Option Investor
Newsletter

Daily Newsletter, Wednesday, 10/28/2015

Table of Contents

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

Market Wrap

Whipsaw Around FOMC Announcement Turns Bullish

by Keene Little

Click here to email Keene Little
The market consolidated since last Friday and essentially went on hold until the FOMC announcement today. Following the usual volatility around the announcement the market then continued higher. The rally doesn't look finished yet but it's looking tired.

Today's Market Stats

The market's consolidation following last Friday's high was a bullish continuation pattern and it appeared the market was simply waiting to get through the FOMC announcement before continuing higher. A negative reaction following the announcement turned into a bear trap and a strong spike up into the close created new highs for the indexes. The rally is likely running on fumes but higher highs look to be in the cards.

There weren't any significant economic reports today, except a bullish crude oil inventory report (which sent oil prices higher), and the market started the day with a dip but that was met with some big buy programs to keep the sellers away. The same thing happened following the negative reaction to the FOMC announcement, which has it looking like someone is waiting for dips to hit the market with big buy programs. The bears are totally frustrated with the market's inability to pull back and the bulls are at risk of getting complacent about their expectation for new all-time highs from here.

We could be seeing an effort to get the indexes as high as possible for October month-end. This could continue into Friday and if it does then I'd be concerned about what next week will bring. We'll look at some upside projections to see if they get hit before the end of the week but it's important to understand that the price pattern can be considered complete to the upside at any time, which makes trading the long side riskier than usual. At this point entering new long trades can be considered chasing the market higher and this late in rally means you run the risk of a sudden reversal (after setting a bull trap).

The FOMC announcement held no surprises and in fact I'm not sure why the market even cares at this point. A surprising move was the U.S. dollar's rally this afternoon, which tanked the metals. What was the surprise? The Fed said they still want to raise rates in December, to which I say yea, good luck with that. The Fed doesn't have an economy that can handle a rate increase and it would only further strengthen the dollar, which would crush the emerging economies and make our international corporations even less profitable. The Fed is in a corner and as much as they want to get a rate increase started they simply don't have the room to do it. The last thing they'll want to do is embarrass themselves with a rate increase that needs to get reversed in the next 3-6 months.

With a weak economy the Fed is forced to leave rates alone and in fact might be forced to follow the ECB in establish a negative rate (depositors would have to pay banks to park their money for them). The Fed is crossing its collective fingers in hopes the asset bubble they've created doesn't pop before the economy recovers. I don't believe they'll be successful but they are apparently either delusional or eternally optimistic. More than likely, instead of raising rates they'll soon be forced to modify their language to say something like they're "data dependent" and will "exercise patience" before deciding to raise rates. When that happens that would be our clue that another QE is not far behind.

In fact the Fed changed their language slightly, hinting of the coming change. The Fed said it would determine "whether it will appropriate to raise the target range at its next meeting." Hint, hint, we don't see the ability to raise rates but we'll wait for December before we'll start hinting in the other direction. What a silly game they play with the market (and the market eats it up, which is even sillier).

Since this time last week, following Wednesday's decline, I had thought we had a good setup where the 5th wave of the leg up from September 29th had finished near resistance (price-level S/R near 2040 for SPX). But last Thursday's strong spike up, starting with a big gap up following an overnight rally in equity futures (a favorite way to trap the bears from the day before), has seen follow through and the 5th wave extended into a larger 5-wave move (the leg up from last Wednesday). Today's rally has done a nice job giving us the 5th of the 5th wave and while there is additional upside potential, this is a very risky time to trade the long side.

What is bullish at the moment for SPX is the fact that it has pushed through what I thought would strong resistance at 2075-2085 (it closed at 2090 today). Price-level S/R near 2075, its broken uptrend line from October 2011 - October 2014 and the top of a parallel up-channel for the rally from 2009 all coincided in this resistance band. Unless this afternoon's rally was just a final short-covering burst higher (very possible), in which case a close back below 2075 would be a sell signal (after setting a bull trap this afternoon), there is now additional upside potential to at least 2100-2110.

S&P 500, SPX, Weekly chart

Once the leg up from September 29th completes, which should be soon if it didn't finish this afternoon, we'll need to see what kind of pullback/decline follows next. A choppy sideways/down correction would look like a 4th wave in the rally from August, which would mean another rally into the end of the year (bold green depiction on the chart above) and potentially up to 2170. But if the 3-wave bounce off the August low is an a-b-c correction to the July-August decline then the next leg down will be strong and likely make it down to at least the October 2014 low at 1820.

The daily chart below shows a rising wedge shape for the rally from September 29th, the top of which is currently near 2100. By the end of the day Friday it will be near 2109. A drop below 2075 would be a bearish heads up since it would leave a failed breakout attempt. A drop below Tuesday's low near 2059 would tell us the top is in place for now.

S&P 500, SPX, Daily chart

Key Levels for SPX:
- bullish above 2077
- bearish below 2058

The 60-min chart below shows the rising wedge and the potential path to higher highs. If it pulls back from a test of the top of the wedge, near 2100, watch to see if it holds support above 2075. If support holds we could then see another leg up to new all-time highs in November. You can see how price-level S/R lines acted as support after they were broken to the upside. The bulls want to see 2075 act the same way.

S&P 500, SPX, 60-min chart

The S&P 100 index (OEX) shows an interesting setup on its weekly chart as it approaches its July high at 947.85. That high was within 3 points of the price projection at 950.45, which is where the 2nd leg of the 3-wave rally off the 2009 low is 162% of the 1st leg up (a common reversal Fib projection). Maybe we'll see another attempt at achieving that projection but at the moment it's about to back test its broken uptrend line from October 2011, currently near 937. The break of the uptrend line in August tells us the leg up from October 2011 finished and a back-test of it is a setup for a short play.

S&P 100 index, OEX, Weekly chart

The DOW has the same setup as shown for SPX. The top of a rising wedge for the rally from September 29th is currently near 17860 so that's the upside potential if the rally continues on Thursday. If it consolidates a little on Thursday and then pushes higher for a closing high for month-end on Friday we could see it make it up to just shy of 18K. Wouldn't that be something for the weekend papers? But the DOW closed only slightly above resistance today -- its broken uptrend line from October 2011 - October 2014 (17740) and at its downtrend line from May-July (17760). The bulls need to avoid leaving a failed breakout attempt, which it would be if the drops back below today's low at 17556.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 17,780
- bearish below 17,489

Last Friday's gap up for the tech indexes had NDX jumping over multiple lines of resistance and has held above its broken/recovered uptrend line from 2012-2013-2014, currently near last Friday's low near 4599. A drop below that level would leave a failed attempt to recover its broken uptrend line and it would be a drop into last Friday's gap. It remains bullish above 4600 but watch the price projection at 4716.55, if reached, since that's where the bounce off the August low would have achieved two equal legs up for an a-b-c bounce correction. A rollover from the July high at 4694 would also leave a bearish double top.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- bullish above 4720
- bearish below 4600

I've been watching the RUT's consolidation since its October 13th high and thinking it's bullish. The RUT has been relatively weak for months and yet it was the one suggesting we'd see a bullish move. Today's big rally (+2.9%) is a bullish breakout and it looks like it caught a few traders short. Upside potential is to 1192-1196 where it would back-test its broken uptrend line from October 2011 - October 2014 (1192) and where the 2nd leg of the bounce off the September low would be 62% of the 1st leg up. Above that it could make it up to its 200-dma, near 1215, and 1231, where the 2nd leg of the rally from September 29th would equal the 1st leg up. But if the RUT drops below Tuesday's low near 1140 it would leave a failed breakout attempt (bull trap).

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 1170
- bearish below 1140

One reason to be careful about chasing this market higher, and a reason to keep stops on long positions tight now, is that it's overbought by several measures. One is the percentage of stocks above their 50-dma (some by a large margin) and as you can see on the chart below, the percentage is approaching 70%, a level that is associated with prior reversals. It can go higher but it's a warning sign not to get complacent. Notice how it's been chopping higher following the spike up in early October. New price highs are getting fewer stocks participating, always a sign of topping, even if for only a larger pullback.

NYSE Stocks above 50-dma

The banks got a big shot in the arm (short covering?) and I guess it was on the Fed's continued jaw-boning about raising rates, which makes banks more profitable. It's not going to happen and today's rally runs the risk of an immediate reversal. But there is some more upside potential -- a 62% retracement of the July-August decline is at 75.87 and only pennies below that, at 75.74, is the 162% projection for the 2nd leg of the 3-wave bounce off the August low.

KBW Bank index, BKX, Daily chart

The Transports got hit hard yesterday and the decline left a failed breakout attempt over its downtrend line from March, currently near 8125. It bounced off its 50-dma today but is below its 20-dma, also near 8125, and therefore as long as it remains below 8125 it will remain bearish. But a climb back above 8125 would leave a whippy consolidation off its October 9th high and point to a rally up to its 200-dma, currently at 8467, if not price-level S/R at 8515.

Transportation Index, TRAN, Daily chart

The U.S. dollar also got a strong boost this afternoon following the FOMC announcement. Again, hints of raising rates looks like it caught a few traders short the dollar. The rally broke above its downtrend line from March-August, near 97.10, and it could be a bullish breakout. But I'll want to see how it closes for the week since this afternoon's rally might have been nothing more than short covering, which could quickly flame out and reverse back down. I'm expecting a strong dollar rally but I've been thinking not until another leg down into the end of the year. We'll soon find out whether or not that will happen.

U.S. Dollar contract, DX, Weekly chart

Following gold's high on October 15th it's looking like it could be rolling back over. The high was just shy of the projection near 1195 for two equal legs up from July and the larger pattern suggests gold will see lower lows (at least down to 1000 if not a little lower). But a rally above this morning's high at 1183.10 would suggest we could see at least 1200 to the upside, if not higher, before turning back down later this year or early next year. Bulls want to see support near 1142 hold if it pulls back further.

Gold continuous contract, GC, Daily chart

Watching silver for confirmation of gold's move, it's not clear here which way silver is going to go. It's consolidating at its downtrend line from July 2014, which is also where its 50-week MA is currently located, at 16.03. A weekly close above that level would be bullish but it's possible this morning's high concluded its bounce off the August low.

Silver continuous contract, SI, Weekly chart

This morning's crude inventory report (less than expected) prompted some short covering and it could be the kickoff to the next rally leg. I've been expecting another leg up to give us a 3-wave bounce off the August low and if it heads higher from here the projection for another equal leg up is at 55.75. If the large sideways triangle pattern, as depicted on its weekly chart, is correct, we'll continue to see oil trade between 38 and 58 (probably narrower) before dropping lower next year. I'll continue to watch for evidence that changes this expectation.

Oil continuous contract, CL, Daily chart

Tomorrow's economic reports include the advance GDP number and expectations are all over the map. But most believe it will show slowing from Q2's 3.9%, which is one of the metrics keeping the Fed from raising rates. We'll also see how pending home sales are looking.

Economic reports and Summary

Conclusion

The rally continues and there's still some upside potential. That's enough to suggest to bears to hold their fire and sit in cash while waiting for the bulls to tire. The market is overbought, overloved and starting to fade in its strength (short-term bearish divergence at this afternoon's new high). It's not a rally I'd chase higher from here but would instead pulls stops up tight and let the market tell you when the rally is over (a drop below Tuesday's low would be good confirmation). We should be days, if not hours, away from putting in a high for the leg up from September 29th and following the high should be at least a larger pullback than we've seen since then.

The larger price pattern is not clear as far as what we should expect into the end of the year. It won't be until we get a pullback/decline that we'll get some clues for the next move. A sharp (impulsive) decline will tell us to short the subsequent bounce but a choppy (corrective) pullback (over a few weeks) will tell us to look to buy the dip for a year-end rally. In the meantime trading should be short-term until the bigger picture clears up.

Good luck and I'll be back with you next Wednesday.

Keene H. Little, CMT

In the end everything works out and if it doesn't work out, it is not the end. Old Indian Saying


New Option Plays

A Strong Combination

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Lam Research Corp. - LRCX - close: 75.74 change: +0.64

Stop Loss: 72.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.5 million
Entry on October -- at $---.--
Listed on October 28, 2015
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Company Description

Trade Description:
Wall Street loves mergers and this month LRCX has jumped into the 2015 buying spree. Semiconductor stocks had a rough summer with the SOX semiconductor index plunging from early June through late August. Fortunately the group appears to have bottomed. LRCX's recent earnings news and acquisition announcement has accelerated the stock's rebound.

LRCX is part of the technology sector. According to the company, "Lam Research Corp. (LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading deposition, etch, and clean solutions helps customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, more powerful, and more power-efficient chips. Through collaboration, continuous innovation, and delivering on commitments, Lam is transforming atomic-scale engineering and enabling its customers to shape the future of technology. Based in Fremont, Calif., Lam Research is a Nasdaq-100 Index and S&P 500 company whose common stock trades on the Nasdaq Global Select MarketSM under the symbol LRCX."

LRCX's most recent earnings report was October 21st. Analysts were expecting a profit of $1.72 per share on revenues of $1.6 billion. LRCX delivered earnings of $1.82 a share. Revenues were up +38.8% from a year ago to $1.6 billion. Management then raised their Q2 earnings guidance to $1.32-1.52 a share, which is significant above analysts' estimates.

The news didn't stop there. LRCX also announced they were buying KLA-Tencor (KLAC) for $10.6 billion. This new combined company will have $8.7 billion in revenues.

Here are a few highlights from the LRCX-KLAC merger deal:

Creates Premier Semiconductor Capital Equipment Company: Strengthened platform for continued outperformance, combining Lam's best-in-class capabilities in deposition, etch, and clean with KLA-Tencor's leadership in inspection and metrology

Accelerates Innovation: Increased opportunity and capability to address customers' escalating technical and economic challenges Broadens Market Relevance: Comprehensive and complementary presence across market segments provides diversity, scale and value creating innovation opportunities

Significant Cost and Revenue Synergies: Approximately $250 million in expected annual on-going pre-tax cost synergies within 18-24 months of closing the transaction, and $600 million in annual revenue synergies by 2020 Accretive Transaction: Increased non-GAAP EPS and free cash flow per share during the first 12 months post-closing

Strong Cash Flow: Complementary memory and logic customer base, operational strength, and meaningful installed base revenues strengthen cash generation capability Anstice concluded, "We have tremendous respect for the company KLA-Tencor employees have built over nearly 40 years - their culture, technology, and operating practices. I have no doubt that our combined values, focus on the customer, and complementary technologies will create a trusted leader in our industry, capable of creating significant opportunity for profitable growth and in turn delivering tremendous value to all of our stakeholders. This is the right time for the right combination in our industry." You can read more details about the merger here.

The combination of the earnings beat, raised guidance, and the merger news launched LRCX stock higher. Traders have been consistently buying the dips since then. Now shares of LRCX are poised to break through technical resistance at its 200-dma soon. Shares have been upgraded with a new price target of $85.00. Meanwhile the point & figure chart is bullish and forecasting at long-term target of $107.00.

LRCX looks like it could run towards the 2015 highs in the $84-85 region. Today's intraday high was $76.19. We are suggesting a trigger to buy calls at $76.25.

Trigger @ $76.25

- Suggested Positions -

Buy the JAN $80 CALL (LRCX160115C80) current ask $3.00
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 Rebound From Post-FOMC Meeting Dip

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market was in rally mode today. A slightly more hawkish tone in the FOMC announcement sparked some profit taking. Fortunately traders pounced on the dip and stocks rallied back to a new high for the session.

Our plan was to exit the CVS trade this morning.

IWM and LEA both hit our entry triggers today.


Current Portfolio:


CALL Play Updates

Salesforce.com, Inc. - CRM - close: 78.53 change: +0.78

Stop Loss: 74.75
Target(s): To Be Determined
Current Option Gain/Loss: +23.0%
Average Daily Volume = 3.6 million
Entry on October 12 at $76.25
Listed on October 07, 2015
Time Frame: Exit PRIOR to earnings on November 18th
New Positions: see below

Comments:
10/28/15: Traders bought the dip in CRM near its rising 20-dma and shares rebounded to a +1.0% gain on the session.

I am not suggesting new positions at current levels.

Trade Description: October 7, 2015:
Cloud computing and software giant CRM has been churning sideways for almost seven months. In spite of this lack of upward movement CRM is still outperforming the broader market. The NASDAQ composite is up +1.2% year to date. CRM is up +26%. The good news is that CRM looks poised to breakout past major resistance and begin its next leg higher.

CRM is part of the technology sector. According to the company, "Salesforce is the world's #1 CRM company. Our industry-leading Customer Success Platform has become the world's leading enterprise cloud ecosystem. Industries and companies of all sizes can connect to their customers in a whole new way using the latest innovations in cloud, social, mobile and data science technologies with the Customer Success Platform."

CRM's revenues have been consistently growing in the mid +20% range the last few quarters. Their Q4 revenues were up +26%. Q1 revenues were +23%. The company's most recent quarter was announced August 20th. Analysts were expecting Q2 results of $0.17 a share on revenues of $1.6 billion. CRM beat both estimates with a profit of $0.19 as revenues grew +23.5% to $1.63 billion. Management raised their Q3 and full year 2016 revenue guidance.

Technically the stock is in a long-term up trend and the point & figure chart is forecasting an $85.00 target. The $75.00-76.00 area is major resistance with CRM failing in this region multiple times. The recent rally has boosted CRM back to this level and the stock looks poised to breakout soon.

(Side note - CRM did hit an intraday high of $78.46 on April 29th thanks to M&A rumors. The company is still considered a potential acquisition target by larger rivals.)

We like CRM's relative strength and consistently strong earnings and revenue growth. A breakout here could spark a run that lasts until the company's earnings report in November. Tonight we are suggesting a trigger to buy calls if CRM trades at $76.25 (or higher).

- Suggested Positions -

Long DEC $80 CALL (CRM151218C80) entry $3.05

10/17/15 new stop @ 74.75
10/12/15 triggered @ $76.25
Option Format: symbol-year-month-day-call-strike


The Walt Disney Company - DIS - close: 114.34 change: +0.57

Stop Loss: 109.25
Target(s): To Be Determined
Current Option Gain/Loss: +237.3%
Average Daily Volume = 9.9 million
Entry on October 12 at $106.50
Listed on October 10, 2015
Time Frame: Exit PRIOR to earnings on November 5th
New Positions: see below

Comments:
10/28/15: DIS shares seem almost bullet proof as traders continue to buy the dips. Shares fell to $112.86 this afternoon, following the FOMC announcement, and then rallied back to a new three-month closing high.

There is no change from my recent comments. More conservative investors will want to seriously consider taking profits right now.

No new positions at this time.

Trade Description: October 10, 2015:
The Force is strong with this one. DIS is poised to reap a galaxy of profits as the company re-launches the Star Wars franchise.

DIS has been a big cap superstar with strong, steady gains off its 2011 lows. That changed in August this year. Shares of DIS plunged into a very sharp and painful correction. The catalyst for the drop was the company's earnings report. 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 accelerated in August thanks to the global market meltdown. Since then shares have recovered.

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 were 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.

(sidenote - The advertising environment for television should also improve in 2016 thanks to the U.S. presidential election.)

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 list)

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

Content is still king and DIS rules. They're going to make a hoard of money off their Star Wars movies but that's just the tip of the iceberg. There will be tons of money made on merchandising from toys, clothing, video games, and just about everything else under the sun they can slap a Star Wars logo on.

The stock's correction from $121 to $90 was abrupt. DIS quickly fell from correction territory to bear-market territory in just a few days. Fortunately DIS produced a pretty good rebound. Yet the oversold bounce stalled under resistance near $105 and its 200-dma.

The breakdown under round-number support at $100 in late September looked ugly but there was no follow through lower. Since the late September low shares have rallied and Friday, October 9th, saw DIS close above resistance at its 50-dma and above resistance at $105.00. Now it just needs to clear technical resistance at the 200-dma currently at $106.21. We are suggesting a trigger to buy calls at $106.50.

We will plan on exiting prior to DIS' earnings report in early November. More aggressive investors might want to hold over the report (if that's you I suggest considering the January 2016 calls).

- Suggested Positions -

Long NOV $110 CALL (DIS151120C110) entry $1.66

10/24/15 Less than two weeks to go on this trade
10/22/15 new stop @ 109.25
Investors may want to take some money off the table with our option up +200%
10/17/15 new stop @ 104.40
10/15/15 new stop @ 101.85
10/12/15 triggered @ $106.50
Option Format: symbol-year-month-day-call-strike


The Home Depot, Inc. - HD - close: 123.82 change: -0.65

Stop Loss: 121.75
Target(s): To Be Determined
Current Option Gain/Loss: +37.8%
Average Daily Volume = 5.3 million
Entry on October 08 at $120.25
Listed on October 05, 2015
Time Frame: Exit PRIOR to earnings on November 17th
New Positions: see below

Comments:
10/28/15: HD encountered some profit taking today. Shares fell toward the $122 level this afternoon. Thankfully HD managed to pare its losses by the closing bell.

No new positions at this time.

Trade Description: October 5, 2015:
Home Depot's stock has outperformed the broader market in spite of the fact shares have been stuck in a trading range for the last seven months. That could be about to change.

The big surge in the U.S. housing market this year has been a bullish tailwind for HD's business. The home remodeling and repair industry and consumer spending in this category is expected to hit levels not seen since before the "Great Recession" in 2008-2009. HD is poised to reap the benefits.

HD is in the services sector. According to the company, "The Home Depot is the world's largest home improvement specialty retailer, with 2,270 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. In fiscal 2014, The Home Depot had sales of $83.2 billion and earnings of $6.3 billion. The Company employs more than 370,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index."

HD has been showing steady earnings and revenue growth. The company has beaten Wall Street estimates on both the top and bottom line the last three quarters in a row. Management has also raised their guidance the last three quarters in a row.

Their most recent report was August 18th. HD announced its Q2 earnings were up +14% from a year ago to $1.71 per share. Revenues were up +4.3% to $24.83 billion. Comparable store sales came in better than expected with a +4.2% improvement.

Wall Street analysts seem bullish with firms like Deutsche Bank and UBS recently raising their price targets on HD. Currently the point & figure chart is bearish but a rally past $120.00 would generate a brand new buy signal.

Earlier I mentioned that HD has been stuck in a long trading range or consolidation for most of 2015. With the exception of a few days, shares of HD have been churning sideways in the $110-120 range. Today HD looks poised to breakout from this channel. The $120.00 level is round-number resistance. Tonight we are suggesting a trigger to buy calls at $120.25. Plan on exiting prior to HD's earnings report in mid November.

- Suggested Positions -

Long NOV $125 CALL (HD151120C125) entry $1.43

10/22/15 new stop @ 121.75
10/10/15 new stop @ 117.45
10/08/15 triggered @ $120.25
Option Format: symbol-year-month-day-call-strike


iShares Russell 2000 ETF - IWM - close: 117.12 change: +3.32

Stop Loss: 113.35
Target(s): To Be Determined
Current Option Gain/Loss: +7.9%
Average Daily Volume = 36 million
Entry on October 28 at $116.55
Listed on October 24, 2015
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
10/28/15: The small cap ETF roared back to life today. Shares surged +2.9% and outperformed its big cap rivals. The IWM also broke through significant resistance. Our trigger to buy calls was hit at $116.55.

Trade Description: October 24, 2015:
If you haven't noticed the market is in rally mode. Worries over the Fed raising rates in 2015 are fading while the rest of the world is trying to add stimulus to their economies. Concerns over a terrible Q3 earnings season are also fading. Yes, earnings results have been bad but the bar was set low enough that companies are beating estimates. Now the U.S. market is surging.

One area of the market has lagged behind and that is the small cap stocks. The NASDAQ composite ended the week with a +6.3% gain for 2015. The S&P 500 edged back into positive territory with a +0.8% gain for the year. Yet the small cap Russell 2000 index is still down -3.2%. It's time for the small caps to play catch up with the rest of the market.

A couple of issues have driven this divergence. Right now big caps are outperforming because mutual fund and hedge fund managers are probably window dressing their portfolios for the end of their fiscal year (October 31st). Another factor has been weakness in the biotech stocks. Biotechs reversed sharply in the last three months and they have struggled to keep up with the market's rebound. Currently there are a lot of small biotech companies in the small cap index. Biotechs now account for about 7% of the Russell 2000 index. This group has definitely lagged the rest of the market over the last three weeks.

The good news is that the IWM small cap ETF, which tracks the Russell 2000 index, looks poised to breakout higher. It has been coiling below resistance in the $116 area the last several days. When it finally breaks higher it can move pretty quick.

Tonight we are suggesting a trigger to buy calls at $116.55. If triggered we will start with a stop loss at $113.35. This is a multi-week trade.

- Suggested Positions -

Long 2016 JAN $120 CALL (IWM160115C120) entry $1.89

10/28/15 triggered @ $116.55
Option Format: symbol-year-month-day-call-strike


Lear Corp. - LEA - close: 125.68 change: +3.15

Stop Loss: 117.80
Target(s): To Be Determined
Current Option Gain/Loss: +24.3%
Average Daily Volume = 951 thousand
Entry on October 28 at $123.65
Listed on October 27, 2015
Time Frame: Exit PRIOR to December option expiration
New Positions: see below

Comments:
10/28/15: Our brand new call play on LEA is off to a good start. Shares gapped open higher at $123.03 and then surged to a +2.5% gain on the session. Our trigger to buy calls was hit at $123.65.

Trade Description: October 27, 2015:
Shares of LEA experienced a correction this summer but the stock has come charging back. Year to day LEA is up +25% against the S&P 500, which is virtually flat with a +0.3% gain. The relative strength has been very evident in the last couple of months. The S&P 500 is up +10.6% from its August-correction lows. LEA is up +36% off its August intraday lows.

LEA is in the consumer goods sector. They are part of the auto parts industry. According to the company, "The Lear Corporation is a Fortune 500 company with world-class products designed, engineered and manufactured by a diverse team of talented employees. As a leading supplier of automotive seating and electrical, Lear serves its customers with global capabilities while maintaining individual commitment. With headquarters in Southfield, Michigan, Lear maintains 235 locations in 35 countries around the globe and employs approximately 135,000 employees. Lear is traded under the symbol [LEA] on the New York Stock Exchange."

The strong dollar has created negative currency headwinds for LEA but the company continues to beat on the bottom line. Their Q2 results, announced on July 24th, were better than expected with earnings of $2.82 per share. That was 34 cents above estimates. Management raised their full-year 2015 guidance.

The trend of better than expected earnings continued in the third quarter. LEA just announced their Q3 results a few days ago on October 23rd. Analysts were expecting a profit of $2.37 a share on revenues of $4.41 billion. LEA delivered a profit of $2.56 a share. That is a +33% jump from a year ago. Revenues were only up +2.3% to $4.33 billion. That missed expectations. However, if you discount negative currency headwinds, sales were up +11%. LEA management raised their 2015 outlook again.

These results were good enough to generate some bullish analyst comments on LEA and a new price target at $138.00. Coincidentally the point & figure chart is bullish and forecasting at $138 target. The current rally in LEA has produced a bullish breakout past major resistance in the $118.00 region, which should now become new support. More aggressive traders may want to buy calls now. We are suggesting a trigger to buy calls at $123.65, which would be a new all-time high.

- Suggested Positions -

Long DEC $125 CALL (LEA151218C125) entry $3.70

10/28/15 triggered @ $123.65
Option Format: symbol-year-month-day-call-strike


Pepsico, Inc. - PEP - close: 102.74 change: -0.20

Stop Loss: 94.75
Target(s): To Be Determined
Current Option Gain/Loss: +40.6%
Average Daily Volume = 5.0 million
Entry on October 22 at $101.00
Listed on October 19, 2015
Time Frame: Exit prior to expiration in January
New Positions: see below

Comments:
10/28/15: Stocks were volatile following the FOMC announcement this afternoon. Shares of PEP dipped toward $101.50 before bouncing back into the closing bell.

Investors may want to start raising their stop loss. The $100 level should be support.

Trade Description: October 19, 2015:
Soda sales remain the biggest chunk of non-alcoholic drinks. Unfortunately for big soda makers like PEP and KO trends are changing. Consumers are become more health conscious. Sugary soda drink sales have fallen ten years in a row. The good news is that more and more consumers are reaching for bottled water and other drinks perceived to be healthier than traditional colas. Bottled water sales are on pace to surpass soda as the beverage of choice for U.S. consumers soon. (FYI: PEP's bottled water brand is Aquafina)

PEP is a consumer goods giant with a global presence. According to the company, "PepsiCo products are enjoyed by consumers one billion times a day in more than 200 countries and territories around the world. PepsiCo generated more than $66 billion in net revenue in 2014, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. PepsiCo's product portfolio includes a wide range of enjoyable foods and beverages, including 22 brands that generate more than $1 billion each in estimated annual retail sales."

The stock has been stuck consolidating sideways in the $90-100 trading range for almost a year. It looks like that consolidation may be nearing its end.

Earnings have been better than expected. I looked at the last three quarters. PEP has managed to beat Wall Street's estimates on both the top and the bottom line. Revenues have declined year over year but that is due to negative foreign currency exchange rates that is shaving off about -10% from earnings and revenues. The company says their gross margins and operating margins continue to improve.

PEP's Q3 results showed a +7.4% jump in organic revenues. On a constant currency basis their operating profit was up +12%. Earnings were up +14% from a year ago and their core gross margins surged 120 basis points. They have raised their full year 2015 core constant currency EPS guidance twice this year. Thus far PEP has saved $1 billion in productivity savings and returned $9 billion to shareholders in 2015.

The U.S. market is up the last three weeks in a row but it's relatively flat for the year. Investors are confused with all the different global cross currents, exchange fluctuations, central bank moves, and more. Fund managers are probably tempted to park cash in a huge, liquid big cap like PEP and get paid 2.8% a year with dividends. Why not? PEP is still growing with solid single-digit growth.

Technically PEP looks poised to breakout past major resistance in the $100 area. The point & figure chart is already bullish and forecasting at $120.00 target. Tonight we are listing a trigger to buy calls at $101.00.

- Suggested Positions -

Long 2016 JAN $100 CALL (PEP160115C100) entry $2.81

10/22/15 triggered @ $101.00
Option Format: symbol-year-month-day-call-strike


Signet Jewelers Limited - SIG - close: 149.47 change: +1.77

Stop Loss: 144.15
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 889 thousand
Entry on October -- at $---.--
Listed on October 26, 2015
Time Frame: Exit PRIOR to earnings on November 24th
New Positions: Yes, see below

Comments:
10/28/15: SIG is looking healthier today. Shares bounced off their afternoon lows to add +1.19% for the day. SIG is now poised to breakout past round-number resistance at $150.00 soon. Our suggested entry point is $150.75.

Trade Description: October 26, 2015:
The holiday shopping season is almost here. A lot of retailers launch their holiday sales push in the first week of November. Soon investors are going to be looking for a Santa Claus rally. SIG looks like a tempting candidate since it has a history of outperforming the S&P 500 during the fourth quarter.

SIG is in the services sector. According to the company, "Signet Jewelers Limited is the world's largest retailer of diamond jewelry. Signet operates approximately 3,600 stores primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda. Further information on Signet is available at www.signetjewelers.com. See also www.kay.com, www.zales.com, www.jared.com, www.hsamuel.co.uk, www.ernestjones.co.uk, www.peoplesjewellers.com and www.pagoda.com."

Kay, Zales, and Jared are the first, third, and fourth biggest brand names in the jewelry business. In spite of having such a dominant position SIG only has about 8% of the $74 billion U.S. jewelry market. That leaves plenty of room to grow.

The company is integrating its recent acquisition of Zales. The results have boosted sales. Their 2016 Q1 and Q2 results (announced in May and August) came in better than expected. Same-store sales have been healthy at more than +4%. They are also seeing strong growth in their online sales.

Wall Street seems positive on SIG. A Nomura analyst recently labeled SIG as one of their best multi-year growth stories in retail. The stock has been showing relative strength too. SIG is up +12% in 2015 versus an S&P 500 that is virtually flat for the year.

Technically shares have a bullish trend of higher lows and higher highs. The point & figure chart is bullish with a quadruple top breakout buy signal and a $187 price target. On a short-term basis SIG has resistance in the $150.00 area. The recent high was $150.65. Tonight we are suggesting a trigger to buy calls at $150.75.

Trigger @ $150.75

- Suggested Positions -

Buy the DEC $155 CALL (SIG151218C155)

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


Constellation Brands Inc. - STZ - close: 135.61 change: -0.07

Stop Loss: 133.20
Target(s): To Be Determined
Current Option Gain/Loss: -48.0%
Average Daily Volume = 1.29 million
Entry on October 23 at $138.38
Listed on October 22, 2015
Time Frame: Exit PRIOR to earnings in early January
New Positions: see below

Comments:
10/28/15: STZ spent most of the day churning sideways but when the market turned lower following the FOMC news the stock plunged sharply. Shares traded below $135.00 but they bounced near its rising 20-dma. STZ managed to trim its loss to almost unchanged on the session. No new positions at this time.

Trade Description: October 22, 2015:
Major beer brands have suffered from the boom in craft beers. Yet STZ's Corona and Modelo have seen significant growth, especially in the U.S. The company's earnings and revenue growth has fueled a rally in the stock that has outpaced the major marker indices.

STZ is in the consumer goods sector. According to the company, "Constellation Brands (NYSE:STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. In 2014, Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Constellation is the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world`s leader in premium wine, selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company`s premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.

Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand-building, our trade partners, the environment, our investors and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Founded in 1945, Constellation has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio, sales in approximately 100 countries, about 40 facilities and approximately 7,200 talented employees."

STZ has been reporting strong earnings numbers. Back in January they reported their Q3 2015 numbers that beat estimates on both the top and bottom line numbers. STZ management raised their 2015 guidance. Their Q4 results were out on April 9th. Earnings were up +37% from a year ago. Gross margins improved. Their fiscal year 2015 sales were up +24%. Management guided 2016 earnings growth in the +12% to +17% range.

Their 2016 Q1 report came out in July. They managed to beat estimates again on both the top and bottom line. STZ management raised their guidance again. Their most recent earnings report was October 7th. STZ said their 2016 Q2 earnings were $1.56 a share. That was 24 cents better than expected. Revenues were up +7.8% to $1.73 billion, which was in-line with estimates. The company remains optimistic and raised their guidance yet again.

This strong track record of earnings growth has fueled a long-term rally in STZ. The stock is also outperforming the broader market. The S&P 500 index is flat for the year (-0.3%) while STZ is up +40% in 2015.

After a big rally off its late September lows (about $122 to almost $139) shares dipped to their 10-dma and bounced (around $133.25). The market's current rally has lifted STZ back toward its all-time highs. Tonight we are suggesting a trigger to buy calls at $138.25.

- Suggested Positions -

Long 2016 JAN $145 CALL (STZ160115C145) entry $2.50

10/23/15 triggered on gap open at $138.38, entry trigger was $138.25
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Cracker Barrel Old Country - CBRL - close: 143.90 change: +2.97

Stop Loss: 145.05
Target(s): To Be Determined
Current Option Gain/Loss: -57.8%
Average Daily Volume = 395 thousand
Entry on October 22 at $136.90
Listed on October 21, 2015
Time Frame: Exit PRIOR to earnings on Nov. 24th
New Positions: see below

Comments:
10/28/15: Restaurant stocks were suddenly in rally mode today. A lot of the well-known restaurant stocks outperformed the major indices. CBRL gained +2.1% to close just below short-term resistance at $144.00.

The group looked poised for further gains tomorrow morning. However, after the closing bell there were some disappointing earnings results. BWLD missed estimates on both the top and bottom line and BWLD management lowered their guidance. This seems to be weighing on the restaurant stocks after hours with many them seeing losses after the closing bell.

No new positions in CBRL at this time.

Trade Description: October 21, 2015:
Some of the restaurant stocks are struggling. Disappointing consumer spending, slower foot traffic, and tougher comparisons are weighing on the group.

CBRL is in the services sector. According to the company, "Cracker Barrel Old Country Store restaurants provide a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that's surprisingly unique, genuinely fun and reminiscent of America's country heritage...all at a fair price. Cracker Barrel Old Country Store, Inc. (Nasdaq:CBRL) was established in 1969 in Lebanon, Tenn. and operates 637 company-owned locations in 42 states."

Earnings have taken a turn for the worse with CBRL. Back in June this year CBRL delivered a very upbeat earnings report. Profit was $1.49 per share, which was 12 cents above estimates. Revenues were up +6.3% to $683.7 million, beating expectations. Comparable store sales were relatively healthy and management raised their guidance.

Fast-forward to September 16th and CBRL reported their fiscal Q4 results of $1.97 a share. That did beat estimates but revenue growth slowed down to +3.8% to $719 million, which missed estimates. Comparable store sales slowed down to +0.6%. Management lowered their fiscal 2016 Q1 guidance.

Technically CBRL has developed a bearish trend of lower highs and now lower lows. This past week has seen the oversold bounce fail at resistance near its 200-dma. The point & figure chart is bearish and forecasting at $124.00 target.

I'm a little bit worried about the elevated short interest. The most recent data listed short interest at 22% of the small 19.0 million share float. That could make CBRL more volatile than normal but the shorts are probably right on this one, at least for a little while.

Tonight we are suggesting a trigger to launch bearish positions at $136.90. We are not setting an exit target tonight but the $130.00 and $120.00 levels are potential support (and thus possible bearish targets).

- Suggested Positions -

Long DEC $130 PUT (CBRL151218P130) entry $3.20

10/22/15 triggered @ $136.90
Option Format: symbol-year-month-day-call-strike


Darden Restaurants - DRI - close: 64.85 change: +1.63

Stop Loss: 66.30
Target(s): To Be Determined
Current Option Gain/Loss: -20.9%
Average Daily Volume = 1.7 million
Entry on October 21 at $63.40
Listed on October 20, 2015
Time Frame: Exit PRIOR to earnings in December
New Positions: see below

Comments:
10/28/15: DRI is another restaurant stock that outperformed the market today (+2.5%). Yet after hours DRI is erasing most of these gains thanks to BWLD's disappointing earnings report and lowered guidance.

No new positions at this time.

Trade Description: October 20, 2015:
Consumer spending has been disappointing and some of the restaurant names are suffering for it. DRI has actually raised guidance two quarters in a row but investors are ignoring this news and seem to be focusing on the larger macro trends for the industry.

DRI is in the services sector. According to the company, "Darden Restaurants, Inc., (DRI) owns and operates more than 1,500 restaurants that generate $6.8 billion in annual sales. Headquartered in Orlando, Florida, and employing 150,000 people, Darden is recognized for a culture that rewards caring for and responding to people. Our restaurant brands - Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's and Yard House - reflect the rich diversity of those who dine with us. Our brands are built on deep insights into what our guests want."

DRI reported their Q4 report on June 23rd. They beat Wall Street's EPS estimate and raised their 2016 guidance. Shares popped on the news and the stock continued to rally into late summer. Unfortunately shares produced a bearish double-top pattern in the July-August time frame. DRI began to correct lower.

The company reported its 2016 Q1 results on September 22nd. Earnings of $0.68 per share beat estimates by 10 cents. Revenues were up +5.7% to $1.69 billion, which was above estimates. Same-store sales were up +3.4% for the quarter. Management raised their 2016 earnings guidance again. This looked like a pretty good report. Yet three days later investors sold the rally.

Nationwide the pace of consumer spending has been lower than expected. A few days ago an industry research firm said U.S. restaurant sales were up +1.5% in Q3 but that was slower than Q2's +1.8% growth. A higher tab helped offset slower traffic numbers. The outlook for traffic is worrisome. This firm expects restaurant traffic numbers to be stagnant. This is inline with another research note that expects foot traffic at retailers to fall -8% this holiday season.

The market used to think that consumers would take the money they saved from lower gasoline prices and spend it elsewhere. That doesn't seem to be happening. Now the restaurant industry is facing tough comparisons to last year's relatively healthy Q4 numbers.

Technically DRI is now in a bearish trend of lower highs and lower lows. Shares have broken down below their 200-dma. The oversold bounce just failed at resistance near $66.00. The point & figure chart is bearish and forecasting at $55.00 target. Tonight we are suggesting a trigger to buy puts if DRI trades down to $63.40. This is a multi-week trade. We will plan on exiting prior to earnings in December.

- Suggested Positions -

Long 2016 JAN $60 PUT (DRI160115P60) entry $2.15

10/21/15 triggered @ $63.40
Option Format: symbol-year-month-day-call-strike


Nordstrom Inc. - JWN - close: 64.66 change: +0.08

Stop Loss: 70.05
Target(s): To Be Determined
Current Option Gain/Loss: +104.4%
Average Daily Volume = 1.4 million
Entry on October 15 at $66.40
Listed on October 14, 2015
Time Frame: Exit PRIOR to earnings on November 12
New Positions: see below

Comments:
10/28/15: JWN's attempt at a rally today failed at short-term resistance near the $66.00 level. Shares faded back to unchanged on the session.

No new positions at this time.

Trade Description: October 14, 2015:
Normally Q4 is the time investors think about buying retail-related stocks in anticipation of a strong holiday shopping season. This year the retailers' Q4 is off to a weak start.

JWN is in the services sector. According to the company, "Nordstrom, Inc. is a leading fashion specialty retailer based in the U.S. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 316 stores in 39 states, including 120 full-line stores in the United States, Canada and Puerto Rico; 188 Nordstrom Rack stores; two Jeffrey boutiques; and one clearance store. Additionally, customers are served online through Nordstrom.com, Nordstromrack.com and HauteLook. The company also owns Trunk Club, a personalized clothing service serving customers online at TrunkClub.com and its five clubhouses. Nordstrom, Inc.'s common stock is publicly traded on the NYSE under the symbol JWN."

JWN's earnings results have struggled this past year. Last November they beat estimates by a penny but guided lower. When JWN reported earnings in February 2015 they missed expectations and guided lower the second quarter in a row. In May this year they missed estimates again. Their most recent earnings report was August 13th. JWN beat Wall Street estimates by three cents with a profit of $0.93 a share. Revenues were up +9% to $3.6 billion, slightly above estimates. Management actually raised their 2016 guidance. The stock popped higher on the earnings beat and bullish guidance. Unfortunately the rally did not last.

Shares of JWN reversed and formed a bearish double top. Since then investors have continued to sell the rallies. The big drop on October 7th was an adjustment for JWN's special cash dividend of $4.85. There has been virtually no bounce.

Today JWN underperformed as the market reacted to Wal-Mart's earnings warning. Suddenly investors are concerned that consumer spending this holiday season may be weaker than expected. That doesn't bode well for JWN. The trend is already down and the point & figure chart is forecasting at $58.00 target.

Shares readers could argue there is potential support near the $65.00 level but we think JWN is headed a lot lower and could drop toward round-number support at $60.00. Tonight we are suggesting a trigger to buy puts at $66.40. Prepare to exit prior to JWN's earnings report in November.

- Suggested Positions -

Long NOV $65.15* PUT (JWN151120P65.15) entry $1.13

10/15/15 triggered @ $66.40
*NOTE: The odd option strike is due to JWN's special cash dividend of $4.85 per share. The ex-distribution date was Wednesday, October 7, 2015. The option market adjusted all the prior option strikes down -4.85.

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



CLOSED BULLISH PLAYS

CVS Health Corp. - CVS - close: 103.81 change: -1.48

Stop Loss: 99.40
Target(s): To Be Determined
Current Option Gain/Loss: +8.2%
Average Daily Volume = 4.7 million
Entry on October 13 at $103.75
Listed on October 12, 2015
Time Frame: Exit PRIOR to earnings on October 30th
New Positions: see below

Comments:
10/28/15: Good thing we decided to exit early. Last night we adjusted our exit schedule to close this play this morning instead of at the closing bell. Shares of CVS nearly erased yesterday's rally with a -1.4% decline. Rival Walgreens (WBA) plunged -10.7% and Rite Aid (RAD) fell -7.0% as doubts rose about the possibility of a merger between the two.

- Suggested Positions -

NOV $105 CALL (CVS151120C105) entry $2.07 exit $2.24 (+8.2%)

10/28/15 planned exit this morning
10/27/15 Exit tomorrow morning!
10/24/15 prepare to exit by Wednesday.
10/13/15 triggered @ $103.75
Option Format: symbol-year-month-day-call-strike

chart: