Option Investor
Newsletter

Daily Newsletter, Monday, 1/4/2016

Table of Contents

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

Market Wrap

Global Woe Sinks Stocks

by Thomas Hughes

Click here to email Thomas Hughes
The market began the year in retreat as mounting global woe weighs on stocks.

Introduction

The global markets began the new rear in retreat as mounting woes weigh on sentiment.

The bad news began in China where a number of events combined to force indices down by more than -7%, triggering circuit breakers and closing the market. The PBC raised the midpoint for the yuan before the market opened, then, after the open, weak PMI showed another month of contraction in China's industrial sector.

European markets were not cheered by the sell off in Asia and followed suit. Losses here were not as large but aided by the mounting tensions between Iran and Saudi Arabia. The Saudis have responded to Iran's storming of it's embassy by cutting off all diplomatic ties.

Market Statistics

Futures trading indicated a negative open right from the start. The S&P and Dow Jones Industrial Average were looking at a loss of -1% and that was achieved within minutes of the open; there were no economic or earnings releases before the opening bell. After the opening bell the market sold off and sold off hard, hitting the day's bottom near 11AM and -2.5% below last years close. A small bounce regained a fraction of the days losses and led to an afternoon of sideways trading and another bounce that carried the market into the close of today's session.

Economic Calendar

The Economy

Two pieces of the economic puzzle were released today, both after the opening bell and both weaker than expected. Construction spending fell by -0.4% versus the expected +0.8%. However, this month's release came with a footnote detailing a revision to the past 10 years of data. The revisions are expected to raise 2014 GDP by 0.2-0.3% with a similar impact for 2015. Within the data the housing sector saw an increase of 0.2%.

Manufacturing ISM fell unexpectedly to 48.2, down -0.4 from last month. Analysts had been expecting the reading to rise slightly to 49. Within the report New Orders, Employment, Shipments and Production are all down and with Inventories in contraction.

This is a big week for data. Tomorrow auto/truck sales data, later in the week the monthly labor data. Wednesday is ADP, Thursday Challenger layoffs and Friday NFP/Unemployment/Earnings. Also this week we will see Factory Orders, both manufacturing and services ISM, consumer credit and auto/truck sales.

Moody's Survey Of Business Confidence fell back to its recent lows. This week the index fell by -1.5% to 32.4 and near an 18 month low. While still high compared to past recoveries the index shows a noticeable downturn in sentiment since the summer that Mr. Zandi attributes to weak global growth, financial market volatility and possibly the recent rise in world wide terror activity. He also mentions this week's data may be skewed due to a low, holiday induced, response rate.


According to FactSet the blended rate for S&P 500 earnings growth in the 4th quarter of 2015 is now -4.7%. This is up -.2% from last week and may, maybe, possibly, signal the bottom in expectations for the quarter. If trend holds true we can expect to see final 4th quarter growth come in about 4% above this level.

We have seen 17 reports so far this season; 13 beat earnings expectations, 6 beat revenue expectations. Energy remains the weakest sector with expected growth of -66.3%; down from last week. Ex-energy, 4th quarter growth should be in the range of 1-5%.


Full year 2016 earnings growth projections rose by a tenth to 6%; ex-energy is 7.6%. The energy sector is now expected to to see a decline in growth of -8.4%. The season gets off to its unofficial start next Monday when Alcoa reports after the bell. The company is expected to report in-line with the previous quarter.


The Oil Index

Oil prices had a wild day. The early trade was driven on knee-jerk reaction to the Saudi/Iran situation and then later on supply glut fear. In early trading WTI was up as much as 1.5%, later in the day rumors of supply glut in Cushing sent prices down by -1.25%. Fundamentals remain in place for low oil prices, the risk now is that global tensions will lift prices. Today's action may be telling, fundamentals overcame fear to send prices lower.

The Oil Index had a mixed day as well. The index opened lower, despite oils early rise, moved higher and into positive territory, only to be repelled by resistance and eventually fall to test support at 1,050. Today's candle is relatively small but has returned the index to support targets. The indicators are rolling into a bearish signal, in line with recent trends, that could lead to additional testing of support or new lows. If 1,050 is broken the next target is in the 1,000 to 1,025 range.


