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Newsletter

Daily Newsletter, Wednesday, 5/27/2015

Table of Contents

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

Market Wrap

The Bulls Came Roaring Back

by Keene Little

Click here to email Keene Little
The market has had a helping hand for a long time from the Fed and government (and globally from all central banks and governments) and today looks to have been another example of that helping hand rescuing the market from another scary 1-day selloff on Tuesday.

Wednesday's Market Stats

Bears that did not look both ways before crossing the street got slammed by the northbound bus today. Road kill is never pretty. But that was after the bulls got body-slammed yesterday by the bears before they sauntered off and got hit by the bus. Now both are lying there wondering what hit them. As for traders watching this slugfest, it's just more of the same choppy whippy price action we've seen since February as the indexes remain trapped inside a relatively small trading range.

As far as keeping score, Tuesday's selling was stronger than today's buying across the various indexes. Yesterday's trading volume was stronger and the internals were weaker, which shows the selling continues to be stronger than the buying. Yesterday's saw more than 5:1 down volume vs. up volume whereas today saw about 3:1 up volume vs. down volume. But short covering continues to be the bear's worst enemy and today was no exception. Except for the tech indexes making new highs and the RUT climbing back above yesterday's close, the blue chips produced inside days and SPX pulled back after closing yesterday morning's gap down. The techs got a big lift from a strong performance by the SOX, which was up +3.9%. The net result is we'll need to see how the next couple of days go before we'll get a better idea as to whether Tuesday's decline was a head-fake move or if instead today's rally was the head fake.

There was very little in the way of economic news this morning and the opening bell was followed by a very brief bout of selling before the buy programs hit. The indexes were popped higher but the initial surge stopped after about 25 minutes. From there the DOW struggled the rest of the day while the others continued to tack on some more points. So what prompted the buy programs just after the open? Need you ask? "Someone" got nervous with yesterday's selloff and decided the market needed a little help in reversing that. Put in some buy programs, throw in some short covering and voila, another rally is born.

Some will say the Greek tragedy prompted today's buying since it's "good" news that they're crafting together some kind of bailout deal. Others credit the news about some kind of Broadcom (BRCM) deal and rumors about Netflix (NFLX) and NVidia (NVDA), all of which had strong days today, which lifted the tech indexes. But some of their bounces look like they could be completions of corrections so how much they'll help the techs tomorrow is another question. With today's slightly lower trading volume, it looks like a lot of today's buying might have been short covering. But there was also some real buying, especially since some strong support levels held against yesterday's selling. The net result, unfortunately for us traders, is more of the same choppy price range that we've been in for a long time.

The weekly chart of the Wilshire 5000 index, shown below, is a good example of how tight the weekly trading range has been -- look at the small, and getting smaller, candles since the February 25th high. Price has been chopping its way higher but there's simply no strength behind the move. The bearish divergence on the momentum indicators (MACD and RSI) is a warning sign to those who wish to chase this higher. It could break out to the upside with a sudden and unexpected catalyst but at the moment that's looking like a lower-odds probability. The rising wedge with bearish divergence warns us that a breakdown, when it happens, will likely go very fast. However, betting on the short side has been an exercise in frustration and today's rally probably just shoved a few more bears to the sidelines. There is potential for the W5000 to rally up to the top of a rising wedge, the top of which is the trend line along the highs from last July, currently near 23000, but again, keep in mind that this could suddenly break down at any time.

Wilshire 5000 index, Weekly chart

Inside the rising wedge shown on the weekly chart there is another one for the choppy move up from the March 11th low, the top of which is near 22600, and is shown on the daily chart below. For the moment I'm showing an expectation for one more leg up to complete a 5-wave move up from March but last week's high fit well as the completion and therefore a new high is not a guarantee. It's possible today's rally completed just a high bounce correction to the decline off last week's high, which suggests another reversal of a reversal (to thoroughly confuse both sides) and start a stronger decline on Thursday and Friday. A break below yesterday's low near 22450 would be bearish while a rally above 22610 would be more bullish.

Wilshire 5000 index, Daily chart

You can see the strong similarity between the W5000 and the SPX daily chart below and the only minor difference is that SPX found support yesterday at its uptrend line from March 2009 - October 2011 while the W5000 was slightly above its trend line. Also, the W5000 tagged its 50-dma yesterday while SPX remained slightly above its 50-dma, but these are minor differences. The bullish setup yesterday was the pullback to support (50-dma and uptrend line) and in an uptrend the bulls did exactly what they're supposed to do -- buy support in a pullback. In a downtrend you want to sell bounces to resistance. If the buyers can keep up today's buying, even if it's after a pullback, the upside potential for SPX is to at least the 2140 area where it would run into the top of its rising wedge pattern for the choppy rally from March (the trend line along the highs from March 23 - April 27, which is where last week's rally stopped). But if today's rally was just a strong bounce correction then a break of support near 2100 would be a bearish sign since last week's high would then look good as THE top.

S&P 500, SPX, Daily chart

Key Levels for SPX:
- bullish above 2142
- bearish below 2099

The 60-min chart below shows today's rally made it above price-level S/R near 2121 so that's a bullish accomplishment. But knowing how many times this market has flushed the stops on both sides I wouldn't be a bit surprised to see the market drop right back down from here and head for new lows. Neither direction from here would surprise me and that makes picking a direction a problem at the moment. Last week's high fit well as the completion of a 3-wave move up from May 6th to complete the 5-wave move up from March (the rising wedge calls for all 3-wave moves for each of the 5 waves inside the wedge). But it's possible we'll get a larger 3-wave move and that's why a new high is certainly possible. It turns more bullish above 2132 and a rally above 2140 would point to 2150-2170.

S&P 500, SPX, 60-min chart

The DOW has been the weaker sister the past week and as I'll show later, the TRAN is even weaker, both of which are another warning sign for the bulls. Coming out of the gate this morning the DOW jumped up about 100 points in the first 25 minutes of trading, hitting a high of 18161. From there it struggled to add 30 more points the rest of the day until just before the close when a selloff dropped it back down to where it was before 10:00 AM, so it netted zero after the initial morning spurt. Not exactly a lot of bullish follow through today on that one. It closed at its previously broken trend line that marked the top of its sideways triangle, as can be seen on its daily chart below, and that leaves a potentially bearish back-test today if it's followed with a kiss goodbye on Thursday.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 18,350
- bearish below 17,990

NDX made a new high today and is now only about 11 points from a new intraday high above its April 27th high. It did make a new closing high for its current rally and has upside potential to the 4600 area where it would run into the top of the rising wedge for its rally from February (the top of which is the trend line along the highs from March 2 - April 27). It reached the top of a smaller rising wedge for its rally off the May 6th low and we could see it chop higher inside this smaller wedge and not reach 4600 before topping out. A rally above 4620 would be a bullish move (if it can hold above) whereas a drop below yesterday's low (4456) would be a bearish heads up and a drop below its 50-dma would also be a break of its uptrend line from March 2009, both currently near 4431.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- bullish above 4620
- bearish below 4430

The RUT struggled a bit this morning but then when it looked like the rally was going to hold we saw some more buyers come rushing in and push it much higher throughout the day. It finished near its high for the day, which is another sign of short covering (or late-to-the-party bulls). It stopped a little shy of a new downtrend line from April 27th, currently near 1257.50, so a climb above that level, followed by a break above last Thursday's high near 1261 would keep the bulls in the driver's seat. The bears need to see the RUT below yesterday's low near 1233 in order to show us there's a new downtrend for the bulls to contend with.

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 1261
- bearish below 1233

Initially today the bond market was selling off while the stock market rallied, which was supportive of the stock market. But that reversed around 10:00 AM and the buying drove yields back down to yesterday's lows (the 30-year dropped lower). This is not supportive of the stock market and one more reason to suspect today might have been more about manipulating the stock market, to get some short covering, than about real buying interest.

Two weeks ago, on May 12th, the 30-year yield (TYX) had rallied up to the price projection at 3.089% (with a brief morning high at 3.099) and then was repeatedly tested over the next 5 trading days before dropping over the past week. Yesterday's and today's decline has it back below its broken downtrend line from December 2013, near 2.9%, and so far it's looking like it could continue lower into the summer. The pattern hasn't developed enough to rule out another rally to at least test the May 12th high but the risk from here (for bond bears) is a continuation of the rally in bonds and a decline in yields.

30-year Yield, TYX, Weekly chart

As mentioned earlier, the TRAN has been a warning sign to the bulls and continues to be. Today's rally was relatively strong, up +1.1%, but it was only good enough, so far, for a back-test of its broken uptrend line from March 2009 - November 2012, which it broke yesterday. It remains to be seen if yesterday's break was a head-fake break or if today's bounce back up to support-turned-resistance will be followed by a bearish kiss goodbye. A rally above the trend line along the lows since December 2014, near 8500, would at least be short-term bullish but the bulls will need to see a rally above its May 19th high near 8770 to negate the bearish pattern here.

Transportation Index, TRAN, Daily chart

The U.S. dollar has had a nice bounce off channel support (the top of its broken up-channel from 2008) but it's hard to know if from here it will head immediately to a new high or instead continue to consolidate for months before heading higher. I've been thinking we'll see a multi-month consolidation and at the moment I do not see a reason to change that expectation.

U.S. Dollar contract, DX, Weekly chart

Gold consolidated today following yesterday's relatively strong selloff. Currently it's holding its uptrend line from March 17th so there's still the potential for another bounce up to a minor new high for its bounce (green dashed line), perhaps up to the 1238 area by mid-June. I could see this happening with a stock market rally, if we get one. Otherwise a further breakdown below its uptrend line, near 1184, and its June low near 1179 would likely lead to more selling. I show a decline to about 1155 and then a bounce back up to its broken uptrend line next month before selling off more strongly. That's obviously a guess at the moment but it's a pattern I'll be tracking and I'll update it as price tells me to.

Gold continuous contract, GC, Daily chart

Oil's 3-wave bounce correction off its January low looks like it's finished and could lead to at least a test of its low near 42, if not a minor new low. That would likely be accompanied by a bullish divergence and a good setup for a multi-month trade on the long side. But it's possible we'll see oil trade sideways through the summer (for example, in a sideways triangle as depicted with the red dashed lines) before dropping lower. As with the dollar, it could be a choppy ride for traders over the next few months.

Oil continuous contract, CL, Daily chart

Tomorrow's economic reports will not likely move the market. Pending home sales could move things a little but the market hasn't been paying much attention to housing data. Friday's GDP, Chicago PMI and Michigan Sentiment will be looked at closely.

Economic reports and Summary

Conclusion

The frustration with a market that causes traders to sing "I can't get no satisfaction" continues. The bulls can't get it up and the bears can't get it to go down (get your minds out of the gutter). The choppy price range continues and both sides continue to get whipsawed out of their positions. Selling options above and below resistance and support has worked well and some day traders have done well with the volatility, taking small base hits and getting out of the way. There have been no swing trades for months and it's getting very old.

The first chart I showed tonight, the weekly Wilshire 5000, says it all -- the choppy move higher has been on slowing volume and a narrowing trading range. Momentum is slowing and up volume is not as strong as down volume. We've got all the classic telltale signs of a market top. But tell that to the bulls (and the shorts who keep getting scared out their positions) who don't want to let a good buying opportunity go to waste. As for volume, the declining trading volume can be seen on the SPY daily chart below.

SPDR S&P 500 ETF, SPY, Daily chart

Trading volume has been in decline since last October's volume peak (on the decline) and it's indicative of a problem for the bulls. Lower volume does make it easier to manipulate the market, like this morning, but sooner or later it's going to need stronger buying volume in order to sustain the rally. There's a reason why we're seeing so many rising wedge patterns -- they're very typical at the tops of rallies that have gone too far and when they break they tend to be retraced much faster than it took to build them. The one from last October's low, about eight months, could be completely retraced in a month or two, maybe faster if we get another flash crash in there (a strong possibility since liquidity is drying up).

All of this means bears need to respect the upside while bulls get defensive against a break to the downside. A flash crash will not give you an easy exit from long positions, which is a reason why it makes sense to trim your positions and move to cash. Upside potential is dwarfed by downside risk and you have to ask yourself, when considering holding a position, whether or not you'd be willing to enter a new trade here (in this case on the long side). If not then consider trimming.

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

Delivering Big Results On Big Data

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Tableau Software, Inc. - DATA - close: 114.86 change: +2.25

Stop Loss: 109.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.0 million
Entry on May -- at $---.--
Listed on May 26, 2015
Time Frame: Exit prior to July option expiration
New Positions: Yes, see below

Company Description

Trade Description:
The market for analyzing big business data is growing fast. DATA is leading the charge. According to the company, "Tableau Software (NYSE: DATA) helps people see and understand data. Tableau helps anyone quickly analyze, visualize and share information. More than 26,000 customer accounts get rapid results with Tableau in the office and on-the-go. And tens of thousands of people use Tableau Public to share data in their blogs and websites."

The last few earnings reports have been very impressive. DATA released their Q3 results on November 5, 2014. Results were 12 cents above estimates with revenues up +71% to $104.5 million, also above estimates.

Their Q4 results came out in early February. Analysts were expecting a profit of $0.11 a share on revenues of $122.58 million. DATA delivered $0.42 a share with revenues up +75% to $142.9 million. In the fourth quarter they added 2,600 new customers. They closed 304 transactions worth more than $100,000, a +70% improvement from a year ago.

Christian Chabot, Chief Executive Officer of Tableau. "In 2014, we experienced the strongest demand we've seen in our history, as the move to agile analytics grows faster than ever."

DATA reported their 2015 Q1 results on May 7th. Analysts were looking for a loss of $0.03 per share on revenues of $115.29 million. The company blew away these numbers with a profit of $0.08 per share (11 cents above estimates). The pattern of big revenue growth continued with Q1 revenues up +74.4% to $130.1 million. They added 2,600 new customers putting their total above 29,000. The number of deals above $100,000 hit 249 in the first quarter.

Management provided bullish guidance with estimates for Q2 revenues in the $135-140 million range. That's above Wall Street's estimate of $130.9 million. They also upped their fiscal year 2015 earnings picture and see $600-615 million, which is better than analysts' estimates of $587 million.

Shares of DATA surged on its results and optimistic guidance. Since then traders have been buying the dips pretty quickly. Today's display of relative strength (+1.99%) is also a new all-time closing high for DATA. It's also worth noting that DATA has been talked about as a potential takeover target.

The $115.00 level looks like short-term resistance. We will use a trigger at $115.25 as our entry point to buy calls.

Trigger @ $115.25

- Suggested Positions -

Buy the JUL $120 CALL (DATA150717C120) current ask $3.90
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:



In Play Updates and Reviews

Stocks Bounce On Greek Rumors

by James Brown

Click here to email James Brown

Editor's Note:

Rumors that Greece was actually making progress on a deal with its creditors in Europe helped fuel a market bounce. Many analyst viewed the Greek story with skepticism. Stocks rallied anyway and the NASDAQ set a new all-time closing high.

EA and ROP both hit our bullish entry triggers today.


Current Portfolio:


CALL Play Updates

Adobe Systems - ADBE - close: 80.16 change: +0.80

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

Comments:
05/27/15: ADBE is bouncing from its simple 10-dma. Shares added +1.0% today. If this rebound continues we could see ADBE hit our suggested entry point at $80.85 tomorrow.

Trade Description: May 21, 2015:
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)

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


Anthem, Inc. - ANTM - close: 163.38 change: +1.04

Stop Loss: 159.85
Target(s): To Be Determined
Current Option Gain/Loss: -1.1%
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:
05/27/15: It was a quiet day for shares of ANTM. The stock drifted sideways inside yesterday's trading range.

If shares break down under $162.00 odds are good it will test $160.00. No new positions at this time.

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

05/26/15 new stop @ 159.85
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: 87.92 change: +0.08

Stop Loss: 86.45
Target(s): To Be Determined
Current Option Gain/Loss: -35.5%
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:
05/27/15: CAT delivered a disappointing performance. The early morning rally faded. Shares closed virtually unchanged on the session in spite of the market's widespread gains.

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


Electronic Arts - EA - close: 63.86 change: +1.34

Stop Loss: 59.85
Target(s): To Be Determined
Current Option Gain/Loss: +0.6%
Average Daily Volume = 3.5 million
Entry on May 27 at $63.65
Listed on May 18, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/15: Our bullish play on EA is finally open. Shares rallied past short-term resistance and broke out to new highs. The stock hit our suggested entry point at $63.65. I would consider new positions at current levels.

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.

- Suggested Positions -

Long SEP $70 CALL (EA150918C70) entry $1.66

05/27/15 triggered @ 63.65
Option Format: symbol-year-month-day-call-strike


Eaton Corp. - ETN - close: 72.98 change: +0.97

Stop Loss: 70.65
Target(s): To Be Determined
Current Option Gain/Loss: -18.2%
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:
05/27/15: ETN bounced off yesterday's lows. Shares almost erased Tuesday's losses with a +1.3% gain today. The $73.60 area is very short-term resistance. 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

05/26/15 new stop @ 70.65
05/13/15 triggered @ 72.75
Option Format: symbol-year-month-day-call-strike


FactSet Research - FDS - close: 166.72 change: +2.21

Stop Loss: 163.85
Target(s): To Be Determined
Current Option Gain/Loss: +36.8%
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:
05/27/15: Traders pounced on FDS' spike toward yesterday's lows and the stock surged to a +1.3% gain, erasing yesterday's losses.

I am not suggesting new positions at this time.

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: 125.96 change: -0.12

Stop Loss: 123.85
Target(s): To Be Determined
Current Option Gain/Loss: -27.7%
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:
05/27/15: Uh-oh! FFIV's performance today could be a warning signal. Shares failed to participate in the market's widespread bounce. The stock closed virtually unchanged.

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

05/26/15 new stop @ 123.85
05/08/15 triggered @ 125.15
Option Format: symbol-year-month-day-call-strike


Northern Trust Corp. - NTRS - close: 75.51 change: +0.72

Stop Loss: 73.85
Target(s): To Be Determined
Current Option Gain/Loss: -14.0%
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:
05/27/15: NTRS almost recouped all of yesterday's losses but fell short by about five cents. I am still cautious on NTRS following yesterday's performance.

No new positions at this time.

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

05/26/15 new stop @ 73.85
05/12/15 new stop @ 73.45
05/05/15 triggered @ 75.05
Option Format: symbol-year-month-day-call-strike


Roper Technologies - ROP - close: 177.69 change: +1.98

Stop Loss: 173.25
Target(s): To Be Determined
Current Option Gain/Loss: -4.2%
Average Daily Volume = 441 thousand
Entry on May 27 at $177.75
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/15: ROP managed to erase yesterday's losses. More importantly the stock tagged new highs and hit our suggested entry point at $177.75. More conservative traders may want to see a rally past $178.00 before initiating positions.

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.

- Suggested Positions -

Long AUG $180 CALL (ROP150821C180) entry $4.80

05/27/15 triggered @ $177.75
Option Format: symbol-year-month-day-call-strike


Snap-on Inc. - SNA - close: 157.51 change: +1.69

Stop Loss: 153.85
Target(s): To Be Determined
Current Option Gain/Loss: +49.0%
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:
05/27/15: SNA rebounded back toward resistance near $158.00. Fortunately our call option value also recovered. A close above $158.00 could signal the next leg higher.

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

05/26/15 new stop @ 153.85
05/14/15 new stop @ 152.25
05/07/15 triggered @ 153.50
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Norfolk Southern Corp. - NSC - close: 94.83 change: +0.26

Stop Loss: 100.25
Target(s): To Be Determined
Current Option Gain/Loss: -9.4%
Average Daily Volume = 2.2 million
Entry on May 26 at $94.85
Listed on May 23, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/15: The Dow Jones Transportation Average produced a +1.12% bounce following yesterday's drop to new relative lows. Shares of NSC only bounced +0.27% today. The $96.00 level and its 10-dma near $96.50 should be overhead resistance.

Trade Description: May 23, 2015:
The combination of weak fuel prices, lower global demand for fuel, and rising exports from other countries has been hurting U.S. coal exports. The U.S. Energy Information Administration expects U.S. coal exports to fall throughout 2015 before leveling off in 2016. Less exports means less coal that needs to be moved by railroad.

NSC is in the services sector. They're a major player in the railroad industry. According to the company, "Norfolk Southern Corporation (NSC) is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products."

Falling coal shipments is not the only problem for the railroads. Crude oil's decline from last year's highs and the massive slowdown in the amount of fracking in the U.S. has also hurt the railroad business. Less drilling means fewer rail cars of oil pipe and drilling equipment to be shipped. Less fracking means less fracking sand and other proppants to be shipped. Less drilling also means less oil produced and thus less oil to be transported by rails.

It's not just NSC that's suffering. In March 2015 railroad company Kansas City Southern (KSU) dramatically reduced their guidance. Two months later (about May 14th) KSU actually revoked its guidance altogether. Management sees no visibility due to so much uncertainty surrounding the energy market. KSU's energy-related business is down -50% from a year ago and carloads are down -38% in Q2 2015. Their utility coal shipments are down -68%.

Another company, Union Pacific (UNP), painted a similar picture of lower shipments and falling demand. The industry is facing difficult year over year comparisons. They have seen 11 weeks of negative rail volume. Industry wide coal shipments are down -15% from a year ago (UNP's was down -25%). Shipments of crude oil are down. Shipments of agriculture products are down.

It could be months before the oil industry in the U.S. recovers. Coal isn't expected to recover this year. That doesn't paint a very rosy picture for the railroads.

On April 13, 2015 NSC issued an earnings warning. They guided their Q1 results to $1.00 per share on revenues of $2.6 billion. That's a -15% drop in earnings from a year ago. Wall Street was expecting $1.29 per share on revenues of $2.68 billion. Shares of NSC crashed on this news and then rebounded but the bounce failed at technical resistance and shares have accelerated lower. NSC has broke down under major support near the $100 level.

Technical traders could argue that NSC has created a giant head-and-shoulders pattern (with two right shoulders) over the last nine months. This H&S pattern would suggest a downside target in the $80-85 region. Tonight we are suggesting a trigger to buy puts at $94.85. We will start this trade with a stop loss at $100.25. More conservative traders may want to use a stop around $98.30 as an alternative.

- Suggested Positions -

Long SEP $90 PUT (NSC150918P90) entry $2.65

05/26/15 triggered @ $94.85
Option Format: symbol-year-month-day-call-strike


SPX Corp. - SPW - close: 74.71 change: +0.45

Stop Loss: 76.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 500 thousand
Entry on May -- at $---.--
Listed on May 26, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/27/15: SPW did not see any follow through on yesterday's breakdown. Instead the stock rebounded with a +0.6% gain. Fortunately broken support near $75.00 is still overhead resistance.

Our plan has not changed and our suggested entry point to buy puts is $73.45.

Trade Description: May 26, 2015:
The business environment for SPW seems to be getting tougher. Their revenue growth has slowed down and now turned negative. Naturally shares of SPW have been under pressure.

SPW is in the industrial goods sector. According to the company, "Based in Charlotte, North Carolina, SPX Corporation (NYSE: SPW) is a global multi-industry manufacturing leader with approximately $5 billion in annual revenue, operations in more than 35 countries and over 14,000 employees. The company's highly-specialized, engineered products and technologies are concentrated in Flow Technology and energy infrastructure. Many of SPX's innovative solutions are playing a role in helping to meet rising global demand for electricity and processed foods and beverages, particularly in emerging markets. The company's key products include food processing systems for the food and beverage industry, critical pumps and valves used in oil & gas processing, power transformers used by utility companies, and heat transfer technology for power plants."

SPW's 2014 Q3 revenues only grew +1.1%. Their 2014 Q4 earnings report showed revenues falling -3.9% and management lowered guidance for fiscal year 2015. They forecasting revenues falling into the $4.48-4.67 billion range, which was below Wall Street's $4.8 billion estimate.

The disappointing performance continued into the first quarter of 2015. SPW reported earnings on April 29th. They missed estimates by three cents. The revenue decline accelerated with revenues down -12.1% from a year ago, and significantly below estimates. Management lowered their 2015 guidance again. They now forecast 2015 revenues in the $4.25-4.44 billion versus Wall Street's adjusted estimate of $4.5 billion.

Traders have been selling the bounces and SPW has a bearish trend of lower highs. Today's display of relative weakness (-2.8%) was significant because it's a breakdown under support at $75.00. I would be tempted to buy puts now but tonight we are listing a trigger to buy puts at $73.45.

FYI: In October 2014 SPW announced a spin-off of its flow business into a new independent company. In their press release SPW said the Future Flow Company will consist of SPX's current Flow segment and its hydraulic technologies business. It is expected to have annual revenue of approximately $3 billion. SPW just recently filed their Form 10 Registration Statement and said the new company's name will be SPX FLOW. The spin-off is expected to be complete in Q3 2015.

Trigger @ $73.45

- Suggested Positions -

Buy the JUL $70 PUT (SPW150717P70)

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