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Daily Newsletter, Tuesday, 8/25/2015

Table of Contents

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

Market Wrap

That Was Unexpected

by Jim Brown

Click here to email Jim Brown

The very oversold market rebounded at the open with the Dow up +441 points. Unfortunately, it did not hold with a -650 point decline into the close. This was a very bearish signal.

Market Statistics

The markets were very oversold on at the close on Monday despite the +500 point rebound off the lows. S&P futures rallied overnight by nearly 50 points and a monster short squeeze was born. Despite the +441 Dow gain at the high the internals were weak. Volume was only mediocre and advancers were only about 3:1 over decliners. Given the oversold conditions, the short squeeze was very thin and lacked any follow through. Sellers appeared exhausted and the only buyers were the shorts.

Fast forward to Tuesday afternoon and sellers returned in volume. The market-on-close orders were 95% to the sell side with $3.5 billion in stock for sale. Once the indexes rolled over the selling accelerated. Shorts knocked out at the open came back into the market along with a lot of institutional selling.

Two factors stood out to me. The S&P never got back to the intraday highs from Monday at 1,954. The high today was only 1,948. That is a warning sign. The second was the low at 1,867.08. Monday's low was 1,867.01. As much as I would like it to be, that is not a double bottom. Most double bottoms are formed over weeks or months, not in back-to-back trading days. It can happen but I would not count on it.

What this tells me is that the global economic worries and the currency crisis in the emerging markets is not yet factored into the market. Early Tuesday I thought maybe China was now old news since the Shanghai market closed down -7.63% and under the psychologically important 3,000 level. Our market still rallied at the open and it appeared to ignore China.

After the market close in Shanghai, China cut interest rates for the fifth time in nine months and the reserve rate for the third time. They did it after the close and in the middle of the week. Normally those moves are done on Sunday night before the market opens. This suggests they were trying to trap the shorts and produce a monster short squeeze on Wednesday. China promised to support the market but their actual support did not work. This post close announcement "should" push the market higher on Wednesday. It is possible this announcement erased the negativity over the Shanghai market decline for U.S. investors.


The Dow closed -650 points off its highs. You have to go back to the financial crisis and October 2008 for a reversal that bad.

The afternoon selloff also coincided with a Bloomberg article released at 1:56 ET about Citigroup sticking with their call for a rate hike in September. The bank's economists, led by William Lee, interpreted the FOMC minutes differently than other analysts. Citi said the increased concerns by policy makers over financial stability "cemented the case for a rate hike in September."

Other banks had pushed their forecasts for a rate hike well into the future after China's meltdown, emerging market currency crisis and the U.S. market correction. Barclays said on Monday they had pushed their forecast out until March. The Fed funds futures had been projecting between 55% and 65% chance for a hike in September and they dipped below a 26% chance late last week. Citi pointed to the appearance by Fed vice Chair Stanley Fischer at the Jackson Hole economic policy symposium as the wild card in their forecast. If Fischer expresses further concerns about declining inflation, Citi believes that would be a major change in the Fed stance. Yellen will not be attending the Fed conference. There are whispers that Fischer is being groomed to take over Yellen's job in the near future. He is more hawkish than Yellen. Whether the news from Citi had any impact on the market is unknown.

Later in the day, Mohamed El-Erian said volatility in global financial markets is worrisome and will hamper the Fed's ability to raise rates in September. He said the Fed missed its chance to hike rates a few weeks ago when the economic signals were stronger, the financial markets were in relatively good shape and the international economy was neutral. The second two factors "have turned violently against the Fed, so I don't think the Fed will take the risk of hiking in this environment."

Bridgewater's Ray Dalio said the next Fed move could be further easing with another period of QE. Dalio said the risks of deflationary contraction are increasing relative to the risks for inflationary expansion. Dalio said the banks have few tools left to combat another deflationary cycle and the risks are weighted to the downside. Three rounds of QE plus Operation Twist added $3.7 trillion to the Fed's balance sheet and Dalio believes they are not done regardless of how badly they want to raise rates. He believes the Fed must keep rates low to keep government borrowing costs low on the $8 trillion in debt the government has added since the financial crisis to bring the total debt to nearly $19 trillion.

While the analysts in the U.S. are blaming China for the market rout, the PBOC is blaming the Fed. Yao Yudong, head of the PBOC Research Institute of Finance, said the expected Fed rate hike was responsible for the wild market swings. PBOC analysts are worried that the Fed rate hike could accelerate the plunge in U.S. stocks and trigger a sell-off of assets worldwide and even a new global credit crisis.

Regardless of who, if anyone, is to blame for the current global sell off it is clear that the global economic worries are not yet factored into the markets. Sixteen of the top 30 global markets have already declined into bear territory with declines of more than 20%.

The Emerging Market ETF (EEM) is at post crisis lows despite a minor gain today. The Chinese yuan is still declining and pushing other emerging market currencies lower.


There was a flurry of economic reports today but none of them were market moving. The Case Shiller Home Price Indexes showed prices were up +5% in June over June 2014. No surprise there. The FHFA Purchase Only House Price Index showed a gain of +5.6% over the same period.

New home sales for July rebounded from the June dip to 507,000. That was up from 481,000 in June but down from 521,000 in May. Sales rose in the Northeast, South and West but declined -6.9% in the Midwest. There is a 5.2-month supply of homes on the market. The average home price rose from $279,700 to $288,300.


There was some bad news in the manufacturing sector. The Richmond Fed Manufacturing Survey for August declined from 12.6 to zero. The new orders component fell from 17.4 to 1.0 and backorders declined from 9.7 to -15.1. This follows a decline in the NY Empire Manufacturing Survey last week from 3.9 to -14.9. It is hard to see how the Fed can raise rates when the regional surveys are collapsing. The separate services Survey declined from 32 to 30.



Consumer Confidence for August rose from 91.0 to 101.5 and well over expectations for 93.3. This was the highest level since January. Both internal components posted solid gains. The present conditions component rose from 104.0 to 115.1 and the expectations component rose from 82.3 to 92.5.

The headline numbers did not carry over into the buying patterns of participants. Those respondents planning on buying a car declined from 11.8% to 10.6%, homebuyers declined from 5.9% to 4.1% and appliance buyers fell from 52.1% to 48.9%.

More than 21.9% of respondents claimed jobs were plentiful. However, an equal number of 21.9% said jobs were hard to find but that fell -6.5% from the prior month.


The big report for the week remains the GDP for Q2 on Thursday. Since last week, the expectations have risen from 3.0% growth to 3.2%. I remain in the more bearish camp and expect a number under 3%.

The Kansas Fed Manufacturing Survey will round out the week and hopefully it will improve from the -7.0 reading from July. The Kansas survey is heavily influenced by the automobile manufacturers. Over the summer, automakers cancelled the normal vacation shutdowns and worked extra shifts to accommodate the high demand for vehicles. This suggests the Kansas survey could reflect these positive conditions.


Earnings on tap for tomorrow include Abercrombie & Fitch (ANF) and Avago Technologies (AVGO). Retailers Chicos Fashions (CHS) and Guess (GES) will also report.


Earnings out this morning were highlighted by Best Buy (BBY). The company reported earnings of 49 cents compared to estimates for 34 cents. Revenue of $8.53 billion beat estimates for $8.29 billion. This marked the fifth consecutive quarter of earnings increases. Not bad for a company almost given up for dead a couple years ago.

Same store sales rose +3.8% due to sales in major appliances, large-screen televisions, mobile phones and health and fitness devices. Analysts were only expecting a +1.3% increase. These sales caught everyone off guard since sales in the industry for electronic devices have declined -1.9% in Q2. Computing and mobile phones accounted for 47% of sales, consumer electronics 32%, appliances 10% and entertainment products 6%.

Best Buy said sales would grow in the low single digits in the current quarter. Gross margins also increased from 23.4% to 24.6%. Online sales increased +17%.

The company also said demand was so strong it was expanding the Apple Watch offering from 350 stores to 1,050 stores in time for the holidays. The company said sales were off to a strong start since they began on August 7th. By September 4th, they will have watches in 900 stores with expansion into all 1,050 big box stores by the end of September. They are also expanding the Apple store-within-a-store sections at 740 stores. There will be new fixtures and more display tables for iPhones, iPads, Mac computers and the Apple Watch.

They are also increasing the number of Microsoft, Samsung and Sony store-within-a-store sections with new fixtures and more products. Apparently Best Buy has found the right combination of products, services and presentation to compete favorably with Walmart and Amazon. Shares rose +3.68 in a bad market.


Toll Brothers (TOL) reported earnings of 42 cents compared to estimates for 50 cents. Revenue of $1.03 billion also missed estimates for $1.05 billion. The homebuilder said lower realized prices and slower sales impacted earnings. They blamed higher mortgage rates for a slowdown in orders 9-12 months ago. Costs also rose as it opened new communities. Their average sales price declined from $732,000 to $724,000. Deliveries declined -2% to 1,419 homes. Shares declined -8% on the news.


Shoe retailer DSW Inc (DSW) reported earnings of 42 cents, which matched analyst estimates. Revenue of $627.2 million missed estimates for $635 million. The company projected full year earnings of $1.80-$1.90. Sales rose +1.8% compared to estimates for +3.8%. The company said it was trying to improve margins by reducing clearance events. Shares declined -11% on the news.


Crude prices rose 85 cents in the regular session but remain right at $39 tonight. The bounce was short covering ahead of Wednesday's EIA inventory report. Crude has risen on 10 of the last 12 Tuesdays ahead of the report. Analysts are united in the outlook for lower lows and suggest shorting any bounce in WTI. Crude prices dipped to a 6.5-year low at $37.75 on Monday during the market crash.


Markets

Where do I start? What a week and it is only Tuesday! The Dow is down -1,811 points in just the last seven days. That is a whopping -10.4% decline and it looks like we are going lower. The S&P futures are down -16 points at 8:PM.

The S&P is in crash mode with 66% of the stocks, probably more now, down over 10%. Of those 31% are in a bear market with declines of more than 20% as of Friday's close. Given the last two days of trading that is probably significantly higher today.

I thought we had a good chance of a capitulation event on Monday. Volume was nearly double an average day. 52-week lows were 30:1 over 52-week highs. Decliners were 10:1 over advancers and declining volume was 13:1 over advancing volume. Those are all typical statistics for a capitulation day where all the weak holders were flushed and all the stop losses were erased.


I expected a short squeeze on Tuesday. Typically when the markets are down more than 3% over two days there is an oversold rally the next several days. We got the squeeze but it was lackluster with only mediocre volume in the morning and advancers only about 3:1 over decliners.

I looked at several hundred individual stock charts tonight and the vast majority were ugly. Most did not rebound back to their intraday highs from Monday and most closed well into negative territory.

For weeks I have been showing the chart of the Bullish Percent Index on the S&P-500 with the percentage of stocks with a bullish Point and Figure chart holding at about 53%. The dam has broken. That percentage has fallen to only 22.4% over the last four days. That is easily the most bearish chart in my wrap tonight. The last time we were at this level was October 2011.


The percentage of S&P stocks trading under their 200-day average has also fallen off a cliff from 65% to 17.6%.


The percentage under the shorter-term 50-day average fell to only 4.6%. That is getting awfully close to the 0.4% low from October 2011.


Those three charts show us where we have been and where we are now. They do not show where we are going. However, the bearishness has hit so hard and so completely that it easily suggests a counter trend move is due soon.

Markets rarely become so over balanced. They tend to remain in standard norms whether they are moving up or down. The severity of the decline is so extreme that we should expect a serious rebound soon.

At this point if I could run Aladdin's magic lamp and get a free wish I would ask for a continued drop to 1,820 and the October 2014 intraday low. With sentiment already so bearish, another 47-point decline would not be the end of the world. What that would do is free all the closeted bulls to buy the dip, confident that the bottom had arrived. Unfortunately, I do not have a magic lamp.

However, in the time it took me to type the last 15 paragraphs and copy the charts the S&P futures have rebounded from -16 to +3. Something, somewhere has reversed sentiment in a big way. Whether it will hold until morning is anybody's guess.

There is no material support from today's close at 1,867 to that 1,820 low from October. If we do open lower on Wednesday, there is nothing to stop a continued decline.

Resistance is now 1,950-1,955 and roughly the intraday high from Monday.



The Dow touched 15,370 as the intraday low on Monday. That is just above the 15,340 low from February 2014. A full 18 months of gains were wiped out in a little more than two weeks. To say the Dow was oversold would be an understatement.

Ten Dow stocks are already in a bear market. Those are:

DD -34%
PG -24%
CVX -43%
CAT -33%
XOM -29%
UTX -26%
IBM -25%
AXP -20%
WMT -28%
INTC -24%

On the positive side this should be very strong support assuming China does not meltdown again. They say bull market corrections are short, sharp and scary. I would say this one definitely qualifies.

If we do move lower on Wednesday I would look for a retest of those Monday lows.



The Nasdaq Composite was the best-behaved index with a decline of only 19 points but that does not tell the entire story. The intraday high was 4,689 and the close at 4,508. That is a -181 point decline from the highs. Under normal circumstances, the Nasdaq does not move 181 points in a month, much less in one day.

The big cap favorites sprinted out of the gate at the open with Netflix and Apple posting big gains on multiple upgrades. Netflix closed with a +4.64 gain but that was -$7 off its highs. Apple closed with a fractional gain and -$8 off its highs. There were buyers for the tech stocks but they were covering shorts rather than buying for an investment. Once that short covering faded, it was back to the lows again.

The Nasdaq has not declined as much relative to the October lows at 4,130. We would have to fall another 370 points to test those same lows the other indexes are already testing. This is because the Nasdaq big caps have supported the market for the last six months.

There is light support around 4,320 and then 4,130. Resistance is the 4,695 level and the intraday high from Monday.



The small caps closed at a lower low at 1,104 and -2 points below the intraday low on Monday. This is a bearish signal that suggests the S&P will not hold its intraday lows. The small caps had been relatively stronger due to their lack of impact from the strong dollar and the Chinese yuan. However, when markets are crashing you sell what you can to raise money, not what you want to sell.

Support would be the 1,050 level from the October lows. Resistance is 1,140.


The Vanguard Total stock market ETF (VTI) tested the October lows at $93.78 on Monday and closed at $97 on Tuesday. This suggests the broader market was not quite as weak on Tuesday. This is an index of 3,814 stocks.


I have no bias for the market on Wednesday. While I typed and prepared the last ten paragraphs and charts the S&P futures went negative again to -7. The volatility is extreme and we could easily go in either direction tomorrow. About the only guarantee is that it will be a quick trip.

The market is very oversold and this kind of volatility is typical of tops and bottoms. What we are seeing is the indecision by both buyers and sellers. It is hard to predict a rebound since the short squeeze today was erased so quickly. The volume is so high it has to be coming from institutions and funds and quite a few appear to be liquidating rather than simply taking profits or restructuring their portfolios.

Remember, August and September are the two worst months of the year for the markets. So far August has exceeded its historical norms. Let us hope that September does not follow suit.

In a bull market correction, we normally have a series of negative days that are eventually punctuated by a "high intensity" low. That would be the drop on Monday. After that low there is normally an oversold bounce that lasts for 2-3 days. We got the bounce but it did not last and that suggests a lower low ahead. After the rebound there is normally a retest of the high intensity low followed by a smaller bounce and sometimes a lower low. These bottoms are not made in a couple days. They normally take several weeks. While everyone is hoping for that big "V" bottom, they rarely occur in that manner. Be prepared for continued volatility in both directions.


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Enter passively, exit aggressively!

Jim Brown

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New Option Plays

Market Darling

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Netflix, Inc. - NFLX - close: 101.52 change: +4.64

Stop Loss: None. No stop at this time.
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 8.0 million
Entry on August -- at $---.--
Listed on August 25, 2015
Time Frame: Exit PRIOR to Earnings in October
New Positions: Yes, see below

Company Description

Trade Description:
Some of the market's best-loved stocks have been crushed in the last couple of weeks. NFLX is one of them but this big decline offers a big opportunity.

If you're not familiar with NFLX, here is a brief summary from the company, "Netflix is the world's leading Internet television network with over 62 million members in over 50 countries enjoying more than 100 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments."

NFLX is cashing in on a massive sea change in consumer media viewing habits. Traditional TV is dead. Cable is worried as more and more consumers "cut their cord" and only consume media on streaming services. NFLX is the leading streaming service in the world.

The company said their customers watched over 10 billion hours of streaming content in the first quarter of 2015. That is a +20% jump from a year ago. The company has been focused on building up their own original content creation and expanding overseas. Just this week NFLX announced a deal with Japanese company SoftBank that would bring NFLX to Japan. Softbank is a bit of a technology conglomerate with stakes in multiple companies. One of their biggest investments is an 80% stake in Sprint (S). NFLX also struck a deal with T-Mobile. There seems to be a trend here of consumers, Netflix, and their smart phones.

The carnage over the last several days has been brutal. Shares of NFLX have plunged from its recent highs above $125.00 to almost $85.00 during Monday's market crash. Today the stock bounced with a range of $101.52-107.88. There is no denying the volatility in NFLX's stock. However, multiple analysts have said that investors should buy the "market darlings" like NFLX during this sell-off. They believe stocks like NFLX will outperform in the next few weeks and over the next few months.

Prior to the market's crash over the last few days analysts were upgrading their price targets on NFLX into the $140 area.

Tonight we are listing two different entry triggers to buy calls.

NOTE: This is an aggressive, higher-risk trade. NFLX options are expensive and the stock is volatile. We are not listing a stop loss at this time. Traders can try and limit their risk by adjusting their position size.

If NFLX rallies from current levels then we want to buy calls if shares traded at $110.65. We'll use the November $120 call.

If NFXL sinks from current levels then we want to buy calls on a dip at $92.00. We'll use the November $100 call.

- - TWO DIFFERENT ENTRY POINTS - -

#1) Buy-the-dip trigger: If NFLX hits $92.00

- Suggested Positions -

Buy the NOV $100 CALL (NFLX151120C100)

- or -

#2) Breakout trigger: If NFLX hits $110.65

- Suggested Positions -

Buy the NOV $120 CALL (NFLX151120C120)

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

Selling The Bounce?

by James Brown

Click here to email James Brown

Editor's Note:

Stocks were up big this morning but gains faded. Traders were selling into strength every time stocks rallied midday. Eventually investors seemed to give up and stocks raced lower again this afternoon.

Our IWM trade opened this morning.

JACK hit our stop loss.


Current Portfolio:


CALL Play Updates

The Walt Disney Co. - DIS - close: 95.89 change: +0.53

Stop Loss: None. No stop at this time.
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 8.5 million
Entry on August -- at $---.--
Listed on August 24, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: Yes, see below

Comments:
08/25/15: DIS gapped open higher at $99.73 this morning. Yet the rally immediately stalled at round-number resistance near the $100.00 mark. Shares churned sideways most of the session and then started to sink as the broader market accelerated lower this afternoon.

If DIS breaks down under $95.00 our chances of getting triggered on our buy-the-dip trigger at $91.00 will skyrocket.

Trade Description: August 24, 2015:
We are bringing DIS back. The sell-off from its August high has been extreme. At its low today near $90.00 DIS was down -26% from its high. The retreat offers a lot of opportunity. Jump to the bottom of this play update for our entry point strategy.

Disney reported earnings on August 4th and beat the street with earnings of $1.45 compared to estimates for $1.42. The very next day shares fell -$11.00 to $110. The sell-off in DIS stock has continued thanks to a global market meltdown.

We think this pullback in the stock is way overdone. Disney posted $13.1 billion in revenue compared to estimates for $13.2 billion. That minor miss was not the reason for the huge decline in the stock. Disney said revenues in its cable products rose +5% BUT they had seen some pressure from online streaming. Subscription growth to the ESPN cable bundle had slowed, not declined, just slowed.

There are multiple reasons. There are no major sporting events this summer like the World Cup, Olympics, etc. Some consumers are cutting the cord to cable because they are now getting their TV programming from Netflix, Hulu, etc. Cable is expensive compared to the streaming options. The drop off in ESPN growth is not related specifically to Disney. CEO Bob Iger said subscriptions would pick back up in 2016 and expand sharply in 2017 thanks to a flood of sporting events due to come online next year.

Disney has already purchased the rights to nearly every sporting event available in the next five years but the old contracts with the prior rights holders have yet to expire. As those contracts expire and the new Disney contracts begin the content on ESPN will surge.

This slowdown in ESPN growth should be ignored. This is just a small part of the Disney empire and everything else is growing like crazy. Parks and resorts revenue rose +4%. Consumer products revenue rose +6% thanks to Frozen, Avengers and Star Wars merchandise. The only weak spot was interactive gaming, which declined -$58 million to $208 million. Disney expects that to rebound in Q4 as new games are released and holiday shopping begins.

The real key here is the theme parks, cruises and most of all the movie franchises. They have five Star Wars movies in the pipeline and the one opening this December is expected to gross $2.2 billion and provide Disney with more than $1 billion in profits. This is just one of the blockbusters they have scheduled.

Analysts are claiming Disney shares could add 25% before the end of December because of their strong movie schedule and coming attractions. The Avengers movie in April was a hit and added greatly to their Q2 earnings. However, that will just be a drop in the bucket compared to the money they are going to make on the Star Wars reboot in December. That is the first of five Star Wars movies on the calendar. Remember, Disney now has Marvel, Pixar and Star Wars (Lucasfilm) all under the same roof.

Disney Movie Schedule (partial)

Dec. 18, 2015 - "Star Wars: Episode VII - The Force Awakens"
2016 - "The Incredibles 2"
2016 - "Frozen" sequel
April 29, 2016 - "Captain America: Civil War"
June 17, 2016 - "Finding Dory"
Dec. 16, 2016 - "Star Wars Anthology: Rogue One"
May 26, 2017 - "Star Wars: Episode VIII"
June 16, 2017 - "Toy Story 4"
Late 2017 - "Thor: Ragnarok"
May 4, 2018 - "Avengers: Infinity War - Part I"
2018 - "Untitled Star Wars Anthology Project"
May 3, 2019 - "Avengers: Infinity War - Part II"
2019 - "Star Wars: Episode IX"

The four-week drop in DIS' stock has sent shares back to their 2015 lows. During the panic this morning investors bought the dip at round-number support near $90.00 (FYI: the February 2015 low was $90.06). When the market bounced DIS rallied more than +10% only to stall at round-number resistance at $100.00. DIS closed right in the middle of this $90-100 trading range today.

We want to be ready no matter what direction DIS moves. That's why we are listing two different entry point strategies.

Our first plan is to buy calls on a dip at $91.00 should DIS dip toward today's low. The second entry trigger is to buy calls on a breakout at $101.00 since the $100 level was resistance.

We are not listing a stop loss tonight. The market volatility has been extreme. The intraday moves in the market are a little ridiculous and nearly impossible to trade around if you're not glued to your screen and day trading. You can manage your risk by limiting your position size. We'll add a stop loss once the dust settles, likely in a couple of days.

Option strikes and entry points are listed below:

- TWO DIFFERENT ENTRY POINTS -

#1) Buy-the-dip trigger: If DIS hits $91.00

- Suggested Positions -

Buy the OCT $95 CALL (DIS151016C95)

- or -

#2) Breakout trigger: If DIS hits $101.00

- Suggested Positions -

Buy the OCT $105 CALL (DIS151016C105)

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


Facebook, Inc. - FB - close: 83.00 change: +0.91

Stop Loss: No stop at the moment (See August 24th update)
Target(s): To Be Determined
Current Option Gain/Loss: +185.7%
Average Daily Volume = 27.3 million
Entry on August 24 at $77.03
Listed on August 20, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

Comments:
08/25/15: Tuesday turned out to be a pretty disappointing day for investors with the market's midday gains fading into red. FB managed to close with a +1.1% gain but shares were sinking fast into the closing bell. Odds are it will see a drop tomorrow morning. I'd watch the $80.00 area for potential short-term support.

No new positions at this time.

Trade Description:
Facebook needs no introduction. It is the largest social media platform on the planet. As of June 30th, 2015 the company reported 1.49 billion monthly active users and 968 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, announced in January, were up +69% from a year ago. Revenues were up +49%. The company released their Q1 results 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.

FB's Q2 results, announced July 29th, were also better than expected. Earnings were $0.50 per share, which was three cents above estimates. Revenues surged +39% to $4.04 billion, above expectations. Daily active users were up +17%. Mobile daily active users were up +29%. Monthly actives were up +13%. Wall Street expects income to surge next year with +12% profit growth in 2015 but +32% profit growth in 2016.

FB continues to see growth among its niche properties. The company bought Instagram for $1 billion in 2012. Last late year Instagram surpassed Twitter with more than 300 million active users. FB is also a dominant 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. On the subject of Instagram advertising, FB just released the advertising API for the photo-sharing service in August 2015. The API or application programming interface will allow third-party marketers to plug into the system to buy advertising. Instagram could soon rival Google and Twitter for the online ad market. According to EMarketer, Instagram will surpass Google and Twitter for U.S. mobile display ad revenue by 2017.

Since we are talking about advertising, this year has seen FB jump into the video ad market 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, its Instagram business, and messaging properties. In the last several 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.

After surging to new highs in mid July shares of FB had been consolidating sideways in the $92-99 zone. The stock broke down through the bottom of that trading range today with a -4.98% plunge toward technical support at the simple 50-dma. The broader market looks very vulnerable right now with the S&P 500, the NASDAQ composite, and the small cap Russell 2000 all piercing key support levels with today's sell-off. If this market weakness continues we want to take advantage of it.

Stocks tend to overreact to big market moves, especially to the downside. FB is no exception. When traders panic they sell everything. We want to be ready to buy FB when it nears support. Prior resistance near $85-86 should be new support. Tonight we are suggesting a buy-the-dip trigger to buy FB calls at $85.50. If triggered we'll start with a stop at $81.40, just below the simple 200-dma.

- Suggested Positions -

Long OCT $90 CALL (FB151016C90) entry $1.05

08/24/15 Strategy Update = remove the stop loss. Expect more volatility
08/24/15 Trade opens. FB gapped down at $77.03.
08/22/15 Adjusted entry point. FB missed our buy-the-dip trigger at $85.50 by a few cents on Friday. We want to buy calls at the opening bell on Monday morning, August 24th.
Option Format: symbol-year-month-day-call-strike


iShares Russell 2000 ETF - IWM - close: 109.69 change: -0.85

Stop Loss: No stop at the moment (See August 24th update)
Target(s): To Be Determined
Current Option Gain/Loss: -27.5%
Average Daily Volume = 31 million
Entry on August 25 at $114.05
Listed on August 22, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

Comments:
08/25/15: We were expecting the IWM to bounce today. We were not expecting it to gap open higher +$3.50. Our trade opened this morning with the IWM gapping higher at $114.05. Unfortunately that was the high for the session with the rally quickly fading as traders sold into strength.

The fact that the IWM closed near its lows for today's session definitely suggest more weakness tomorrow morning. I would hesitate to launch new bullish positions at this time.

Trade Description: August 22, 2015:
Stocks are getting crushed. Worries about a slowing Chinese economy worsened this week. This China concern combined with uncertainty about the Federal Reserve raising rates was enough of a catalyst to spark a serious sell-off. The U.S. market just experienced its worst weekly decline in more than four years.

Friday's action looks like a capitulation sell-off. Volume soared. It was the heaviest volume day of the year. Most of that volume was down volume. The S&P 500 posted zero new highs on Friday. All ten sectors were in the red. The two-day (Thursday-Friday) decline has pushed all of the major U.S. indices into negative territory for 2015 (although the NASDAQ composite is only -0.6% year to date).

The Dow Jones Industrial Average and the NASDAQ-100 index are both in correction territory, which is a decline of more than -10% from its highs. The small cap Russell 2000 index also hit correction territory on Friday. The tone on Friday was fearful with the volatility index (VIX), a.k.a. the fear gauge, soaring +46% to a new high for 2015. One CNBC commentator described the action on Friday as investors just "puking" up stocks to get out of the market.

According to 18th century British nobleman Baron Rothschild, "The time to buy is when there's blood in the streets." We think Friday's market sell-off qualifies as a "bloody" day for stocks.

Did you notice that the Dow Industrials, the NASDAQ composite, and the S&P 500 were all down -3.1% (or worse) but the small cap Russell 2000 index was only down -1.3% on Friday? This relative strength is a reflection of investors' fears. If China is the bogeyman then no one wants big multi-nationals that do a lot of business overseas. Small cap companies tend to be more U.S. focused. They do less business overseas and should have less exposure to China or a rising U.S. dollar.

Tonight we are suggesting a bullish trade to buy calls on the IWM, which is the small cap Russell 2000 ETF. The afternoon peak on Friday was $116.66 for the IWM. We are suggesting a trigger to buy calls if the IWM trades at $116.85 or higher.

Please note that this is just a trade. We are not calling a bottom for the stock market. On a short-term basis stocks are very oversold and due for a bounce. The big cap indices (S&P 500, NASDAQ, and Dow Industrials) all closed on their low for the day. Normally that's a bearish indication for the next trading day. There is a very good chance that stocks see another spike lower on Monday morning before bouncing. That's one reason why we are suggesting a trigger to buy IWM calls on a bounce.

- Suggested Positions -

Long NOV $115 CALL (IWM151120C115) entry $4.15

08/25/15 Trade opened this morning. The IWM gapped higher at $114.05
08/24/15 Adjust Entry Strategy = new entry = buy IWM calls at the opening bell tomorrow (Tuesday, August 25th). No stop loss at the moment.
Previous entry trigger was $116.85
08/24/15 Adjust option strike = use the November $115 calls
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Bed Bath & Beyond Inc. - BBBY - close: 60.07 change: +0.14

Stop Loss: 61.55
Target(s): To Be Determined
Current Option Gain/Loss: +139.2%
Average Daily Volume = 2.0 million
Entry on July 24 at $66.80
Listed on July 23, 2015
Time Frame: Exit PRIOR to earnings in late September
New Positions: see below

Comments:
08/25/15: BBBY spiked up to $61.44 before the rebound failed. Shares faded back toward unchanged and closed near round-number support at $60.00.

No new positions at this time.

Trade Description: July 23, 2015:
This year is not shaping up very well for bullish investors in BBBY. The stock is down -11.6% year to date. The trouble started with its earnings report back in January.

If you are not familiar with BBBY they are in the services sector. According to the company, "Bed Bath & Beyond Inc. and subsidiaries (the "Company") is a retailer selling a wide assortment of domestics merchandise and home furnishings which operates under the names Bed Bath & Beyond, Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, Harmon or Harmon Face Values, buybuy BABY and World Market, Cost Plus World Market or Cost Plus. Customers can purchase products from the Company either in store, online or through a mobile device.

The Company has the developing ability to have customer purchases picked up in store or shipped direct to the customer from the Company's distribution facilities, stores or vendors. The Company also operates Linen Holdings, a provider of a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, food service, healthcare and other industries.

Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond. Shares of Bed Bath & Beyond Inc. are traded on NASDAQ under the symbol "BBBY" and are included in the Standard and Poor's 500 and Global 1200 Indices and the NASDAQ-100 Index. The Company is counted among the Fortune 500 and the Forbes 2000."

On January 8th BBBY reported its 2014 Q3 results. Earnings were in-line with estimates but revenues missed. Management lowered their same-store sales guidance. The stock plunged the next day. A few weeks later BBBY had managed to recover but the rally failed producing a bearish double top.

The trouble continued in April. BBBY had rallied up into its earnings report and then disappointed. Their 2014 Q4 results were in-line with estimates at $1.80 a share. Yet revenues missed estimates again. They lowered their Q1 guidance. The stock plunged the next day.

On June 24th BBBY reported earnings of $0.93 per share. That was down -1% from a year ago and a penny worse than expected. Revenues were only up +3% to $2.74 billion, which met expectations. Yet comparable store sales were +2.2% when Wall Street was expecting +2.5%. Management lowered their Q2 guidance. Guess what happened the next day? Yup, the stock dropped. Traders immediately sold the bounce and BBBY now has a clearly defined bearish trend of lower highs and lower lows. One has to wonder how bad would BBBY's Q1 results have been had the company not spent $385 million buying back stock last quarter?

In summary, BBBY has been missing Wall Street's revenue or earnings estimates the last three quarters in a row. They have warned twice and same-store sales are disappointing. Technically shares have broken down below multiple layers of support. The company is more of a home furnishing store so back to school season may not give them much of a boost. The point & figure chart is bearish and forecasting at $60.00 target. The last few days have seen some support near $67.00. We are suggesting a trigger to buy puts at $66.80.

- Suggested Positions -

Long NOV $65 PUT (BBBY151120P65) entry $2.55

08/24/15 new stop @ 61.55
08/20/15 new stop @ 64.35
08/06/15 new stop @ 65.25
08/01/15 new stop @ 66.25
07/25/15 new stop @ 67.65
07/24/15 triggered @ $66.80
Option Format: symbol-year-month-day-call-strike


Mallinckrodt Public Ltd - MNK - close: 78.66 change: -3.30

Stop Loss: 85.25
Target(s): To Be Determined
Current Option Gain/Loss: +151.0%
Average Daily Volume = 1.3 million
Entry on August 20 at $93.49
Listed on August 19, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

Comments:
08/25/15: Traders continue to sell MNK. The bounce failed pretty early this morning (at $84.74) and the stock reversed sharply. MNK underperformed the broader market with a -4.0% drop to new 2015 lows. The breakdown under $80.00 is bearish.

No new positions.

Trade Description: August 19, 2015:
Normally you might think of mergers and acquisitions in the healthcare sector is a bullish recipe. It has been a winning combination for Irish drugmaker MNK who has been actively buying smaller rivals. Unfortunately, after the company's most recent earnings report, Wall Street is worried they may have paid too much for a recent purchase.

MNK is in the healthcare sector. According to the company, "Mallinckrodt is a global specialty biopharmaceutical and medical imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and medical imaging agents. Areas of focus include therapeutic drugs for autoimmune and rare disease specialty areas like neurology, rheumatology, nephrology and pulmonology; neonatal critical care respiratory therapies; and analgesics and central nervous system drugs for prescribing by office- and hospital-based physicians. The company's core strengths include the acquisition and management of highly regulated raw materials; deep regulatory expertise; and specialized chemistry, formulation and manufacturing capabilities. The company's Specialty Brands segment includes branded medicines; its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing; and the Global Medical Imaging segment includes contrast media and nuclear imaging agents."

Their most recent earnings report was August 4th. MNK announced its Q3 results of $2.05 per share. That beat estimates of $1.83. Revenues surged +47.8% to $965 million. A big chunk of that revenue improvement was due to recent acquisitions. Furthermore, analysts were expecting MNK to report revenues of $984 million. That's a $19 million miss.

The fly in the ointment seems to be sales of Acthar gel. MNK recently paid $5.6 billion to buy Questcor Pharmaceuticals who makes HP Acthar Gel, which is derived from the pituitary glands of pigs. The drug can be used to treat a variety of autoimmune and inflammatory conditions, plus rare skin diseases. MNK reported that sales of Acthar were only up +4% from a year ago, which was a disappointment. Management lowered their long-term forecast for Acthar sales to mid-single digit to low-double digit percentage growth.

MNK's CEO said they're facing pressure from health insurance companies over the price of Acthar. Some insurance companies have gone so far as to restrict coverage or refusing to cover the drug due to costs (source: AP).

The combination of the revenue miss and this disappointing outlook for Acthar sales sparked a serious sell-off in shares of MNK. The stock plunged from $124 down to $102 the next day. Shares have spent the last couple of weeks trying to produce an oversold bounce but traders keep selling the rallies. The point & figure chart has reversed sharply and is now forecasting at $63.00 target.

The $95.00 level was support in early August but MNK is about to break it. Today's intraday low was $94.44. Tonight I am suggesting a trigger to buy puts at $94.35.

MNK can obviously be a volatile stock. I would consider this a more aggressive, higher-risk trade.

*small positions to limit risk* - Suggested Positions -

Long OCT $90 PUT (MNK151016P90) entry $4.90

08/24/15 new stop @ 85.25
08/22/15 new stop @ 92.85
08/20/15 new stop @ 97.75
08/20/15 triggered on gap down at $93.49, suggested entry was $94.35
Option Format: symbol-year-month-day-call-strike


Tupperware Brands - TUP - close: 48.42 change: -0.65

Stop Loss: 51.25
Target(s): To Be Determined
Current Option Gain/Loss: +263.0%
Average Daily Volume = 489 thousand
Entry on August 11 at $56.50
Listed on August 08, 2015
Time Frame: Exit PRIOR to September option expiration
New Positions: see below

Comments:
08/25/15: TUP spiked up to $50.76 this morning and traders immediately sold the rally. Shares reversed into a -1.3% decline and a new low.

No new positions at this time.

Trade Description: August 8, 2015:
The Tupperware brand has been around for over 60 years. Yet the current version of the company was founded in 1996. They went public the same year. The stock market's huge rally off the 2009 bear-market lows saw shares of TUP surge from $11.00 per share to $97 by December 2013. Unfortunately that was the peak. TUP's stock has been sinking ever since.

TUP is in the consumer goods sector. According to the company, "Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship-based selling method through an independent sales force of 2.9 million. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics and Nuvo brands."

It's easy to see why investors are selling TUP. The company has lowered its guidance four quarters in a row. The outlook seems to be getting worse. Revenues fell -5.2% in Q4 2014. They reported their 2015 Q1 results on April 22nd. TUP beat estimates but revenues were down -12%. They managed to beat the bottom line estimate in their Q2 report (July 22nd) but revenues were down -12.7%. Currently TUP management is expecting 2015 revenues to fall -10% to -11% from 2014.

The reaction to its Q2 results and lowered forecast sparked a sharp decline that pushed TUP to multi-year lows. There has been almost no oversold bounce. TUP tried to bounce last week and traders sold it pretty quick.

Shares displayed relative weakness on Friday with a -2.59% decline and a new multi-year closing low. The point & figure chart is bearish and forecasting at $44.00 target. Tonight we are suggesting a trigger to buy puts at $56.50. I'm listing the September puts but investors may want to go further out and give TUP even more time. There's no telling where the bottom might be.

- Suggested Positions -

Long SEP $55 PUT (TUP150918P55) entry $1.35

08/24/15 new stop @ 51.25
08/22/15 new stop @ 54.15
08/12/15 new stop @ 56.65
08/11/15 triggered @ $56.50
Option Format: symbol-year-month-day-call-strike


WESCO Intl. - WCC - close: 51.24 change: -0.68

Stop Loss: 54.25
Target(s): To Be Determined
Current Option Gain/Loss: +268.4%
Average Daily Volume = 592 thousand
Entry on August 05 at $58.40
Listed on August 04, 2015
Time Frame: Exit PRIOR to September option expiration
New Positions: see below

Comments:
08/25/15: WCC saw its early morning gains vanish and traders sold the midday rally attempts. Shares eventually settled with a -1.3% loss.

More conservative traders may want to lower their stop closer to today's high ($53.30). No new positions.

Trade Description: August 4th, 2015:
The combination of currency headwinds and a slowing global economy has created a rough environment for WCC's business. Revenues are falling and the strong dollar only makes it worse.

WCC is in the services sector. According to the company, WESCO International, Inc. (WCC), a publicly traded Fortune 500 holding company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating ("MRO") and original equipment manufacturers ("OEM") products, construction materials, and advanced supply chain management and logistic services. 2014 annual sales were approximately $7.9 billion. The Company employs approximately 9,400 people, maintains relationships with over 25,000 suppliers, and serves over 75,000 active customers worldwide. Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers and utilities. WESCO operates nine fully automated distribution centers and approximately 485 full-service branches in North America and international markets, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations.

Looking at some recent earnings reports from WCC the company has missed Wall Street's bottom line estimate three times in a row. Prior to their Q4 earnings report (January 29th), the company issued an earnings warning for their fiscal 2015 on December 17th.

WCC's Q1 report was April 23rd. They missed the EPS number by 10 cents. Revenues were only up +0.3% to $1.82 billion but that missed estimates. Mr. John J. Engel, WESCO's Chairman and Chief Executive Officer, stated, "We had a challenging start to the year where reduced demand in the industrial market, winter weather impacts, and foreign exchange headwinds weighed heavily on our results in the first quarter. While organic sales per workday grew 3%, sales momentum decelerated through the quarter. Gross margin was down versus prior year but was flat sequentially."

Following their Q1 report WCC management lowered their 2015 guidance again from $5.20-5.60 a share down to $5.00-5.40 per share.

The situation worsened in the second quarter. WCC reported its Q2 numbers on July 23rd. Analysts were expecting a profit of $1.15 per share on revenues of $1.97 billion. WCC only delivered $1.00 per share (a -15 cent miss) and revenues plunged -4.4% to $1.92 billion. The company said their normalized organic sales fell -3.0% and foreign exchange hit them for another -3.0%. They also suffered from falling margins while expenses rose. That's not a good recipe.

Following the Q2 numbers, Mr. Engel, stated, "Our second quarter sales declined 4% reflecting continued foreign exchange headwinds and weakness in the industrial market as well as a slow seasonal start in the non-residential construction market." Management lowered their 2015 forecast yet again. This time from $5.00-5.40 down to $4.50-4.90.

The forecast for WCC is bearish and the stock is getting hammered. Shares are trading at two-year lows. It's hard to say where the next support level is. The point & figure chart is forecasting at $44.00 target. Tonight we are suggesting a trigger to buy puts at $58.40.

- Suggested Positions -

Long SEP $55 PUT (WCC150918P55) entry $0.95

08/24/15 new stop @ 54.25
08/22/15 new stop @ 56.05
08/20/15 new stop @ 57.05
08/08/15 new stop @ 59.35
08/05/15 triggered @ $58.40
Option Format: symbol-year-month-day-call-strike


Wynn Resorts Ltd. - WYNN - close: 75.71 change: -0.77

Stop Loss: 81.55
Target(s): To Be Determined
Current Option Gain/Loss: +355.4%
Average Daily Volume = 2.5 million
Entry on August 14 at $93.40
Listed on August 13, 2015
Time Frame: Exit PRIOR to September option expiration
New Positions: see below

Comments:
08/25/15: WYNN's bounce attempts struggled in the $79.25-80.00 range today. Shares started to spike lower in the last few minutes to close down -1.0%. This is a new multi-year closing low for WYNN.

More conservative traders might want to move their stop closer to today's high (79.61).

No new positions.

Trade Description: August 13, 2015:
Casino stocks have been a bad bet this year. CZR and LVS are both down for the year. MGM seems to be an exception with a very minor gain. Yet one of the biggest losers is WYNN. Shares of WYNN are down -36% in 2015. The bear market started last year. Shares of WYNN peaked just below $250.00 in early 2014 and now they're down -60% from the highs. The catalyst for this dramatic decline is a plunge in gaming revenues from Macau.

WYNN is in the services sector. According to the company, "Wynn Resorts, Limited, owns 72.2% of Wynn Macau, Limited (www.wynnmacaulimited.com), which operates a casino hotel resort property in the Macau Special Administrative Region of the People's Republic of China. The Company also owns and operates a casino hotel resort property in Las Vegas, Nevada.

Our Macau resort is a resort destination casino with two luxury hotel towers (Wynn Macau and Encore) with a total of 1,008 spacious rooms and suites, approximately 280,000 square feet of casino space, casual and fine dining in eight restaurants, approximately 57,000 square feet of retail space, and recreation and leisure facilities, including two health clubs and spas and a pool.

Our Las Vegas operations (Wynn Las Vegas and Encore) feature two luxury hotel towers with a total of 4,748 spacious hotel rooms, suites and villas, approximately 186,000 square feet of casino space, 34 food and beverage outlets featuring signature chefs, an on-site 18-hole golf course, meeting space, a Ferrari and Maserati dealership, approximately 96,000 square feet of retail space, two showrooms, three nightclubs and a beach club."

The problems started in June 2014. China launched a nationwide crackdown on corruption. This had a huge impact on how many government officials decided to vacation and gamble in Macau. The region also saw a drop in other high rollers not wanting to be seen tossing money around. Plus the Chinese government enacted harsh no-smoking rules in Macau. There was a direct impact on gambling revenues that is still being felt today.

WYNN reported its 2015 Q1 results on April 28th. Analysts were expecting a profit of $1.33 per share on revenues of $1.17 billion. The company delivered a profit of $0.70 (big miss) and revenues plunged -27.8% to $1.09 billion. Its Macau revenues were down -37.7%. Management also announced they were reducing their quarterly dividend.

We looked at playing WYNN as a bearish candidate back in June after several bearish analyst calls on the gambling companies with exposure to Macau. A Sterne Agee analyst noted that table-only gross gaming revenues in Macau were down -46% from a year ago in the first week of June. They estimate that June 2015 will see Macau gambling revenues fall -33% to -38%. June is on track to be the 13th monthly decline in gambling revenues and the tenth month in a row of double-digit declines.

A Susquehanna Financial Group analyst also warned that the region could suffer further declines. There are rumors of an complete smoking ban and there seems to be no let up on the government's anti-corruption efforts. Meanwhile a Wells Fargo analyst is forecasting June gambling revenues in Macau to plunged -30% to -40% to about $2 billion. This would be the lowest monthly total in more than four years.

The stock saw a big bounce in early July on an upgrade but the rally didn't last. WYNN reported its Q2 results on July 29th. Analysts were forecasting $0.97 per share on revenues of $1.07 billion. WYNN missed both estimates with a profit of $0.74 as revenues plunged -26% to $1.04 billion. Their Macau business saw revenues drop -35.8%.

Believe it or not but shares of WYNN saw a relief rally on this earnings news. Maybe investors were expecting even worse numbers. Yet the rally failed the very next day. That's because the situation in Macau hasn't changed. July was the 14th month in a row of falling revenues for the casino industry.

The recent headlines regarding the Chinese government's devaluation of their currency (the yuan, a.k.a. the renminbi) could be a clue that their economy is slowing down faster than expected. That's bad news for the casino business. If the Chinese economy is retreating it would seem unreasonable to expect a recovery in the gambling business.

Shares of WYNN have plunged to key support in the $93.60-94.00 region. We are suggesting a trigger to buy puts at $93.40. A breakdown to new lows could spark the next leg lower after weeks of consolidating sideways.

Traders should note that WYNN can be a volatile stock. The most recent data listed short interest at 13.7% of the relatively small 80.8 million share float. Currently the point & figure chart is bearish and forecasting an $85.00 target.

- Suggested Positions -

Long SEP $90 PUT (WYNN150918P90) entry $3.25

08/24/15 new stop @ 81.55
08/22/15 new stop @ 85.75
08/20/15 new stop @ 91.65, more conservative traders may want to take some money off the table now that our put option has doubled in value.
08/19/15 new stop @ 97.25
08/14/15 triggered @ $93.40
Option Format: symbol-year-month-day-call-strike


CLOSED BEARISH PLAYS

Jack In The Box - JACK - close: 78.72 change: +0.22

Stop Loss: 80.85
Target(s): To Be Determined
Current Option Gain/Loss: +61.0%
Average Daily Volume = 639 thousand
Entry on August 19 at $84.75
Listed on August 18, 2015
Time Frame: Exit PRIOR to earnings in November
New Positions: see below

Comments:
08/25/15: JACK ended Tuesday's session with a minor gain. The stock spent most of the day drifting sideways along round-number support/resistance at the $80.00 level. The market's sharp rally at the opening bell was strong enough to push JACK to $80.98. Our stop was hit at $80.85.

- Suggested Positions -

DEC $80 PUT (JACK151218P80) entry $3.23 exit $5.20 (+61.0%)

08/25/15 stopped out
08/24/15 new stop @ 80.85
08/22/15 new stop @ 85.15
08/19/15 triggered @ $84.75
Option Format: symbol-year-month-day-call-strike

chart: