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Daily Newsletter, Tuesday, 7/14/2015

Table of Contents

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

Market Wrap

The Iranian Battle Begins

by Jim Brown

Click here to email Jim Brown

The long awaited nuclear agreement with Iran was announced this morning. That was the easy part. Now the war of words begins as the various analysts point out all the red lines the administration crossed and Congress begins the task of trying to prevent the deal from being approved.

Market Statistics

On the positive side there was very little news from Greece to disrupt the market. Earnings began to flow and investors began to focus on the market rather than European headlines.

On the negative side, the Iranian agreement is drastically different than the one proposed by President Obama when negotiations began. The president said he would not agree to any deal that did not allow anywhere, anytime inspections. That did not happen. Iran was supposed to come clean about its prior nuclear weapons research. That did not happen. Iran was going to be prevented from enriching uranium. That did not happen. Iran was going to be forced to dismantle its uranium enrichment infrastructure. That did not happen with Iran allowed to keep more than 5,000 operating centrifuges. I could go on with the problems but you get the idea.

Basically the U.S. recognized Iran as a nuclear threshold state and will allow Iran to build nuclear weapons with only a 12-month breakout period. Since Iran has never complied with any prior agreement and was caught just a couple months ago trying to buy prohibited nuclear missile technology, there is no reason to believe that Iran will comply with this new deal. This is strictly a political event and will allow Iran to receive up to $140 billion in funds held up by sanctions and those funds will be used for exporting weapons and terrorism to other nations in the Middle East and for acquiring additional nuclear weapons technology.

Ambaddasor John Bolton called the deal a "tragedy." William Kristol of the Weekly Standard said it was a "very good deal - for Iran. We have a deal. It is a deal worse than even we imagined possible. It’s a deal that gives the Iranian regime $140b in return for … effectively nothing: no dismantlement of Iran’s nuclear program, no anytime/anywhere inspections, no curbs on Iran’s ballistic missile program, no maintenance of the arms embargo, no halt to Iran’s sponsorship of terror."

Complete text of Iranian agreement

Only a couple days ago the Supreme Leader gave another death to America speech. Today an Iranian court fined the U.S. Government $50 billion for killing Iranian nationals and by assisting Iran's enemies. $50 billion fine

This agreement is going to be in the headlines for months to come. Congress has 60 days to review the agreement and either approve or deny it. However, President Obama issued a veto warning this morning saying he would veto any legislation that did not approve the agreement. This means a minimum of 67% of both houses have to vote against it in order to override a presidential veto.

Investor's Business Daily Editorial Cartoon.

The market rallied despite the Iranian news and some weak economics. The retail sales report for June showed that sales declined -0.3% compared to a previously reported +1.2% rise in May. However, that May number was revised down to a +1.0% gain. Analysts were expecting a +0.3% rise in sales in June. This was the second weakest report in more than a year.

Sales declined in almost every category. Motor vehicles declined -1.1%, home furnishings -1.6%, building materials -1.3%, clothing -1.5%, food service and bars -0.2% and non-store retailers -0.4%. The only gainers were gasoline stations +0.8%, appliances +1.0% and general merchandise +0.7%.

The NFIB Small Business Survey declined a whopping -4 points from 98.3 to 98.1 with every internal component worsening. This is the lowest level since March 2014 and only the third time in history that the headline number declined -4 points or more. In the internal components the earnings trends declined from -7 to -17, expectations for the economy to improve dropped from -3 to -9, plans to increase inventories from +4 to -4 and plans to increase employment fell from 12 to 9. A net of 17% of respondents reported weaker earnings in Q2. In a separate survey, QuickBooks found that small business revenue has declined for seven consecutive months.

The NFIB survey showed more layoffs, weaker hiring and weaker hiring plans for the next six months. This is not a good sign for the U.S. economy since small businesses produce the most new jobs.

Import prices declined -0.1% in June, compared to a +1.3% rise in May. This was in line with consensus and suggests May was an outlier. May was the only price rise in more than a year. This drop back into a decline suggests that inflationary pressures have evaporated again. Imported food prices fell -0.6%, nonfuel imports fell -0.2% while petroleum prices rose +0.8%. With oil prices falling again in July this suggests another negative month when the July report arrives in August.

The three economic reports above will have an impact on the Fed's economic outlook at the July FOMC meeting in two weeks. The Fed may want to hike rates in September but with the economic indicators weakening it may be tough to justify.

Yellen's testimony tomorrow morning will probably not mention the weakening economics. That would go against her position that the economy is strengthening enough to allow a rate hike in September. However, the impact will not be lost on the Fed. They will keep their fingers crossed that the economy rises to meet their projections and allow their bias to be proved correct.

The calendar for Wednesday is busy with the Yellen testimony having the biggest potential to move the market. I will be interested to see if the Beige Book shows any weakness from the last report since that is the Fed's analysis of the economy by region.


Earnings finally began today with several major companies reporting. JP Morgan started the ball rolling with earnings of $1.54 compared to estimates for $1.44. Net revenue fell -3.2% to $24.53 billion. Total assets were $2.45 trillion at the end of June compared to $2.58 trillion at the end of March. They made home loans of $29.3 billion, an increase of +74% but mortgage profits declined because of intense competition. Mortgage revenue declined -1% to $1.71 billion. Shares rose $1 on the news.


Wells Fargo (WFC) profits declined for the second consecutive quarter as expenses rose faster than revenue growth. Low interest rates continue to hamper bank profits. Net interest margin, the amount the bank makes between its cost of borrowing and the interest received from loans, fell from 3.15% to 2.97%. Mortgage banking revenue declined -1% but still accounted for 17% of its non-interest income. Wells made $62 billion in mortgage loans for the quarter. Earnings of $1.03 matched analyst estimates. Revenue rose +1% to $21.3 billion but missed estimates for $21.7 billion. Shares rose 50 cents on the news.


Johnson & Johnson (JNJ) reported earnings of $1.71, which beat estimates by 4 cents, with revenue declining -9% to $17.8 billion but still beating estimates. JNJ said the strong dollar was a major headwind knocking -7.2% off of revenue, as well as falling sales on their Hep-C drug because of strong competition from Gilead Sciences. JNJ raised guidance from $6.04-$6.19 to $6.10-$6.20. Shares declined -50 cents.


CSX reported earnings of 56 cents compared to estimates of 53 cents. Revenues of $3.06 billion missed estimates for $3.12 billion. Shipping volumes declined -1% hurt in part by a sharp decline in coal shipments as well as materials used in drilling oil wells like pipe and frac sand. Expenses declined -9% to $2.05 billion thanks to a drop in fuel costs from $416 million to $263 million. CSX maintained its earnings forecast for 2015 but said the high end of the range could be challenging. Shares rose $1 in afterhours to $33.11.


Yum Brands reported after the bell with earnings of 69 cents on revenue of $3.11 billion. That beat estimates of 63 cents but missed revenue estimates for $3.18 billion. KFC sales rose +6%, Taco Bell up +9% and Pizza Hut up +1%.

Same store sales in China declined -10% and slightly worse than the -8.4% analysts expected. Yum is still trying to overcome a problem with a meat supplier from several months ago. The company is opening 700 new stores in China in 2015. Shares were down about $1 after the report.


Earnings for tomorrow include Intel and Netflix. Intel (INTC) was cut to a sell by Bernstein with a $25 price target. The analyst said datacenter growth was slowing with cloud servers becoming more popular. A cloud server can run dozens of virtual machines rather than having those companies pay for an actual server for each one of the applications.

Netflix (NFLX) reports earnings after the close on Wednesday. However, they split the stock 7:1 after the close today with shares will be worth worth $100.36 each based on the $702.53 close today.


Micron (MU) saw its shares rally +11% to $19.61 state-owned Chinese company Tsinghua Unigroup reportedly was preparing a $23 billion bid that would value Micron at $21 per share. There is virtually no chance of this bid being accepted and no chance of the U.S. approving the sale if it was accepted. That price is roughly 8 times Micron's 2014 earnings. Given the cyber security problems with China and the proprietary technology in Micron products, the U.S. is not going to allow a Chinese acquisition.

Analysts said a real bid for Micron would have to be in the $35 per share range to be worthwhile despite Micron's $20 share price today. Micron was $30 in April. They warned of a slowdown in certain sectors in June but said they expect a rebound in 2016.


Twitter (TWTR) shares rallied +10% intraday when a bogus news alert said the company was negotiating with a prospective buyer. The bogus news alert looked like it came from Bloomberg with the website www.Bloomberg.Market.com recently registered by an anonymous party on July 10th. Having a website, it is easy to cut and paste HTML from a real press release to announce anything you want. The headline "Twitter Attracts Suitors" was also too short for a real Bloomberg headline. In the ten-minute period between the first tweet referencing the news alert until it was disavowed by Twitter and Bloomberg, more than 16.3 million shares traded at an average price of $37.83 or $617 million. Twitter shares opened the day at $35.78.


Amazon (AMZN) is having their 20th anniversary on Wednesday and they are celebrating with "Prime Day." They are offering ridiculous discounts on hundreds of items to account holders with Prime subscriptions. For instance a 40-inch HDTV for $115. Many prices are the lowest ever on Amazon. Starting at midnight there will be thousands of bargains and new ones will be listed every ten minutes throughout the day. They are claiming there will be more deals that on Black Friday. Amazon shares soared to another new high at $465. Click here for details


Crude prices rose +1.17 on the details in the Iranian deal. The first date to get sanctions removed is December 15th when the IAEA certifies Iran has complied with the first set of changes they are required to make. Once that certification is complete the next stage begins where sanctions can be removed. There are some doubts Iran will make the December 15th cutoff so expectations for Iranian oil coming to market are six-months at the very earliest and nine-months the most likely. That took the pressure off the oil market and short covering began.

After the bell tonight, the API oil inventories were reported to have declined -7 million barrels for last week. This caused another uptick in the futures of about 35 cents. Investors and speculators pay more attention to the EIA inventories that come out on Wednesday mornings. A big decline there could really get prices moving.


Markets

Today was not a short squeeze! For the first time in a long time the markets did not gap open and then hover at the opening high for the rest of the day. We actually saw some real buyers come into the market and the indexes moved over some critical resistance.

We had a -4% correction from the 2130 high in June on the S&P to the 2044 low last Wednesday. After three days of major short squeezes the market actually has some positive momentum. Today was the first four-day gain for the S&P since January. The S&P has now returned to within 1% of its 2130 high close back in May.

2015 has been a rocky market. We have had the most down days in the first six months since 2003. When you consider that period covers the Great Recession that is an amazing statistic.

The resistance at 2100 was broken at the open and the S&P just continued to creep higher the rest of the day. Investors are so thankful that the Greek disaster is almost over that they are celebrating by adding stocks to their portfolio.

The S&P now faces resistance at 2120 and then 2130. Support is well back at 2080.


The Dow had another good day but did not quite make it to resistance at 18,100 with the high at 18,072. The Dow has a little rougher time in trying to move back to its highs because that range from 18,100-18,165 is very congested. With multiple Dow components reporting this week the index could have some anchors.

JP Morgan added $1 to give the Dow roughly +8 points and Goldman Sachs added $2 or about +15 Dow points. Goldman reports earnings on Thursday.

Support is roughly 17,800 and resistance 18,100 and 18,165.



The Nasdaq crept up to resistance at 5100 by 11:AM and held there the rest of the day with a small buy spurt in late afternoon. Google and Amazon were major contributors. With Netflix and Intel reporting after the bell on Wednesday and Ebay, Google on Thursday there could be some challenges in moving much higher unless those companies knock it out of the park.

If the Nasdaq moves convincingly over 5100 the next major hurdle is 5150 and then the historic high close of 5161.



The Russell 2000 is approaching resistance at 1275 after three days of strong gains. This is going to be a crucial resistance point but the small caps should have better earnings than the large caps because of the lack of dollar exposure.


I am encouraged by the four days of gains and the confrontation with new resistance levels. Assuming Greece does not do anything stupid with their vote on Wednesday and Janet Yellen does not press too hard on the potential for a rate hike we could see further gains. However, I would not be surprised to see some profit taking at these levels. We had a sharp rebound off the lows and it would not be unusual to see some profit taking.

Enter passively, exit aggressively!

Jim Brown

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New Option Plays

Rebounding From Support

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Adobe Systems Inc. - ADBE - close: 81.89 change: +0.45

Stop Loss: 78.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.64 million
Entry on July -- at $---.--
Listed on July 14, 2015
Time Frame: Exit PRIOR to earnings in September
New Positions: Yes, see below

Company Description

Trade Description:
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."

Looking at the last couple of earnings reports ADBE has beaten Wall Street's bottom line estimate. They reported their Q1 report on March 17th. Earnings were up +46% from a year ago to $0.44 per share. It was their best quarterly earnings growth in four years and above analysts' estimates. Revenues were up almost +11% to $1.11 billion.

During the first quarter they added 517,000 customers to their subscription service. While that was up +28% from a year ago it missed expectations. Jumping to the second quarter ADBE said they added +639,000 new subscribers, which was well above estimates for +575K.

The company announced their Q2 earnings on June 16th. Earnings were up +30% to $0.48 per share, which beat estimates. Revenues hit a record of $1.16 billion, which was in-line with expectations.

Shantanu Narayen, Adobe's president and CEO, commented on the quarter, "Strong execution against our Creative Cloud, Document Cloud and Marketing Cloud businesses drove record revenue. We are accelerating the pace of innovation in our Cloud offerings and are thrilled to be launching our best Creative Cloud release to date, which includes Adobe Stock - our new stock content service." ADBE's executive vice president and CFO, Mark Garrett, said, "With our business model transition largely behind us, the positive financial benefits are now reflected in our P&L. We are driving more profit, earnings per share, cash flow and deferred revenue and unbilled backlog."

Management did lower their Q3 and 2015 forecast on both the top and bottom line. Yet investors seemed to ignore this earnings warning because it was all due to foreign currency exchange headwinds. ADBE is expecting their Adobe Marketing Cloud sales to grow more than +20% year over year.

Mr. Narayen, CEO, mentioned their new Adobe Stock service. This is a multimedia marketplace where users can buy and sell images. Analysts think this could add a significant revenue boost by 2017 (up to $1 billion a year).

Multiple analysts have upgraded their price target on ADBE since its earnings report. The most recent was on July 6th where ADBE garnered a new price target at $103.00. Currently the point & figure chart is only forecasting at $92.00 target.

Shares of ADBE broke out past major resistance near $80.00 in mid June. Then the market reversed lower in the last several days of June and shares of ADBE sank back toward prior resistance and now new support in the $80.00 region. The intraday low was $78.94 on July 7th where ADBE bounced off technical support at its rising 50-dma.

Investors have started buying the dip again and this bounce from support near $80.00 is a bullish entry point. We are suggesting a trigger to buy calls at $82.50.

Trigger @ $82.50

- Suggested Positions -

Buy the OCT $85 CALL (ADBE151016C85) current ask $2.69
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

Bulls Push Rally To Four Days In A Row

by James Brown

Click here to email James Brown

Editor's Note:

The S&P 500, the Russell 2000, and the NASDAQ composite all managed to rally for a fourth day in a row. Momentum slowed after yesterday's celebration of a potential Greek deal.

We have updated several stop losses tonight.


Current Portfolio:


CALL Play Updates

Cracker Barrel Old Country Store - CBRL - close: 160.42 change: -0.33

Stop Loss: 156.40
Target(s): To Be Determined
Current Option Gain/Loss: +92.5%
Average Daily Volume = 332 thousand
Entry on July 01 at $150.25
Listed on June 20, 2015
Time Frame: Plan on exiting prior to August 5th
New Positions: see below

Comments:
07/14/15: After a $3.00 move yesterday CBRL only gave back 33 cents today. The stock essentially hovered near $160 all day.

No new positions at this time. We are moving the stop loss up to $156.40.

Trade Description: June 20, 2015:
It's summertime and that means vacations and road trips for a lot of Americans. That's good news for a company like CBRL because most of their 634 restaurants are located along major highways.

CBRL is in the services sector. According to the company, "Cracker Barrel Old Country Store, Inc. provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America's country heritage…all at a fair price. Cracker Barrel Old Country Store, Inc. (CBRL) was established in 1969 in Lebanon, Tenn. and operates 634 company-owned locations in 42 states."

Wall Street loves earnings growth and CBRL continues to deliver. Back in February the company beat earnings and revenue estimates and raised their 2015 guidance. Their most recent report was June 2nd. CBRL reported their fiscal third quarter. Analysts were expecting a profit of $1.37 per share on revenues of $680 million. CBRL beat estimates with a profit of $1.49 per share. This is a +21% rise from a year ago and marks the fifth quarter in a row of double-digit earnings growth. Revenues also beat estimates with a +6.3% rise to $683.7 million. CBRL said their comparable store sales were up +5.2%. Their comparable retail store sales were up +4.5%.

Management raised their normal quarterly dividend +10% to $1.10. They also announced a special one-time dividend of $3.00 per share. Both are payable on August 5th, 2015 to shareholders on record as of July 17th. CBRL offered a bullish outlook for both their fourth quarter and 2015. Management raised their 2015 earnings guidance from $6.40-6.50 to $6.60-6.70 per share. Wall Street was only expecting $6.55.

Technically the stock looks bullish. Shares have been consolidating their post-earnings gains the last couple of weeks but traders are buying the dip. Today CBRL is poised for a breakout past short-term resistance near $148.50. If the stock does breakout it could see some short covering. The latest data listed short interest at 17% of its small 18.9 million share float. Meanwhile the point & figure chart is very bullish and forecasting a long-term target at $231.00.

Tonight we are suggesting a trigger to buy calls at $150.25. More aggressive traders may want to jump in early on a rally past $148.75.

- Suggested Positions -

Long SEP $155 CALL (CBRL150918C155) entry $4.00

07/14/15 new stop @ 156.40
07/11/15 new stop @ 152.40
07/07/15 new stop @ 147.75
07/01/15 triggered @ $150.25
Option Format: symbol-year-month-day-call-strike


The Walt Disney Co. - DIS - close: 117.85 change: -0.20

Stop Loss: 115.85
Target(s): To Be Determined
Current Option Gain/Loss: +89.1%
Average Daily Volume = 5.7 million
Entry on June 18 at $112.25
Listed on June 17, 2015
Time Frame: Exit PRIOR to earnings in August
New Positions: see below

Comments:
07/14/15: DIS also spent today consolidating sideways. Shares closed almost flat for the session. If the stock does see a dip I would expect support at the simple 10-dma near $116.00.

We are going to try and reduce our risk by raising the stop loss to $115.85. No new positions at this time.

Trade Description: June 17, 2015:
Disney is an American icon. The company is over 90 years old. They have grown into a massive content generating giant. Today DIS runs five business segments. Their media networks include broadcast, cable, radio, publishing, and digital businesses headlined by their Disney/ABC television group and ESPN Inc. DIS' parks and resort business includes Disneyland, Disneyworld, plus theme parks in Tokyo, Paris, Hong Kong, Shanghai, and a cruise line.

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

Their movie business has been a money maker over the years with huge hits like the Pirates of the Caribbean franchise, Tangled, Wreck-it Ralph. In 2013 they released the animated film "Frozen", which has turned into the largest grossing animated movie of all time. Pixar has a stable of successful movies that have grossed almost $9 billion. DIS is also mining gold in Marvel Entertainment's library of over 8,000 characters of comic book history. Marvel had two big hits in 2014 Captain America: Winter Soldier and Guardians of the Galaxy. Their 2015 Avengers: Age of Ultron was also a big winner at the box office grossing more than $1.3 billion worldwide. Of course not every Disney movie crushes it. Their recent Tomorrowland was a big disappointment and they could lose more than $100 million on the film.

Back in 2012 Disney purchased Lucasfilm and all the Star Wars properties from George Lucas for $4 billion. The company is busy filming the next three episodes of the Star Wars franchise. The next Star Wars film it titled "The Force Awakens." It will be episode seven in the franchise. The movie doesn't hit theaters until December 2015 but analysts are already predicting that "The Force Awakens" will generate $1.2 billion at the global box office.

DIS management loves movie franchises because they can fuel years of sequels, park rides, and merchandise. The approach seems to be working. Revenues and net income have hit all-time highs for five consecutive quarters. Their 2015 Q1 results saw earnings per share up +23% to $1.27. Their Q2 results saw earnings grow +14% to $1.23 per share. Their domestic theme parks showed a strong surge in both attendance and in customer spending. Analysts are forecasting DIS earnings to grow +17% this year.

The stock surged to new all-time highs back in early May after its Q2 earnings report. Shares have since spent the last six weeks digesting gains in a sideways consolidation that has ignored much of the broader market's volatility. More recently DIS has started to rebound and is now at the top of its trading range. A breakout here could signal the next leg higher.

The point & figure chart is bullish and forecasting at long-term target of $154.00. I personally suspect that DIS could rally toward $120-125 before its next earnings report in August. Credit Suisse recently upped their price target to $130. Tonight we are suggesting a trigger at $112.25 to buy calls.

- Suggested Positions -

Long AUG $115 CALL (DIS150821C115) entry $2.30

07/14/15 new stop @ 115.85
06/27/15 new stop @ 112.25
06/18/15 triggered @ $112.25
Option Format: symbol-year-month-day-call-strike


Facebook, Inc. - FB - close: 89.68 change: -0.42

Stop Loss: 84.90
Target(s): To Be Determined
Current Option Gain/Loss: +12.7%
Average Daily Volume = 24.5 million
Entry on July 06 at $88.15
Listed on July 04, 2015
Time Frame: Exit PRIOR to earnings on July 29th
New Positions: see below

Comments:
07/14/15: One of the big stories for FB today is how the company has become the fastest to reach a $250 billion valuation. Today the stock has a market cap of $251 billion just three years after its IPO. That beat Google (GOOG) the previous record holder, which took eight years to reach a $250 billion market cap.

Shares of FB churned sideways on either side of $90.00. I would expect a dip toward $88.00, which should be new support.

Trade Description: July 4, 2015:
Facebook probably needs no introduction. It's the largest social media platform on the planet. As of March 31st, 2015 the company reported 1.44 billion monthly active users and 936 million daily active users. If FB were a country that makes them the most populous country on the planet. China has 1.35 billion while India has 1.25 billion people.

Earlier this year (March) the company announced a new mobile payment service through FB's messenger app. The new service will compete with similar programs through PayPal, Apple Pay, and Google Wallet.

Meanwhile business at FB is great. According to IBD, FB's Q4 earnings were up +69% from a year ago. Revenues were up +49%. Q1 results were out on April 22nd. Earnings were up +20% to $0.42 per share, which beat estimates. Revenues were up +41.6% to $3.54 billion in the first quarter. Wall Street is expecting FB's profit to rise +12% in 2015 and +32% in 2016.

FB continues to see growth among its niche properties. The company bought Instragram for $1 billion in 2012. Last late year Instragram surpassed Twitter with more than 300 million active users. FB is also a dominate player in the messenger industry with more than 600 million users on WhatsApp and 145 million users on Facebook Messenger. FB has not yet started to truly monetize its WhatsApp and Messenger properties. It's just now starting to include ads in Instagram. Eventually, with audiences this big, FB will be able to generate a lot of cash through additional advertising.

Speaking of advertising, FB has jumped into the video ad game with both feet and it's off to a strong start. FB claims that it's already up to four billion video views a day. They had 315 billion video views in Q1 2015. That's pretty significant. YouTube had 756 billion video views in Q1 but YouTube has been around for ten years (FYI: YouTube is owned by Google). FB has only recently focused on video.

Wall Street is growing more optimistic as FB develops its blooming video ad business and its Instagram and messaging properties. In the last few weeks the stock has seen a number of price target upgrades. Bank of America upped their FB price target from $95 to $105. Cantor Fitzergerald upped theirs to $100. Brean Capital raised theirs to $108. Piper Jaffray upgraded their FB target to $120. Currently the point & figure chart is bullish with a $113.00 target.

Technically FB was stuck in a trading range for months while still working on a long-term, slow moving up trend of higher lows. That changed a couple of weeks ago with a bullish breakout to new highs. The recent pullback is an opportunity. If traders continue to buy this dip we want to jump on board. Tonight we are listing an entry point to buy calls at $88.15.

- Suggested Positions -

Long AUG $90 CALL (FB150821C90) entry $2.84

07/06/15 triggered @ $88.15
Option Format: symbol-year-month-day-call-strike


Fiserv, Inc. - FISV - close: 87.40 change: +0.31

Stop Loss: 85.85
Target(s): To Be Determined
Current Option Gain/Loss: +3.1%
Average Daily Volume = 1.0 million
Entry on July 10 at $85.41
Listed on July 07, 2015
Time Frame: Exit PRIOR to earnings on July 29th
New Positions: see below

Comments:
07/14/15: Traders bought the dip in FISV this morning and shares drifted to another new high. Tonight we are raising the stop loss up to $85.85. No new positions at this time.

Trade Description: July 7, 2015:
Apple isn't the only one with a mobile payments platform. Last year AAPL launched its Apple Pay service, which allows people to use their smart phones (and now smart watches) to pay for stuff at the register. FISV also jumped into the mobile pay industry late last year. That's on top of a growing business of its traditional payment systems.

FISV is part of the services sector. According to the company, "Fiserv, Inc. (FISV) enables clients to achieve best-in-class results by driving quality and innovation in payments, processing services, risk and compliance, customer and channel management, and business insights and optimization."

Earnings have been relatively on track the last couple of quarters. FISV most recent report was announced on May 5th. They reported earnings of $0.89 per share. That was up +8.5% from a year ago and above Wall Street estimates. Revenues were up +3.4% and slightly behind expectations. The company spent $290 million buying back 3.8 million shares last quarter.

Shares of FISV had been slowly drifting higher in the $75-80 zone from February to June. Suddenly things changed. The market's big rally on June 18th helped FISV breakout from its trading range. The next day the stock was upgraded to an "outperform" and given at $95 target. This launched FISV's stock toward $85.00.

Shares have been trading technically and slowly faded back toward its mid-June breakout high. Once FISV had filled the gap it began to rally again. The stock held up well this morning during the market sell-off. When the major indices reversed higher FISV outperformed them with a +0.77% gain. We want to hop on board if FISV can rally past $85.00. Tonight we're suggesting a trigger to buy calls at $85.15. Plan on exiting this trade prior to their earnings report on July 29th.

- Suggested Positions -

Long AUG $85 CALL (FISV150821C85) entry $3.20

07/14/15 new stop @ 85.85
07/10/15 triggered on gap open at $85.41, trigger was $85.15
Option Format: symbol-year-month-day-call-strike


INSYS Therapeutics - INSY - close: 39.19 change: +0.92

Stop Loss: 36.35
Target(s): To Be Determined
Current Option Gain/Loss: -25.0%
Average Daily Volume = 607 thousand
Entry on July 01 at $36.30
Listed on June 30, 2015
Time Frame: Exit PRIOR to earnings in August
New Positions: see below

Comments:
07/14/15: INSY spiked lower this morning. The stock was down -4.6% at its low of the day. Fortunately traders bought the dip near INSY's short-term bullish trend of higher lows. The stock rebounded to a +2.4% gain on the session, outperforming the major indices.

Tonight we are raising the stop loss to $36.35. No new positions at this time.

Trade Description: June 30, 2015:
INSY is probably best known for its synthetic cannabinoid drugs that use THC, the same ingredient in marijuana. Yet it is the company's Subsys treatment, a painkiller several times stronger than morphine, that generates the most revenues for INSY. The marketing practices behind Subsys have generated some scandal-worthy headlines but nothing seems to be slowing down the stock's long-term rally.

INSY is in the healthcare sector, more specifically the biotech industry. According to the company, "Insys Therapeutics is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve the quality of life of patients. Using our proprietary sublingual spray technology and our capability to develop pharmaceutical cannabinoids, Insys addresses the clinical shortcomings of existing commercial products. Insys currently markets two products: Subsys, which is sublingual Fentanyl spray for breakthrough cancer pain, and a generic version of Dronabinol (THC) capsules. The Company's lead product candidate is Dronabinol Oral Solution, a proprietary, orally administered liquid formulation of dronabinol that Insys believes has distinct advantages over the current formulation of dronabinol in soft gel capsule. Insys is developing a pipeline of sublingual sprays, as well as pharmaceutical cannabidiol."

The company's earnings growth has been impressive. They have consistently beaten Wall Street's bottom line earnings estimates the last six quarters in a row. They normally beat the revenue estimate as well. Looking at the last three quarters INSY has seen its revenues jump +99.7%, +65.4%, and +70.2%. Most of that has been on strong Subsys sales, which were up +69% in the fourth quarter and up +74% in the first quarter.

INSY management is very optimistic and expects to complete four Phase III clinical trials in 2015. If successful it will significantly broaden their product line. The company just recently announced a New Drug Application (NDA) for its "proprietary Dronabinol Oral Solution for anorexia associated with weight loss in patients with AIDS; and nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments. Dronabinol Oral Solution is an orally administered liquid formulation of the pharmaceutical cannabinoid dronabinol, a synthetic version of tetrahydrocannabinol (THC)."

INSY's stock has been a strong performer since the company's IPO in 2013. Shares saw a 3-for-2 split in 2014. They just completed a 2-for-1 split on June 5th.

Before I continue I want to remind traders that biotech stocks can be tough to trade. Normally stocks in this group can be volatile with lots of headline risk. The right headline about a successful test or clinical trial or FDA approval can send shares soaring. The wrong headline could see a biotech stock crash or even gap down several points.

It is important to note that not all the news is good for INSY. In late 2014 the Wall Street Journal (WSJ) ran a story about some shady marketing practices for INSY's Subsys painkiller. This is an under-the-tongue spray version of the painkiller fentanyl. Subsys has a very high risk of dependency and is currently only approved for cancer patients. Yet strangely enough only 1% of prescriptions last year were written by oncologists. Several doctors with the biggest number of Subsys prescriptions have also been under review or disciplined. The WSJ noted that the Office of the Inspector General of the U.S. Department of Health and Human Services and the U.S. Attorneys in the Central District of California and Massachusetts are all looking into the matter. This is significant because Subsys accounts for the vast majority of INSY's revenues.

Thus far the stock market has managed to ignore the shadow cast by Subsys and how the drug is prescribed and INSY's financial relationship with the doctors who prescribe it.

Last week saw biotech stocks retreat. The IBB biotech ETF had broken out in mid June and rallied to new record highs. The group reversed lower last week with a sharp correction. INSY followed its peers lower with a painful drop from $42 to $34 in about three days. Currently the $34.00 level is holding up as support. If INSY can bounce from current levels the move could be big.

A rally from here could spark a short squeeze. The most recent data listed short interest at 68% of the small 23.6 million share float. Tonight we are suggesting a trigger to buy calls at $36.30.

*Small positions to limit risk* - Suggested Positions -

Long AUG $40 CALL (INSY150821C40) entry $3.40

07/14/15 new stop @ 36.35
07/01/15 triggered @ $36.30
Option Format: symbol-year-month-day-call-strike


Jack In The Box Inc. - JACK - close: 92.89 change: +0.79

Stop Loss: 89.75
Target(s): To Be Determined
Current Option Gain/Loss: +50.0%
Average Daily Volume = 600 thousand
Entry on July 13 at $90.25
Listed on July 11, 2015
Time Frame: Exit PRIOR to earnings
New Positions: see below

Comments:
07/14/15: JACK found support near $92.00 midday and the stock rebounded to a +0.85% gain. I am not suggesting new positions at current levels. We will adjust the stop loss up to $89.75.

Trade Description: July 11, 2015:
It's a burger-eat-burger world out there in the fast-food business. Jack in the Box is small fries compared to its larger rivals like McDonalds (36,258 locations) and Wendy's (6,515 locations). Let's not forget heavy weights like Taco Bell, Burger King, Subway, Dairy Queen, and a handful of pizza chains. JACK only has about 2,200 restaurants but it also has a secret weapon and that is the Qdoba Mexican Grill, a fast-casual restaurant with about 600 locations. Fast-casual restaurant rival Chipotle Mexican Grill has almost 1,800 locations.

Some of that intense competition being felt by McDonalds and Chipotle Mexican Grill is coming from Jack in the Box and its Qdoba brand, which is growing sharply. A majority of their Qdoba franchisees own multiple stores with 10, 20 even 40 stores common. Enterprising business owners don't open additional stores if the original stores are not working. To have so many owners with high numbers of stores suggests the franchise is consistently profitable.

To be profitable they need solid customer traffic, good food and decent margins. Shares of JACK have been one of the best performers on the S&P over the last couple of years because the company has been posting solid earnings and growth.

With analysts cutting earnings estimates for McDonalds and Chipotle, earlier this year, because of competition in the sector it makes sense to look at what has happened at JACK. Over the last quarter and the last year not a single analyst has lowered their earnings estimates for JACK. According to Zacks, analysts are expecting JACK to grow earnings +11.7% in the current quarter and +22% for 2015.

Customers are trending towards healthier foods and away from the mass produced burgers and fries at McDonalds. Did you know there are 19 ingredients in McDonalds fries? Surely you didn't think they were just potatoes and grease? This trend may not help the Jack in the box brand but it's good news for Qdoba. Restaurants like Qdoba and Chipotle are capitalizing on the healthy food craze.

The company plans to open 15 new Jack in the Box stores in 2015. They're also cashing in on Qdoba's success and planning to open 50 to 60 new Qdoba locations. That compares to just 12 new Jacks and 38 new Qdobas in 2014.

Management is trying to be shareholder friendly. They have an active share buyback program and they reduced the share count by 10% over the last few quarters. In their most recent earnings report (May 13th) the company raised their quarterly dividend by +50%.

JACK reported its Q1 2015 earnings on February 17th. Analysts were expecting a profit of $0.87 a share on revenues of $461.2 million. JACK delivered earnings of $0.93 a share. That's a +24% improvement from a year ago. Revenues were up +4.1% to $468.6 million, above estimates. Their operating margins improved 1% to 19.3%. Management raised their 2015 guidance.

The company did it again in May with their Q2 report. Estimates were for $0.66 per share on revenues of $356 million. JACK reported $0.69 per share with revenues up +5.0% to $358 million. That is a +35.2% earnings improvement from a year ago. Their consolidated restaurant operating margins improved 210 basis points to 20.6%. Plus, management raised their 2015 guidance again.

The stock has ignored a lot of the market's recent volatility. Shares of JACK seem to be marching to the beat of their own drummer. You can see the market reaction to its Q1 earnings report in February with the big surge higher. The rally reversed in late March and shares found support near $86.00. The stock has been bouncing along the 486.00 level for more than two months. Its consolidation has narrow over the last few weeks. It used to be the $86-90 range. The last few days the consolidation has been in the $88-90 zone. JACK looks like it could breakout past $90.00 soon.

We want to be ready if JACK does breakout. Tonight we're suggesting a trigger to buy calls at $90.25. Plan on exiting prior to earnings in early August.

- Suggested Positions -

Long AUG $95 CALL (JACK150821C95) entry $1.60

07/14/15 new stop @ 89.75
07/13/15 triggered @ $90.25
Option Format: symbol-year-month-day-call-strike


Under Armour, Inc. - UA - close: 88.80 change: -0.55

Stop Loss: 83.75
Target(s): To Be Determined
Current Option Gain/Loss: +30.4%
Average Daily Volume = 2.0 million
Entry on June 26 at $86.05
Listed on June 23, 2015
Time Frame: Exit prior to August expiration
New Positions: see below

Comments:
07/14/15: UA also took today off to rest and recuperate after yesterday's sprint higher. Tonight we are moving the stop loss up to $86.85.

No new positions at this time.

Trade Description: June 23, 2015:
UA is in the consumer goods sector. They make shoes and athletic wear. According to the company, "Under Armour (UA), the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. The Under Armour Connected Fitnessplatform powers the world's largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal."

The athletic shoe and athletic apparel business is very competitive. Nike (NKE) has dominated the space for years. UA is about 10% the size of NKE but it is actively fighting for market share and recently overtook Adidas as the second biggest athletic wear brand inside the United States. Nike had sales of $27.8 billion in 2014. UA is a fraction of that with 2014 sales of $3.08 billion but UA grew +32%.

UA has been firing on all cylinders with its earnings results. Most of last year saw the company not only beating Wall Street's estimates but also raising guidance.

UA reported their 2014 Q4 results on February 4th. The company reported a profit of $0.40 a share with revenues climbing +31% to $895 million, which was above estimates for $849 million. UA's CEO Kevin Plank, in a recent interview, said his company will grow at 20%-plus in 2015. The company's current estimates are $3.76 billion in sales for the year.

There was a steady stream of analysts raising their price targets on UA after its February earnings report. Many of these new price targets were in the low $90s ($91-94).

The company's most recent earnings report was April 21st when UA announced Q1 results. After raising guidance back in February the company reported earnings of $0.05 per share, which was in-line with Wall Street's new estimates. Revenues were up +25.4% to $804.9 million, which beat expectations. UA management raised their outlook again. They expect 2015 operating income to improve +13-to-15%. UA expects 2015 revenues to rise +23% to $3.78 billion.

The stock has rallied sharply into its earnings report and shares suffered some post-earnings depression with a -$12.00 drop (-13.6%) in the following two weeks. The price target upgrades continued but UA spent most of May consolidating sideways inside a narrow range. Finally on June 5th shares of UA broke out past multiple layers of resistance on another upgrade. The stock was upgraded to a "buy" with a $91 price target.

UA spent about a week digesting its bullish breakout and then took off. The company recently announced a 2-for-1 stock split. However, instead of a normal split the company is creating a new Class C stock which will have no voting rights.

Why a new class of shares? That's because the company's founder and current CEO Kevin Plank does not want to lose control. This way he can maintain control by keeping his voting shares while still selling the new Class C shares. Just in case you were curious, Class A UA stock has one vote per share. Class B stock has ten votes per share, which Plank owns the majority of.

This stock "split" will be disbursed as a dividend. There's no word yet on the new ticker symbol for the class C shares. There is a special meeting of UA shareholders on August 26, 2015 to approve the necessary changes so they can proceed with this stock split. Google did a similar stock split back in 2014 so the founders could maintain control. Both GOOG's and UA's decision has rankled some shareholders. However, normally stock splits tend to be viewed as a bullish move since stocks don't split if they're not rising. Stocks that split tend to outperform the broader market.

Tonight we are suggesting a trigger to buy calls at $86.05. More conservative traders may want to consider waiting for a dip instead. The nearest support is $82.00. We'll start with a stop loss at $81.75.

- Suggested Positions -

Long AUG $90 CALL (UA150821C90) entry $2.30

07/14/15 new stop @ 86.85
07/11/15 new stop @ 83.75
06/26/15 triggered @ $86.05
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Barracuda Networks, Inc. - CUDA - close: 30.96 change: +0.62

Stop Loss: 32.15
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 512 thousand
Entry on July -- at $---.--
Listed on July 13, 2015
Time Frame: 2 or 3 weeks
New Positions: Yes, see below

Comments:
07/14/15: CUDA briefly traded below round-number support at $30.00 but shares bounced at $29.84. Shares managed to outperform the broader market with a +2.0% rebound.

We are on the sidelines and waiting for CUDA to trade at $29.75 or lower before launching bearish positions.

Trade Description: July 13, 2015:
Cyber-security is a hot industry right now. We constantly hear about hackers stealing information from major corporations. There has also been a high-profile attack on U.S. government employee data. This has driven gains for a number of cyber security stocks. Yet one security firm is underperforming its peers. That is CUDA.

CUDA is in the technology sector. According to the company, "Barracuda (CUDA) provides cloud-connected security and storage solutions that simplify IT. These powerful, easy-to-use and affordable solutions are trusted by more than 150,000 organizations worldwide and are delivered in appliance, virtual appliance, cloud and hybrid deployments. Barracuda's customer-centric business model focuses on delivering high-value, subscription-based IT solutions that provide end-to-end network and data security."

They reported their 2016 Q1 earnings on July 9th. Earnings rose +39% from a year ago to $0.09 per share. That beat estimates of $0.08. Revenues were up +17.8% to $78 million, also above expectations. Their subscribers grew +18% to 252,000 and their subscription revenue was up +19.6%.

It looks like a pretty good report. So why did the stock plunge -19% on Friday? That's because Wall Street was not happy with CUDA's gross billing number or its soft Q2 guidance.

CUDA reported their Q1 gross billings were up +7.6% to $94.3 million. Yet that was below expectations in the $103 million region. Management also guided Q2 revenue estimates into the $78-79 million range. That's below estimates of $80.4 million.

Shares were crushed on Friday and there was no oversold bounce today. CUDA continued to underperform with a -3.8% drop in spite of the market's widespread rally today. The point & figure chart is now bearish and forecasting a $26.00 target. We think CUDA could drop toward $25.00. However, I will warn you that CUDA does have potential support in the $29.50-30.00 range.

Tonight we are suggesting small bearish positions to buy puts at $29.75. More conservative traders may want to sit this one out or wait for a drop below $29.00 as an alternative entry point. I consider this a higher-risk, more aggressive trade.

Trigger @ $29.75 *small positions to limit risk*

- Suggested Positions -

Buy the AUG $30 PUT (CUDA150821P30)

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


Concho Resources - CXO - close: 111.25 change: +1.08

Stop Loss: 112.50
Target(s): To Be Determined
Current Option Gain/Loss: -51.1%
Average Daily Volume = 1.4 million
Entry on July 07 at $106.90
Listed on July 06, 2015
Time Frame: Exit PRIOR to earnings on July 29th
New Positions: see below

Comments:
07/14/15: Our CXO trade could be in trouble. Shares managed a +0.98% gain on the session. The stock traded above what should have been resistance near $112.00 and its 200-dma and hit an intraday high of $112.20.

No new positions at this time.

Trade Description: July 6, 2015:
It has been a bumpy ride for energy stock traders over the last year. That's especially true for CXO investors. The stock fell from $148 to $80 in less than five months last year. CXO bottomed in December 2014. The stock managed a big bounce from $80 to $130 in the next five months but that rally is over with a big reversal on the company's Q1 earnings report in early May.

CXO is in the basic materials sector. According to the company, "Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company's operations are primarily focused in the Permian Basin of southeast New Mexico and west Texas."

The last couple of quarters have seen CXO's revenues decline. They reported their 2014 Q4 results on February 25th. Earnings were 88 cents a share, which was four cents above estimates. Yet revenues fell -6.0% to $594 million, way below estimates. Their 2015 Q1 results were announced on May 4th. Earnings per shares was $0.06. That was 17 cents worse than expected. CXO's revenues plunged -37.4% to $413.5 million, another big miss. The stock reacted to this news with a spike higher that quickly reversed.

Today the oil stocks are suffering as the commodity sinks due to oversupply concerns. The weekly Baker Hughes active rig count just turned positive two weeks in a row after a 28-week decline. This would suggest the pullback in the industry is over and the market has found a temporary equilibrium that will allow domestic companies to start launching new oil and gas rigs again. This will continue to boost supply and pressure prices lower.

A bigger problem could be the Iran nuclear negotiations. If Iran does sign a deal with the West then sanctions could be lifted that would allow Iran to sell up to one million barrels of oil per day on the global market. Sources suggest Iran already has dozens of crude oil tankers filled up and ready to go if the sanctions are lifted. This is one reason crude oil has been plunging the last few days. The current deadline (and there have been many) is tomorrow, July 7th. If Iran signs a deal then oil will likely drop again. If they don't then oil could bounce. If talks are postponed again then I suspect the prevailing trend, which is down, will remain in effect for oil and the oil stocks.

CXO has technically broken down below support near $110 and its 200-dma. The point & figure chart looks very bearish and is currently forecasting an $89 target. Tonight we're suggesting a trigger to buy puts at $106.90.

- Suggested Positions -

Long AUG $105 PUT (CXO150821P105) entry $4.60

07/07/15 triggered @ $106.90
Option Format: symbol-year-month-day-call-strike


SM Energy Company - SM - close: 43.24 change: +0.82

Stop Loss: 45.25
Target(s): To Be Determined
Current Option Gain/Loss: -18.2%
Average Daily Volume = 1.6 million
Entry on June 19 at $44.49
Listed on June 13, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
07/14/15: SM is another energy stock that is trying to bounce. Shares outperformed the broader market with a +1.9% gain. The bearish trend of lower highs should be resistance in the $44.50-45.00 region.

No new positions at this time.

Trade Description: June 13, 2015:
SM has been around a long time. They were founded back in 1908. The company was formerly known as St. Mary Land & Exploration Company but they changed their name to SM Energy Company about five years ago.

SM is in the basic materials sector. According to the company, "SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in onshore North America."

SM operates in the Rocky Mountain region including the Bakken and Three Forks formations. Further south, they drill in the Haynesville and Woodford shales of Texas and Oklahoma. SM also operates in the Permian region of Texas and New Mexico. Even further south SM drills in the South Texas area with the Eagle Ford shale formation.

Crude oil's plunge in late 2014 crushed the oil sector and shares of SM followed it lower. Yet SM appeared to be having trouble before the big drop in oil prices. The company has missed Wall Street's earnings estimates the last four quarters in a row.

The huge drop in oil sparked significant cutbacks across the oil and gas industry with most major exploration companies reducing their capital spending plans. When SM reported their Q4 earnings in February 2015 they missed the EPS number by five cents and revenues were down -6.4% from a year ago. Management also slashed their 2015 investment plans by -44% from $1.9 billion to $1.0 billion.

SM reported its 2015 Q1 numbers on May 5th. Analysts were expecting a profit of $0.29 per share on revenues of $543.1 million. SM delivered a profit of $0.21 as revenues plunged -42% to $365.9 million.

Citigroup issued a research report last month that suggested U.S. oil producers will still be able to profit with oil at depressed prices. Here's a quote from a Bloomberg article, "belt-tightening across the industry and more strategic drilling in prolific areas would deliver ample profits even at $50 crude. The improvement is driven by costs that are expected to fall by 20 to 30 percent and techniques that allow rigs to wring 30 percent more oil or natural gas from each well compared with a year ago." That definitely seems like ammunition for the bulls to be buying some of the oil producers. Yet the group continues to lag. They are facing some stiff headwinds.

Crude oil has produced a +25% bounce off its March 2015 lows. Yet the rally in oil has stalled the last few weeks with the commodity churning sideways. The recent OPEC meeting showed that the Middle East shows no signs of slowing down their production. The world is temporarily facing a small oil glut.

Meanwhile currencies could play an issue here. It is widely accepted that the long-term trend for the U.S. dollar is now higher. The Federal Reserve will eventually raise rates, either later this year or early next year. When they start raising rates it should boost the dollar. At the same time central banks around the world (like Japan and Europe) are in the middle of huge QE programs that will drive their currencies lower. Naturally this will lift the dollar even higher. A rising dollar pushes commodities lower.

Technically shares of SM have been very weak. The broke down from a bullish channel a couple of weeks ago. The stock has also sliced through some psychological support levels. The point & figure chart is currently forecasting at $40.00 target. You could argue that SM is already oversold. However, the path of least resistance is lower. Tonight we are suggesting a trigger to buy puts at $44.90 with a wide stop loss at $50.25 just in case SM does see a little oversold bounce.

- Suggested Positions -

Long AUG $40 PUT (SM150821P40) entry $1.65

07/06/15 new stop @ 45.25
06/23/15 new stop @ 48.75
06/19/15 triggered on gap down at $44.49, suggested entry was $44.90
Option Format: symbol-year-month-day-call-strike