19, 2015:
Consistent earnings growth has helped lift CSL to new all-time highs. Year to date shares of CSL are up +10.8% versus a +3.4% gain in the S&P 500.

CSL is in the consumer goods sector. According to the company, "Carlisle Companies Incorporated is a global diversified company that designs, manufactures and markets a wide range of products that serve a broad range of niche markets including commercial roofing, energy, agriculture, mining, construction, aerospace and defense electronics, medical technology, foodservice, healthcare, sanitary maintenance, transportation, general industrial, protective coating, wood, specialty and auto refinishing.

Through our group of decentralized operating companies led by entrepreneurial management teams, we bring innovative product solutions to solve the challenges facing our customers. Our worldwide team of employees, who generated $3.2 billion in net sales in 2014, is focused on continuously improving the value of the Carlisle brand by developing the best products, ensuring the highest quality and providing unequaled customer service in the many industries we serve."

The last three quarters have seen CSL deliver consistent growth. The company has beat Wall Street estimates on both the top and bottom line the last few quarters. If you look at CSL's daily chart you can see the post-earnings rally in October, early February, and again in late April.

Their most recent report was April 23rd. Analysts were expecting a profit f $0.58 a share on revenues of $699 million. CSL delivered $0.59 with revenues up +9.1% to $709 million.

A couple of Q1 highlights include their CCM and CIT segments. Here's a couple of excerpts from their earnings release.

Carlisle Construction Materials (CCM): Net sales in the first quarter 2015 grew 6.9% to $371.3 million, reflecting organic sales growth of 9.3% primarily on higher demand for new commercial construction, partially offset by a 2.4% negative impact from foreign exchange fluctuations in the stronger U.S. dollar versus the Canadian dollar and Euro.

Carlisle Interconnect Technologies (CIT): Net sales in the first quarter 2015 grew 29% to $194.4 million, reflecting organic growth of 12% and acquisition growth of 17%. Sales in CIT’s aerospace market were up 12%. Sales to the military and test and measurement markets were up 12% and 53%, respectively. Sales to the industrial market were down 8%.

CSL does not have a lot of analyst coverage (about eight firms) and currently the consensus is mostly bullish. The median price target is $110.00. That's a little bit less than CSL's point & figure chart, which is bullish and forecasting at $113.00 target.

Goldman Sachs recently studied the global medical technology medical supplies market. The research team sees the global plasma market growing at 6-to-8 percent. They believe that CSL and rival Grifols (GRFS) are the best ways to play this industry and suggested CSL was a "buy".

Technically CSL has digested its post-earnings pop from April. The consolidation appears to be over. Shares have rallied back to round-number, psychological resistance at the $100.00 level. The intraday high was $100.83 on April 24th. We are suggesting a trigger to buy calls at $101.00.

Trigger @ $101.00

- Suggested Positions -

Buy the SEP $105 CALL (CSL150918C105)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Electronic Arts - EA - close: 62.61 change: -0.69

Stop Loss: 59.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.5 million
Entry on May -- at $---.--
Listed on May 18, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/20/15: Hmm.... shares of EA are now down two days in a row. We're not worried yet. The market really hasn't moved much this week.

We are on the sidelines and waiting for a new relative high. Our suggested entry point is $63.65.

Trade Description: May 18, 2015:
Video game stocks are hitting high scores this year. The two biggest players in this industry are ATVI and EA. Shares of ATVI are at all-time highs while EA is nearing a new 10-year high.

EA is considered part of the technology sector. According to the company, "Electronic Arts ( EA ) is a global leader in digital interactive entertainment. The Company delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. EA has more than 300 million registered players around the world. In fiscal year 2015, EA posted GAAP net revenue of $4.5 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality blockbuster brands such as The Sims, Madden NFL, EA SPORTS FIFA, Battlefield, Dragon Age and Plants vs. Zombies."

Shares of EA popped above major resistance near the $60.00 level earlier this month after reporting better than expected Q4 2015 results. Wall Street was looking for EA to deliver a profit of $0.26 a share on revenues of $852.9 million. EA announced a profit of $0.39 a share. Revenues were down -2.0% from a year ago but came in at $896 million, well above estimates.

Their full year results were impressive. EA's net revenues were up almost $1 billion to $4.5 billion. The company's net income soared from $8 million in 2014 to $875 million in 2015. Shares of EA have benefitted from the company's turnaround. The stock is up more than +100% in the last 12 months.

EA's guidance was mixed. They issued bearish guidance for their Q1 2016 (current quarter) and see EPS about flat ($0.00) when Wall Street was expecting $0.19 per share. EA is forecasting Q1 revenues significantly below expectations. However, they raised their fiscal year 2016 profit estimate to $2.75 per share when analysts were only expecting $2.63.

Last quarter EA spent $95 million buying back 1.8 million shares of their stock. When they reported earnings on May 5th they also announced a new $1 billion stock buyback program that expires on May 31, 2017.

EA management sounds pretty optimistic. Here's an excerpt from their earnings press release:

With a clear focus on putting our players first, FY15 was an exceptional year for Electronic Arts. We introduced award-winning games, delivered enduring entertainment in our live services, and forged deeper relationships with a growing global audience across consoles, mobile devices and PC, said Chief Executive Officer Andrew Wilson. EA continues to sharpen our focus and speed, and in the year ahead we will engage more players on more platforms with new experiences like Star Wars Battlefront, FIFA 16, Minions Paradise and more.

Two years ago, we discussed a three-year plan to double non-GAAP operating margins to 20%, said Chief Financial Officer Blake Jorgensen. Today, Im happy to announce that we exceeded our goal a full year ahead of schedule. Looking forward, we anticipate continued earnings growth driven by our strong portfolio, investment in new IP, the market shift to digital, and on-going cost discipline.

Wall Street's analyst community seems bullish on EA as well. Several firms reiterated their bullish ratings and raised price targets.

Shares of EA have been building on a bullish trend of higher lows. The current rally has produced a buy signal on the point & figure chart that is forecasting a long-term target of $110.00. On a short-term basis EA seems to be coiling for a breakout past resistance near $63.50. Tonight we're suggesting a trigger to buy calls at $63.65.

Trigger @ $63.65

- Suggested Positions -

Buy the SEP $70 CALL (EA150918C70)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Eaton Corp. - ETN - close: 72.77 change: -0.03

Stop Loss: 69.75
Target(s): To Be Determined
Current Option Gain/Loss: -22.7%
Average Daily Volume = 2.6 million
Entry on May 13 at $72.75
Listed on May 09, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: ETN just slept through Wednesday's session. Shares traded sideways inside a 50-cent range. I am not suggesting new positions at this time.

Trade Description: May 9, 2015:
ETN is in the industrial goods sector. The company makes products for a wide variety of industries including: aerospace, electrical equipment, filtration systems, hydraulics, plastic extrusion, industrial clutches and brakes, and vehicles.

According to the company, "Eaton is a power management company with 2014 sales of $22.6 billion. Eaton provides energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton has approximately 102,000 employees and sells products to customers in more than 175 countries."

When the market ignores negative earnings news it could be a signal that all the bad news is priced in to a stock and the path of least resistance is higher. That appears to be the case for ETN.

In July 2014 the stock was crushed after the company reported earnings that were only in-line with estimates and the management lowered their 2014 Q3 guidance. Three months later ETN reported its Q3 results that missed expectations on both the top and bottom line. What did the stock do? It rallied.

Fast forward another few months and in early February ETN reported better than expected earnings but revenues were just a hair below estimates. Management lowered their 2015 Q1 estimates due to currency headwinds. They were expecting a -4% impact do to the strong dollar in 2015. What did the stock do on this negative forecast? It rallied.

Several days ago ETN reported its Q1 results on April 29th. Earnings were 3 cents better than expected even as revenues fell -5% to $5.22 billion. This was a result of +1% organic growth offset by -6% decline due to currency translation.

The company's management readjusted their forecast and now expect a -5% impact due to currency headwinds for 2015. With this adjustment they lowered their Q2 and 2015 guidance. Since this earnings report the stock has rallied. Last week shares were upgraded by J.P.Morgan from neutral to overweight who adjusted their ETN price target from $70 to $84. The point & figure chart is even more optimistic and forecasting an $89 target.

If investors are going to be this forgiving then we think there might be an opportunity here. The recent rally in ETN has pushed shares toward resistance near its February highs around $72.50(ish). We are suggesting a trigger to buy calls at $72.75.

- Suggested Positions -

Long JUL $75 CALL (ETN150717C75) entry $1.10

05/13/15 triggered @ 72.75
Option Format: symbol-year-month-day-call-strike


FactSet Research - FDS - close: 167.52 change: -0.34

Stop Loss: 163.85
Target(s): To Be Determined
Current Option Gain/Loss: +47.4%
Average Daily Volume = 302 thousand
Entry on May 13 at $162.25
Listed on May 11, 2015
Time Frame: Exit PRIOR to FDS earnings in late June or plan on exiting prior to JUNE option expiration on June 19th
New Positions: see below

Comments:
05/20/15: FDS encountered a little bit of profit taking today. After a run of five up days in a row the stock slipped -0.2%. If shares do pullback I'd look for potential support near $165.00.

Trade Description: May 11, 2015:
FDS has provided data, analytics and research to the Wall Street crowd for more than 35 years. Today their software provides a host of services for investment managers, hedge funds, bankers, wealth managers, private equity, buy-side traders, sell-side traders, and more.

FDS is considered part of the technology sector. According to the company, "FactSet, a leading provider of financial information and analytics, helps the world's best investment professionals outperform. More than 50,000 users stay ahead of global market trends, access extensive company and industry intelligence, and monitor performance with FactSet's desktop analytics, mobile applications, and comprehensive data feeds."

The company has been delivering pretty consistent sales growth around +9% every quarter. They raised guidance back in December with their Q1 report. FDS' most recent earnings report was March 17th. The company announced their Q2 results of $1.39 per share, which was up +13.9% from a year ago. Unfortunately that missed analysts' estimates by two cents. Revenues grew +9.2% and kept the trend alive of FDS delivering revenues just above expectations.

The company has an active stock buyback program. Management boosted their repurchase program back in December by $300 million. At the time that meant their buyback program was almost $339 million. Keep in mind that FDS only has 41.7 million shares outstanding.

Following FDS' March 17th Q2 report the company raised their guidance for Q3. They now estimate earnings will grow +12.8% into the $1.40-1.42 per share range. This is above Wall Street estimates. Shares of FDS rallied on this report but they've spent the last several weeks consolidating sideways on either side of $160.00. The good news is that FDS is building a bullish trend of higher lows. Today the stock is poised to breakout past resistance and hit new record highs. We are suggesting a trigger to buy calls at $162.25.

- Suggested Positions -

Long JUN $165 CALL (FDS150619C165) entry $3.80

05/19/15 new stop @ 163.85
05/13/15 triggered @ 162.25
Option Format: symbol-year-month-day-call-strike


F5 Networks - FFIV - close: 126.96 change: +0.03

Stop Loss: 121.40
Target(s): To Be Determined
Current Option Gain/Loss: -7.7%
Average Daily Volume = 1.2 million
Entry on May 08 at $125.15
Listed on May 07, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: It was another quiet day for FFIV. The stock has been churning sideways this week. Today the stock was stuck inside a $1.00 range. The $128.00 level is short-term resistance.

No new positions at this time.

Trade Description: May 7, 2015:
It has become a hostile world for corporations and their biggest weakness is online security. It feels like every day we hear about another company getting hacked. In recent years there have been a number of high-profile hacking attacks like Target (TGT), Home Depot (HD), and Sony (SNE). Fortunately for FFIV all of this plays to their strength as more corporations seek to beef up their cyber security.

According to company marketing, "F5 provides solutions for an application world. F5 helps organizations seamlessly scale cloud, data center, and software defined networking (SDN) deployments to successfully deliver applications to anyone, anywhere, at any time. F5 solutions broaden the reach of IT through an open, extensible framework and a rich partner ecosystem of leading technology and data center orchestration vendors. This approach lets customers pursue the infrastructure model that best fits their needs over time. The world's largest businesses, service providers, government entities, and consumer brands rely on F5 to stay ahead of cloud, security, and mobility trends."

After strong earnings and sales growth in 2014 the company hiccupped in Q1 2015 (which was the last quarter of 2014). FFIV beat estimates on the bottom line but management guided lower for Q2. You can see how the market reacted to this news with the big gap down in mid January.

Their most recent earnings report was April 22nd. FFIV reported their 2015 Q2 results of $1.59 per share. That was nine cents better than expected. Revenues were up +12.4% to $472.1 million, just above estimates. Wall Street's biggest concerns following these results are the impact of currency headwinds (thanks to the strong dollar) and FFIV's falling revenue growth. They're still growing but momentum seems to be slowing a bit.

The stock rallied on its earnings news and burst through major resistance near $120 and several key moving averages. The last couple of weeks have looked like a consolidation period where FFIV digested its post-earnings pop. Now FFIV is poised for the next leg higher. The point & figure chart is very bullish and forecasting a long-term target of $193.00. Tonight we're suggesting a trigger to buy calls at $125.15.

- Suggested Positions -

Long JUL $130 CALL (FFIV150717C130) entry $3.25

05/08/15 triggered @ 125.15
Option Format: symbol-year-month-day-call-strike


Martin Marietta Materials - MLM - close: 153.50 change: -0.76

Stop Loss: 149.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 809 thousand
Entry on May -- at $---.--
Listed on May 14, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/20/15: We are not giving up on MLM just yet but if shares continue to sink we might drop it as a candidate. Currently the plan is to buy calls at $156.00. Alternative, the $150.00 level could be round-number support, so nimble traders could try buying a bounce from $150.00 and just use a tight stop loss.

Trade Description: May 14, 2015:
The Dow Industrials delivered a strong day with a +191 point gain. It's on the verge of breaking out to a new all-time high. Unfortunately the industrials are lagging behind the other major indices with a mere +1.5% gain in 2015.

One industrial sector stock that is really outperforming its peers is MLM. Shares are also near all-time highs and MLM is up about +40% year to date. According to the company, "Martin Marietta, an American-based company and a member of the S&P 500 Index, is a leading supplier of aggregates and heavy building materials, with operations spanning 32 states, Canada and the Caribbean. Dedicated teams at Martin Marietta supply the resources for the roads, sidewalks and foundations on which we live. Martin Marietta's Magnesia Specialties business provides a full range of magnesium oxide, magnesium hydroxide and dolomitic lime products."

You probably noticed the huge rally in MLM back in February. That was a reaction to its 2014 Q4 results. Earnings were above expectations and revenues soared +57% from a year ago to $856 million, which was also above analysts' estimates.

The company also announced a 20 million share stock buyback program back in February. Now 20 million shares may not sound like much but MLM only has 67.48 million shares outstanding.

The stock spent the following eight weeks slowly drifting lower. It finally found support in the $135.00 area. Then suddenly MLM found its mojo again when the company reported its 2015 Q1 results on April 30th. The funny thing is MLM actually missed Wall Street estimates. Analysts were expecting a profit of $0.09-0.12 a share for the first quarter. MLM only delivered $0.07 but it was better than a loss of $0.47 a year ago. 2015 Q1 was the first time MLM had reported a profit in the first quarter since 2008.

MLM said revenues rose +61% from a year ago to $691.4 million. That too was below expectations but traders didn't care. Management said their margins improved 500 basis points. Business was strong enough they were able to raise prices +11%. Here's an excerpt from the company's press release:

Ward Nye, Chairman, President and CEO of Martin Marietta, stated: "We are pleased to report improved margins and increased profitability, both considerably ahead of our internal plans, and a first-quarter profit for the first time since 2008. These quarterly results serve as a further validation of our success in executing on our strategic objectives, as well as our relentless commitment to operational excellence and cost discipline. Notably, we achieved volume growth and reported a double-digit pricing increase in our heritage aggregates product line despite severe late winter weather in many markets and significant rainfall in Texas. We view this volume and pricing momentum as an indication of a more construction-centric phase of economic recovery. Our first-quarter results and outlook for the full year have led us to increase our annual aggregates product line pricing guidance from an increase of 4% to 6% to an increase of 7% to 9% over 2014."
Shares of MLM soared on its Q1 report and now the stock has broken through resistance near $150.00. The point & figure chart is bullish and forecasting a long-term target of $221.00. The stock tested $150 as new support three days ago and looks poised to continue its climb. We are suggesting a trigger to buy calls at $156.00.

Trigger @ $156.00

- Suggested Positions -

Buy the JUL $160 CALL (MLM150717C160)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Northern Trust Corp. - NTRS - close: 76.16 change: +0.01

Stop Loss: 73.45
Target(s): To Be Determined
Current Option Gain/Loss: +7.0%
Average Daily Volume = 1.1 million
Entry on May 05 at $75.05
Listed on May 04, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: NTRS consolidated sideways in a 70-cent range today. I'm not suggesting new positions at this time. I would be tempted to inch the stop loss closer to the $74.00 level.

Trade Description: May 4, 2015:
NTRS has been around for 125 years. The company looks pretty good for its age. Shares are outperforming the broader market and its peers. Currently NTRS is up +10% in 2015 versus a -0.6% decline in the financial sector.

According to the company, "Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2015, Northern Trust had assets under custody of US$6.1 trillion, and assets under management of US$960.1 billion. For 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation."

The last couple of earnings reports have been healthy. Their Q4 report in January came in better than expected on both the top and bottom line. NTRS' most recent report was its 2015 Q1 results on April 21st. Wall Street was looking for a profit of $0.87 a share on revenues of $1.12 billion. NTRS said their earnings rose +25% from a year ago to $0.94 and revenues were up +9.0% to $1.13 billion.

NTRS' Chairman and CEO Frederick Waddell commented on his company's performance, "We are pleased with our financial performance in the first quarter of 2015, which reflects continued growth in our business serving personal and institutional clients. Trust, investment and other servicing fees, which represent two-thirds of our revenue, increased 7% compared to last year. New business and higher equity markets contributed to growth in assets under custody and under management of 6% and 5%, respectively. Total revenue grew 9% and we maintained a disciplined focus on expenses, which increased 3%, producing meaningful operating leverage. As a result, our pre-tax profit margin improved to 31.2% in the first quarter and our return on equity was within our target range of 10-15%. We also look forward to returning capital to our stockholders in the year ahead as the Federal Reserve did not object to the proposed capital actions in our 2015 Capital Plan. Our Capital Plan and proposed capital distributions demonstrate the strength of Northern Trust's focused business model, financial position and commitment to stockholders."

Shares of NTRS popped to new multi-year highs on its Q1 report. Instead of giving back its gains the stock has been able to consolidate at these highs. Shares displayed relative strength again with today's +1.1% gain. Today's move is also a bullish breakout past resistance near $74.00. The point & figure chart is bullish and forecasting a long-term target of $86.00. Tonight we're suggesting a trigger to buy calls at $75.05.

- Suggested Positions -

Long JUL $75 CALL (NTRS150717C75) entry $2.15

05/12/15 new stop @ 73.45
05/05/15 triggered @ 75.05
Option Format: symbol-year-month-day-call-strike


Omincare Inc. - OCR - close: 94.63 change: +2.29

Stop Loss: 90.45
Target(s): To Be Determined
Current Option Gain/Loss: +53.5%
Average Daily Volume = 921 thousand
Entry on May 06 at $90.35
Listed on May 05, 2015
Time Frame: Exit prior to June option expiration
New Positions: see below

Comments:
05/20/15: OCR displayed relative strength today with a +2.47% gain and a push to new highs. This may have been thanks to new rumors that OCR is close to being acquired.

After hours tonight shares of OCR spiked above $102.00 per share and is currently trading near $99.00. That's because Bloomberg issued a story saying that CVS Health Corp. (CVS) was in advanced talks to buy OCR. We already knew OCR was a potential buyout target (see original play description).

Expect OCR to gap open higher tomorrow. No new positions at this time.

Trade Description: May 5, 2015:
Wall Street loves mergers and acquisitions. OCR has put itself up for sale.

OCR is in the healthcare sector. According to the company, "Omnicare, Inc., a Fortune 500 company based in Cincinnati, Ohio, provides comprehensive pharmaceutical services to patients and providers across the United States. As the market-leader in professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other chronic care institutions, Omnicare leverages its unparalleled clinical insight into the geriatric market along with some of the industry's most innovative technological capabilities to the benefit of its long-term care customers. Omnicare also provides specialty pharmacy and key commercialization services for the bio-pharmaceutical industry through its Specialty Care Group."

Most of OCR's sales are in the long-term care group. This business essentially helps nursing homes with their resident's medications and dispensed more than 110 million prescriptions last year.

The company has been a consistent earnings producer. OCR has beaten Wall Street's estimates on both the top and bottom line the last four quarters in a row. Their most recent report was April 29th. OCR announced its 2015 Q1 results with earnings up +12% from a year ago at $1.02 per share. Revenues were up +5.7% to $1.66 billion. The company is forecasting 2015 earnings in the $4.08-4.16 per share range with sales in the $6.50-6.70 billion zone.

Currently the spark behind OCR's surge to new highs is M&A speculation. Around April 21st it was disclosed that OCR was exploring a sale of the company. Potential bidders include Cardinal Health (CAH), CVS, Express Scripts (ESRX), McKesson (MCK), and Walgreens Boots Alliance (WBA). Initial bids are expected in May. One analyst has estimated the company could go for $101.00 per share. It's important to note that there is no guarantee OCR will reach a deal and none of the potential bidders are talking to reporters.

Technically shares of OCR have been showing relative strength. At the moment OCR is on the verge of breaking out past resistance near $90-91. Tonight we're suggesting a trigger to buy calls at $90.35. More conservative traders may want to use a trigger closer to $91.00. The stock has been volatile since it was discovered the company is for sale. Investors may want to use small positions to limit risk.

- Suggested Positions -

Long JUN $95 CALL (OCR150619C95) entry $2.28

05/20/15 After hours, OCR spikes toward $100 on news it is in talks with CVS
05/19/15 new stop @ 90.45
05/06/15 triggered @ 90.35
Option Format: symbol-year-month-day-call-strike


Snap-on Inc. - SNA - close: 156.58 change: -0.53

Stop Loss: 152.25
Target(s): To Be Determined
Current Option Gain/Loss: +33.3%
Average Daily Volume = 346 thousand
Entry on May 07 at $153.50
Listed on May 06, 2015
Time Frame: exit PRIOR to June option expiration
New Positions: see below

Comments:
05/20/15: SNA, like most of the market today, just quietly churned sideways. The stock hit its rising 10-dma and bounced, which pared its loss to about 50 cents.

No new positions at this time.

Trade Description: May 6, 2015:
Steady earnings growth, a consistent dividend, and a positive outlook are three things investors like to see. SNA delivers on all three counts. The company is in the industrial goods sector.

According to the company, "Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users performing critical tasks. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as for customers in industries, including aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation and technical education. Snap-on also derives income from various financing programs to facilitate the sales of its products. Products and services are sold through the company’s franchisee, company-direct, distributor and internet channels. Founded in 1920, Snap-on is a $3.3 billion, S&P 500 company headquartered in Kenosha, Wisconsin."

SNA has been consistently beating analysts expectations. Prior to their Q1 report the company was delivering results above estimates on both the top and bottom line. That changed with the April 23rd announcement of its Q1 results. Earnings rose +15.4% from a year ago to $1.87 per share. This was above Wall Street estimates and the eight consecutive quarter in a row that SNA has beaten analysts' expectations. Unfortunately, revenues only rose +5.1% to $827.8 million and that missed estimates of $834.4 million.

The market's didn't seem to care. Shares of SNA rallied anyway in spite of the earnings miss. Management said their Q1 2015 saw strong organic growth in sales of +9.9%. One analyst raised their price target on SNA to $180 per share. The point & figure chart is even more optimistic and forecasting at $191 target.

SNA has also announced another dividend. Here's a quick excerpt from the company press release, SNA has declared a "quarterly common stock dividend of $0.53 per share payable June 10, 2015 to shareholders of record on May 20, 2015. Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction, since 1939."

Technically shares of SNA look bullish with a strong pattern of higher lows. It's currently poised to breakthrough short-term resistance near $153.25 soon. We are suggesting at rigger to buy calls at $153.50.

- Suggested Positions -

Long JUN $155 CALL (SNA150619C155) entry $2.55

05/14/15 new stop @ 152.25
05/07/15 triggered @ 153.50
Option Format: symbol-year-month-day-call-strike




PUT Play Updates


Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

Global Payments Inc. - GPN - close: 105.38 change: +0.14

Stop Loss: 103.65
Target(s): To Be Determined
Current Option Gain/Loss: +33.3%
Average Daily Volume = 589 thousand
Entry on April 21 at $101.05
Listed on April 18, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/20/15: After hitting all-time highs yesterday shares of GPN were downgraded to an underperform this morning. The stock reacted with a gap down at $104.69. Shares spiked to $103.56 before paring its losses. Our new stop loss was hit at $103.65.

- Suggested Positions -

AUG $105 CALL (GPN150821C105) entry $2.85 exit $3.80 (+33.3%)

05/20/15 stopped out
05/19/15 new stop @ 103.65
05/12/15 new stop @ 99.85
04/21/15 triggered @ 101.05
Option Format: symbol-year-month-day-call-strike

chart: