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Daily Newsletter, Saturday, 10/3/2015

Table of Contents

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

Market Wrap

Bad News is Good News Again

by Jim Brown

Click here to email Jim Brown
An ugly nonfarm payroll report and downward revisions to prior reports knocked the chance of an October rate hike off the table and turned December into only a minimal possibility. After a -258 point opening drop the Dow recovered to close up +200 points. Apparently, bad news is good news again.

Market Statistics

The Fed took a lot of heat by not raising rates in October. Now that decision is looking like the right one or at least a lucky one. Even a blind squirrel finds an acorn occasionally and that decision was their acorn.

The estimate for the September Nonfarm Payrolls was for a gain of +203,000. The headline number came in at +142,000 and a serious -61,000 miss. In addition, the +173,000 job gain in August was revised lower to +136,000 and the loss of another -37,000 jobs. Analysts were expecting an upward revision of +60,000 jobs. The July reading of +245,000 was also revised lower to +223,000 and a loss of -22,000 previously reported jobs. Including the downward revisions and the estimate misses the Friday payroll report was -180,000 jobs lower than analysts expected. That is a huge miss.

The three-month moving average is now only +167,000 and under the "well over 200,000" the Fed wants to see before they can raise rates. That is the weakest quarterly average since mid 2012. It would require a gain of nearly 300,000 jobs in October to push the average back to more than 200,000. That is not likely to happen. The average for all of 2015 is +198,000 compared to +260,000 for all of 2014.

Normally when there is a bad number the analysts always point to some internal component as the silver lining in the report. There were no silver linings. A Jefferies analyst said, "It has been years since we have seen such an unambiguously bad report."

Average hourly earnings were flat after a +0.4% rise in August. The average workweek declined from 34.6 to 34.5 hours. The unemployment rate remained 5.1% except that 579,000 workers left the workforce to push the participation rate down from 62.6% to 62.4% and a level not seen since Oct 1977.


Goods producer payrolls shrank by -13,000. Mining (energy) lost -12,000 jobs and manufacturing shrank by -9,000 after a -18,000 loss in August. That is the largest two-month loss for manufacturing since 2010. The mining/energy sector has lost -102,000 jobs since peaking in December. Services jobs rose only +131,000 compared to +197,000 in September 2014. Government jobs rose +24,000. Retail rose +24,000 compared to the average of +27,000.

In the separate Household Survey, jobs actually declined by -236,000 to 148.8 million. The -579,000 decline in the workforce and the -447,000 decline in involuntary part time workers lowered the U6 employment from 10.3% to 10.0% and a post recession low.


The Fed Funds Futures collapsed after the report. The odds of an October hike fell from 18% to 8%. The odds for a December hike declined from 47.5% to 28.2%. January odds fell from 53.8% to 36.9% and March odds fell from 66.7% to 50.7%. April declined from 7.1% to 54.7% but is now the closest month with odds comfortably over 50%.

When you couple the weak payrolls with the weak national ISM Manufacturing data from Thursday it is a miracle the market did not implode. Global economic weakness and the strong dollar are crushing the U.S. manufacturing sector. The 50.2 print was only 0.3 above contraction territory and nearing a post recession low. Order backlogs declined from 46.5 to 41.5 and even deeper into contraction territory suggesting future manufacturing activity will continue to slow.

Factory Orders declined for the tenth consecutive month and the longest streak in history outside a recession. The ratio of inventories to shipments rose to 1.35 and the highest level since 2009. Rising inventories suggests slowing sales.


If the trend in job growth continues to decline over the next four months, the market is going to be talking about QE4 rather than rate hikes according to David Rosenberg at Gluskin Sheff.

The yield on the 3-month treasury declined to -0.02% suggesting investors are expecting more trouble ahead. The yield on the ten-year treasury declined to close at 1.989% and under the emotional 2% level. There is no rate hike on the horizon based on treasury yields. A couple more economic reports with weak numbers and we could be down to 1.8%.


After the factory orders, ISM, International trade data and payrolls the Atlanta Fed GDPNow forecast for Q3 sank from +1.8% on Sept 28th to only +0.9% growth on Friday.


The calendar for next week is nonthreatening with the only material event the FOMC minutes on Thursday. The ISM Nonmanufacturing report on Monday is likely to be disappointing but the ISM Manufacturing, Factory Orders and payrolls have already laid the sentiment groundwork so a decline will probably be ignored.


Acasti Pharma announced a 1:10 reverse split to avoid being delisted. It should be ignored. Full Stock Split Calendar


Wynn Resorts (WYNN) was the winner on Friday. On Thursday, it was reported that gaming revenue in Macau declined -33% in September for the 16th consecutive month of declines. Shares of WYNN hit a new six-year low. On Friday, there was a report out of China that the government planned to revive the slowing gambling industry in Macau. Support policies will be announced by the end of December. Wynn generates 70% of its revenue in Macau so that was good news. Shares spiked +23% on short covering. Unfortunately, the gain is almost invisible on the chart because WYNN shares had declined so badly over the last two years. The $12 spike is a good lesson on why you need to maintain stop losses on your option positions. That would have erased $12 in premium on any deep in the money put.


Tesla (TSLA) reported deliveries of 11,580 vehicles in Q3 and met its targets. Tesla expects to deliver more than 50,000 vehicles in 2015. That was up slightly from the 11,532 delivered in the prior quarter. Their nine-month total is now 33,157 and that suggests they have to deliver 16,483 in Q4 to meet the full year forecast.

Now that the model X is delivering, the company has two models in production for the first time. Elon Musk said orders for both the Model X and the Model S spiked last week after the first Model X was delivered. The publicity and rave reviews prompted more people to order the Model X. Those that do not want to wait for 9-12 months or longer to get the Model X transferred their deposits to the Model S. On the first delivery day on September 29th, Musk delivered six Model Xs. Musk got the first one, board member Steve Jurvetson the second and the fourth went to Google co-founder Sergey Brin. Shares were up +$8 on Friday.


Twitter (TWTR) shares rose 7% but there is still no CEO announcement. Analysts were expecting the big news on Wednesday but it did not appear. Shares rebounded on Friday after several analysts made positive comments on the stock. Deutsche Bank said it was "firmly in the bull camp" despite the lack of an announcement. The bank expects project Lightening, which will be called "Moments" to be delivered on Tuesday. DB said this could be the key to converting casual users into regular users. They also expect the CEO announcement and a restructuring of the board.

Wedbush initiated coverage with a neutral rating and a $30 price target. The analyst said the business model was flawed and casual users drifted away. However, as they eventually spend more time on Twitter their usage grows dramatically once they find a compelling reason to stay on the platform.

Twitter recently removed the 140-character limit on "direct" messages. Users can now send up to 10,000 characters. Reportedly, Twitter is considering removing the restriction on tweets as well. Interim CEO Jack Dorsey is monitoring a project code-named 140 Plus that would remove the restriction.

The company is struggling to find a way to involve the drive by readers. More than 500 million unique visitors come to the Twitter home page every month but they do not log in. if they can figure out some way to hook those visitors their usage numbers would explode.


Amazon (AMZN) decided to ban streaming products from Apple and Google that do not cooperate with Amazon's streaming infrastructure. Google Chromecast and Apple TV do not provide customers with the "optimal experience" for viewing Amazon Instant Video on their products. Other competitors including the Xbox and PlayStation to play well with Amazon so those products are not banned. Since there are thousands of retailers that sell Apple and Google products this is not likely to hamper sales for those companies. It might help Amazon sell a few more of their own streaming devices.


Google (GOOG/GOOGL) became Alphabet after the close on Friday. The shares will begin trading under the new name on Monday but the ticker symbols will not change. The core business will still be called Google and will operate as a wholly-owned subsidiary of Alphabet. Sundar Pichai will head Google. Alphabet will be run by Larry Page and each of the individual businesses in Alphabet will have its own CEO.

Oppenheimer upgraded Google to outperform with a price target of $700. The analyst said the concerns over the flurry of ad blocking apps is overblown. He said YouTube usage is growing at the fastest rate in the last two years. In Q2 the time spent on YouTube increased +60%. The target for his bull case is $905. Shares of Google rallied +$15 on Friday.


UBS added three firms to its "focus list" for Q4. They added Gilead Sciences (GILD) because of its top-selling drugs and strong pipeline. The stock closed at $98.28 with the consensus target at $125.

The bank added Eli Lilly (LLY) because it was poised to significantly grow earnings with new drugs for cancer and diabetes. With patent expirations behind it and a robust pipeline the company is poised to surge. Shares closed at $87.54 with the consensus target at $96.26.

The last company was WhiteWave Foods (WWAV). This is the leading packaged food distributor throughout North America and Europe. The company manufactures and sells foods under dozens of different brands. Shares closed at $41.78 with the consensus target at $53.89.

Of the group, I like Gilead the best. They have a PE of 9 compared to 45 for LLY and 51 for WWAV. Gilead has a very strong and growing free cash flow and they are poised to make an acquisition in the coming months to add to their pipeline.

They were crushed in the biotech selloff because their Hep-C drugs are $90,000 for a 12-week course of treatment. Since nothing is going to happen in the form of price controls until 2017, I think the selloff was overdone.


The earnings calendar is thin for next week with Yum Brands, Monsanto and Alcoa the only standouts. The following week will see a dramatic acceleration in the number of reports. Currently S&P is forecasting a -4.7% decline in earnings and -2.9% decline in revenue for Q3. However, if you remove the energy sector there would be +3.4% earnings growth. You can expect to hear that many times over the next four weeks. Four of the ten S&P sectors, energy, materials, consumer staples and information technology are expected to post negative earnings growth.


This is the week when oil prices were supposed to go down. However, Putin decided to move into Syria and support Assad and that produced worries over a bigger conflict with Russia and the U.S. getting into a skirmish. It also injected Putin into the Middle East in a more forceful way as Iran's ally. That means Saudi Arabia now has a bigger target on its back as the biggest producer in the region and the archenemy of Iran. With Russian military in Syria and Iranian troops headed for Syria the future of Iraq is even more uncertain.

With the U.S. withdrawing from the region, and Russia/Iran in control of Syria it would be very easy to include Iraq in their sphere of influence. Whether Iran understands it or not, Putin could end up as the controller of Iran, Iraq and Syria and the oil production from those regions. I know that is a lot to understand in one paragraph but traders immediately grasped the potential for higher oil prices thanks to Russian intervention.


Crude spiked to $47.10 on short covering on Thursday and although it retraced its gains on Friday, it refused to move under $44. When the Baker Hughes rig counts came out in the afternoon it spiked back to close at $45.55.

Baker Hughes said active rigs declined a whopping -29 for the week ended on Friday. That is the biggest one-day decline since the recession. The total active rigs fell to 809. Oil rigs declined -26 to 614 and a new 10-year low. Gas rigs declined -2 to 195 and a new 18-year low. This is the result of producers moving into cash conservation mode. Prices did not rebound as expected and they are forced to slash drilling expenses to keep from running out of cash.

The sharp drop in rigs suggests production will continue to decline. U.S. production declined -40,000 bpd last week to 9.021 million bpd. That is now -514,000 bpd below the April peak at 9.612 million bpd. That decline in production did not keep inventories low. Crude inventories rose +4.0 million barrels last week.

Fundamentally oil prices should be declining but the geopolitical events in the Middle East and the sharp drop in rigs could keep a bid under prices for weeks to come.



Markets

If you look at the short-term chart, it would appear the Tuesday low of 1,871 was a successful retest of the August low of 1,867. The rebound was instant and despite intraday selling, the S&P rallied back at the close each day starting on Wednesday.

The Dow gapped down -258 points on Friday morning. It appeared that bad news was going to send us to lower lows in the first week of October to match the historical pattern.

However, a series of buy programs hit the tape several times in the morning. Those programs lifted the indexes back into positive territory and created a serious short squeeze. We can tell the afternoon was a squeeze because the stocks with the worst declines in recent days were the biggest gainers and most of their gains were in the afternoon.

The Dow and S&P were helped by the short squeeze in energy stocks. Chevron rallied +4% and Exxon just under 3% to lift the Dow. Caterpillar, a company that has missed, warned and warned again surged +2% on no news.

Wynn Resorts spiked +23% on news that China may do something several months from now about gambling in Macau. It was clearly short covering rather than a change in the immediate fundamentals. Biotechs rebounded sharply after several brokers upgraded their favorite picks. The biotech index rallied +3.27%.


The Semiconductor Index ($SOX) rebounded +2% on the Micron earnings and guidance. Qualcomm spiked +3.55% on minimal news. On Thursday Samsung said they were going to use Qualcomm chips in "some" Galaxy S7 phones. The gain was short covering.

Alibaba (BABA) spiked +7%, Sohu.com (SOHU) +6%, Sina (SINA) +6% and Baidu (BIDU) +8% on news that the Chinese government "may" increase targeted stimulus to boost the lagging economy. The Chinese markets are closed for a holiday until October 8th. This was short covering ahead of the holiday and the potential for stimulus details.

I know everyone wants to believe that the rebound was due to a successful retest of the August lows. In reality it may be. Most bull market rallies begin with a strong short squeeze from very oversold conditions.

Market sentiment after Tuesday's low was very bearish. The AAII sentiment survey saw a big +11.2% spike in bearish sentiment. Those in the neutral camp fled to the dark side with a -7.2% decline in neutral sentiment. Bullish sentiment declined -4%.

Extremely bearish sentiment is a contrarian indicator. With 72% of investors either bearish or neutral there was a lot of cash on the sidelines or short. That was a lot of dry powder that could come back into the market at any time.

The series of buy programs at the open were likely related to end of quarter portfolio restructuring. Q3 is over and Q4 is now in play. Fund managers have very little time to buy some winners and hope they can recover losses in Q4.


Here is the test. The S&P closed at 1,951 and ever so slightly over resistance from last week. If the S&P can add to those gains on Monday and then break through that 1990-2005 resistance we should be good to go. Breaking through that heavy resistance surrounding 2,000 should convince even the strongest doubters that a Q4 rally has begun and the real short covering and price chasing can begin.

Support has been 1,900 for the last three days and a return to that level would negate the late week rebound.



The Dow is a similar chart to the S&P only the support at 16,000 was tested the first week of September and then again last week. That support test may be valid because the 15,370 low on August 24th was really a bad print. Numerous stocks had not opened or opened with serious imbalances and caused the panic low. The low the next day was 15,651 and came at the close. That was the real low, which should have been retested.

That has not happened and the Dow has moved sideways for the last month. The mid month pre Fed rally was sold hard when the Fed did not hike rates. For the last seven trading days, the Dow has retested the 16,000 level and it has held.

The key here will be to move back above those pre Fed highs at 16,666-16,750. I am not counting the post Fed intraday volatility spike. Those are not valid events and are caused by competing program trades.

A lot of the Dow laggards saw short covering on Friday and caused the +458 point rebound from the opening lows. That is not likely to be repeated on Monday. We need a day of "normal" trading so pressure from opposing forces can equalize and the real market direction can appear.




The Nasdaq received help from multiple sectors and surged to a +1.74% gain. Unfortunately, it is still a long way from resistance at 4,800 and 4,835. That is followed by even stronger resistance at 4,900. While it will not be an easy task for the Nasdaq to punch through those levels a rebound in the biotech stocks could help. A lot of tech stocks were severely beaten down and we saw short covering there on Friday. That could be a one-day wonder.

The Nasdaq is nearing some significant congestion and the tech stocks will need a catalyst to keep the momentum going. We are still a couple weeks away from the burst of earnings and we do not know if weak earnings are going to be able to provide the rally fuel.

Support is 4,560.



The Russell 2000 was the laggard last week with a decline compared to gains by the big cap averages. On the plus side, the support at 1,082 held and the index closed back over 1,100 on Friday. The Russell has a long way to go to clear resistance at 1,150 and 1,165. Since the Russell was the only index to actually make a lower low it should find some buyers because confidence will be stronger that the retest was valid.


The next week is typically bearish with lows seen in the first week of October. When Q3 and September are negative, the gains in Q4 are normally muted and occur only about 47% of the time. I would like to think that all the bad news is priced in and the market will continue to rebound from oversold conditions. That may be wishful thinking but I will keep my fingers crossed. If you made a shopping list in case of lower lows, I would reevaluate it to see if you want to buy now or holdout for a better buying opportunity. The key for me would be a decent gain on Monday over S&P 1,950. That could shift sentiment back into bullish mode and begin the price chasing.


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Random Thoughts


Bill Ackman's Pershing Square Holdings declined -12.5% in September. Being smart and rich with a building full of analysts is no guarantee of success in the market.


The demand for silver coins has exploded after silver hit a six-year low in August. The demand is so strong that the premium, the cost of the coin over the actual silver content, has surged to 34%. That means a one-ounce Silver Eagle costs an average of $20.10, if you can find them. Silver is $15.23 today. A quick check of Apmex.com shows a price of $20.84 to $21.84 depending on quantity. The mint is backordered and cannot make them fast enough. Both the U.S. Mint and the Canadian Mint are allocating production after temporarily selling out in July. The U.S. Mint allocation is now 750,000 coins a week after dropping to one million coins two weeks ago. In the last two weeks, all the available coins have been purchased in just the first two days. Dealers are quoting four-week delivery after receipt of your funds.

American Silver Eagles have sold 34,304,500 year to date, up +15% from record 2014 levels. The Perth Mint has a new one-ounce coin called the Silver Kangaroo. They sold a record 3.53 million coins in September, which was FIVE times higher than August sales simply because of the global demand for silver coins. The mint has suspended orders until they work through the existing backlog.

JP Morgan is reportedly buying bulk silver in large volumes. Demand was 22% higher than supply in 2014 and with the cost of mining silver now above the value, many mines have shutdown and others have curtailed production. Global demand was 1.07 billion ounces and production was 877.5 million ounces. The shortfall came from existing inventories but obviously that cannot last forever.

With demand for solar panels increasing dramatically the demand for silver will also accelerate. Silver is a key ingredient in silicon photovoltaic cells. According to IHS Cera solar demand is expected to grow by 30% in 2015 with 70 million ounces of silver used in the process.

I would recommend that any investor continue to hold a significant amount of physical silver in bars or coins because the long term price of silver will go a lot higher. Eventually inflation will return, the dollar will decline and silver will spike significantly. In the longer term, the dollar as a global reserve currency is in serious trouble and once our national debt exceeds $20-$22 trillion or even $25 trillion the value of the dollar is going to crash. Analysts expect the debt to rise $500 billion a year until the Fed normalizes rates and then climb $750 billion a year because of interest on the debt.



JP Morgan said 67% of mutual funds underperformed their benchmark in Q3, with more than one third underperforming by at least -2.5%. Those statistics are based on a universe of 2,300 funds with more than $5.5 trillion in assets. The -11% decline in healthcare was the primary cause of the underperformance since that was the hot sector going into Q3. Everyone owned it. Funds Underperform

Mutual funds and ETFs currently hold $18 trillion in investor capital. Jack Bogle of Vanguard was quoted as saying, "if everybody were to suddenly want their money back at once, it is not going to happen." The opening drop on August 24th was a preview of what would happen if everyone hit the sell button at the same time. More than 1,200 stocks were halted for trading under the circuit-breaker rule. ETFs with no ability to get quotes on their underlying stocks went into free fall with some dropping 20-40% below their net asset value in a matter of seconds.

Eventually some event is going to cause investors to hit the panic button and it will not be pretty. Are You Ready for the Bear?


The Dow just suffered its third straight quarterly decline for the first time since 2009 when it suffered six negative quarters. Before that, you have to go back to 1978 for a similar streak. In its 119 year history the Dow has only had 20 streaks of three quarters or more of losses. This is a rare occurrence since this has happened only three times in the last 43 years. Dow Losing Streaks

The global markets just suffered the worst quarter since 2011. More than $11 trillion in wealth was erased from the world markets.


There are fewer bulls today than in March of 2009 when the market began a six-year rally. Only 25% of financial advisors are bullish today according to an Investors Intelligence survey. When Lehman imploded, only 22% were bullish because of fears about a collapse of the entire banking system. Conditions are nowhere near as grim today as they were during the Lehman collapse but the bullish sentiment is almost that low.

Chart Source

Ed Yardeni of Yardeni Research, pointed out that the Investors Intelligence ratio of bulls to bears declined to 0.7 and the fifth consecutive week under 1.0. "In the past that has been a very reliable buy signal." Investors too Bearish


Investor Carl Icahn posted a video to his website last week warning investors of danger ahead. He said the low interest rates have created bubbles everywhere and there is trouble brewing. Back in 2007, he warned of trouble ahead but was not very forceful in his comments. This time around, he decided to go all in with the warning in hopes of preventing significant losses by investors that heed his advice. Danger Ahead Video


Time flies way too fast. In a little over two weeks, Marty McFly will arrive in the future on Oct 21st, 2015. Seems like yesterday it was 1985 and we were watching Back to the Future. Now we are living in it.



 

Enter passively and exit aggressively!

Jim Brown

Send Jim an email

 

"Doubt is the father of invention."


Galileo Galilei (Italian physicist and astronomer, 1564-1642)

 

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Index Wrap

Rally or Bear Market Bounce?

by Jim Brown

Click here to email Jim Brown

After a couple of high profile declines, the Dow managed to recover with a weekly gain of +157 points. The indexes refused to move lower but it remains to be seen if they can actually move higher.

The Dow declined -258 points at the open on Friday but rebounded to end the day +200. That was a 458-point recovery from the lows. On Monday, the Dow fell -312 points to end near the lows of the day at 16,001. It was a very volatile week with large triple digit moves every day.

The most positive event was the hold at support at 16,000. For seven days that level has halted further declines. When an index fails to go down the bulls begin to get anxious. Friday's rebound from a significant low at 16,013 to close at 16,471 was spectacular.

The morning saw numerous buy programs lift the Dow off its lows. Once it turned positive, the short covering accelerated to push it back over 16,400.


The challenge for the Dow is maintaining the positive momentum through the late August resistance at 16,666. The pre Fed bounce punched through that level but was quickly sold when the Fed did not hike rates. That 16,666 level should now be strong resistance again.

There was a lot of short covering in the Dow stocks on Friday. It may be tough to continue higher without that price chasing on Monday.


On the longer-term chart the outlook is not so good. The 50/200 moving average death cross is fully involved with the 50-day average in almost vertical descent. The Dow has more than 2,000 points to recover just to return to the highs and earnings are not likely to provide much lift.

You have to ask yourself this question. If the chart below were a stock, would I buy it? I suspect the answer would be no. Most investors would want to wait until the price moved back over the 16,666 level before putting their money at risk.


The S&P has the same problems as the Dow. The Friday rebound was mostly short covering with a 40 point gap between Friday's close and the nearest strong resistance at 1,990. Without additional short covering or buy programs there is little in the way of headlines on the calendar to push it higher.

The resistance band from 1,985 to 2,005 is strong but I am only showing the 1,990 level. A failure in that resistance band that produces another decline could be severe. Bullish sentiment would be trashed and the bears would come back in force.


The Biotech sector saw significant short covering on Friday after several analysts upgraded or reiterated buys on their favorite stocks. Unfortunately, the chart is still broken. The rebound could just be another short squeeze, bear market bounce and we could see another failure similar to the mid September bounce.

It would be hard to make a bullish case for the biotech chart. More time needs to pass and the direction confirmed before we assume the worst is over.

On the positive side, the sector did bounce at the 3,280 level, which was support last December. That is the right spot and that may give investors hope.


The Dow Transports closed barely positive for the week with a minimal gain of 23 points. Spiking oil prices weighed on the carriers as well as additional spending cuts in the drilling sector. Everything is pointing to a continued decline in railroad traffic other than auto shipments. If oil continues to raise it will pressure the airlines. FedEx already warned about global headwinds and falling currencies around the world are going to impact earnings in all international airlines and shippers.

The Transports have strong downtrend resistance at 8,200 and intermediate resistance at 8,000. The index did have a successful retest of the 7,640 low from early September. A violation of that low would likely point to a significant decline.


The NYSE Composite Index came very close to a complete retest of the August panic low at 9,509 with a decline to 9,565. For many analysts that would be close enough to claim. The Friday rebound was mostly short covering. I looked at several hundred charts and they all looked the same with major spikes after a week of declines.

The index has significant overhead resistance at 10,250 and again at 10,600. If this were a stock, I would not buy it.


The Russell 3000, the 3,000 largest stocks in the market, had a successful retest of the August lows and rebounded +4% from the Tuesday lows. This was the closest example of a textbook retest of all the major indexes.

The +1.47% rebound on Friday was clearly short covering and out of character with recent moves. The index has major resistance in the 1182-1189 range and it would take a convincing rally to move all 3,000 stocks past that resistance. Again, if this were a stock, I would not buy it. However, I would be tempted to try a long trade above 1,165.


The Nasdaq Composite completed the retest of the "post" panic lows at 4,530 with the dip to 4,517 on Tuesday. I am using the post panic lows since more than 1,200 stocks either failed to open or were halted for trading immediately after the open on August 24th. There were no quotes so the indexes reflected that in their prices rather than the true values. I am not using that panic low in my calculations.

The Nasdaq saw significant short covering on Friday with biotechs, semiconductors and China stocks all rebounding strongly.

However, it is a long way to real resistance at 4,900. There is significant congestion in the 4,800 range and it could be a battle to move higher.


I want to be bullish for next week but the charts do not support it. One day or even one week does not make a trend. Volatility has returned to the markets with large triple digit swings on a daily basis. This is the trademark of a market that is either topping or trying to find a bottom. Indecision is rampant and end of year portfolio restructuring is also moving the markets.

I am in the "show me" camp for next week. I would like nothing better than to see a continued Q4 rally but there is no apparent catalyst on the calendar for next week. Earnings warnings could be a challenge now that the quarter is over.

Enter passively and exit aggressively!

Jim Brown

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New Option Plays

Biotech & Services

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Alkermes Plc - ALKS - close: 60.48 change: +0.97

Stop Loss: 54.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.0 million
Entry on October -- at $---.--
Listed on October 03, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: Yes, see below

Company Description

Trade Description:
The U.S. market delivered an impressive bounce the last few days. If this rebound continues the beaten-down biotech stocks could easily outperform. ALKS looks like a good candidate to capture the bounce.

ALKS is in the healthcare sector. According to the company, "Alkermes plc is a fully integrated, global biopharmaceutical company developing innovative medicines for the treatment of central nervous system (CNS) diseases. The company has a diversified commercial product portfolio and a substantial clinical pipeline of product candidates for chronic diseases that include schizophrenia, depression, addiction and multiple sclerosis. Headquartered in Dublin, Ireland, Alkermes plc has an R&D center in Waltham, Massachusetts; a research and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio."

The earnings picture for ALKS seems to be improving. Looking at the last few earnings reports ALKS has beaten Wall Street expectations on both the top and bottom line the last three quarters in a row. Their most recent report, on July 30th, was follow up with management raising their 2015 guidance above analysts estimates.

While the earnings picture is supportive for a bullish bias, today's trade is more of a technical one. The biotechs have been crushed lately (Thanks, Hillary Clinton!) and shares of ALKS plunged from resistance near $73.00 to support near $54.00. Now it's starting to rebound. This is not the first time ALKS has bounced from this area.

Tonight we are suggesting a trigger to buy calls at $60.75. Our target is $71.50. Plan on exiting prior to ALKS' earnings report in late October. Please note that I consider this a more aggressive trade because the option spreads on ALKS' November options are a little bit wide (and because ALKS is a biotech stock and biotech stocks tend to be more volatile anyway but regular readers already know that).

FYI: If you like biotech stocks another one that looks ready to bounce is Clovis Oncology (CLVS). Shares of CLVS have been hovering near support around $90 and delivered a big bounce on Friday. This could be another great bullish candidate for a trade.

ALKS Trigger @ $60.75

- Suggested Positions -

Buy the NOV $65 CALL (ALKS151120C65) current ask $3.20
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:


Costco Wholesale Corp. - COST - close: 145.86 change: +1.30

Stop Loss: 141.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.9 million
Entry on October -- at $---.--
Listed on October 03, 2015
Time Frame: Exit PRIOR to November option expiration
New Positions: Yes, see below

Company Description

Trade Description:
Thus far 2015 has been a frustrating year for COST bulls. After years of steady stock price appreciation (2009-2014) the rally peaked in the first quarter of 2015. Shares spent months correcting lower but it looks like the worst may be behind it for COST.

If you're not familiar with COST they are in the services sector. The company runs a membership warehouse business that competes with the likes of Sam's Club (a division of Wal-Mart). According to the company, "Costco currently operates 686 warehouses, including 480 in the United States and Puerto Rico, 89 in Canada, 36 in Mexico, 27 in the United Kingdom, 23 in Japan, 12 in Korea, 11 in Taiwan, seven in Australia and one in Spain. The Company plans to open up to an additional 16 new warehouses (including one relocation to a larger and better-located facility) prior to the end of its fiscal year on August 30, 2015. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom and Mexico."

Revenue growth has been lackluster this year. COST has managed to beat Wall Street estimates on the bottom line but the revenue number has been soft. Their most recent quarterly report was announced on September 29th. Earnings were up +10% from a year ago to $1.73 a share. That beat estimates. Yet COST said their Q4 revenues were virtually flat (+0.7%) to $35.78 billion. That missed expectations. Comparable store sales were up +2% in the U.S. but down -10% in Canada.

A lot of COST's revenue troubles have come from lower oil, which has pushed gas prices lower. The big drop in gas prices cuts their revenue growth. Plus the stronger dollar hurts their foreign sales. The company continues to expand its presence in the U.S. and overseas. Management plans to launch 12 new warehouses this quarter. Overall COST plans to build 32 new stores in the next 12 months, including its first store in France.

The stock looks poised to breakout past its July, August, and September highs and make a run at its 2015 highs. We suspect COST is going to grab more investor attention as we approach the holiday shopping season. The stock tends to see a rally from September into Black Friday (the day after Thanksgiving).

Tonight we are suggesting a trigger to buy calls at $146.25. More conservative traders may want to wait for a rally past the September peak ($146.90) or even past short-term resistance $147.00. We want to jump in a little early as COST could surge wants it clears $147.00.

Trigger @ $146.25

- Suggested Positions -

Buy the NOV $150 CALL (COST151120C150) current ask $2.12
option price is a current quote and not a suggested entry price.

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

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

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

Stocks Ignore Bad Jobs Data

by James Brown

Click here to email James Brown

Editor's Note:

The market initially sold off on the very disappointing jobs number. Unfortunately for the bears the weakness didn't last long and a short squeeze quickly followed driving the market higher.

Warning! The market's performance on Friday has generated a potential reversal. The early morning drop on the jobs number and then rebound higher has produced several bullish-reversal looking candlesticks on the daily charts of our active bearish plays. A few were stopped out. The question now is if this bounce (reversal) sees any follow through higher or does it fail?

NKE and BABA have been removed as candidates.

CMP, IFF, LH, and TIF were stopped out on Friday's widespread market rally.


Current Portfolio:


CALL Play Updates

Currently we do not have any active bullish candidates.

Please check tonight's new plays for bullish candidates.



PUT Play Updates

Aon plc - AON - close: 89.78 change: +1.22

Stop Loss: 90.35
Target(s): To Be Determined
Current Option Gain/Loss: -19.7%
Average Daily Volume = 1.2 million
Entry on September 23 at $88.65
Listed on September 22, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

Comments:
10/03/15: Caution - the action in shares of AON on Friday produced a bullish engulfing candlestick reversal pattern. The stock dropped to new lows and hit $86.38 only to bounce back toward $90 with a +4% surge off its Friday low.

The $90.00 level is still resistance but it sure looks like AON is going to test it and potentially break it on Monday morning. The 20-dma (currently $90.28) is also potential resistance. We will move our stop loss down to $90.35.

No new positions at this time.

Trade Description: September 22, 2015:
A slowing global economy and negative currency winds have created a tougher environment for AON. Financial stocks in general have underperformed the broader market (-8%) and AON looks like it could play catch up with the group.

AON is in the insurance business. According to the company, "Aon plc is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise."

Management has managed to beat Wall Street's bottom line earnings estimate the last few quarters. However, they have been missing analysts' revenue estimates. Revenues have been falling faster than expected. Their Q4 results saw revenues drop to +3% growth. By Q1 revenues were down -3.4%. Their Q2 results, announced on July 31st, saw revenues decline -3.9%. As a global company the impact of negative currency headwinds does account for a lot of this revenue trouble. While some traders may want to write this off the situation could get worse as the U.S. dollar should rally when the Fed starts to raise rates.

Technically shares of AON look broken. The stock collapsed during the market's correction in late August. The oversold bounce failed pretty quickly. Now three weeks later the stock is starting to breakdown from this short-term consolidation pattern. The point & figure chart is already bearish and forecasting at $75.00 target. We are suggesting a trigger to buy puts at $88.65.

- Suggested Positions -

Long 2016 JAN $85 PUT (AON160115P85) entry $3.30

10/03/15 new stop @ 90.35
09/28/15 new stop @ 90.85
09/23/15 triggered @ $88.65
Option Format: symbol-year-month-day-call-strike

chart:


Deckers Outdoor Corp. - DECK - close: 59.01 change: +0.93

Stop Loss: 60.25
Target(s): To Be Determined
Current Option Gain/Loss: -29.8%
Average Daily Volume = 775 thousand
Entry on September 24 at $58.28
Listed on September 23, 2015
Time Frame: Exit PRIOR to earnings
New Positions: see below

Comments:
10/03/15: DECK followed the broader market lower on Friday morning and higher throughout the rest of the session. Shares added +1.6%, which almost kept pace with the NASDAQ's +1.7% gain. DECK should still have resistance in the $60.00 area. Wait for a failed rally near $60.00 before considering new bearish positions.

Trade Description: September 23, 2015:
Slowing sales and rising expenses is a dangerous recipe. Investors seem to have lost confidence in DECK with the stock down -35% year to date.

DECK is in the consumer goods sector. According to the company, "Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Teva®, Sanuk®, Ahnu®, and HOKA ONE ONE®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 143 Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally."

The stock was crushed in January 2015 with a plunge from $94 to $66. A big chunk of that decline was a reaction to their earnings (January 29th). DECK missed estimates on both the top and bottom line and lowered guidance.

Since then DECK has seen some improvement in earnings but their most recent report was still disappointing. DECK reported its 2016 Q1 results on July 30th. Wall Street was expecting a loss of ($1.50) per share on revenues of $213 million. DECK delivered a loss of ($1.43) a share. That beat estimates but it was still worse than the ($1.07) loss a year ago. Revenues were up +4.5% to $221 million. Unfortunately DECK said their expenses were up while margins contracted.

DECK management also offered soft Q2 guidance while bumping their full-year 2016 earnings estimates. Investors chose to sell. Their Q1 results saw Teva brand sales up +6.8% but Sanuk brand sales fell -7.0% while Ugg brand sales dropped -7.2%. The Ugg number is important since Ugg sales account for more than 50% of DECK's revenues.

It looks like the bears might be right about this one but I have to warn you this is starting to look like a crowded trade. The most recent data listed short interest at 20% of the 32.1 million share float. This raises the risk of a short squeeze. Consider small positions to limit risk.

Technically DECK is in a bear market. The trend of lower highs is pushing it lower. Today DECK just broke down below key support at the $60.00 level. The next support area could be the $50 region. Today's low was $58.77. I am suggesting a trigger to open bearish positions at $58.65.

- Suggested Positions -

Long NOV $55 PUT (DECK151120P55) entry $2.85

09/28/15 new stop @ 60.25
09/24/15 Trade begins on gap down at $58.28, trigger was $58.65
Option Format: symbol-year-month-day-call-strike

chart:


Outerwall Inc. - OUTR - close: 58.15 change: +0.30

Stop Loss: 60.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 486 thousand
Entry on September -- at $---.--
Listed on September 30, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: Yes, see below

Comments:
10/03/15: OUTR underperformed the market on Friday. The major indices surged +1.4% (or more) while OUTR only added +0.5%. This stock is still stuck in the $56.50-58.25 trading range.

If this market continues to bounce I could see OUTR challenging resistance near the $60.00 level. Currently our suggested entry point to buy puts is $56.35 but we might adjust our entry if OUTR delivers a clearly defined failed rally near $60.

Trade Description: September 30, 2015:
Technology and consumer trends are constantly growing and changing. OUTR has failed to keep up and it's business model appears to be outdated.

OUTR is part of the services sector. According to the company, "Outerwall Inc. has more than 20 years of experience creating some of the most profitable spaces for their retail partners. The company delivers breakthrough kiosk experiences that delight consumers and generate revenue for retailers. As the company that brought consumers Redbox® entertainment, Coinstar® money services, and ecoATM® electronics recycling kiosks, Outerwall is leading the next generation of automated retail and paving the way for inventive, scalable businesses. Outerwall kiosks are in neighborhood grocery stores, drug stores, mass merchants, malls, and other retail locations in the United States, Canada, Puerto Rico, the United Kingdom, and Ireland."

The Redbox DVD kiosks business was great while it lasted. Last year the company hit their four billionth rental. Unfortunately today everything is turning digital and consumer viewing habits are moving into streaming services. I'm sure we'll see Redbox kiosks around for years but their growth is over. That's bad news for OUTR since Redbox accounts of 80.5% of their revenues.

Another challenge is OUTR's ecoATM concept. The idea is people bring their old smartphones, tablets, and other electronic gadgets to the kiosks and sell them to OUTR. OUTR then resells the used electronics. One of the biggest categories for their ecoATM business was buying and selling used Apple iPhones. Unfortunately for OUTR Apple just announced a new iPhone leasing program where consumers can get a new upgraded iPhone every year for just $32 a month. Obviously every iPhone user is not going to take advantage of Apple's new program but it will reduce the number of iPhones that end up in an ecoATM kiosk. Plus, the bigger risk is that other mobile phone makers like Samsung might follow Apple's lead and offer their own program that reduces the number of used smartphones in the after market.

The ecoATM concept was already struggling before Apple made their leasing announcement. OUTR more than doubled the number of ecoATM kiosks and yet revenues only rose +9%.

Looking at OUTR's earnings report results have been mixed. The company managed to beat estimates on the bottom line the last couple of quarters but revenues have been flat or down the last three quarters. One of the biggest reasons OUTR has been beating the top line is their aggressive stock buyback program that is reducing the number of shares.

The company's most recent earnings report was July 31st. Q2 revenues were down -0.2% to $545.4 million, which missed estimates. Earnings guidance was in-line with estimates but revenue guidance for 2015 was below Wall Street expectations. OUTR's stock collapsed on the earnings news because of the sharp slowdown in their Redbox business.

Last quarter the number of rental nights per Redbox fell -19% while rentals per kiosk dropped -8.9%. It was the fifth quarter in a row of declines for the Redbox business. Analysts believe this trend will continue for the aging business.

Technically OUTR's stock is bearish. The stock is in a bear market with a -32% drop from its July 2015 highs. OUTR has broken down below its August (market-correction) lows. The stock is also in the process of breaking down below a very key trend line of support on the long-term weekly chart (see below).

Yesterday's intraday low was $56.50. We are suggesting a trigger to launch bearish positions at $56.35. Odds are good we could see OUTR drop toward round-number support at $50.00. The point & figure chart is more bearish and forecasting at $32.00 target.

I have to caution traders that there is an elevated risk of a short squeeze. There are already a lot of bears in this trade. The most recent data listed short interest at 40% of the very small 14.5 million share float. That raises the risk of a short squeeze. Combine that with the company actively buying back stock and any significant bounce is the beginning of a potential squeeze higher. I suggest small positions to limit risk.

Trigger @ $56.35 *small positions to limit risk*

- Suggested Positions -

Buy the NOV $55 PUT (OUTR151120P55)

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

chart:


The WhiteWave Foods Co. - WWAV - close: 41.78 change: +1.67

Stop Loss: 42.35
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.8 million
Entry on October -- at $---.--
Listed on October 01, 2015
Time Frame: Exit PRIOR to earnings in early November
New Positions: see below

Comments:
10/03/15: I have to urge caution on our new WWAV trade. The action on Friday was not kind if you're bearish. The disappointing jobs data sparked a move lower on Friday morning and WWAV hit new lows. The stock also hit our suggested entry point to buy puts at $39.45. Unfortunately the entire market reversed higher and WWAV followed suit. Shares rallied +6% off its Friday low. If WWAV sees any significant follow through higher we could get stopped out at $42.35.

No new positions at this time.

Trade Description: October 1, 2015:
America is slowly starting to eat healthier. That has been a huge tailwind for WWAV who is one of the fastest growing companies in the United States. I personally know a lot of consumers who buy plenty of WWAV's products from their plant-based beverages to their organic milks and creamers. Unfortunately, even a strong, growing company like WWAV can see its stock price retreat. After a two and a half year rally from $15 to $52 WWAV appears to be in correction mode. Actually that's being generous. Shares of WWAV are technically in a bear market with a -23% pullback from its early August highs.

WWAV is in the consumer goods sector. According to the company, "The WhiteWave Foods Company is a leading consumer packaged food and beverage company that manufactures, markets, distributes, and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products and organic produce throughout North America and Europe. The Company also holds a 49% ownership interest in a joint venture that manufactures, markets, distributes, and sells branded plant-based beverages in China.

WhiteWave is focused on providing consumers with innovative, great-tasting food and beverage choices that meet their increasing desires for nutritious, flavorful, convenient, and responsibly-produced products. The Company's widely-recognized, leading brands distributed in North America include Silk®, So Delicious® and Vega® plant-based foods and beverages, International Delight® and LAND O LAKES® coffee creamers and beverages, Horizon Organic® premium dairy products and Earthbound Farm® organic salads, fruits and vegetables. Its popular plant-based foods and beverages brands in Europe include Alpro® and Provamel®, and its plant-based beverages in China are sold under the Silk® ZhiPuMoFang® brand."

Earnings growth has been steady and the company has been making acquisitions. Their most recent report was August 7th when WWAV announced their Q2 results. Earnings were up +8% from a year ago to $0.24 a share. Revenues were up +10.3% to $924 million. That actually missed estimates of $928 million but on a constant currency basis WWAV's revenues were up +14%.

Here's an excerpt from WWAV's earnings release discussing their 2015 forecast, "The company expects continued strong growth in 2015 and is increasing its full year outlook for net sales, adjusted operating income and adjusted diluted earnings per share. Management is increasing its net sales growth expectations for full year 2015 to 15 percent to 16 percent on a constant currency basis, and 12 percent to 13 percent on a reported basis. For third quarter 2015, management expects net sales growth to be 18 percent to 19 percent on a constant currency basis, translating into 14 percent to 15 percent growth on a reported basis."

That forecast wasn't good enough for Wall Street. The stock retreated on this news. A few days later the market started to correct lower. Suddenly the floor just fell away from WWAV's stock. In five trading days the stock plunged from about $50 to almost $35 erasing five months of gains. The stock did see a big bounce back but that rebound has failed under new resistance in the $47.00 area (see chart).

Personally, WWAV is a long-term bullish candidate for me. They are also widely considered to be an acquisition target (which is a risk if you're short the stock). However, on a short-term basis the stock is underperforming. WWAV has spent the last few days hovering near round-number support at $40.00 but it looks like the stock is about to break down.

The stock market seems to be in a risk-off mood and traders are selling anything and everything, especially if it looks rich. Even with the -20% decline from its highs WWAV has a P/E near 50. The point & figure chart is bearish and forecasting at $22.00 target. Tonight we are suggesting a trigger to launch bearish positions at $39.45.

- Suggested Positions -

Long NOV $37.50 PUT (WWAV151120P37.5) entry $1.80

10/02/15 triggered @ $39.45
Option Format: symbol-year-month-day-call-strike

chart:



CLOSED BULLISH PLAYS

Nike, Inc. - NKE - close: 125.21 change: +1.38

Stop Loss: 112.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.6 million
Entry on September -- at $---.--
Listed on September 28, 2015
Time Frame: Exit PRIOR to earnings in December
New Positions: see below

Comments:
10/03/15: We are temporarily giving up on NKE. The stock has shown significant relative strength this week. We actually really like NKE as a bullish candidate. However, we do not want to buy it at new highs. More aggressive traders might want to consider buying calls on a breakout past its September high ($125.95) and just use a tight stop loss. We are going to wait for a pullback and then jump in. So tonight we are removing NKE as a candidate.

Trade did not open.

10/03/15 removed from the newsletter, suggested entry was a dip to $117.50

chart:


CLOSED BEARISH PLAYS

Alibaba Group - BABA - close: 63.20 change: +4.33

Stop Loss: 61.05
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 15.8 million
Entry on September -- at $---.--
Listed on September 29, 2015
Time Frame: Exit PRIOR to earnings in November
New Positions: see below

Comments:
10/03/15: Whoa! The short covering panic on Friday was very evident in BABA. The stock soared +7.35% and broke through short-term resistance near $60.00. The stock's long-term trend is still bearish and the story on BABA still seems bearish (slowing growth, slowing Chinese economy). However, we do not want to fight this bounce.

Our trade has not opened yet. We are removing BABA as a candidate.

Trade did not open.

10/03/15 removed from the newsletter, suggested entry was $57.15

chart:


Compass Minerals Intl. - CMP - close: 81.65 change: +2.83

Stop Loss: 79.55
Target(s): To Be Determined
Current Option Gain/Loss: -29.7%
Average Daily Volume = 269 thousand
Entry on September 24 at $78.70
Listed on September 23, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

Comments:
10/03/15: Most of the market gapped down on Friday morning and then bounced. Not so much for CMP. Shares were in rally mode almost all day. The stock hit our stop loss at $79.55 and just kept right on going with a +3.59% gain on Friday. The bounce finally stalled near technical resistance at CMP's 50-dma.

- Suggested Positions -

DEC $75 PUT (CMP151218P75) entry $3.20 exit $2.25 (-29.7%)

10/02/15 stopped @ 79.55
10/01/15 CMP is not cooperating. Readers may want to exit early now
09/28/15 new stop @ 79.55
09/24/15 triggered @ $78.70
Option Format: symbol-year-month-day-call-strike

chart:


International Flavors & Fragrances Inc. - IFF - close: 106.81 chg: +2.93

Stop Loss: 105.05
Target(s): To Be Determined
Current Option Gain/Loss: -28.6%
Average Daily Volume = 470 thousand
Entry on September 23 at $104.45
Listed on September 19, 2015
Time Frame: Exit PRIOR to earnings in early November
New Positions: see below

Comments:
10/03/15: Traders bought the dip in IFF near $102.50 on Friday morning and the stock soared more than +4% off its lows. IFF broke through several layers of short-term resistance and also hit our stop loss at $105.05.

- Suggested Positions -

NOV $100 PUT (IFF151120P100) entry $2.80 exit $2.00 (-28.6%)

10/02/15 stopped out
09/28/15 new stop @ 105.05
09/23/15 triggered @ $104.45
Option Format: symbol-year-month-day-call-strike

chart:


Laboratory Corp. Of America - LH - close: 112.29 change: +2.11

Stop Loss: 112.25
Target(s): To Be Determined
Current Option Gain/Loss: +12.3%
Average Daily Volume = 1.0 million
Entry on September 25 at $114.25
Listed on September 24, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

Comments:
10/03/15: After a seven-day plunge to new lows shares of LH managed a big, three-day bounce. The market's rally on Friday boosted LH to a +1.9% gain on the session. Shares hit our stop loss at $112.25.

Our play is closed but readers may want to keep LH on their watch list. The $115-120 area looks like it should be major resistance for the stock. I would not be surprised to see this bounce roll over.

- Suggested Positions -

NOV $110 PUT (LH151120P110) entry $2.85 exit $3.20 (+12.3%)

10/02/15 stopped out
09/28/15 new stop @ 112.25
09/25/15 triggered @ $114.25
Option Format: symbol-year-month-day-call-strike

chart:


Tiffany & Co. - TIF - close: 77.90 change: +1.32

Stop Loss: $77.55
Target(s): To Be Determined
Current Option Gain/Loss: -12.4%
Average Daily Volume = 1.2 million
Entry on September 11 at $79.75-
Listed on September 9, 2015
Time Frame: Exit PRIOR to November option expiration
New Positions: see below

Comments:
10/03/15: TIF produced a +3.8% rally off its Friday morning low. That was enough to lift shares past its 10-dma and to our stop loss at $77.55. Our play is closed. If you're still in TIF keep an eye on the 20-dma near $78.93, that's the next level of resistance.

- Suggested Positions -

NOV $75 PUT (TIF151120P75) entry $2.42 exit $2.12 (-12.4%)

10/02/15 stopped out
09/28/15 new stop @ 77.55
09/23/15 new stop @ 80.35
09/19/15 new stop @ 82.35
09/11/15 triggered @ $79.75
Option Format: symbol-year-month-day-call-strike

chart: