Option Investor
Newsletter

Daily Newsletter, Thursday, 5/21/2015

Table of Contents

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

Market Wrap

Struggling With New Highs

by Thomas Hughes

Click here to email Thomas Hughes
The market struggled to make new highs as new data suggest upward momentum in the economy.

Introduction

The debate rages on over the trajectory of the US economy and FOMC rate hike timeline. Today's data was another mixed basket of results that both supports ongoing economic trends and leaves the timing of Fed policy changes “data dependent”.

Early trading was affected by events in overseas markets, notably PMI readings. China's flash PMI reading came in at 49.1, weaker than expected and the third month of contraction. The silver lining is that it is an increase from last month, albeit a small one. The reading spurred hopes for additional QE from the Peoples Bank and helped to move indices across the region, although not all in the same direction. The Heng Seng lost -0.22, the Nikkei gained 0.03% after both put in half percent moves in early trading.

Market Statistics

In Europe PMI reveals the region is still expanding but at a slightly slower pace than last month. Composite flash PMI reading for the Eurozone fell to 53.4 from 53.9 in April. This was no surprise in light of comments made by the ECB earlier this week. European indices were largely lower in early trading but moved up by end of day to close in the green.

Jobless claims data was the only economic data released before the opening bell. Claims remain low and helped to lift futures from mixed to mixed with a positive bias. After the open trading remained mixed. The indices hovered around break even level until a little after 10Am. At 10AM a raft of housing and manufacturing data hit the market that took a minute to digest. Once the market had a chance to dig into the numbers the market was able to move higher. The broad market was able to rally to what would become a new all-time closing high but was not able to set a new all-time intraday high.

Economic Calendar

The Economy

Jobless claims remain low although there was a slight rise this week. Initial claims gained 10,000 from last weeks not revised figure to hit 274,000. This is the third weak of mild gains and puts claims above the four week moving average for the first time in about a month. The four week moving average of claims continues to trend lower however. It fell -5,500 this week and hit a new 15 year low.

Initial claims may not be setting new lows but at this level are historically low and consistent with a healthy labor market. On a not adjusted basis claims fell by -88, or less than -0.1%, versus an expected drop closer to -4%. No states had significant changes in claims. Georgia had the biggest increase at 1,480, New York had the biggest decline, -1696.


Continuing claims fell -12,000 from a downward revision to last weeks number for a net decline of -18,000. This is a new 15+ year low for this figure. The 4 week moving average also fell, -29,000 from a downward revision, setting a new low of its own. Continuing claims is moving lower, indicative of lower job turnover rates and lower long term unemployment, but may level off or rebound in the coming weeks based on the steady levels of initial claims. Regardless, claims are at historic lows and consistent with the ongoing labor market recovery.

Total claims for unemployment also fell, shedding -58,933, to hit a new low. Total claims are now 2.195 million, the lowest level since October of last year. Total claims have been in rapid decline over the past two months and may continue to fall further. Claims are now 16.2% lower on a year over year basis and have been trending lower for several years. This decline, both near term and long term, is supportive of ongoing labor market recovery and suggest that jobs creation is still steady and unemployment is still declining.


Three market moving pieces of data were released simultaneously at 10AM. Existing home sales, leading indicators and the Philly Fed Manufacturing Business Outlook Survey. Existing home sales was the rotten egg in the basket but may in fact be an ugly duckling.

Existing Home Sales fell by -3.3%, much lower than the +1% expected by the market. The reason why it may turn out to be a positive for the market is because the drop is due to lack of inventory. Traffic volumes are high but lack of inventory is leading to an overall decline in sales, which is expected to add upward momentum to home building in the coming months. Despite the drop sales remain over the 5 million mark and have been so for 3 months. Sales are also up on a year over year basis, +6.1%, and have been positive for the past 7 months.

The Philly Fed Survey declined, falling -0.7 in May from a reading of 7.5. This is below expectations for a slight rise in activity but still expansionary. Within the report new orders and current shipments both rose by 3 points while the employment component fell by 5. The future activity index remains strong at 33.9 showing only a small drop from the April reading of 35.5. Of those surveyed, 32% of respondents expect their businesses to expand in the coming months.

Leading Indicators was a positive surprise, rising by 0.7% and well ahead of expectations. This shows a moderate increase in activity from last month, +0.4%, and is the second month of increased expansion following the winter economic decline. The coincident and lagging indicators both rose as well, gaining 0.2% and 0.1% respectively.

Tomorrow only one release, CPI, and I think it could be a real market mover. The read on consumer level inflation is expected to remain unchanged from last months slight rise. Any deviation from that is going to be heavily watched as sign of when the FOMC will move on raising interest rates. If it is light then rate hikes expectations get pushed back, if it's hot then those expectations get moved up.

The Oil Index

Oil prices climbed today as tensions flare across the middle east. ISIS militants continue to gain ground and dig in around Ramadi, coalition attacks on rebels continue in Yemen and Iranian propaganda keeps the nuclear deal in the spotlight. On top of this, another draw down of US stockpiles has added to speculation oversupply is easing, helping to support prices. WTI gained 2.9%, Brent 2.26% but there is still no sign of declining production.

The Oil Index rose in tandem with the underlying commodity. The index gained about 0.75% in a move creating a small bodied candle just under the short term moving average. The index has been drifting lower since dropping below 1,400 and may have found near term support. The indicators remain bearish but are consistent with a near term bottom. The long term trend is up so this could develop into a trend following buy signal but we are far from that yet. Near term trend is down with resistance at 1,400.


The Gold Index

Gold prices drifted lower in today's action but remain above $1200. Today's move is in response to the dollar's rebound from support, a move which may already be over; the index fell from support today and if the CPI is as weak as the PPI could easily fall further and lift gold. Gold prices are now trading just above $1200 which is now my target for support. A break below $1200 could take the metal down to test longer term support near $1,175, a bounce could go as high as $1250.

The gold miners ETF GDX is now trading near the short term moving average, along the rising support line, after falling back to support earlier this week. The sector still looks strong for longer term trades but is having trouble holding significant gains in the short term. The indicators are consistent with support along my line and suggestive that prices will continue to find higher levels of support on each dip. Higher gold prices are helping to support the index, so long as they remain supported so should the gold miners sector. A break below the rising trend line could see the ETF fall to $17.50, a break above resistance, near $21.15, has a target between $22.50 and $25.


In The News, Story Stocks and Earnings

Lumber Liquidators plunged today on reports the CEO quit. This is the second surprise exodus from the plagued company and could be the signal this company is on the skids. Now that the CFO and CEO have both quit, in the wake of the Chinese formaldehyde scandal, there is little hope the company can make a substantial recovery in the foreseeable future. Shares of the stock dropped more than 15% on the news, gapping lower and hitting a new three year low. The stock is now trading near a long term support level that may add volatility to prices.


Best Buy beat on the top and bottom line as traffic and sales in smart phones and TV's were stronger that expected. Despite the beat earnings and revenue are down more than 70% from the comparable quarter last year and not enough to sustain the early pop. The stock jumped more than 10% in the early pre-open session, gapping above resistance at the open and the sold off during the day. Volume was high and left prices below the short term moving average and the $35.25 support line.


Gap Stores reported mediocre results after the bell. The clothing store met expectations for earnings but fell short on revenue. Full year guidance was reaffirmed in a range around consensus expectations, largely due to performance at Old Navy; Gap comp sales fell 4%, Old Navy grew by 3%. Shares of the stock were little changed in after hours trading.


Ross Stores delivered a double dose of positive surprise in its report. The company beat on the top and bottom lines, and raised guidance. Full year guidance is now in line with consensus estimates near $4.80 per share. The new is evidence that not all retailers are suffering, just some of them. Shares of the stock rose in after hours trading


The Indices

The market moved higher today but barely. Today's action saw the indices hover near break even in the early morning, rise to test recent highs, dip back to test break even and then rise again going into the close. The major indices were able to close with gains today, led ironically by the Dow Jones Transportation Average. I say ironically because it continues to lag the broader market and persists in testing support along the long term trend line while other indices are pushing new highs.

Today's action lifted the index 0.56%.Today's move up from 8,500 was halted beneath the long term trend line and the bottom of the previous 6 month range. The current positioning of the index is alarming as it is beneath two major support lines and at the intersection of those two lines, a set-up I have noticed can result in substantial moves. The long term trend remains up so I am not turning bearish just yet. However, if it does not regain the upper side of the trend line and support a deeper correction could follow.


The NASDAQ Composite made the next largest gain today. The tech heavy index moved up to test the current all-time-closing high but fell short of setting one. The index is moving higher and looks like it will test the all-time high, closing and intra-day, in the near term. Momentum is bullish, weak but bullish, and stochastic is moving higher supporting this view. We still need a break to new highs, which would have a target near 5,250 in the near to short term, to get bullish for the summer. If the test of new highs is rejected first support target is 5,000 with the long term trend line next target, near 4,800. A correction to the trend line would be close to 6%.


The Dow Jones Industrial Average made the third largest gain today, about 0.34%. The blue chips did not make a new high but they traded in a tight range just below the current high. The index appears to be struggling with resistance but the indicators are consistent with higher prices so a retest of resistance is likely. MACD and stochastic are both bullish, stochastic showing strength in a crossover of the upper signal line that could lead to another 250 points of upside. It looks like the index wants to move higher but without a more decisive break-out I remain cautious.


The S&P 500 brings up the rear in today's action. The broad market gained only 0.23% but was able to set a new all time closing high. Today's candle tested the current all-time intraday high but was not able to break it. The indicators are bullish and stochastic at least is gaining strength so it looks like a test of the high or another new high is likely. Regardless of making a new high, today is the 5th day of trading above the recently broken previous all-time high and a good sign for the bulls. The longer the index can trade and consolidate at this level the better.


There is a divergence in the market that is gaining attention. The transportation average persists in trading at the bottom of its range while the blue chips and broader market are setting new highs. Depending on which way you look at it the transports are going to lead the broader market lower, or the broader market is going to lead the transports higher. It all comes down to economic and earnings outlook. If you are in the camp that sees economic growth stalling then the transports could be leading the broad market lower. If you are in the camp that sees economic growth and expansion continuing into the future then the broad market is leading the transports higher. I for one still see economic expansion and earnings growth on the horizon.

Until then, remember the trend!

Thomas Hughes


New Option Plays

Getting Creative

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Adobe Systems - ADBE - close: 80.56 change: +0.95

Stop Loss: 77.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.2 million
Entry on May -- at $---.--
Listed on May 21, 2015
Time Frame: 3 to 4 weeks, exit PRIOR to earnings in mid June
New Positions: Yes, see below

Company Description

Why We Like It:
ADBE appears to have successfully completed its transition from a traditional pay up front software sales model to a subscription based pay-as-you-go model for its industry leading creative software.

ADBE is in the technology sector. They are part of the software industry. According to the company, "Adobe is changing the world through digital experiences. Content built and optimized with Adobe products is everywhere you look — from websites, video games, and smartphones to televisions, tablets, and beyond. Adobe® Creative Cloud® software offers the most innovative tools for creating digital media, while Adobe Marketing Cloud delivers groundbreaking solutions for data-driven marketing. Our leadership in these two emerging categories, Digital Media and Digital Marketing, provides our customers with a real competitive advantage, positioning Adobe for continued growth well into the future. As one of the largest software companies in the world, Adobe achieved revenue of more than US$4 billion in 2013."

The company's most recent earnings report was March 17th. ADBE said its Q1 earnings soared +46% to $0.44 a share . It was ADBE's best quarterly earnings growth in four years. Analysts were expecting a profit of $0.39. Revenues rose +10.9% to $1.11 billion, which was above ADBE's estimate of $1.05-1.10 billion. Wall Street was forecasting $1.08 billion.

ADBE said a record 70 percent of their Q1 revenues came from recurring sources, compared to 52 percent in Q1 fiscal 2014. They added 517 thousand customers to their creative cloud subscriptions. That is up +28% from a year ago. Unfortunately this missed expectations. Analysts were hoping for +573K.

ADBE's guidance was a little bit soft. The combination of the new subscription miss and the lackluster guidance sparked some profit taking. Fortunately for shareholders the sell-off didn't last long. Investors have been buying the dips and ADBE's long-term up trend remains in place.

It would appear that any post-earnings bearishness has vanished. JP Morgan recently started coverage on ADBE with an "overweight" and a $91 target. ADBE's point & figure chart is bullish and forecasting at $92. Technically shares of ADBE have rallied to resistance near $80.00 and its 2015 highs. After consolidating below $80 the last few days the stock finally broke out today. The intraday high today was $80.74. We're suggesting a trigger to buy calls at $80.85.

Trigger @ $80.85

- Suggested Positions -

Buy the JUL $85 CALL (ADBE150717C85) current ask $1.35
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:



In Play Updates and Reviews

Stocks Inch Higher

by James Brown

Click here to email James Brown

Editor's Note:

The big cap indices snapped a two-day decline and ended at new highs for the week. Small caps were underperforming while the transportation average produced a little oversold bounce.

EEFT hit our bullish entry point today.

We want to exit the OCR trade tomorrow morning.


Current Portfolio:


CALL Play Updates

Anthem, Inc. - ANTM - close: 164.62 change: +1.05

Stop Loss: 154.85
Target(s): To Be Determined
Current Option Gain/Loss: +12.5%
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:
05/21/15: ANTM rebounded off its morning lows and outpaced the major indices with a +0.64% gain. The stock looks poised to rally past potential round-number resistance at $165.00 tomorrow.

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: 89.33 change: +1.40

Stop Loss: 86.45
Target(s): To Be Determined
Current Option Gain/Loss: -2.5%
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:
05/21/15: How's this for crazy - CAT reports that retail sales of CAT products fell for the 29th month in a row in April 2015. Sales for their construction industry products are down -12% year over year.

The biggest decline was Latin America, which saw a -44% drop in sales. The Asia Pacific region saw a -16% decline in sales. European-African-Middle East region reported sales down -9%. Only North American saw any gains and sales rose +5%. The combination of a global economic slowdown, led by a weak Chinese economy, and lack of demand from the mining industry continue to plague CAT's sales.

The funny thing is that investors completely ignored this report this morning. Shares of CAT rallied this morning to close at new four-month highs. One potential explanation is that investors might be speculating that the worst is behind it for CAT and the situation can only get better.

I am not suggesting 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: 98.41 change: -0.43

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:
05/21/15: CSL tried to bounce this morning but the rally didn't make it very far. CSL looks like it could test the $98.00 level tomorrow.

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: 62.69 change: +0.08

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:
05/21/15: Shares of EA spiked lower at the open but traders bought the dip near $61.60. EA's rebound pushed shares to a +0.7% gain on the session, which was enough to outperform the major indices.

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


Euronet Worldwide - EEFT - close: 61.21 change: -0.83

Stop Loss: 59.75
Target(s): To Be Determined
Current Option Gain/Loss: -26.0%
Average Daily Volume = 335 thousand
Entry on May 21 at $62.25
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/21/15: Our brand new play on EEFT is open. The stock briefly traded above resistance near $62.00, hit a new all-time high, and then reversed lower. It was not a good day if you're bullish as today's move looks like a potential bull-trap pattern. Unfortunately our trigger to buy calls was hit at $62.25. I'd wait for a new rally past $62.25 before initiating new positions.

Trade Description: May 20, 2015:
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.

- Suggested Positions -

Long AUG $65 CALL (EEFT150821C65) entry $2.50

05/21/15 triggered @ 62.25
Option Format: symbol-year-month-day-call-strike


Eaton Corp. - ETN - close: 73.40 change: +0.63

Stop Loss: 69.75
Target(s): To Be Determined
Current Option Gain/Loss: +4.5%
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:
05/21/15: ETN rebounded off short-term support near $72.50 and rallied to a +0.86% gain. Shares look poised to breakout of its recent $72.50-73.75 trading range. I'd be tempted to buy calls again if ETN continues to push higher tomorrow.

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: 167.70 change: +0.18

Stop Loss: 163.85
Target(s): To Be Determined
Current Option Gain/Loss: +42.1%
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:
05/21/15: FDS spent the first half of Thursday fading lower. Shares eventually bounced early this afternoon near $166.50. As long as the market is positive tomorrow we could see FDS make a run towards $170.

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: 126.90 change: -0.06

Stop Loss: 121.40
Target(s): To Be Determined
Current Option Gain/Loss: -9.8%
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:
05/21/15: FFIV has been a zombie all week. Shares are sleepwalking sideways and spent today's session in another narrow 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: 154.58 change: +1.08

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:
05/21/15: MLM managed to erase yesterday's decline but the stock remains under resistance near $156.00. Our suggested entry point to buy calls is $156.00.

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: 76.03 change: -0.13

Stop Loss: 73.45
Target(s): To Be Determined
Current Option Gain/Loss: +2.3%
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:
05/21/15: NTRS also delivered a quiet session. Shares hovered near the $76.00 level all day long. 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: 96.26 change: +1.63

Stop Loss: 90.45
Target(s): To Be Determined
Current Option Gain/Loss: -38.6%
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:
05/21/15: It's time to move on and exit our OCR trade.

Last night there were rumors that CVS was in "advanced" talks to acquire OCR. This morning, before the bell, it was unveiled that OCR had accepted at $12.7 billion bid from CVS. This deal values OCR at $98.00 per share and CVS will take on $2.3 billion of OCR's debt.

Shares of OCR gapped open higher. By lunchtime the rally had leveled off and OCR drifted sideways in the $96.20-96.40 zone. The value of our call option plummeted.

Any time premium just vanished. This deal won't be done before our June call expires. There is no reason for OCR shares to trade above $98.00. It's conceivable that another company could make an offer for OCR and there could be a bidding war but that's just wishful thinking.

We'll exit this trade tomorrow morning.

- Suggested Positions -

Long JUN $95 CALL (OCR150619C95) entry $2.28

05/21/15 prepare to exit tomorrow morning, CVS offers $98/share for OCR
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


Roper Technologies - ROP - close: 177.20 change: +0.31

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

Comments:
05/21/15: ROP spent today's session churning sideways. I don't see any changes from last night's new play description.

Trade Description: May 20, 2015:
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)

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


Snap-on Inc. - SNA - close: 157.74 change: +1.16

Stop Loss: 152.25
Target(s): To Be Determined
Current Option Gain/Loss: +56.9%
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:
05/21/15: SNA bounced toward last week's highs and paused just below short-term resistance near $158.00.

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.