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Daily Newsletter, Wednesday, 2/22/2017

Table of Contents

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

Market Wrap

Bulls Still Holding the Reins

by Keene Little

Click here to email Keene Little
The Dow was the only one of the major indexes to finish today in the green but only be a small amount. The day was more or less a continuation of the consolidation from last week and we wait to see if it results in another leg up.

Today's Market Stats

We know the market is overbought and overloved and showing signs of tiring. But that hasn't stopped the bulls from keeping the bears away and as long as the buyers keep buying the small dips, which they're doing, we have higher potential. There are enough warning signs to suggest caution about chasing the market higher but there are no signs of a top yet. There's nothing for a bear to chew on but at the same time it's looking risky to the upside, all of which has traders heading for the sidelines while waiting for the next good setup.

The only economic report of significance today was the FOMC minutes, released at 14:00. The indexes had been chopping sideways (slightly up for the Dow) before the release, did a little squiggle after the announcement and then continued chopping sideways for the rest of the day. Virtually no reaction.

Even though we've seen recent data that suggests inflation is already at the Fed's 2% target rate, the Fed believes there's little risk to the economy. The Fed believes they have "ample time to respond" to any rise in inflation. Call me unconvinced, especially knowing how well they've been able to predict anything about the economy, ever. They have a perfect record of never being right.

The lack of urgency on the Fed's part means there's not likely to be a change to their expected plans on raising rates. This was reflected in a sharp decline in the U.S. dollar following the announcement (and spike in gold) while Treasury rates dropped sharply. All the moves were relatively small but the reactions were telling -- universal agreement that the Fed may stay somewhat reluctant to raise rates even while threatening to do so.

Apparently there is some disagreement between the Fed heads about how the labor market is doing. With the official unemployment rate currently at 4.8% there are some who fear rising wages could boost inflation faster than expected, which they argue means a need for higher rates sooner rather than later. But apparently the majority does not hold that opinion and the minutes reflected more caution than aggressiveness about raising rates.

The Dow's day in the green makes it 9 in a row from February 8th and 13 up days if we ignore the minor loss on February 8th. But it too is showing signs of weakening and likely near a top for at least the leg up from January. At the same time we're seeing many signs of increased risk as investors show more signs of greed and not enough fear (although the VIX has been slowly climbing as the rally makes its way higher).

One of the highlights of the rally is how steady it's been with practically no volatility. At first glance that would seem bullish -- nice steady accumulation and it could very well be just that. But typically a lack of volatility for a period of time leads to an expansion of volatility and with that a big price move. The question here is whether that will mean an acceleration higher or a fast drop back down.

The S&P 500 has now gone more than 50 days without a 1% move in either direction, which is the longest stretch since 1970. Think about that for a moment -- it's been nearly 50 years since the market has been this quiet and we're now facing a tired market that has investors feeling bullish to an extreme.

In addition to the quiet rally, we haven't seen a 1% correction since October 11th (91 trading days), which is the longest streak since 2006. This also begs the question about what kind of correction will follow this quiet period. Without the normal inhalation-exhalation the market becomes even more vulnerable to a strong disconnect to the downside. A little volatility moves traders in and out of the market, which in turn strengthens the remaining holders. Instead, we now have a lot of "untested" long players who will likely bail quickly out of fear (and fear is more powerful than greed).

Assuming we're overdue a correction the big question is whether it will be just a pullback correction or something more bearish. We could see a multi-week, scare the hell out of the bulls, kind of pullback and then set up the next big rally. Or we could start a major reversal back down. We'll have to wait for clues from the pattern of the pullback/decline (corrective vs. impulsive) to help figure that out later. First we have to identify when the current trend (up) has changed.

In support of just a pullback and then higher is a record that strongly favors the bulls. Sam Stovall, Chief Investment Guru at CFRA, issued a call this morning that says we should remain bullish for the year. He noted that since 1945 there have been 27 years where the S&P 500 was positive in both January and February and each of those years finished higher, no exceptions. In only 2 of those 27 years the S&P finished lower in the subsequent 10 months but never to a loss for the year.

The chart below shows each of the 27 years in which both January and February were positive. The average rise was +24% and with the S&P currently +5.5% for the year that's a lot of growth potential. Only 1987 (+5%) and 2011 (+2%) finished below where SPX is currently and so the question now is whether or not this year will be different.

S&P 500 returns since 1945 when January and February are positive, chart courtesy CFRA

One could argue that things are very different now than they were prior to 2009, especially with a volatile president at the helm and a Fed that is becoming less accommodative. I certainly would not use this 27-year record as a reason to mortgage the house and put it all in the stock market but it does provide a reason to only cautiously think about the bearish potential while the market is pulling back (assuming the current stock market hasn't negated the laws of gravity).

I see higher risk for the market than the above record would suggest and it's reason enough for me to recommend not riding the next pullback in long positions with the assumption that it will come back. I think the risk is high that it won't come back and that this year will break the above 27-year record.

It will be a while before we'll have a better idea about the possibility for a more significant decline but with the potential for an explosive move, presumably down, is it really worth the risk in simply plugging your nose and holding on through the next downturn? And if you like to play the short side we could soon be in a position to play.

The RUT has reached a potentially very important level and how it does from here could tell us lots about what this market might do next. I'll therefore start off tonight's chart review with weekly chart of the RUT.


Russell-2000, RUT, Weekly chart

I've shown the RUT's weekly chart before to point out the big megaphone pattern that has developed since early 2014. A trend line that runs along the highs from June 2007-March 2014-June 2015 is currently near 1412 and Tuesday's high missed it by only 2 points. While the RUT would be more bullish above 1415, based on this pattern, we need to keep in mind that it's a bearish pattern and it calls for a decline to the bottom, which is the trend line along the lows since February 2014.

For some perspective, that line will be near 825 by the end of this year. The May 2011 high was at 868. The short-term pattern remains bullish since it's obviously in an uptrend, which is why it would be more bullish above 1415. But with the bearish divergence at the current high at vs. the December high (daily and weekly charts) I think it's a high-risk bet to be thinking long here. And if you wouldn't buy it here should you also be thinking of selling?


Russell-2000, RUT, Daily chart

The RUT's daily chart shows a tiny little air gap between Tuesday's high and the trend line along the highs from 2007-2015. We could see another attempt to reach the line, and it might even poke above it (to hit a lot of stops), before starting back down but that's a high-risk bet here. While the RUT remains bullish until proven otherwise, the setup here is for a top of significance. A drop back below the downtrend line from December 9th, currently near 1376, which would also be a break of its uptrend line from November, would confirm a top is in place. We have a setup for a top but no confirmation of it.

Key Levels for RUT:
- bullish above 1415
- bearish below 1376


Russell-2000, RUT, 60-min chart

The 60-min chart of the RUT shows the first crack in the bull's foundation with today's break of its short-term uptrend line from February 8th. I see the potential for a bounce back up to a minor new high to do a back-test of that uptrend line, which would result in it reaching the trend line along the highs from 2007-2015. But again, it's not something I'd be willing to bet any money on. If it happens, watch for continuing bearish divergence and short a rollover from resistance. The second sign of trouble for the bulls would be a drop below the February 16th low near 1391.


S&P 500, SPX, Daily chart

SPX is now nearing a price projection at 2376, which is where the 2nd leg of a 3-wave move up from December 30th would be 162% of the 1st leg up. It should be noted that the pieces are in place for a top at any time but obviously the bulls have had different ideas and keep buying the small dips. That could continue but again, the risk for a big move is high and chasing this higher from here is too risky unless you're day trading this.

Key Levels for SPX:
- more bullish above 2377
- bearish below 2300


S&P 500, SPX, 60-min chart

The 2nd leg of the rally from December 30th is the leg up from January 31st and the 60-min chart shows the 2376 projection for it. There are a couple of other shorter-term projections at 2373 and 2382, which gives us a relatively small range to watch for a possible high. The little sideways consolidation off Tuesday's high looks like a bullish consolidation pattern that is holding at the uptrend line from February 8th, both of which call for another rally leg on Thursday.

One more leg up would do a nice job finishing the wave count for the rally from January 31st so watch it carefully for a possible shorting opportunity. On the other hand, if it breaks down from here it would be immediately bearish.


Dow Industrials, INDU, Daily chart

The Dow looks like SPX with the February 14th break above its trend line along the highs from April-December 2016. That made the Dow even more bullish and now it stays bullish as long as the trend line holds as support on a pullback. The bulls now need to negate the bearish divergence against the December high. A top would be confirmed in place if the Dow drops below its January 26th high at 20125.

Key Levels for DOW:
- stay bullish above 20,550
- bearish below 20,125


Nasdaq Composite index, COMPQ, Daily chart

The Nasdaq turned more bullish on February 14th when it broke above the tops to two rising wedge patterns, one for the rally from February 2016 and the other for the leg up from November. The tops of those rising wedges cross on Thursday near 5800 and as long as that level holds as support on a pullback it will stay bullish. But a drop back below 5800 would leave a throw-over finish to the two rising wedge patterns and that would likely lead to a very strong selloff (rising wedges get retraced very quickly).

There is still some upside potential to a price projection at 5940.60, which is where the 5th wave of the rally from November would equal the 1st wave. But the 5th wave has already met its minimum expectation, at 5801 (62% of the 1st wave), and therefore rally completion can be called at any time.

Key Levels for COMPQ:
- stay bullish above 5802
- bearish below 5700


10-year Yield, TNX, Weekly chart

Treasuries continue to consolidate since mid-December and TNX remains inside a sideways triangle that has formed for the consolidation. This is a bullish continuation pattern and therefore the expectation is for another leg up. But a triangle consolidation typically leads to the last leg of the move (up in this case) and therefore I'm not expecting much higher (lower for bond prices). A downtrend line from 2007-2013 is currently near 2.63% (the December 15th high was 2.621%) and a price projection for an a-b-c bounce pattern off the January 2015 low points to 2.687%.

Assuming we'll see another rally leg those are the two levels to watch. But if TNX drops below its January 12th low near 2.3% I'd start to think more bearishly about yields sooner rather than later, especially since a failed bullish pattern would likely mean a fast drop in yields. This could happen if there's a sudden rush into the relative safety of bonds.


KBW Bank index, BKX, Weekly chart

Last week I pointed out how BKX had reached a price projection target zone at 97.07-92.21 with a high at 97.25 last Wednesday. Since then it's been struggling to push higher but has only been able to reach 97.08 and 97.12 yesterday and today, respectively. The sideways consolidation is potentially bullish, like the broader averages, in which case the next upside projection is 102.19. That's where the 5th wave of the leg up from June 2016 would equal the 1st wave. But it's important to note that the pattern can be considered complete at any time.


SPX comparison to Relative Strength of TRAN/UTY and XLY/XLP, Daily chart

The TRAN's chart is not clear at the moment, except that it has developed a strong bearish divergence since early December at its new price highs in January and lost week. But I think we continue to have a bearish warning when comparing the strength of the TRAN to the Utility index (the black line on the bottom chart below). The TRAN has been underperforming UTY since December, including into this week, and that's not a good sign about the economy.

The same can be said when looking at the underperformance of the Consumer Discretionary (XLY) vs. Consumer Staples (XLP), which is the blue line on the bottom chart. This tells us the consumer is spending more carefully and more on staples than want-to-have stuff. This often accompanies a slowdown in the economy.


U.S. Dollar contract, DX, Daily chart

The US$ dropped sharply after the FOMC minutes were released this afternoon, which is another indication that traders in the dollar believe the Fed may be reluctant to raise rates soon (rate hikes make the dollar more attractive to investors, which drives the price higher). But this afternoon's pullback has retraced only a small portion of the bounce off the pullback into the February 16th low. While I see the potential for another move higher for the dollar, perhaps up to about 102, I think there's a higher probability for the dollar to continue its decline from its January 3rd high. At the moment it's struggling to get back above its broken 50-dma, currently at 101.37.


Gold continuous contract, GC, Daily chart

Doing the reverse of the dollar, gold had declined during the day but did a sharp reversal back up at 14:00 and erased most of the day's loss. But by the end of the day the daily candle was just another doji inside the trading range that gold has been in since February 8th. This consolidation suggests we'll see another leg up for gold, which fits the projection I've been showing at 1273.20 for two equal legs up from its December 15th low. Or perhaps it will only make it up to its broken 200-dma, currently at 1264.50. Above 1274 would be more bullish for gold but for now I'm thinking we're getting only a bounce correction off the December low that will then be followed by a resumption of its decline.


Silver continuous contract, SI, Daily chart

Looking at silver to see how it's confirming (or not) the pattern for gold, I see the same potential for at least a little higher before turning back down. Two equal legs up from December 20th points to 18.32 and the top of rising wedge for its bounce off the December 20th low will be near 18.50 by the end of the month. But the oscillators are threatening to roll over as silver struggles with its 200-dma, currently at 17.95 (as well as its 200-week MA at 18.01), and it's nearing its downtrend line from July 2016, currently near 18.22. With all of this it looks like silver might be able to make it up to 18.22-18.50 but might roll over sooner rather than later.


Oil continuous contract, CL, Daily chart

If nothing else oil has been tenaciously holding near its December 12th high at 54.51. One could easily interpret the choppy sideways consolidation since then as a bullish continuation pattern, in which case we could see oil rally to 59-60. But with the COT report showing a very bullish speculator crowd vs. a bearish commercial crowd I think it's safer to bet with the commercial traders.

The bearish divergence since December also makes it difficult to think about the long side, although the bleeding off of an overbought condition from December while price has chopped sideways can also be considered bullish. Above 55.50 would be arguably bullish but until then I think there's a higher probability for a breakdown.


Economic reports

The rest of the week will remain quiet as far as economic reports go. The market will be responding more to overseas events and markets.


Conclusion

The stock market has been moving higher in relatively small steps but the lack of selling has made it relatively easy for the buyers to keep the market moving steadily higher. There are no signs of a market top but there are plenty of signs of waning momentum and deteriorating market internals. There's no reason to short this market but there's also elevated risk in chasing this higher.

As mentioned above, the sustained length of time without much in the way of volatility actually makes the market riskier here. While it's possible we'll see a strong acceleration higher I think the higher-odds probability is for a strong breakdown that scares lots of traders out of the market. It's likely we're going to see a strong spike in the VIX in the process (June VIX calls anyone?).

It's too early to short (although we could see a setup on Thursday or Friday) and it's too late to get long, which leaves many traders on the sidelines here. Wait for your setup and don't force a trade; look for your candidates to short while waiting for the correction.

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

Keene H. Little, CMT


New Option Plays

Competition Hurts

by Jim Brown

Click here to email Jim Brown

Editors Note:

You can be a leader when you are the only company in the space but your success attracts competition. In the case of YELP, they have attracted a lot of competition and much of it from sites like Amazn, Facebook and Google. Those are companies with a lot of clout.


NEW DIRECTIONAL CALL PLAYS

No New Bullish Plays


NEW DIRECTIONAL PUT PLAYS

YELP - Yelp Inc - Company Profile

Yelp Inc. operates a platform that connects people with local businesses primarily in the United States. Its platform covers various local business categories, including restaurants, shopping, beauty and fitness, arts, entertainment and events, home and local services, health, nightlife, travel and hotel, auto, and others categories. The company provides free and paid business listing services to businesses of various sizes, as well as enables businesses to deliver targeted search advertising to large local audiences through its Website and mobile app. It also provides other services, including Yelp platform, which allows consumers to transact directly on Yelp; Yelp deals that allow local business owners to create promotional discounted deals for their products and services; and gift certificates products for local business owners to sell full-price gift certificates directly to customers. The company's Yelp platform enables consumers to complete food delivery transactions, book spa and salon appointments, order flowers, make winery reservations, and others. It also serves customers in Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, the Netherlands, New Zealand, Norway, the Philippines Poland, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, and the United Kingdom. Company description from FinViz.com.

Yelp reported earnings on February 9th of 27 cents that easily beat estimates for 25 cents. Revenue of $194.8 million barely beat estimates for $194.3 million. With an earnings beat you would have expected the stock to rally strongly. That was not the case.

The company guided to revenue of $195-$199 million and analysts were looking for $204.4 million. Full year guidance was $880-$900 million.

The challenge was slowing growth. In Q2 they added 7,400 accounts. In Q3 6,600 accounts and in Q4 only 2,800 accounts. Yelp says its addressable universe is more than 20 million local businesses but they only have 138,000 active advertisers. It is far too soon for growth to be slowing at that fast a pace.

They are also seeing a decline in website traffic and app usage.

The problem is competition. Amazon, Google and Facebook are breaking into the market with new offerings. Other copycat sites like Munch Ado are stealing their customers.

Yelp pulled back from its focus on national brands and is concentrating on local business advertising, which is the bulk of their business. They are aggressively cutting costs as evidenced by the earnings beat but that only works so long if the new advertiser growth is slowing and consumer usage is fading.

Piper Jaffray called the guidance lackluster and said a "confluence of factors" will cause further decline in Yelp traffic in the future.

Earnings May 11th.

Shares have been declining steadily since earnings and have now moved under support at $35.

Buy APR $33 put, currently $1.45, initial stop loss $37.25.



In Play Updates and Reviews

Dow Leaders Rotating

by Jim Brown

Click here to email Jim Brown

Editors Note:

The Dow was the strongest index today but the Nasdaq managed to extend its string to 14 days. The Dow streak is now nine days and the stocks carrying the load today were MMM, DD, IBM and NKE. Other than IBM, those have not been recent visitors to the winners list. CVX, XOM and INTC were the biggest losers. The Russell 2000 gave back -6.5 points after its 10 point gain on Tuesday.

The Nasdaq 100 ($NDX) RSI reading rose again to 84.79 when 70 is considered overbought. Wednesday was the highest reading since January 9th, 1992 when it hit 86.39 after a 20% gain in the Nasdaq in only 13 days consecutive days. That move was followed by a six-month decline. Overbought oscillators can always become even more overbought but this is flashing a huge warning sign there could be a peak ahead.



Current Portfolio


Stop Loss Updates

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.


Profit Targets

Check the graphic below for any profit stops in green. We need to always be prepared for a profit exit at resistance.





Current Position Changes


DVMT - Dell Technologies

Close the long call position at the open.

BMY - Bristol Myers

The June long call position was entered at the open.

VIX - Volatility Index

The April $13 call position was entered at the open.

QQQ - Nasdaq 100 ETF

The April $128 put position was entered at the open.

XBI - Biotech ETF

The long call position was stopped out at $68.50.



If you are looking for a different type of option strategy, try these newsletters:

Credit spreads and naked puts = OptionWriter

Long term option investments = LEAPS Investor

3-6 month Option Trades = Ultimate Investor

Iron Condors = Couch Potato Trader

Long and short equity trades = Premier Investor



BULLISH Play Updates

ADP - Automatic Data Processing - Company Description

Comments:

No specific news. Finally a nice move above recent congestion.

Original Trade Description: February 11th

Automatic Data Processing, Inc., together with its subsidiaries, provides business process outsourcing services worldwide. The company operates through two segments, Employer Services and Professional Employer Organization (PEO) Services. The Employer Services segment offers a range of business outsourcing and technology-enabled human capital management (HCM) solutions, including payroll services, benefits administration services, talent management, human resources management solutions, time and attendance management solutions, insurance services, retirement services, and tax and compliance solutions. This segment's integrated HCM solutions include RUN Powered by ADP, ADP Workforce Now, ADP Vantage HCM, and ADP GlobalView, which assist employers of all sizes in all stages of the employment cycle from recruitment to retirement; and ADP SmartCompliance and ADP Health Compliance. The PEO Services segment provides a human resources (HR) outsourcing solution through a co-employment model to small and mid-sized businesses. This segment offers ADP TotalSource that provides various HR management services and employee benefits functions, such as HR administration, employee benefits, and employer liability management into a single-source solution. Company description from FinViz.com.

Earnings for the last quarter rose 20% to 87 cents and analysts were expecting 81 cents. Revenues of $2.99 billion rose 6% but missed estimates for $3.02 billion.

They guided for lower than expected bookings for 2017. The CEO said the decline in expectations was driven by the uncertainty surrounding the election but now that a new administration was in place they expected their bookings pressure to ease. "Despite the recent uncertainty in the U.S. business environment, we continue to believe that change will be beneficial to us, as we are well-positioned to help our clients navigate the complexities of HCM (human capital management)."

They are now expecting 6% revenue growth in 2017 compared to prior forecasts for 7% to 8%. Worldwide new business bookings would be similar to the $1.75 billion sold in 2016 compared to prior forecasts for 4% growth. They expect earnings to rise 15% to 17% over 2016.

ADP is rapidly expanding their Total Service product where they provide comprehensive outsourcing solutions where workers are co-employed by ADP and its clients. Revenue in that division rose 16% with 12% earnings.

Update 2/21/17: ADP Mobile Solutions App just passed 10 million individual employees and is growing by 300,000 per month. More than 1,000 HR transactions are being processed per second. Users can access time cards, W2s, digital payroll statements as well as other data.

Earnings May 3rd.

Shares crashed on the lowered guidance but are rebounding now that the market is improving. The bottom line is that earnings are expected to rise 16% and the emphasis on jobs by the Trump administration is going to be positive for ADP. Long-term investors are going to see the $2.28 dividend and the double-digit earnings growth and assume the worst is already priced into the stock with the post earnings drop.

Position 2/13/17:

Long May $100 call @ $2.18, see portfolio graphic for stop loss.


BMY - Bristol Myers - Company Profile

Comments:

No specific news. The headlines were full of "Icahn takes a stake in BMY" but none of them detailed how big a stake. The investor has not yet filed with the SEC. Shares were up strongly around lunchtime but faded with the market and the weak biotech sector.

Original Trade Description: February 21st

Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, markets, and distributes biopharmaceutical products worldwide. It offers chemically-synthesized drug or small molecule, and biologic in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV); oncology; immunoscience; cardiovascular; and neuroscience. Its products include Baraclude for the treatment of chronic hepatitis B virus infection; Daklinza and Sunvepra for the treatment of hepatitis C virus infection; Reyataz and Sustiva for the treatment of HIV; Empliciti, a humanized monoclonal antibody for the treatment of multiple myeloma; Erbitux, an IgG1 monoclonal antibody that blocks the epidermal growth factor receptor; Opdivo, a fully human monoclonal antibody for non-small cell lung and renal cell cancer, and melanoma; Sprycel, a tyrosine kinase inhibitor for the treatment of adults with Philadelphia chromosome-positive chronic myeloid leukemia; Yervoy, a monoclonal antibody for metastatic melanoma; Abilify, an antipsychotic agent for adults with schizophrenia, bipolar mania disorder, and depressive disorder; Orencia to treat rheumatoid arthritis; and Eliquis, an oral factor Xa inhibitor targeted at stroke prevention in atrial fibrillation. Its products pipeline includes Beclabuvir, a non-nucleoside NS5B inhibitor for the treatment of HCV; BMS-663068, an investigational compound that is being studied in HIV-1; and Prostvac, a Phase III prostate-specific antigen to treat asymptomatic or minimally symptomatic metastatic castration-resistant prostate cancer. The company has clinical trial collaborations with Calithera Biosciences, Inc. and Janssen Biotech, Inc.; and a research collaboration with GeneCentric Diagnostics, Inc. Company description from FinViz.com.

BMY reported earnings of 63 cents that missed estimates for 67 cents. They guided for 2017 for earnings of $2.70-$2.90 and analysts were expecting $2.97. The shares were crushed with a $9 drop over five days. Complicating the earnings was news that sales of two drugs were slowing because of competition. However, what was not said was that BMY has dozens of other drugs currently being sold and dozens more in the pipeline. BMY has one of the richest pipelines in the business.

Fund manager Dodge & Cox did an extensive analysis of BMY and said the recent problems have just been a temporary setback and the strong pipeline of drugs plus their immuno-oncology business makes them particularly attractive and they initiated a large position. They said BMY has capitalized on its recent problems to become a focused biopharmaceutical company that is positioned to grow.

Multiple analysts have now called BMY an acquisition target. Icahn said that was one of his reasons for opening the position.

Earnings April 27th.

Shares are starting to rebound from the $46 low and they have plenty of ground to cover. The biotech sector is actually positive over the last week as through investors believe the danger from Trump and drug prices may have passed or at least moved into a new stage.

I am choosing a $60 June option with earnings in April. The option is cheap enough that we can hold over that earnings report if we decide to do that in April. If by chance there is a big gap higher on Wednesday, switch to the $60 strike.

Position 2/22/17:

Long June $57.50 call @ $2.78, no initial stop loss.


DVMT - Dell Technologies - Company Profile

Comments:

No specific news. Shares continue to trade in a narrow range right at support. The upward momentum has died. I am recommending as close this position before we get a negative surprise.

Original Trade Description: February 4th

Dell Technologies Inc. provides a range of technology solutions worldwide. It offers client computing devices, including desktop personal computers, notebooks, and tablets; rack, blade, tower, and hyperscale servers for enterprise customers; value tower servers for small organizations, networks, and remote offices; networking solutions; and storage solutions, including storage area networks, network-attached and direct-attached storage, and backup systems. It also sells peripherals, including monitors, printers, projectors, and other client and enterprise peripherals, as well as third-party software products. In addition, the company offers support and extended warranty, enterprise installation, and configuration services; and infrastructure and security managed, cloud computing and infrastructure consulting, and security consulting and threat intelligence services. Further, it provides application services, such as application development, maintenance, migration, management, and consulting, as well as package implementation, testing and quality assurance functions, business intelligence and data warehouse solutions; business process services comprising back office administration, call center management, and other technical and administration services; and system and information management, and security software services. Additionally, the company offers financial services, including originating, collecting, and servicing customer receivables primarily related to the purchase of its products. It serves corporate businesses; educational institutions, government, healthcare, and law enforcement agencies; small and medium-sized businesses; and consumers directly, as well as through retailers, third-party solution providers, system integrators, and third-party resellers. The company was formerly known as Denali Holding Inc. and changed its name to Dell Technologies Inc. in August 2016. Dell Technologies Inc. was founded in 1984 and is headquartered in Round Rock, Texas. Company description from FinViz.com.

The company came public without a lot of fanfare back in August and moved sideways for two months. Since the election, the stock has been unstoppable. There was a spike last week when Michael Dell was seen in one of the presidents CEO meetings and identified as the CEO of Dell Technologies. I do not think the average investor has picked up on the fact that Dell is public again.

You may recall that Dell recently bought EMC and VMWare and they are leveraging that technology internationally. Dell has been on a mission to divest as many non-core entities as possible. On October 31st, they sold the Dell Software Group for $2.4 billion. In November, they sold the Dell Services group for $3 billion. In September, they announced a deal to sell the EMC Enterprise Content division for $1.6 billion.

In Q3, they reported revenue of $16.8 billion. Not bad for a company many investors have forgotten about.

The original Dell Company created thousands of millionaires as the stock doubled and tripled, split and repeat multiple times. I know the chart is ridiculous with a $10 gain over the last month but it has very low volatility and the option is cheap. I have put off recommending it several times thinking I would wait for a dip, only it never dips.

Update 2/15/17: Elliott Management disclosed they bought 7.1 million shares worth $392 million and call options on another 2.8 million shares worth $154 million. That is a very big bet on Dell's resurgence.

Earnings March 9th.

Position 2/6/17:

Long March $65 call @ $1.75, see portfolio graphic for stop loss.


MLNX - Mellanox - Company Profile

Comments:

No specific news. Minor decline to prior resistance, now support.

Original Trade Description: February 16th

Mellanox Technologies, Ltd., a fabless semiconductor company, designs, manufactures, and sells interconnect products and solutions. The company's products are used for computing, storage, and communications applications in the high-performance computing, Web 2.0, storage, financial services, enterprise data center, and cloud markets. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment, and other embedded systems. The company offers 40/56/100Gb/s InfiniBand solutions, including switch and gateway integrated circuits (ICs), adapter cards, cables, modules, and software, as well as switch, gateway, and long-haul systems; 10/40/56Gb/s Ethernet solution for use in EDC, HPC, embedded environments, hyperscale Web 2.0, and cloud data centers; and 10/25/40/50/56/100Gb/s Ethernet NICs. It also provides adapters to server, storage, communications infrastructure, and embedded systems original equipment manufacturers (OEMs) as ICs or standard card form factors with PCI express interfaces; and switch ICs to server, storage, communications infrastructure, and embedded systems OEMs to create switching equipment. In addition, the company supports server operating systems, including Linux, Windows, AIX, HPUX, Solaris, and VxWorks. Mellanox Technologies, Ltd. markets its products under the Mellanox, BridgeX, Connect-IB, ConnectX, CoolBox, CORE-Direct, GPUDirect, InfiniBridge, InfiniHost, InfiniScale, Kotura, Mellanox Federal Systems, Mellanox ScalableHPC, Mellanox Technologies Connect. Accelerate. Outperform, MetroDX, MetroX, MLNX-OS, Open Ethernet, PhyX, SwitchX, TestX, The Generation of Open Ethernet, UFM, Virtual Protocol Interconnect, and Voltaire trademarks. Company description from FinViz.com.

On February 1st, the company reported earnings of 82 cents compared to estimates for 86 cents. Revenue of $221.7 million missed estimates for $225 million. Shares crashed to a six-week low. Revenues did increase 17% and earnings up +6.5%.

The company said growth in its 25, 50 and 100 gigabit network solution was robust and would push strong multi-year growth across multiple sectors. Margin rose a whopping 24.9% to 71.6%.

They guided slightly weak for Q1 because of normal seasonal factors and $16 million in stock based compensation for employees.

Earnings May 3rd.

Shares crashed on the earnings but immediately began to rebound and have now risen above the pre-earnings level. Thursday's close was a breakout to a seven-month high.

Position 2/17/17:

Long June $50 call @ $2.80, see portfolio graphic for stop loss.


PANW - Palo Alto Networks - Company Profile

Comments:

No specific news. Chopping around at the recent highs.

Original Trade Description: Jan 23rd

Palo Alto Networks, Inc. provides security platform solutions to enterprises, service providers, and government entities worldwide. Its platform includes Next-Generation Firewall that delivers application, user, and content visibility and control, as well as protection against network-based cyber threats; Advanced Endpoint Protection, which prevents cyber attacks that exploit software vulnerabilities on various fixed and virtual endpoints and servers; and Threat Intelligence Cloud, which offers central intelligence capabilities, security for software as a service applications, and automated delivery of preventative measures against cyber attacks. The company provides firewall appliances; Panorama, a security management solution for the control of appliances deployed on an end-customer's network as a virtual or a physical appliance; and Virtual System Upgrades, which are available as an extensions to the virtual system capacity that ships with the physical appliances. It also offers subscription services covering the areas of threat prevention, uniform resource filtering, malware and persistent threat, laptop and mobile device, and firewall protection services, as well as cyber attack, threat intelligence, and content control services. In addition, the company provides support and maintenance services; and professional services, including application traffic management, solution design and planning, configuration, and firewall migration, as well as provides online and classroom-style education training services. Palo Alto Networks, Inc. primarily sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries comprising education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. Company description from FinViz.com.

In November, PANW posted earnings that beat the street but revenue, which rose 34% missed estimates by a fraction. Revenue was $398.1 million and analysts were expecting $400.1 million. PANW had guided for revenue growth of 33% to 35% so they were right in the middle of their guidance range. Earnings of 55 cents beat estimates for 53 cents. Shares were crushed because the company said the market was "lumpy" and customers were taking longer to make purchase decisions.

In Q3 they added more than 1,500 new customers to hit 35,500 globally. Subscription revenue has risen to 60% of total revenue as they move to a cloud model.

In early January, noted short seller Andrew Left of Citron Research, put out a bullish note on PANW saying they had a fantastic moat, which would be a barrier to entry for other companies trying to duplicate their type of firewall. His price target is $170. Shares rallied $14 over the next three weeks on the call. At the same time, Bernstein put out a very positive note on the company saying nobody serious about protecting their web environment should be without PANW as their security solution.

Shares have rebounded to their November gap down level of $144 and have found resistance. They are not giving back their gains but there was a slight retracement on Monday in a weak market. I believe they will overcome this resistance level and move higher, market permitting.

There is a persistent rumor in the market that Microsoft and Cisco Systems are both looking for a cybersecurity company to acquire. Given Palo Alto's position in the sector, they would be a good target.

Update 2/14/17: The Cyber Threat Alliance (CTA) announced that FTNT, PANW, SYMC, CHKP, INTC and CSCO are the founding members and they appointed Michael Daniel as the first president. The CTA members are all contributing to an automated threat intelligence sharing platform to exchange actionable threat data. The CTA was incorporated as a not-for-profit organization in January.

Earnings February 28th.

Because of the price of the options, I am forced to turn this into a spread. If you want to go with a naked call, I would probably use the $150 strike.

Position 1/24/17:

Long March $145 call @ $6.00, see portfolio graphic for stop loss.
Short March $155 call @ $3.15, see portfolio graphic for stop loss.
Net debit $2.85


QCOM - Qualcomm - Company Profile

Comments:

Qualcomm announced a joint venture with GE Digital and Nokia to create LTE hotspots for individual companies with large facilities. The concept is to provide a large area like a factory, rail yard, port or mining complex with a wide area WiFi to enable "Industrial Internet of Things" (IIoT) devices.

Original Trade Description: February 15th

QUALCOMM Incorporated develops, designs, manufactures, and markets digital communications products and services in China, South Korea, Taiwan, the United States, and internationally. The company operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on code division multiple access (CDMA), orthogonal frequency division multiple access (OFDMA), and other technologies for use in voice and data communications, networking, application processing, multimedia, and global positioning system products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of certain wireless products comprising products implementing CDMA2000, WCDMA, CDMA TDD, and/or LTE standards, as well as their derivatives. The QSI segment invests in early-stage companies in various industries, including digital media, e-commerce, healthcare, and wearable devices for supporting the design and introduction of new products and services for voice and data communications. The company also develops and offers products for implementation of small cells; mobile health products and services; software products, and content and push-to-talk enablement services to wireless operators; and development, and other services and related products to the United States government agencies and their contractors. In addition, it licenses chipset technology and products for data centers. Company description from FinViz.com.

Qualcomm it under attack from every direction. A while back China's regulator assessed a $975 million fine for improper licensing and made them lower royalties. The South Korean FTC imposed a fine of $853 million because it found the company's licensing practices to be monopolistic. The KFTC found that Qualcomm's market share had risen from 34% in 2010 to 69% in 2015 while many competitors were forced out of the market.

In early January, the US FTC attacked the company for anticompetitive practices that prevented competitors from supplying chips to handset makers. This is another billion-dollar problem.

Three days later Apple sued Qualcomm for $1 billion claiming Qualcomm charged five times as much for licensing than all other cellular patent licensors combined. Apple also claimed the company withheld $1 billion in rebates because Apple had cooperated with KFTC when that investigation was active.

With roughly $4 billion in fines and suits over the last few weeks, the investor appetite for QCOM shares had evaporated in early February. Brokers were slashing their ratings from buy to hold or even sell.

The company reported earnings of $1.19 that matched estimates but missed on revenue. They guided for $1.15-$1.25 for Q1 and analysts were expecting $1.17.

We played a put on QCOM a couple weeks ago and once the stock hit $53 it quit going down. It stayed at that level for more than two weeks and then began rebounding. Analysts are saying it will be years before there is any outcome on the Apple suit and the CEO said at the Goldman tech conference this week, that Apple has a very weak position and he expects it to be settled out of court.

Shares closed at a three-week high on Wednesday. Options are cheap and the stock is already beaten up. If the market begins to correct, this should be seen as a fallen angel.

Update 2/21/17: Qualcomm announced a new WiFi standard 802.11ax that is designed to provide added connectivity for IoT devices. Business Insider said there will be more than 22 billion IoT devices in operation by 2021 and more than $5 trillion will be spent on IoT devices over the next five years. Current WiFi protocols are not structured for the high number of in home devices expected in the coming years. The current communication protocols get bogged down in a high use environment. The 802.11ax standard will solve that problem and put Qualcomm at the top in what could become a crowded market.

Earnings April 26th.

Futures are down tonight so I am going to put an entry trigger on this recommendation.

Position 2/16/17 with a QCOM trade at $56.75

Long June $60.00 call @ $1.50, no initial stop loss.


SFLY - Shutterfly - Company Profile

Comments:

No specific news. Shares joined the S&P-600 at the open on Tuesday and faded the rest of the day as traders exited. I was encouraged when the stock did not decline today. That suggests the exits have already taken place.

Original Trade Description: February 15th

Shutterfly, Inc. engages in manufacturing and retailing personalized products and services in the United States. The company operates through Consumer and Enterprise segments. It offers a range of personalized photo-based products and services that enable consumers to upload, edit, enhance, organize, find, share, create, print, and preserve their memories. The company also provides photo-based products, such as photo books; cards and stationery; photo gifts; home decor; photo prints comprising wallet 4x6, 5x7, 8x10, square, and large format sizes, including posters and collages; and photo-based merchandise items consisting of mugs, iPhone cases, desktop plaques, candles, pillows, canvas prints, and blankets. In addition, it operates an online cards and stationery boutique that sells announcements, invitations, and personal stationery for every occasion; and cloud services under the Tiny Prints name. Further, it offers personalized save the dates, wedding invitations, thank you cards, and bridal invitations under the Wedding Paper Divas brand; and ThisLife, a service that gathers and organizes photos and videos. Additionally, the company provides MyPublisher, which allows customers to create custom photo books, share memories, and tell their stories using their own photos; BorrowLenses, an online marketplace for photographic and video equipment rentals; and Groovebook, a mobile photo book application subscription service that sends customers a keepsake book of their mobile photos each month. It also engages in the advertising and sponsorship activities; and printing and shipping of direct marketing and other variable data print products and formats, as well as operates Share sites, a share platform. Company description from FinViz.com.

Shutterfly reported earnings of $2.63 compared to estimates for $2.84. Revenue of $ 561.2 million also missed estimates for $584.4 million. They guided for Q1 for a loss of 95 cents to $1 per share. Analysts were expecting a loss of 84 cents. Revenue guidance was $185-$190 million and analysts expected $199.4 million. Shares were crushed for a $10 loss.

Shutterfly announced a major restructuring with layoffs of 260 workers or 13% of the total. They are halting development of multiple websites and businesses and will concentrate on just their core market. They tried to expand too aggressively in to other things and customers just wanted to make their picture books. They had a picture sharing site, a site to rent/borrow cameras, a Wedding Paper Divas site, Tiny Prints site, MyPublisher.com site, Trippix for trip pictures, FAvPix.com for favorite pictures, etc. They are shutting all of these down and will simply concentrate on the core concept that produces 85% of the revenue. They currently have about 11 million customers and could double that over the next five years.

Update 2/16/17: At 6:37 ET last night the S&P announced SFLY would be joining the S&P-600 at the open on Feb-21st. Shares gapped higher at the open to fill us at the high for the day.

Earnings May 3rd.

The shares were beaten severely on the earnings but now rebounding on the restructuring story.

Position 2/16/17 with a SFLY trade at $46.15

Long June $47.50 call @ $3.00, no initial stop loss.


VAR - Varian Medical systems - Company Profile

Comments:

No specific news. Nice rebound from the opening dip to close unchanged when the biotech sector was down sharply.

Original Trade Description: February 18th

Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide. It operates through two segments, Oncology Systems and Imaging Components. The Oncology Systems segment provides hardware and software products for treating cancer with radiotherapy, fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy, and brachytherapy. Its products include linear accelerators, brachytherapy afterloaders, treatment simulation, verification equipment, and accessories; and information management, treatment planning, image processing, clinical knowledge exchange, patient care management, decision-making support, and practice management software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, physicians' offices, oncology practices, radiotherapy centers, and cancer care clinics. The Imaging Components segment offers X-ray imaging components for use in radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, computer aided diagnostics, and industrial applications. It also provides Linatron X-ray accelerators, imaging processing software, and image detection products for security and inspection purposes. This segment serves original equipment manufacturers, independent service companies, and end-users. In addition, the company offers products and systems for delivering proton therapy; and develops technologies in the areas of digital X-ray imaging, volumetric and functional imaging, and improved X-ray sources. Company description from FinViz.com.

Varian reported lower than expected earnings on January 26th and shares fell -$6 to $87. Two days later, they spun off Varex and shares fell to $77 as a result of the separation. Since that split the stock has been moving higher and the rate of climb has accelerated over the last two weeks as they signed multiple new deals around the world.

Varian guided for earnings of $2.94-$3.06 for Q2 through Q4. For Q2 earnings are expected to be 84-90 cents on a 4% to 5% increase in revenues. The split at the end of January complicates apples to apples comparisons for Q1.

Earnings April 26th.

On February 13th the company announced competitive bid wins for six Shanghai hospitals. Varian is the leading manufacturer of medical devices and software for treating cancer and will provide its state of the art advanced radiotherapy technology to those hospitals. On February 14th, Varian's Eclipse treatment planning software was named the 2017 category leader for oncology treatment planning by KLAS. KLAS is an independent research firm specializing in monitoring and reporting on healthcare vendors.

Varian is on track to return to its pre-split price of $90 if the current rally continues. Because of its decline in February, I believe it offers some protection against a potential market decline.

Position 2/21/17:

Long May $85 call @ $2.75, see portfolio graphic for stop loss.


$VIX - Volatility Index - Index Description

Comments:

We rolled up our March $12 put into an April $13 put at the open today. I remain strongly convinced we will see a significant volatility event over the next six weeks.

Original Trade Description: Jan 26th

The VIX is a computed index, much like the S&P 500 itself, although it is not derived based on stock prices. Instead, it uses the price of options on the S&P 500, and then estimates how volatile those options will be between the current date and the option's expiration date. The CBOE combines the price of multiple options and derives an aggregate value of volatility, which the index tracks.

The VIX closed at 10.63 and very close to record lows. You have to go back to June of 2014 for a lower recent close at 10.28. Before that, you have to travel back in time to Feb-2007 for a close at 10.05. The next lowest close was 9.48 in Dec-1993.

The point here is that volatility is near record lows only reached four times in the last 23 years. That qualifies for an abnormal event. I believe it is time we bought some VIX calls. The odds of the VIX remaining this low for the next two months are about as close to zero as you can get.

There is a very old saying in the market. "When the VIX is high, it is time to buy. When the VIX is low, it is time to go." You cannot get much lower than this.

The VIX is telling us that everyone expects the market to continue moving higher. Nobody is worried that some unexpected headline or event is going to trigger a significant market decline. When nobody expects an event is when we should be the most concerned.

Position 2/7/17:

Closed 2/22/17: Long March $12 call @ $1.75 adj, exit $1.65, -.10 loss.
Long Apr $13 call @ $2.30, no stop loss, profit target $17.

Previously Closed 2/1/17: Long March $12 call @ $2.60, exit $2.50, -.10 loss.


VMW - VMWare - Company Profile

Comments:

No specific news. Minor 59 cent decline after a $1.13 gain to a new high on Tuesday.

Original Trade Description: February 8th

VMware, Inc. provides virtualization and cloud infrastructure solutions in the United States and internationally. Its virtualization infrastructure solutions include a suite of products and services designed to deliver a software-defined data center (SDDC), run on industry-standard desktop computers, servers, and mobile devices; and support a range of operating system and application environments, as well as networking and storage infrastructures. The company offers VMware vSphere, a SDDC platform, which enables users to deploy hypervisor, a layer of software that resides between the operating system and system hardware to enable compute virtualization; storage and availability products that provide data storage and protection options; network and security products; and management and automation products to manage and automate overarching IT processes involved in provisioning IT services and resources to users from initial infrastructure deployment to retirement. It also provides SDDC suites, such as VMware vCloud Suite, vSphere with Operations Management, and VMware vRealize suite for building and managing cloud infrastructure for use with the VMware vSphere platform. In addition, the company offers hybrid cloud computing solutions, including VMware vCloud Air Network Service Providers and VMware vCloud Air; and end-user computing solutions, which enables IT organizations to deliver secure access to applications, data, and devices to end users. Company description from FinViz.com.

In late January VMWare reported earnings of $1.11 that beat estimates for $1.08.Revenues of $2.03 billion also beat estimates for $1.99 billion. Overall revenues rose 8.8%, service revenues 9.8% and license revenues 7.5%. The exited the quarter with $8 billion in cash with free cash flow at $2.23 billion for the full year. They announced a new $1.2 billion share repurchase program.

For Q1 they guided for revenues of $1.625 billion to $1.725 billion and earnings of 93 to 96 cents. Dell Technologies owns 80% of VMW and the future earnings dates will be aligned with Dell's for transparency.

The company announced a joint venture with Amazon Web Services to provide VMWare on AWS beginning this summer. The VMW CEO said partnering with Amazon will allow VMWare customers to maintain their leadership while moving from a private cloud to the public cloud. Companies are increasingly closing or reducing existing data centers and moving operations to the cloud so someone else can be responsible for physical security, heating, cooling, electrical demand, server upgrades, etc. VMW is the number one maker of virtualization software and has shifted focus to combining customer's public and private clouds into a hybrid cloud. VMWare has smaller partnerships with Google and Microsoft but they are also competitors in many cases.

At least five analysts hiked their price targets on VMW after the earnings and Amazon announcement.

Update 2/15/17: The CEO was interviewed by Bloomberg and he was positively gushing about the prospects for Q3/Q4 because of the partnership with Amazon Wed Services. Also, the new software-defined networking (SDN) product saw a 50% increase in sales in Q4 and they are expecting $1 billion in new revenue from SND in 2017.

Earnings April 27th.

Position 2/9/17:

Long April $92.50 call @ $2.25, see portfolio graphic for stop loss.


XBI - Biotech ETF - ETF Profile

Comments:

The biotech sector was weak again today with the BTK losing -1.3%. This knocked the XBI for a loss to stop us out at $68.50 for a minimal gain. I had a tight stop because this was a March option.

Original Trade Description: February 9th

The SPDR S&P Biotech ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Biotechnology Select Industry Index.

This is a sector ETF that tracks 90 biotech and pharma stocks having a market cap of at least $500 million. The index is rebalanced quarterly to remove stocks that have decreased and add stocks that have exceeded the market cap requirements. As such this ETF is focused on the larger cap names and many of the small cap stocks are not represented.

The XBI has rebounded from $61, where it fell after comments from the president in January, to $67 despite new comments earlier this week. The overall optimism about the economy, faster approval of drugs and tax cuts have lifted the sector.

If the ETF can move over $70 the next material resistance is $80. I am using an inexpensive March option because the sector can be volatile. There are no April options yet.

Position 2/10/17:

Closed 2/22/17: Long Mar $68 call @ $1.92, exit $2.11, +.19 gain.



BEARISH Play Updates (Alpha by Symbol)

QQQ - Nasdaq 100 ETF - ETF Profile

Comments:

We rolled this position up from a March $127 put to an April $128 put at the open. That gives us a lot wider time horizon for the Nasdaq 100 to fall off a cliff. Today was the 14th consecutive day of gains if you do not count the 4 cent decline several days ago. That hardly counts as a loss.

Would you buy this chart at the current level?

Original Trade Description: February 13th

PowerShares QQQ, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock", is an exchange-traded fund based on the Nasdaq-100 Index. The Fund will, under most circumstances, consist of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The Fund and the Index are rebalanced quarterly and reconstituted annually.

The Nasdaq 100 big cap index has been leading the market higher since early December. The QQQ ETF is up 11% since the close on December 2nd. While the Dow and S&P were moving sideways over January the Nasdaq 100 was piling on the gains. Those gains have gone vertical since the beginning of February.

The Nasdaq 100 is in very overbought territory with the RSI at a whopping 78.47 at today's close. A reading of 70 is considered to be overbought. The last two times the NDX had a RSI reading over 70 there was a decline in the index.

Nobody can predict when an index will decline but we can read the indicators and they are telling us to be careful with new longs at this point.

Janet Yellen will be testifying before the House and Senate over the next two days. All she has to do is phrase one sentence the wrong way and we could see a serious decline.

This is going to be a short-term position because the dip buyers are still alive and well. If we did get a 3% decline, it would be bought. We have not had one since before the election.

I am going to jump right in rather than use an entry trigger. The options are cheap and the most we can lose is $1.29.

Position 2/14/17:

Closed 2/22/17: Long March $127 put @ $1.29, exit .50, -79 cent loss

Long Apr $128 put @ $1.59, no stop loss.




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