The Gold Index

Gold prices got a boost from a falling dollar and perhaps some safety seekers. The spot price jumped as much as 1.5% to trade near $1,080 before falling back to settle with a gain near 1.25%. Today's saw prices rise from support levels near $1,060 to resistance levels near $1,080 and contained by both. It looks like near term news is moving price within a range while we wait on data and the FOMC. This week could see FOMC outlook change, but it all depends on the data. For now, fundamentals support stronger dollar and weaker gold.

The gold miners tried to move higher but the move was without conviction. The Gold Miners ETF GDX gained about 2.5% but the move does little to change over all direction. The indicators are pointing higher, but very weakly and consistent with the recent trading range, so this move could continue with upside target near $14.75. However, this ETF, like gold itself, appears to be range bound while the market waits on data and the FOMC. A break outside of the range is the signal; a move higher could take it up to $16, a move lower down to $12.50 or below. The next FOMC meeting is January 26/27, both gold and GDX could remain range bound until then.


In The News, Story Stocks and Earnings

The dollar saw some weakness in the early part of the day as safety seekers flocked to the yen and gold. The Dollar Index fell more than -1% to test support near $98 but this move did not hold. Dollar bulls stepped in and drove the index back to break even and higher, confirming the $98 support level. The indicators are beginning to look pretty good for a bullish movement. Both MACD and stochastic are confirming support and a move higher with upside target near the current highs.


Tesla reported that 4th quarter sales were at the low end of their previously guided range. Sales came in at 17,400 units, up sharply from last years 11,603, but barely met expectations. The news renewed fears in the company and sent the stock down by more than -7%.


President Obama held a news conference today talking about gun control. He says he is looking over his options as head of the Executive Branch and will be announcing some initiatives over the next few days. The news helped spur buying among the gun manufacturers, a few of today's biggest winners. Smith&Wesson gained close to 6% in today's session and is fast approaching the recent all time high. The indicators are consistent with support, just under $22.50, and a move up to the highs near $24.


The Indices

The indices fell today, and fell and fell, but volume was light and by end of day rose up from support levels. Today's action was led by the Dow Jones Transportation Average, and the NASDAQ Composite, which both lost -2.08%. The transports fell to set a new low and hit my support target near 7,250. The indicators are rolling into what could be a bearish signals but are also highly divergent from the new low. This could indicate a bottom or potential trading range with a chance 7,250 will be tested again.


The NASDAQ Composite also fell -2.08%. The index opened with a loss near -2%, traded in a wide range, and then closed with a loss near -2% creating what could become a very significant doji. It looks like price action is confirming support near 4,900 but is unsure about future direction. The indicators are pointing lower, suggesting today's low and/or support levels could be tested again. The indicators are also divergent from the low set today, indicating support and a possible point of reversal. If the index moves lower next target is 4,800 with upside resistance near today's high, around 5,000 and just under the long term trend line.


The next biggest decline posted in today' session was by the Dow Jones Industrial Average with a loss of -1.58%. The index fell to set a new 2.5 month low but also appears to be confirming support at the 17,000 level. Today's candle is long and black but has a long lower shadow supported by divergent indicators. However, while divergent, the indicators are also pointing lower so further testing of support, possibly as low as the long term trend line near 16,750, is very possible.


The S&P 500 made the smallest declie in today's session, only -1.53% by end of day. Today's session created a new 2.5 month low, barely, and is accompanied by bearish indicators. The indicators are pointing to further testing of support but also very weak and consistent with support/range bound trading. Support appears to be near 2,000 with a move as low as 1,985 possible. The long term trend remains up so this move is looking like a potential entry for bullish positions.


Today's move was surprising and a little alarming but overall not to damaging to the markets, yet. The move was driven by knee-jerk reaction to near term news that will likely be forgotten in a few weeks. The China data at least was expected, not great, but expected.

Today's move was also likely due to a lack of volume as market participants wait for this weeks data and the start of earnings season. This week may see some more volatility, and perhaps low volume, up to and until the NFP report on Friday.

For now, except for manufacturing, economic trends are positive with expectations for growth throughout 2016. Earnings trends are a little less positive, the coming season is expected to show negative growth but that is expected to change with the next, and improve all year. So long as this remains true I remain a bull and looking to buy on the dips.

Until then, remember the trend!

Thomas Hughes

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New Option Plays

Outperforming The Market This Year (and Last Year)

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Harris Corp. - HRS - close: 87.65 change: +0.75

Stop Loss: 84.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 927 thousand
Entry on January -- at $---.--
Listed on January 04, 2016
Time Frame: Exit PRIOR to earnings in early February
New Positions: Yes, see below

Company Description

Trade Description:
Out of the thousands of publically traded companies out there only a few have been around for over 100 years. A couple of weeks ago HRS celebrated its 120th anniversary.

HRS issued a press release to mark the achievement. Here's an excerpt: "Founded in the back room of an Ohio jewelry store in December 1895, Harris grew from a tiny printing press company into a top 10 defense contractor with $8 billion in annualized sales, 22,000 employees, customers in 125 countries, and a diverse portfolio of technologies that connect, inform and protect the world. Harris is the longest-thriving major defense contractor and one of 398 publicly held companies still in existence for 120 years or longer - including GE, CVS, Coca-Cola, Pfizer, P&G, and J.P. Morgan."

Today HRS is in the technology sector. They are considered part of the communication equipment industry. According to the company, "Harris Corporation is a leading technology innovator, solving our customers' toughest mission-critical challenges by providing solutions that connect, inform and protect. Harris supports customers in more than 125 countries, has approximately $8 billion in annual revenue and 22,000 employees worldwide. The company is organized into four business segments: Communication Systems, Space and Intelligence Systems, Electronic Systems, and Critical Networks."

Last year HRS ended 2015 on a strong note. The month of December saw HRS win several government contracts worth more than $1 billion. Meanwhile analysts are bullish on the stock. Goldman Sachs has a buy rating on HRS. Cowen recently upped their price target to $102 and said it was one of their best trading ideas for 2016.

Technically the stock has been showing relative strength. Last year HRS outperformed the broader market with a +20% gain. The positive news about the company's new contract wins produced a bullish breakout past major resistance at $85.00 in mid December. Today investors bought the dip near short-term support at its 10-dma. HRS displayed relative strength today too with a +0.8% gain. If this bounce continues we want to hop on board. Tonight we are suggesting a trigger to buy calls at $88.15.

Trigger @ $88.15

- Suggested Positions -

Buy the FEB $90 CALL (HRS160219C90) current ask $2.20
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:



In Play Updates and Reviews

Markets Plunge Into 2016

by James Brown

Click here to email James Brown

Editor's Note:

The combination of rising geopolitical fears in the Middle East and very disappointing economic data out of China was a powerful one-two punch that knocked the market lower.

The U.S. stock market was poised for its worst start to the year since 1932 but managed to trim its losses by the closing bell.

It was a very, very widespread decline and ABC, BDX, CRL, FB, NOC, RYAAY, and SPB were all stopped out.

Tonight we have adjusted our entry point strategy on AVGO.


Current Portfolio:


CALL Play Updates

Avago Technologies - AVGO - close: 142.28 change: -2.87

Stop Loss: 139.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.6 million
Entry on December -- at $---.--
Listed on December 29, 2015
Time Frame: Exit PRIOR to February option expiration
New Positions: Yes, see below

Comments:
01/04/16: AVGO was definitely not immune to the market's flush lower today. On the plus side investors did buy the dip at round-number support near $140.00. We want to take advantage of this pullback.

The intraday high in AVGO was $142.35. Tonight we are adjusting our entry point strategy and moving our entry trigger down to $142.65. We'll adjust the stop loss to $139.75. We will also adjust the option down to the February $150 call.

Trade Description: December 29, 2015:
AVGO is probably best known for being a chip supplier to Apple Inc. (AAPL). Shares of AAPL have struggled the last half of 2015 on worries about slowing iPhone sales. This worry has not impacted shares of AVGO.

AVGO is in the technology sector. They're part of the semiconductor industry. According to the company, "Avago Technologies Limited is a leading designer, developer and global supplier of a broad range of analog, digital, mixed signal and optoelectronics components and subsystems with a focus in III-V compound and CMOS based semiconductor design and processing. Avago's extensive product portfolio serves four primary target markets: wireless communications, enterprise storage, wired infrastructure, and industrial & other."

We can't mention AVGO without mentioning their $37 billion acquisition of Broadcom (BRCM). Here's a description of BRCM, "Broadcom Corporation, a FORTUNE 500® company, is a global leader and innovator in semiconductor solutions for wired and wireless communications. Broadcom products seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environments. With one of the industry's broadest portfolio of state-of-the-art system-on-a-chip solutions, Broadcom is changing the world by Connecting everything®."

This acquisition of BRCM was announced in May 2015. The combined company was initially valued at $77 billion. Together they will have annual sales of $15 billion with $6-7 billion in free cash flow. The merger is expected to close on February 1, 2016.

Without BRCM, AVGO has been delivering impressive earnings and revenue growth. Last year AVGO saw earnings surge from $1.16 a share to $4.90. This year Wall Street expects AVGO's earnings to hit $9.68 a share. Revenue growth over the last five years has averaged more than +23% a year.

AVGO's most recent earnings report was December 2nd. The company announced their Q4 results with earnings rising +26% from a year ago to $2.51 a share. That beat estimates by 13 cents. Revenues were up +15% to $1.85 billion. Gross margins improved from 51% in Q3 to 54% in Q4. The stock surged toward resistance near $150 following this better than expected earnings report.

Several days ago RBC Capital Markets upgraded AVGO to one of their top picks. RBC analyst Amit Daryanani shared his opinion on the company, saying, "Our bullish bias is predicated on our belief that AVGO will expand EPS from $9.24 in CY15E to [more than] $16.00 by CY18E driven by multiple levers - BRCM integration, asset divestures, RF ramp-up, cost containment and potential deleveraging ... we estimate [less than 30%] of future EPS growth is predicated on organic revenue dynamics and 70%+ is driven by AVGO's ability to curtail costs, optimize the portfolio, and further deleveraging."

Daryanani raised their AVGO price target from $165 to $170. Currently the point & figure chart is very bullish and forecasting a long-term target of $213. Technically shares of AVGO appear to be consolidating sideways beneath major resistance at the $150.00 level. If the stock breaks out we want to be ready. Tonight we are suggesting a trigger to buy calls at $150.25.

Trigger @ $142.65 *New Entry Trigger*

- Suggested Positions -

Buy the FEB $150 CALL (AVGO160219C150) current ask $4.40

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.

01/04/16 Entry Point Update - Move the entry trigger from $150.25 down to $142.65. Adjust the stop loss down to $139.75. Adjust the suggested option from February $155 call to the $150 call.
Option Format: symbol-year-month-day-call-strike


Clovis Oncology - CLVS - close: 33.37 change: -1.63

Stop Loss: 32.45
Target(s): To Be Determined
Current Option Gain/Loss: -53.4%
Average Daily Volume = 1.4 million
Entry on December 01 at $32.55
Listed on November 28, 2015
Time Frame: Exit PRIOR to January option expiration
New Positions: see below

Comments:
01/04/16: Biotech stocks underperformed the broader market with the IBB biotech ETF losing -3.38%. CLVS fared even worse with a -4.6% plunge. I want to caution investors that today's drop has broken CLVS' bullish trend of higher lows. Readers will want to turn more defensive and either raise their stop or take some money off the table.

No new positions at this time.

Trade Description: November 28, 2015:
After a -70% plunge all the bad news might be priced in for this biotech stock.

CLVS is in the healthcare sector. According to the company, "Clovis Oncology is a biopharmaceutical company focused on acquiring, developing and commercializing cancer treatments in the United States, Europe and other international markets. Our product development programs target specific subsets of cancer, and we seek to simultaneously develop, with partners, companion diagnostics that direct our product candidates to the patients most likely to benefit from their use. We believe this approach to personalized medicine - to deliver the right drug to the right patient at the right time - represents the future of cancer therapy."

The company has three product candidates in their pipeline. They are rociletinib, rucaparib, and lucitanib. Right now the market is reacting to news on its rociletinib clinical trials, where the drug is being tested on non-small-cell lung cancer.

Several days ago the company issued an update on their Rociletinib NDA filing. CLVS held their regularly scheduled mid-cycle communication meeting with the U.S. Food and Drug Administration (FDA). The current data on the Rociletinib clinical trials was not good enough. The FDA is asking for more data to prove the treatment's efficacy. This will likely push back the time frame on any approval. Investors were expecting a potential approval in the March-April 2016 time frame.

The delay in Rociletinib approval is a serious setback. Rival biotech firm AstraZeneca just got FDA approval for a competing drug, Tagrisso. By the time Rociletinib is approved (if it's approved), it will face serious competition from an already established treatment.

CLVS is a perfect example of why biotech stocks can be high-risk trades. On November 13, 2015 the stock closed at $99.43. The next trading day, Nov. 16th, shares gapped down at $29.27 and closed near $30. The stock traded down to $24.50 on November 23rd and started to reverse higher. CLVS' stock is now up three days in a row.

The current rally could be a combination of short covering and investors bargain hunting. It has been a full two weeks since the sell-off. If investors were going to sell they probably did so already. We think this rebound has a lot further to go but make no mistake CLVS is still a higher-risk trade. Tonight we are suggesting a trigger to buy calls at $32.55.

- Suggested Positions -

Long JAN $35 CALL (CLVS160115C35) entry $2.90

12/29/15 new stop @ 32.45
12/26/15 new stop @ 31.95
12/14/15 new stop @ 30.75
12/05/15 new stop @ 29.65
12/01/15 triggered @ $32.55
Option Format: symbol-year-month-day-call-strike


Ionis Pharmaceuticals - IONS - close: 61.68 change: -0.25

Stop Loss: 59.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.6 million
Entry on January -- at $---.--
Listed on January 02, 2016
Time Frame: Exit PRIOR to February option expiration
New Positions: Yes, see below

Comments:
01/04/16: IONS' performance was encouraging. Traders bought the dip near round-number support at $60.00 and shares trimmed their loss to just -0.4% versus the NASDAQ's -2.0% decline.

Our suggested entry point remains $63.20.

Trade Description: January 2, 2016:
Biotech stocks had a volatile year, especially after the group peaked in July 2015. The IBB managed to deliver a +11% gain for the year thanks to strength among some of its bigger cap names. IONS closed virtually flat for the year (down -19 cents for all of 2015). The stock has been showing relative strength recently and looks poised to sprint past its peers.

IONS is in the healthcare sector. They are part of the drug and biotech industry. The company was previously known as ISIS pharmaceuticals. Unfortunately the rise of the radical Islamic terrorist group known as ISIS has tarnished the name. A couple of weeks ago ISIS changed its name to Ionis. Here's a bit from the company press release:

"Isis Pharmaceuticals, Inc. today (December 18th) announced that the company has changed its name to Ionis Pharmaceuticals, Inc. Ionis (pronounced "eye-OH-nis") Pharmaceuticals is an original name that the Company has chosen to represent its innovative culture and heritage as both the pioneer and leader in the RNA-targeted therapeutic space for the past 26 years."

Now here is the company's description: "Ionis is the leading company in RNA-targeted drug discovery and development focused on developing drugs for patients who have the highest unmet medical needs, such as those patients with severe and rare diseases. Using its proprietary antisense technology, Ionis has created a large pipeline of first-in-class or best-in-class drugs, with over a dozen drugs in mid- to late-stage development. Drugs currently in Phase 3 development include volanesorsen, a drug Ionis is developing and plans to commercialize through its wholly owned subsidiary, Akcea Therapeutics, to treat patients with familial chylomicronemia syndrome and familial partial lipodystrophy; IONIS-TTRRx, a drug Ionis is developing with GSK to treat patients with all forms of TTR amyloidosis; and nusinersen, a drug Ionis is developing with Biogen to treat infants and children with spinal muscular atrophy. Ionis' patents provide strong and extensive protection for its drugs and technology."

Regular readers know that we feel biotech stocks are aggressive, higher-risk trades. A lot of biotech companies are relatively small and only have one or two treatments in development, which make them binary trades. You can win big or lose big depending on the approval process of their treatment. There is a lot of headline risk. There is still headline risk with IONS but the company's relatively deep pipeline of drugs makes IONS a stronger play. You can view IONS' pipeline here.

Shares of IONS surged through several layers of resistance in early November on a better than expected Q3 earnings report. Since that big rally the stock has been consolidating lower. That changed in mid December when traders bought the dip near its 100-dma. Investors have been buying the dips every since. IONS displayed relative strength on Thursday with a +0.99% gain. The point & figure chart is bullish and forecasting at $74.00 target.

We would like to see some follow through higher. Tonight we are suggesting a trigger to buy calls at $63.20. Plan on exiting prior to February option expiration.

Trigger @ 63.20

- Suggested Positions -

Buy the FEB $65 CALL (IONS160219C65)

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


Royal Caribbean Cruises - RCL - close: 98.14 change: -3.07

Stop Loss: 96.45
Target(s): To Be Determined
Current Option Gain/Loss: -29.5%
Average Daily Volume = 2.0 million
Entry on December 29 at $100.85
Listed on December 26, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: Investors were definitely selling their winners this morning. Shares of RCL gapped down from $101.21 to $99.60 and fell to $96.69 intraday. The stock bounced near its 20-dma and 50-dma after a -4.4% plunge. Shares ended the session with a -3.0% decline. Tonight we are adjusting the stop loss up to $96.45.

No new positions at this time.

Trade Description: December 26, 2015:
2015 has been a tough year for fund managers. The market's recent bounce has lifted the S&P 500 to a +0.1% gain for the year. One group that is outperforming the big cap index is the consumer discretionary stocks. The XLY consumer discretionary ETF is up +8.7% year to date. Helping lead the charge is RCL, which is up more than +20% thus far in 2015.

RCL is in the services sector. According to the company, "Royal Caribbean Cruises Ltd. is a global cruise vacation company that owns Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur and CDF Croisieres de France, as well as TUI Cruises through a 50 percent joint venture. Together, these six brands operate a combined total of 44 ships with an additional eight under construction contracts, and two under conditional agreements. They operate diverse itineraries around the world that call on approximately 480 destinations on all seven continents."

A few weeks ago Barclays just upped their outlook on the cruise liners and believes the group is seeing improved strength in pricing. Meanwhile RCL has been cashing in on the growing trend of Chinese tourism. The recent change in ties between the U.S. and Cuba also represents a new opportunity for the cruise lines.

Crude oil's drop to multi-year lows is another tail wind for RCL. Fuel is a big expense for these massive cruise ships with many burning through 140-150 tons of fuel per day. Fortunately, oil (and fuel) is expected to remain relatively low throughout 2016.

Technically RCL has been able to build on its longer-term trend of higher lows and higher highs. The point & figure chart is bullish and forecasting at $118 target. Last week's widespread market rally lifted shares of RCL toward major resistance at $100. A breakout here could spark the next big leg higher. Tonight we are suggesting a trigger to buy calls at $100.85.

- Suggested Positions -

Long MAR $105 CALL (RCL160318C105) entry $4.10

01/04/16 new stop @ 96.45
12/29/15 triggered @ $100.85
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

AmerisourceBergen Corp. - ABC - close: 101.87 change: -1.84

Stop Loss: 102.40
Target(s): To Be Determined
Current Option Gain/Loss: -38.7%
Average Daily Volume = 2.2 million
Entry on December 15 at $103.02
Listed on December 12, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: The stock market's collapse this morning produced a gap down in shares of ABC. Our stop loss was at $102.40 but ABC opened lower at $102.31 immediately closing our play. The stock closed under technical support at its 20-dma.

- Suggested Positions -

FEB $105 CALL (ABC160219C105) entry $3.10 exit $1.90 (-38.7%)

01/04/16 stopped out
12/29/15 new stop @ 102.40
12/26/15 new stop @ 101.20
12/16/15 new stop @ 99.85
12/15/15 Caution - ABC has produced a bearish engulfing candlestick reversal pattern
12/15/15 triggered on gap higher at $103.02, trigger was $102.85
Option Format: symbol-year-month-day-call-strike

chart:


Becton, Dickinson and Company - BDX - close: 147.95 change: -6.14

Stop Loss: 152.25
Target(s): To Be Determined
Current Option Gain/Loss: -47.9%
Average Daily Volume = 1.0 million
Entry on December 17 at $156.35
Listed on December 16, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: Shares of BDX were hammered lower today. Shares underperformed with a -4% plunge. The combination of the market's sell-off and a downgrade by Morgan Stanley was a tough pill to swallow.

Our stop loss was at $152.25. Unfortunately BDX gapped open lower at $150.62, closing our trade. Shares fell to $146.02 intraday.

- Suggested Positions -

MAR $160 CALL (BDX160318C160) entry $3.84 exit $2.00 (-47.9%)

01/04/16 stopped out on gap down at $150.62
12/26/15 new stop @ 152.25
12/17/15 triggered @ $156.35
Option Format: symbol-year-month-day-call-strike

chart:


Charles River Labs. Intl. - CRL - close: 78.25 change: -2.14

Stop Loss: 77.75
Target(s): To Be Determined
Current Option Gain/Loss: -32.4%
Average Daily Volume = 426 thousand
Entry on December 24 at $80.40
Listed on December 17, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: The stock market's sharp drop today hit CRL pretty hard and shares fell -2.6%. They were down closer to -4% intraday before paring its loss. Our stop loss was hit at $77.75.

- Suggested Positions -

FEB $85 CALL (CRL160219C85) entry $1.85 exit $1.25 (-32.4%)

01/04/16 stopped out @ 77.75
12/24/15 triggered @ $80.40
Option Format: symbol-year-month-day-call-strike

chart:


Facebook, Inc. - FB - close: 102.22 change: -2.44

Stop Loss: 103.40
Target(s): To Be Determined
Current Option Gain/Loss: -43.4%
Average Daily Volume = 28 million
Entry on December 29 at $106.42
Listed on December 28, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: The "FANG" stocks were hammered lower today. Shares of FB gapped open lower at $101.95 and traded toward round-number support near $100 before paring its decline. The stock was down -4.69% at its intraday lows ($99.75). Our suggested stop loss was $103.40 but unfortunately we were stopped out on the gap down at $101.95.

- Suggested Positions -

FEB $110 CALL (FB160219C110) entry $3.20 exit $1.81 (-43.4%)

01/04/16 stopped out on gap down at $101.95
01/02/16 Caution - on 12/31/2014 FB broke some support levels
12/29/15 triggered on gap open at $106.42, suggested entry was $106.25
Option Format: symbol-year-month-day-call-strike

chart:


Northrop Grumman - NOC - close: 187.51 change: -1.30

Stop Loss: 186.85
Target(s): To Be Determined
Current Option Gain/Loss: -43.0%
Average Daily Volume = 1.2 million
Entry on December 29 at $191.25
Listed on December 22, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: NOC was no safe haven for investors this morning. Our stop loss was $186.85 but we were stopped out on the gap down at $185.98. NOC was down -1.8% at its worst levels of the session. The stock did find support near $185 and managed to pare its loss to just -0.68%.

I would keep NOC on your watch list. Another close above $192.00 could be a bullish entry point.

- Suggested Positions -

FEB $195 CALL (NOC160219C195) entry $4.30 exit $2.45 (-43.0%)

01/04/16 stopped out on gap down at $185.98, stop was $186.85
12/29/15: triggered @ $191.25
Option Format: symbol-year-month-day-call-strike

chart:


Ryanair Holdings - RYAAY - close: 84.64 change: -1.82

Stop Loss: 84.45
Target(s): To Be Determined
Current Option Gain/Loss: -64.5%
Average Daily Volume = 406 thousand
Entry on December 21 at $85.77
Listed on December 19, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: Airline stocks did not fare very well today. The XAL airline index plunged -3.8%. RYAAY managed to outperform its peers but still lost -2.1%. Our stop loss was hit early this morning at $84.45.

- Suggested Positions -

MAR $90 CALL (RYAAY160318C90) entry $3.10 exit $1.10 (-64.5%)

01/04/16 stopped out
12/26/15 new stop @ 84.45
12/21/15 triggered on gap open at $85.77, trigger was $85.65
Option Format: symbol-year-month-day-call-strike

chart:


Spectrum Brands Holdings - SPB - close: 102.86 change: +1.06

Stop Loss: 99.85
Target(s): To Be Determined
Current Option Gain/Loss: -9.1%
Average Daily Volume = 257 thousand
Entry on December 22 at $100.57
Listed on December 21, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: The market's widespread weakness this morning pushed SPB through round-number support at $100. Shares hit our stop at $99.85. Surprisingly SPB generated a big intraday bounce and managed to outperform the market by the closing bell with a +1.0% gain on the session.

- Suggested Positions -

APR $105 CALL (SPB160415C105) entry $3.40 exit $3.09 (-9.1%)

01/04/16 stopped out
12/26/15 new stop @ 99.85
Option Format: symbol-year-month-day-call-strike

chart: