Option Investor
Newsletter

Daily Newsletter, Sunday, 3/8/2015

Table of Contents

  1. Leaps Trader Commentary
  2. Portfolio
  3. New Plays
  4. Play Updates
  5. Watch

Leaps Trader Commentary

February Jobs Ignite Rate Hike Fears

by James Brown

Click here to email James Brown

Last Monday was the first trading day of March and the NASDAQ made headlines with its first close above the 5,000 mark in 15 years. The S&P 500, the small cap Russell 2000 index, and the Dow Industrials all closed at record highs. Unfortunately that proved to be a short-term top. I cautioned readers last weekend that after big gains in February the market was due for a pullback.

Stocks endured a lot of headlines last week. There was a ton of economic data released. There were numerous central bank decisions. The financial sector digested the Fed's annual stress tests. In the end worries over the Federal Reserve raising rates send stocks lower on Friday after the February jobs number came in hotter than expected.

Investors were in a sell-everything mood on Friday as stocks, bonds, and commodities declined. The U.S. dollar surged to new 12-year highs. That put pressure on commodities. Silver prices ended the week with a -4.5% loss. Gold lost -3.9% to close at $1,164 an ounce. Crude oil was down on Friday but managed a +1.0% gain on the week yet WTI oil remains under $50.00 a barrel.

All of the Industrials, the S&P 500, and the $RUT all posted declines for the week. The Dow Jones transportation average lost -1.3%. The SOX semiconductor index only fell -0.3% for the week and is still up +3.7% year to date. Meanwhile biotech stocks continued to show relative strength thanks to new merger and acquisition headlines. Elsewhere the U.S. bond market retreated and the sell-off accelerated on Friday. The yield on the 10-year note ended at two-month highs near 2.24%.

Financial stocks failed to see any relief after the Federal Reserve announced the results of its annual stress test. This year the Fed's stress test wanted to see how the biggest 31 banks would hold up if the U.S. economy saw unemployment rise to 10%, if housing prices dropped -25%, and if the stock market plunged -60%. Believe it or not, it was the first time since these stress tests started in 2009 that all the banks tested received a passing grade.

Meanwhile crude oil's direction remained in focus. The number of active rigs inside the U.S. fell for the 13th week in a row. The Baker Hughes rig count dropped another 75 rigs to 1,192 - that's a new 18-year low. At the same time U.S. production rose another +39,000 barrels per day to 9.324 mbpd, which is a 43-year high. The EIA said oil inventories rose +10.3 million barrels from the prior week to 444.4 million barrels, which is a new 80-year record.

There is a growing concern that the U.S. will actually run out of storage before demand is expected to rise this summer. Estimates suggest we could run out of storage by the end of March or early April. If that occurs, Charles Perry, the CEO of energy-consulting firm Perry Management, speculates that crude oil could drop into the $30-40 a barrel range.

Economic Data

We had a ton of economic data released last week. Personal income rose +0.3% in January but personal spending slipped -0.2%. The lack of spending does not bode well for Q1 GDP growth but optimists argue the drop was due to lower gasoline prices.

The February ISM index fell to a 13-month low at 52.9 from January's 53.5. The ISM non-manufacturing (services) index inched higher from 56.7 to 56.9 in February. Numbers above 50.0 suggest growth. The latest Factory Orders in the U.S. fell for the sixth month in a row with a -0.2% drop in January following December's -3.5% plunge. Most of the weakness was due to falling petroleum refinery orders.

Focusing on the labor market the weekly initial jobless claims spiked to nine-month highs at 320,000. Yet this was overshadowed by a healthy ADP National Employment Report. ADP revised their January private job growth estimate from +213,000 to +250K. Their February number showed +212K new jobs.

Nonfarm Payroll Report

The big economic report for the week was the U.S. nonfarm payroll number. Economists were expecting +240,000 new jobs in February. The BLS announced that February saw +295,000 jobs. This sparked a widespread sell-off across the market. There are plenty of opinions on when the Federal Reserve is going to raise rates. For a while there it seemed that consensus was starting to settle on June 2015 for the Fed's first rate hike. However, after the last few weeks of disappointing economic data most had written off June and were looking further out to September or even later. Suddenly this hotter than expected jobs number made a June rate hike a strong possibility again.

The U.S. government said that in spite of the cold winter weather it did not have much impact on the normally weather-sensitive jobs. Construction jobs and hospitability-related jobs both saw gains last month. That surprised a lot of people. The colder than normal winter and the piles of snow blanketing much of the East Coast had soured many expectations. Many analysts were forecasting job growth below 200K.

January's job number of +257K was revised down to +239K. February's jobs report marks the twelfth month in a row of more than +200K jobs. We haven't see a stretch of job growth this good since the 19-month streak that ended in March 1995.

The U.S. unemployment rate dipped from 5.7% to 5.5%. That's the lowest reading since May 2008. Unfortunately this decline was due to another drop in the labor participation rate, which fell from 62.9% to 62.8%, near multi-decade lows. The U-6 measure of unemployment, which includes those working part-time but are seeking full-time work dipped from 11.3% to 11.0%.

Central Banks

Last week there were a number of central bank moves or in some cases lack of movement. The Bank of England left rates unchanged at 0.5%. The Bank of Australia left their rates unchanged at 2.25%. India's central bank reduced its repurchase rate by 25 basis points to 7.5%, which marks the second cut this year. The central bank of China cut its loan and deposit rates by 25 basis points each to 5.35% and 2.5%, respectively.

The one central bank that really made headlines was the European Central Bank (ECB), which met on Thursday. They left rates unchanged at just above zero. The focus was on the ECB's new QE program, which will launch on Monday, March 9th. The ECB will start buying 60 billion euros a month up to September 2016 or until inflation in the Eurozone nears 2%.

Many found it interesting that ECB President Mario Draghi raised their Eurozone GDP growth forecast from +1.0% to +1.5% in 2015. They also projected inflation to rise from zero percent today to 1.8% in 2017. A few market pundits speculated that the ECB was already gaming the system. If the ECB raises their economic and inflation targets above expectations then they can extend their QE program when they miss their targets.

Overseas Economic Data

The latest estimate on Eurozone Q4 GDP was unchanged at +0.3% quarter over quarter. Eurozone Retail Sales came in better than expected at +1.1% for the month. That's probably thanks to Germany's retail sales rising +2.9% for the month, significantly above estimates. There was some interesting news out of Spain. The country's economy minister, Luis de Guindos, said that the Troika was negotiating with Greece over a third bailout. This is a move the European Commission denies.

Japan reported its manufacturing PMI inched higher from 51.5 to 51.6 in February. Meanwhile China's official PMI ticked higher from 49.8 to 49.9. The HSBC Chinese manufacturing PMI improved from 50.1 to 50.7. Numbers above 50.0 suggest growth, below 50 contraction.

The big news out of China last week was their new forecast. Chinese Premier Li Keqiang, in his opening remarks to the National People's Congress, lowered the country's GDP target from 2014's +7.5% down to +7.0%. Keqiang said, "With downward pressure on China's economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the year ahead may be even more formidable than those of last year."

Depending on which metric you choose to use China is either the first or second largest economy on the planet (in a contest with the U.S.). If China continues to slowdown that's not good news for the global economy. Some analysts believe that China's new target of +7% growth is still too optimistic.




Major Indices:

The big cap S&P 500 index lost -1.5% for the week. It was the second weekly loss in a row and its 2015 gain is down to +0.6%. Kind of an ugly week after closing at a record high on Monday. Monday, March 9th, is the six-year anniversary of the bear-market low back in 2009 where the S&P 500 dipped to 666. More on that in a bit.

I cautioned readers last week that if the 2,100 level did not hold as support then look for a dip to 2,085. The S&P 500 dipped to 2,087 on Wednesday before bouncing. Unfortunately the market-wide sell-off on Friday sent it to new three-week lows. The 2,065 area looks like it could offer some support. Below that we're probably looking at the 2,000 area as potential round-number support.

chart of the S&P 500 index:

The NASDAQ composite finally hit the 5,000 mark again. We actually saw it close above this significant psychological level on March 2nd. It looks like traders decided that was their signal to take profits. The NASDAQ retreated with a -0.7% decline for the week. It's still up +4.0% in 2015.

If the 4,900 level does not hold as support I would watch the 4,800 region as the level to watch. The 4,800 level is both prior resistance and lines up with a 50% retracement of the February rally.

chart of the NASDAQ Composite index:

Small caps followed the big caps lower. The Russell 2000 ($RUT) fell -1.29% versus the S&P 500's -1.5%. It closed just below potential support at the December highs. The next level of possible support is the 1,200 mark, which was resistance in January. If the 1,200 area breaks then we're probably headed for the 200-dma near 1,160.

chart of the Russell 2000 index



Economic Data & Event Calendar

It's a very quiet week for economic data. The only thing worth mentioning is probably monthly retail sales and the PPI.

Economic and Event Calendar

- Monday, March 09 -
(nothing significant)

- Tuesday, March 10 -
Wholesale inventory data

- Wednesday, March 11 -
(nothing significant)

- Thursday, March 12 -
U.S. Retail Sales data from February
Business inventory data

- Friday, March 13 -
Producer Price Index (PPI)
University of Michigan Consumer Sentiment survey

Additional Events to be aware of:

Mar. 18th - Federal Reserve policy update
Mar. 18th - Fed Chairman Yellen press conference

Looking Ahead:

Investor sentiment took a beating on Friday with the good news is bad news reaction to the jobs data. Another issue could be growth estimates. A couple of weeks ago Goldman Sachs reduced their Q1 GDP forecast due to the harsh winter weather. This past week JP Morgan cut their Q1 GDP forecast from +2.5% down to +2.0% due to the weather. The Atlanta Fed has also recently reduced their Q1 forecast and they're only expecting +1.2% growth.

Another issue to watch is the U.S. dollar. The biggest corporate excuse for missing earnings in the fourth quarter was the rise of the U.S. dollar. A strong dollar makes U.S. products and services more expensive. Today the dollar index is at 12-year highs and sprinting higher. When the Fed does raise rates it should boost the dollar even further. At the same time the ECB's new QE program, which starts tomorrow, will make the euro weaker and thus add even more upward pressure on the dollar.

Chart of the U.S. dollar ETF

We are two weeks away from the next FOMC meeting and speculation about this meeting's statement will probably dominate the financial media between now and then. Everyone will wonder if the Fed's statement will change following February's hotter than expected jobs number. As long as the Fed keeps the word "patient" in their statement then most believe that any rate hike is still at least two meetings away. Goldman Sachs believes that after Friday's jobs report we will see the Fed modify their statement. However, they do not expect a rate hike until September.

It's certainly possible that the market's knee-jerk reaction (lower) on Friday is just a one-day event. The Federal Reserve has told us time and again that its policy is "data dependent". Rising job growth is just one factor in the manifold of components they will base their decision on. Sure, job growth seems pretty steady. Yet wage growth is not getting out of hand. Friday's nonfarm payroll report said hourly earnings only rose +0.1% in February. That's down from January's +0.5%. The Fed will also consider falling Q1 GDP estimates, falling corporate earnings, and the lack of inflation in the U.S. Europe is still hovering at 0% growth and China just reduced their 2015 growth estimate.

Bull Market Anniversary

Tomorrow you might hear people talking about the sixth anniversary of the current bull market. March 9, 2009 was the bear market low. Looking at S&P 500 data, the current bull market is the fourth longest market in the last 85 years. The research team at Stock Trader's Almanac dug into the numbers. They said that since 1930 the average bull market lasts 1,185 days with an average gain of +127%. As of the March 2nd, 2015 closing high the S&P 500's bull market is 2,184 days old with a gain of +213%. The Dow Industrial Average is up +179% and the NASDAQ composite is up +294%. A normal market sees a pullback of -10% or more about twice a year. We haven't seen one in almost 1,260 days. We got close with a -9.8% decline last October.

I am suggesting patience. We can use this market pullback to our advantage. Now is the time to find strong stocks that we want to buy on a correction near support.

~ James







Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

Stocks encountered some profit taking after tagging new record highs on Monday, March 2nd. Traders sold the better than expected jobs number on worries it could prompt the Fed to raise rates sooner than expected.

Our plan was to close the DIS and WMT trades on Monday, March 2nd.

We have a new stop loss on SWI.

We want to exit our NXPI trade on Monday morning (March 9th).

Watch list candidate LVLT has graduated to our active play list last week.

Disclaimer: At any given time the author may have positions in any or all of any companies mentioned in the Leaps Newsletter.

--Position Summary Table--
Table lists Directional CALL or PUT/LEAPS only.
Insurance puts, if applicable, are not shown.

Red symbol/name represents a play or option position exited or closed this week.





New Plays

NASDAQ Tags 5K and Retreats

by James Brown

Click here to email James Brown


- New Trades -


Editor's Note:

(March 8, 2015)

I cautioned readers last week that stocks were overbought after February's big rally and due for a dip. Equities produced a one-day spike on Monday, March 2nd but that proved to be a top. I have been warning investors for weeks that the 5,000 level could be tough resistance for the NASDAQ.

Stocks experienced profit taking most of the week that only accelerated as investors panicked over a potential hike in interest rates sooner than expected. The next FOMC meeting is less than two weeks away. Stocks might remain weak until we see the Fed's next policy statement on March 18th.

I am not adding any new trades tonight. Last week saw watch list candidate LVLT graduate to our active play list. We also took profits on our DIS trade. Tonight I'm suggesting we close our NXPI trade to lock in potential gains.

If stocks continue to sink we want to use it to our advantage. Our longer-term bias is still higher. Thus tonight I am listing two new watch list candidates AKAM and AMBA to buy calls on a dip.

Radar Screen:
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself. In no particular order:

DWRE, ADBE, MNST, GWPH, SNA, JWN, HAIN, MA, JBHT, FB,



Play Updates

NXPI Soars On M&A News

by James Brown

Click here to email James Brown

Editor's Note:

LVLT graduated from our watch list to our active play list.

We want to lock in potential gains on our NXPI trade.


Closed Plays


Our plan was to exit the DIS and WMT trades on Monday, March 2nd.



Play Updates


Apple Inc. - AAPL - close: 126.60

Comments:
03/08/15: Shares of AAPL did not have a good week and that weighed on the major indices that AAPL is a component of. Of course we have to keep everything in perspective. After huge gains from their January lows AAPL only lost about $1.85 last week.

Shares spiked higher on Friday morning after it was revealed that AAPL is being added to the Dow Jones Industrial Average. AAPL will replace AT&T (T), which has been in the Industrials since 1916. AAPL will join the Industrials on March 18th. The rally didn't last and AAPL failed at short-term resistance near $130 and its simple 10-dma.

I warned readers last week that AAPL was due for a correction lower. I'm expecting a pullback toward $120.00, which should be support. If you don't want to endure that sort of move then consider exiting now.

The week ahead could be interesting. AAPL's special event is Monday, March 9th. It's assumed that the event is about the iWatch launch.

Earlier Comments: November 2, 2014:
Love it or hate it AAPL always has Wall Street's attention. It has a cult-like following. The company's success has turned AAPL's stock into the biggest big cap in the U.S. markets with a current valuation of more than $633 billion.

The company is involved in multiple industries from hardware, software, and media but it's best known for its consumer electronics. The iPod helped perpetuate the digital music revolution. The iPhone, according to AAPL, is the best smartphone in the world. The iPad helped bring the tablet PC to the mass market. The company makes waves in every industry they touch with a very distinctive brand (iOS, iWork, iLife, iMessage, iCloud, iTunes, etc.) and they've done an amazing job at building an Apple-branded ecosystem. Now they're getting into the electronic payments business with Apple Pay.

The company's latest earnings report was super strong. AAPL reported its Q4 (calendar Q3) results on October 20th. Wall Street was expecting a profit of $1.31 a share on revenues of $39.84 billion. The company delivered a profit f $1.42 a share with revenues up +12.4% to $42.12 billion. The EPS number was a +20% improvement from a year ago. Gross margins were up +1% from a year ago to 38%. International sales were 60% of the company's revenues.

AAPL's iPhone sales exceeded estimates at 39.27 million in the quarter and up nearly 16% from a year ago. The only soft spot in their ecosystem seems to be iPad sales, which have declined several quarters in a row. The company hopes to rejuvenate its tablet sales with a refresh of the iPad models. More importantly AAPL management raised their Q1 (calendar Q4) guidance as they expect revenues in the $63.5-66.5 billion in the quarter. Recent news would suggest that AAPL might deliver an incredible 50 million iPhone 6s in 2014. That's not counting their new iPhone 6+.

The better than expected results and bullish guidance sent the stock to new highs. The rally has created a quadruple top breakout buy signal on its point & figure chart that is currently forecasting at $133 target. Yet we do not want to chase AAPL here. The stock is up $12 from its October low. We do want to be ready if shares see a pullback.

Tonight I am suggesting a buy-the-dip trigger to buy calls at $103.50 with a stop loss at $98.90. (We amended the buy-the-dip trigger to $111.00 on Nov. 30th).

- Suggested Positions -
DEC 09, 2014 - entry price on AAPL @ 110.19, option @ 9.55
symbol: AAPL160115C120 2016 JAN $120 call - current bid/ask $16.10/16.25

03/01/15 Caution: AAPL could be poised for a pullback. Consider taking profits now and then re-enter this trade later.
02/22/15 new stop @ 114.00
02/15/15 new stop @ 109.50
12/09/14 triggered on gap down at $110.19, trigger was $111.00
11/30/14 raise the buy-the-dip entry trigger to $111.00
11/16/14 raise the buy-the-dip entry trigger to $108.00
Adjust the strike price to the 2016 Jan $120 call.
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 114.00
Play Entered on: 12/09/14
Originally listed on the Watch List: 11/02/14


Aetna Inc. - AET - close: 100.67

Comments:
03/08/15: AET hit new record highs before the market's big drop on Friday. I don't see any changes from my recent comments. The stock is up five weeks in a row and due for a pullback. I'd watch for support in the $95 region.

I am not suggesting new positions at this time.

Earlier Comments: December 7, 2014:
AET is in the healthcare sector. According to a recent press release, "Aetna is one of the nation's leading diversified health care benefits companies, serving an estimated 46 million people with information and resources to help them make better informed decisions about their health care. Aetna's customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups and expatriates."

If you study a one-year chart of AET the stock has definitely seen its ups and downs. That's because the healthcare industry has faced a number of issues. AET's CEO commented on this past year in their latest post-earnings conference call.

Mark T. Bertolini, Aetna chairman, CEO and president, said, "some of the challenges we face this year, including pricing solving for nearly $1 billion in ACA related industry fees and taxes, solving for the largest rate cuts to the Medicare Advantage program in our recent history, navigating a host of new regulatory requirements in our small group and individual businesses, managing through a turbulent launch in public exchanges and controlling pharmacy costs in a year where heavy priced Hepatitis C treatments first became available and treatment guidelines changed in unforeseen ways." (ACA stands for Affordable Care Act, a.k.a. Obamacare).

In spite of all these challenges shares of AET are outperforming the major indices with a +32% gain in 2014 compared to a +12% gain in the S&P 500. AET's strength is due to the company's earnings performance. They have beaten Wall Street's earnings estimates and raised guidance three quarters in a row.

AET's most recent quarterly report was October 28th. Analysts were expecting a profit of $1.58 a share on revenues of $14.7 billion. AET delivered a profit of $1.79 a share. Revenues were up +13% to match estimates. The company said they added 470,000 new medical insurance customers in the third quarter, putting the total at 23.6 million.

Bertolini commented on their results, "Aetna reported solid third-quarter results, including our 10th consecutive quarter of membership growth, record quarterly operating revenues, and continued high single-digit pretax operating margin."

The major healthcare companies are reaping the benefits of Obamacare as more people sign up. Management raised their full year 2014 earnings guidance into the $6.60-6.70 zone versus Wall Street's estimate of $6.57.

Just last month AET raised their quarterly dividend 11% to 25 cents a share and added $1 billion to its stock buyback program, up from $464 million. In the last two months the stock has received multiple price target upgrades into the $95-100 zone. The point & figure chart is bullish with a $112.00 target.

The breakout past resistance near $85.00 looks like a significant buy signal. Yet after four weeks of gains I don't want to chase AET here. Tonight I am suggesting a buy-the-dip entry point at $86.00. Eventually AET will see a pullback and we want to be ready. It may not happen soon so we just need to be patient.

01/18/15 Strategy Update: Instead of waiting for a dip we will look for AET to close above $93.00 and buy calls the next morning. We will adjust the stop loss to $84.90 and move the option strike from the 2016 January $90 call to the $100 call.

- Suggested Positions -
JAN 22, 2015 - entry price on AET @ 95.52, option @ 6.05
symbol: AET160115C100 2016 JAN $100 call - current bid/ask $ 8.65/8.75

02/22/15 new stop @ 91.40
02/15/15 new stop @ 88.50
01/22/15 Trade begins. AET gaps open higher at $95.52
01/21/15 AET closes at $94.74, above our trigger of $93.00.
01/18/15 Move the trigger to a close above $93.00 with a stop at $84.90 and use the 2016 January $100 call.
12/28/14 adjust the buy-the-dip trigger to $86.00 and raise the stop loss to $83.45
12/14/14 adjust the buy-the-dip trigger from $86.00 to $84.25. Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 91.40
Play Entered on: 01/22/15
Originally listed on the Watch List: 12/07/14


Anthem, Inc. - ANTM - close: 145.16

Comments:
03/08/15: The midweek bounce in ANTM struggled under short-term resistance in the $147.75 area. I wouldn't be surprised to see shares pullback toward $140.00 in the short-term.

Earlier Comments: January 11, 2015:
Anthem, Inc. is one of the largest healthcare insurance companies in the world. The company recently changed its name from Wellpoint to Anthem. They currently offer healthcare plans to almost 68 million people.

Healthcare names displayed significant strength last year as Obamacare added millions of new customers to the health insurance industry. That trend should continue into 2015. ANTM's long-term bullish trend has been butting up against major resistance at $130. That resistance broke on Thursday.

We'd like to see some follow through higher. Tonight I'm suggesting we wait for ANTM to close above $132.00 and then buy calls the next morning with a stop loss at $122.45.

FYI: ANTM is scheduled to report earnings on January 28th and shares could be volatile that morning as investors digest the results.

- Suggested Positions -
JAN 16, 2015 - entry price on ANTM @ 133.75, option @ 11.40
symbol: ANTM160115C140 2016 JAN $140 call - current bid/ask $13.90/16.45

03/01/15 new stop @ 134.65
02/22/15 new stop @ 132.40
02/15/15 new stop @ 129.50
01/25/15 new stop loss @ 126.75
01/16/15 Trade begins. ANTM opens at $133.75
01/15/15 triggered. ANTM closed at $134.09, above our trigger of $132.00
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 134.65
Play Entered on: 01/16/15
Originally listed on the Watch List: 01/11/15


China Mobile Limited - CHL - close: $64.36

Comments:
03/08/15: China Unicom is the second largest mobile phone carrier in China, behind CHL. Last Tuesday China Unicom reported worse than expected earnings with revenues down -5% from a year ago. Mobile services were down -8%. This disappointment sparked some profit taking in CHL. Investors could be worried that if China Unicom is having a tough time then CHL might be too.

I cautioned investors last week that if the pullback in CHL continued we could see it dip toward support in the $64-65 area, which is where CHL ended up. If this support fails then CHL could hit our stop at $62.75.

I am not suggesting new positions at the moment.

Earlier Comments: November 9, 2014:
China Mobile (CHL) is the boasts both the largest mobile network on the planet and the biggest mobile customer base. At the end of the third quarter they had 799.1 million customers. Of that 244.4 million are 3G users and 40.9 million are new 4G users. That last number is significant since the Chinese government just approved 4G licenses this year. CHL had zero 4G customers at the start of 2014 and only 13.9 million at the end of the second quarter.

CHL reported earnings on October 20th and the results were worse than expected. Q3 revenues were down -2% from a year ago to 156.6 billion yuan. That was below analysts' estimates. Yet profits managed to beat expectations at 24.9 billion yuan. The company said that the big drop was due to a sharp decline in SMS (text message) usage. This is due to strong competition in the SMS market from other companies like Tencent's WeChat application. A new VAT tax that started in June also hurt results.

Investors seem to be ignoring CHL's recent earnings miss and focusing on their 4G growth. The company has been investing heavily in its 4G networking and it seems to be paying off. The shocking growth of CHL's 4G customer basis has analysts raising estimates. One firm was estimating 50 million 4G customers this year but have since raised that to 70 million. They also expect CHL will add another 130 million next year to end 2015 at 200 million new 4G customers. This should boost the company's profitability since 4G customers use more data.

The stock bounced near $56.60-57.00 last month, which was a 50% retracement of the July-September rally. The lows in October look like a bullish double bottom and the point & figure chart is bullish and forecasting a long-term target of $108.

Tonight I am suggesting we wait for CHL to close above $62.65 and buy calls the next morning with a stop loss at $56.40. However, I am suggesting we keep our position size small. CHL is a foreign company and its stock will gap open, up or down, every morning as it adjusts for trading in the Chinese markets.

- Suggested Positions -
NOV 11, 2014 - entry price on CHL @ 61.39, option @ 2.80
symbol: CHL160115C70 2016 JAN $70 call - current bid/ask $2.85/3.10

03/01/15 new stop @ 62.75
02/15/15 new stop @ 61.75
01/25/15 new stop at $59.50
12/28/14 Caution! CHL is struggling with resistance near $60.
12/14/14 adjust stop loss down to $55.95
11/11/14 trade begins. CHL gaps down at $61.39
11/10/14 CHL closes at $62.68, above our trigger of $62.65
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined (likely the $75-85 range)
Current Stop loss: 62.75
Play Entered on: 11/11/14
Originally listed on the Watch List: 11/09/14


Cisco Systems - CSCO - close: 28.92

Comments:
03/08/15: CSCO is only down about 60 cents for the week. However, the decline has produced what appears to be a bearish reversal on the stock. I am expecting a dip toward the $27.50-28.00 area.

I am not suggesting new positions.

Earlier Comments: December 21, 2014:
It seems that 2014 delivered a resurgence for old guard, big cap, technology names. CSCO is one of them and the stock has shined this year with a +23.8% gain versus the +14% gain in the NASDAQ Composite.

The company continues to struggle with strong earnings growth and management has been cautious with their guidance. It seems that investors don't care. The stock is sporting a 2.8% dividend yield. That's not bad when the 10-year U.S. bond has a yield near 2.1%.

Analysts are starting to speculate that 2015 could be a good year for earnings since 2014 was so tough (that makes for easier comparisons). The recent strength in shares of CSCO have produced a buy signal on the point & figure chart that's forecasting at $43 price target. The stock has garnered a number of bullish analyst calls since their earnings report in mid November.

The $26.00 level was key resistance for CSCO. Normally broken resistance turns into new support and the stock found support there during the market's recent pullback. Right now CSCO is poised to breakout past $28.00. Tonight I am suggesting we wait for CSCO to close above $28.15 and then buy calls the next morning with a stop loss at $25.75.

- Suggested Positions -
DEC 23, 2014 - entry price on CSCO @ 28.22, option @ 1.40
symbol: CSCO160115C30 2016 JAN $30 call - current bid/ask $1.60/1.65

03/08/15 Shares appear to be correcting lower. Look for potential support in the $27.50-28.00 area.
02/11/15 CSCO reports better than expected earnings and revenues, raises dividend
12/23/14 Our trade begins. CSCO opens at $28.22
12/22/14 CSCO closed at $28.22, above our trigger of $28.15
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 25.75
Play Entered on: 12/23/14
Originally listed on the Watch List: 12/21/14



Fedex Corp. - FDX - close: 173.19

Comments:
03/08/15: I am growing more concerned about our FDX trade. The stock is down two weeks in a row (so is the broader market). I would seriously consider an early exit. However, the long-term trend line of support runs near round-number support at $170.00. Our stop is currently at $168.00. We'll see if shares bounce. I do expect FDX to trade near $170.

I am not suggesting new positions. FDX has earnings coming up on March 18th.

Earlier Comments: January 18, 2015:
FDX is part of the services sector. They're one of the largest air delivery and freight delivery service providers in the world. They have 62,000 vehicles and 370 service centers around the globe.

The stock was a strong performer last year with a +20% gain, outpacing the major market indices. Recently a few Wall Street analysts have turned increasingly bullish on FDX. The global economy might be slowing but the U.S. continues to see economic improvement. At the same time gasoline prices have crashed and this is a favorable environment for shipping companies where fuel is a major expensive.

It's a new year and both UPS and FDX have raised their prices by 5%. FDX has also started charging customers with their new dimensional pricing strategy. That means the size of the package in addition to the weight determines the price to ship it. This is specifically targeting online shippers who have shipping small light weight items in big bulky boxes. The industry is calling this new system dim weight pricing and it should boost revenues for FDX.

Shares of FDX found support near $170 multiple times this January. Friday's breakout past several moving averages looks bullish. The stock has also broken the six-week trend of lower highs. However, instead of chasing FDX here, after a $10 rally, I am suggesting we buy calls on a dip.

Tonight I'm suggesting a buy-the-dip trigger at $175.00 with a stop loss at $168.00.

- Suggested Positions -
JAN 27, 2015 - entry price on FDX @ 175.00, option @ 6.90
symbol: FDX160115C200 2016 JAN $200 call - current bid/ask $4.55/4.80

03/08/15 FDX looks headed for what should be short-term support near $170.00
01/27/15 FDX hits our buy-the-dip trigger at $175.00
Option Format: symbol-year-month-day-call-strike

Current Target: FDX @ TBD
Current Stop loss: 168.00
Play Entered on: 01/27/15
Originally listed on the Watch List: 01/18/15


Humana Inc. - HUM - close: 159.73

Comments:
03/08/15: HUM experienced some profit taking last week. Shares fell more than $4.00 and this snapped a four-week winning streak for the stock. The nearest support appears to be the $155.00 region. I don't see any changes from my recent comments.

Investors may want to seriously consider taking some money off the table here. You could sell part of your position now or you could exit completely and wait for a decline back toward support.

I am not suggesting new positions at this time.

Earlier Comments: October 19, 2014:
HUM is in the healthcare sector. The company offer health insurance. Right now that's a good spot to be as the system irons out the kinks in the Affordable Care Act (a.k.a. Obamacare). Thus far Obamacare has been a boon to insurers as more and more Americans sign up for health insurance.

Shares of HUM did see a pullback from its recent highs near $136 down to $121 (a -11% correction) but now HUM is on the rebound. Even with the pullback HUM still has a long-term bullish trend of higher lows. The point & figure chart is bullish and suggesting a long-term target of $173.00.

Tonight I am suggesting we wait for HUM to close above $130.25 and then buy calls the next morning with a stop loss at $119.75. I do want to warn you that HUM is scheduled to report earnings on November 7th but several of its peers (AET, CI, and WLP) will report earnings in the next two weeks (before the end of October). Their quarterly results and guidance (good or bad) could influence shares of HUM.

- Suggested Positions -
OCT 22, 2014 - entry price on HUM @ 133.75, option @ 13.25*
symbol: HUM160115C140 2016 JAN $140 call - current bid/ask $26.20/29.20

03/08/15 Investors may want to take some money off the table here
03/01/15 new stop @ 149.00
02/22/15 new stop @ 142.00
02/04/15 HUM reports earnings and misses estimates by six cents
01/18/15 new stop @ 137.40
12/07/14 new stop @ 134.00
11/09/14 new stop @ 124.00
10/22/14 trade begins. HUM opens at $133.75
*option entry price is an estimate since the option did not trade at the time our play was opened.
10/21/14 triggered. HUM closed @ 133.27, above our suggested entry above $130.25
Option Format: symbol-year-month-day-call-strike

Current Target: HUM @ TBD
Current Stop loss: 149.00
Play Entered on: 10/22/14
Originally listed on the Watch List: 10/19/14


iShares US Home Construction ETF - ITB - close: 26.82

Comments:
03/08/15: I cautioned readers last week that ITB appeared to have reversed and was headed lower. The profit taking continued. Shares should find some support in the $26.00-26.50 area. If not our stop is at $25.45. I'd wait for ITB to test support and bounce before considering new bullish positions.

Earlier Comments: January 11, 2015:
The ITB is an exchange traded fund that mimics the Dow Jones U.S. Select Home Construction Index. The top 12 holdings are DHI, LEN, PHM, TOL, NVR, HD, TPH, LOW, RYL, SHW, KBH and MTH.

This index has been stuck in a trading range for years. That looks like it's about to change. Have you looked at a chart of the 10-year bond yield lately? Bond yields are going lower. That's going to pressure mortgage rates lower and that's bullish for home sales. This past week saw 30-year mortgage rates dip below 3.6%. That's a 19-month low.

If that wasn't enough of a tailwind President Obama wants to help. On January 7th the White House announced plans to reduce the government mortgage insurance premiums in an effort to boost home ownership. Another positive for the homebuilders is the U.S. Federal Reserve. We just had two fed governors come out last week saying they think the Fed should hold off on raising rates. The longer the Fed waits to start raising rates the better it will be for homebuilders.

Currently the ITB appears to be breaking out past major resistance and closed at multi-year highs. I'd like to see a little bit more follow through. Tonight I'm suggesting we wait for the ITB to close above $27.00 and then buy calls the next morning with a stop loss at $23.95.

- Suggested Positions -
FEB 11, 2015 - entry price on ITB @ 27.09, option @ 1.70
symbol: ITB160115C30 2016 JAN $30 call - current bid/ask $1.10/1.40

03/01/15 new stop @ $25.45
02/11/15 trade begins. ITB opens at $27.09
02/10/15 ITB closes at $27.10, above our trigger at $27.00
Option Format: symbol-year-month-day-call-strike

Current Target: ITB @ TBD
Current Stop loss: 25.45
Play Entered on: 02/11/15
Originally listed on the Watch List: 01/11/15


Lockheed Martin - LMT - close: 197.66

Comments:
03/08/15: Defense names were not immune to the market's decline. LMT fell loess than $3.00 for the week. LMT has effectively seen a 50% retracement of the February rally. If the stock doesn't bounce soon I fear it's headed for $190.00. Our stop is at $189.00.

Investors may want to wait for a new close above $200 before considering new bullish positions.

Earlier Comments: January 18, 2015:
Defense stocks have delivered exceptional gains for investors in spite of the dreaded sequestration budget cuts from Budget Control Act of 2011. Granted the cuts have been delayed and adjusted many times but it still put a crimp in U.S. government defense spending. In response many of America's biggest defense contractors have focused on building up their international business instead of relying on the U.S.

LMT is one such defense contractor. According to a company press release, " Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 113,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation's net sales for 2013 were $45.4 billion."

Right now one of their biggest projects is the massive F-35 Joint Strike Fighter system. It's the most expensive weapons system the U.S. has ever built with an estimated cost of over $1 trillion over its 50-year lifespan.

If you haven't noticed the world seems to be getting more dangerous. The U.S. is facing a growing military rivalry with China, a belligerent and dangerous Russia, and war in the Middle East with ISIS. This sort of environment will likely keep investors focused on defense stocks.

Looking at LMT's earnings results they have beaten Wall Street's estimates for the last four reports in a row. They raised their guidance in two of the last four earnings reports. The rally in the stock has created a buy signal on the point & figure chart with a $240 target. Currently shares are consolidating sideways and appear to be building up steam for a breakout past round-number resistance at $200. I suspect that LMT's earnings on January 27th might be the catalyst needed to push shares higher.

Tonight I am suggesting we wait for LMT to close above $201.00 and then buy calls the next morning with a stop loss at $189.00.

- Suggested Positions -
FEB 20, 2015 - entry price on LMT @ 200.86, option @ 6.40
symbol: LMT160115C220 2016 JAN $220 call - current bid/ask $4.50/5.10

02/20/15 trade begins. LMT opens at $200.86
02/19/15 triggered. LMT closed at $201.75, above our trigger of $201.
Option Format: symbol-year-month-day-call-strike

Current Target: LMT @ TBD
Current Stop loss: 189.00
Play Entered on: 02/20/15
Originally listed on the Watch List: 01/18/15


Lowe's Companies - LOW - close: 73.51

Comments:
03/08/15: LOW is only down about 50 cents for the week. Shares have been churning sideways the last two weeks. I am expecting a pullback toward $70.00. Currently our stop is at $67.00. More conservative investors might want to bump their stop closer to $70.00. I'm not suggesting new positions at this time.

Earlier Comments: January 25, 2015:
LOW is the second biggest player in the home improvement retail business. Their main rival is Home Depot. LOW currently has more than 1,800 stores across the United States, Canada, and Mexico.

The stock has been a great performer the last couple of years, significantly outperforming the broader market. Their most recent earnings report was November 19th and results were one cent above expectations with a profit of $0.59 a share. Revenues also beat expectations with +5.6% growth to $13.68 billion. Same-store sales were up +5.1%.

Management issued bullish guidance for 2015 and raised their earnings estimate above Wall Street's forecast. LOW also raised their revenue guidance above analysts' estimates. The company expects revenues to grow +4.5% to 5% in 2015 with same-store sales growth in the +3.5% to 4% range.

The stock is often influenced by trading and news out of the homebuilders. This year there have been a couple of bombs in the homebuilding industry with both KBH and LEN warning on potential margin pressures in 2015. Shares of LOW, a retailer, shrugged off this headlines.

The U.S. economy grew +4.9% in the third quarter last year and is expected to grow about +3% in 2015. The slow and steady improvement in the U.S. economy is a tailwind for LOW. Another bonus is low gas prices. While we have not seen a lot of evidence that consumers are spending their savings at the pump eventually that money, amounting to hundreds of dollars a year for the average driver, will be spent. Americans love to spend money on their homes, which is bullish for LOW.

We are quickly approaching the spring residential real estate selling season. That means consumers will be spending money on fixing up their homes to go on the market. Those people who buy a home will spend money on their new purchase.

Technically LOW's stock has been consolidating sideways between support near $65 and resistance near $70 the last few weeks. The point & figure chart has already produced a new triple-top breakout buy signal with a $75 target (that could grow). Tonight I am suggesting we wait for LOW to close above $70.75 and then buy calls the next morning with a stop loss at $64.90.

- Suggested Positions -
FEB 06, 2015 - entry price on LOW @ 71.53, option @ 3.45
symbol: LOW160115C80 2016 JAN $80 call - current bid/ask $3.30/3.45

03/01/15 new stop @ 67.00
02/25/15 LOW reports earnings. Results beat expectations, Management raises guidance above Wall Street estimates
02/06/15 trade begins. LOW opens at $71.53
02/05/15 LOW closed at $71.47, above our trigger of $70.75
Option Format: symbol-year-month-day-call-strike

Current Target: LOW @ TBD
Current Stop loss: 67.00
Play Entered on: 02/06/15
Originally listed on the Watch List: 01/25/15


Level 3 Communications - LVLT - close: 54.58

Comments:
03/08/15: LVLT is a watch list candidate that has graduated to an active play. We wanted to see shares close above $54.50 and then buy calls. LVLT met that requirement on March 3rd with a close at $54.90. Our trade opened on Wednesday morning.

LVLT managed a gain for the week but if the broader market continues to sink shares will likely follow. The $54.00 level should be short-term support. If that breaks then $50.00 is the key level to watch for support.

Investors may want to wait a day or two and see how the market performs before launching new positions here.

Earlier Comments: December 28, 2014:
LVLT is a communication services company. Their marketing material describes LVLT as "Level 3 Communications, Inc. is a Fortune 500 company that provides local, national and global communications services to enterprise, government and carrier customers. Level 3's comprehensive portfolio of secure, managed solutions includes fiber and infrastructure solutions; IP-based voice and data communications; wide-area Ethernet services; video and content distribution; data center and cloud-based solutions. Level 3 serves customers in more than 500 markets in over 60 countries over a global services platform anchored by owned fiber networks on three continents and connected by extensive undersea facilities."

They just recently completed a merger with TW Telecom. Earnings have been improving. LVLT has beaten Wall Street's earnings estimates the last three quarters in a row. Technically shares have been outperforming the broader market. The NASDAQ composite is up +15% in 2014 while LVLT is up +50%. The point & figure chart is bullish and forecasting a long-term target at $75.00.

Currently shares of LVLT are hovering just below key resistance at the $50.00 mark. I am suggesting we wait for LVLT to close above $50.50 and then buy calls the next morning with a stop loss at $45.45.

- Suggested Positions -
MAR 04, 2015 - entry price on LVLT @ 54.71, option @ 3.90
symbol:LVLT160115C60 2016 JAN $60 call - current bid/ask $3.30/3.60

03/04/15 trade begins. LVLT opens at $54.71
03/03/15 Triggered. LVLT closed at $54.90, above our trigger of $54.50
02/22/15 Strategy update: Wait for LVLT to close above $54.50, then buy calls the next morning with a new stop at $49.45. Adjust the option strike to 2016 Jan $60 call
02/08/15 Adjust entry point strategy: Buy calls on a dip at $50.75 with a stop loss at $46.25. Option Format: symbol-year-month-day-call-strike

Chart

Current Target: LVLT @ TBD
Current Stop loss: 49.45
Play Entered on: 03/04/15
Originally listed on the Watch List: 12/28/14


ServiceNow, Inc. - NOW - close: 74.06

Comments:
03/08/15: NOW lost $2.20 last week. It's down two weeks in a row. I warned readers last week that NOW could be headed for support in the $70-71 area. That's still a good bet. I'm not suggesting new positions at this time.

Earlier Comments: February 8, 2015:
Shares of NOW are trading at all-time highs thanks to significant earnings growth. The company expects to see growth of more than +40% in 2015.

NOW describes itself as "ServiceNow is changing the way people work. With a service-orientation toward the activities, tasks and processes that make up day-to-day work life, we help the modern enterprise operate faster and be more scalable than ever before. Customers use our service model to define, structure and automate the flow of work, removing dependencies on email and spreadsheets to transform the delivery and management of services for the enterprise. ServiceNow provides service management for every department in the enterprise including IT, human resources, facilities, field service and more. We deliver a 'lights-out, light-speed' experience through our enterprise cloud – built to manage everything as a service."

This company has been consistently guiding their earnings forecast higher. They've done it at least the last four earnings reports in a row. Their most recent earnings report was January 28th. NOW reported their Q4 results of $0.03 a share compared to a loss of 2 cents a year ago. Analysts were expecting a profit of 2 cents a share. Q4 revenues soared +58% to $198 million, which was above expectations.

Some of the highlights from their fourth quarter include billings up +62% year over year and up +34% quarter over quarter. Deferred revenues were up +20% for the quarter. NOW added 211 net new customers, bumping their total to 2,725. Their customer renewal rate was 97%.

NOW said their 2014 revenues soared +61% compared to 2013. Their backlog at the end of 2014 hit $1.4 billion. That's a +57% jump from a year ago. NOW's President and CEO Frank Slootman said, "We finished 2014 with strong metrics across the board, maintaining consistently high year-over-year growth rates. In addition to a growing list of new customers that now includes more than 25% of the Global 2000, we continue to see existing customers expand their relationship with us, resulting in the highest quarterly upsell rate since our IPO." NOW's CFO Michael Scarpelli said, "Within the Global 2000, annualized contract value per customer has increased 40% year-over-year. These expanding contracts have helped us grow our combined backlog and deferred revenue 57% year-over-year."

NOW offered bullish guidance. They expected Q1 revenues to grow +50% in the $207-212 million range compared to Wall Street's estimates of $202.4 million. NOW's 2015 guidance is forecasting revenue growth in the +41% to +47% range in the $960-1,000 million zone versus analysts' estimates of $948 million.

These strong numbers and the consistent growth makes them a popular candidate among Wall Street analysts. After NOW's most recent earnings report several analyst firms raised their price target on NOW's stock.

Technically shares have just recently broken out through major resistance near $70.00. The point & figure chart is bullish and forecasting a long-term target of $97.00. The last few days have seen shares consolidating sideways in the $70-75 range. Tonight I am suggesting investors wait for NOW to close above $75.50 and then buy calls the next morning with a stop loss at $68.90. More nimble traders could wait and cross your fingers for a dip near support at $70.00 as an alternative entry point.

- Suggested Positions -
FEB 13, 2015 - entry price on NOW @ 76.25, option @ 10.00
symbol: NOW160115C80 2016 JAN $80 call - current bid/ask $ 6.70/7.60

03/01/15 Warning! NOW has produced a bearish reversal and is probably headed for the $70.00 region.
02/13/15 trade begins. NOW opens @ $76.25
02/12/15 NOW closed at $75.95, above our $75.50 trigger
Option Format: symbol-year-month-day-call-strike

Current Target: NOW @ TBD
Current Stop loss: 68.90
Play Entered on: 02/13/15
Originally listed on the Watch List: 02/08/15


NXP Semiconductors - NXPI - close: 98.48

Comments:
03/08/15: NXPI was the big winner for the week. Shares soared on Monday after announcing it was buying FreeScale Semiconductor (FSL).

Lately Wall Street loves all the M&A news. Normally shares of the acquiring company go down and the acquired company go up. This time shares of FSL soared +11.7%. Yet shares of NXPI rallied +17.2% on Monday. The combined company will be the biggest manufacturer for automotive semiconductor products and the largest general purpose microcontroller manufacturer. NXPI's CEO Rick Clemmer said, "The merger creates a true industry powerhouse."

NXPI has been very resistant to profit taking this past week. It looks like it wants to go higher. One analyst firm just raised their price target on NXPI to $120. More aggressive investors may want to keep this trade open. Tonight I am suggesting an immediate exit to lock in potential gains. Plan on closing this play Monday morning (March 9th).

We can keep NXPI on our radar screen for a correction.

- Suggested Positions -
JAN 12, 2015 - entry price on NXPI @ 81.00, option @ 11.90
symbol:NXPI160115C85 2016 JAN $85 call - current bid/ask $18.90/20.50

03/08/15 prepare to exit on Monday to lock in potential gains
03/02/15 NXPI soars on news it is buying FSL
03/01/15 new stop @ 78.75
02/15/15 new stop @ 74.00
02/08/15 new stop @ 71.90
02/05/15 NXPI beat estimates on both the top and bottom line
01/25/15 NXPI shares could react to AAPL's earnings this week. Expect some volatility
01/12/15 Trade begins.
01/09/15 NXPI closed at $80.32, above our trigger, which was a close above $78.50
Option Format: symbol-year-month-day-call-strike

Current Target: NXPI @ TBD
Current Stop loss: 78.75
Play Entered on: 01/12/15
Originally listed on the Watch List: 01/04/15


Starbucks - SBUX - close: 92.21

Comments:
03/08/15: I cautioned readers that SBUX was overbought and due for a pullback. The stock only fell about $1.30 last week and closed near short-term support at $92.00. I do not think the pullback is over.

Investors will want to seriously consider an early exit right now to lock in potential gains. You can jump back in on the next correction.

I am not suggesting new positions at this time.

Earlier Comments: December 7, 2014:
I listed SBUX as on my radar screen a couple of weeks ago in the new plays section. The rally has continued and shares have broken through major resistance at their 2013 highs.

The company is in the services sector. They're considered part of the specialty eateries industry. The first Starbucks opened in Seattle back in 1971. Today they are a global brand with locations in 66 countries. SBUX operates more than 21,000 retail stores with more than 300,000 workers.

Earnings have only been so-so this year. You can see the results in SBUX's long-term chart below. After incredible gains in 2013 SBUX has essentially consolidated sideways in 2014. The good news is that looks like it's about to change.

The company recently announced a five-year plan to boost its profits and market share. They're going to be expanding deeper into China, Japan, India, and Brazil. SBUX expects to nearly double its stores in China to over 3,000 locations in the next five years. They're also working hard on their mobile ordering technology to speed up the experience so customers don't have to wait in line so long at their busiest locations. SBUX also plans to significantly increase its food revenues.

The company is also building on its Starbucks Evening experience where they will offer alcohol (mainly wine). SBUX was also making headlines on Friday when they launched their first Starbucks Reserve Roastery and Tasting Room in Seattle. The new roastery is supposed to be the ultimate coffee lovers experience.

Analysts came away from SBUX's recent investor day pretty bullish. One firm expects SBUX's stock to double in the next four years. I certainly think SBUX will be higher a year from now. The point & figure chart is bullish and forecasting at $105 target.

SBUX is currently up five weeks in a row. Tonight I am suggesting a buy-the-dip trigger to buy calls at $82.00. More patient investors may want to consider buying a dip closer to $80.00 instead.

- Suggested Positions -
DEC 15, 2014 - entry price on SBUX @ 82.00, option @ 4.30
symbol:SBUX160115C90 2016 JAN $90 call - current bid/ask $ 8.20/8.45

03/01/15 new stop @ 88.45
03/01/15 Consider exiting early now to lock in potential gains
02/22/15 new stop @ 87.40
01/25/15 new stop loss @ 79.65
01/23/15 SBUX soars on strong earnings results
12/15/14 triggered at $82.00
Option Format: symbol-year-month-day-call-strike

Current Target: SBUX @ TBD
Current Stop loss: 88.45
Play Entered on: 12/15/14
Originally listed on the Watch List: 12/07/14


SolarWinds, Inc. - SWI - close: 48.61

Comments:
03/08/15: The last few days have been ugly for SWI. Shares are down $2.12 for the week but they're off more than $4.00 from Monday's high. I don't see any specific news behind the relative weakness.

I'm not suggesting new positions. We'll adjust our stop loss higher to $47.65.

Earlier Comments: February 15, 2015:
SWI is part of the technology sector. With a name like SolarWinds you'd think the company might be part of the solar energy business but instead SWI makes IT management software.

According to the company, "SolarWinds (NYSE: SWI) provides powerful and affordable IT management software to customers worldwide from Fortune 500® enterprises to small businesses. In all of our market areas, our approach is consistent. We focus exclusively on IT Pros and strive to eliminate the complexity that they have been forced to accept from traditional enterprise software vendors. SolarWinds delivers on this commitment with unexpected simplicity through products that are easy to find, buy, use and maintain while providing the power to address any IT management problem on any scale. Our solutions are rooted in our deep connection to our user base, which interacts in our thwack® online community to solve problems, share technology and best practices, and directly participate in our product development process."

Last year the company had a pretty good track record on earnings. The last four quarterly reports in a row they have beaten Wall Street's estimates on both the top and bottom line. In their Q2 and Q3 reports SWI raised guidance on both the top and bottom line as well. Their most recent report was January 29th where SWI delivered earnings of $0.51 a share as revenues increased +22% to $118.4 million.

The stock has been correcting from its early December highs but it looks like that correction is over. Shares saw a bullish reversal in early February and now SWI is starting to break through resistance.

Tonight I am suggesting we wait for SWI to close above $51.25 and then buy calls the next morning with a stop loss at $46.85.

- Suggested Positions -
FEB 20, 2015 - entry price on SWI @ $51.54, option @ 5.20
symbol: SWI160115C55 2016 JAN $55 call - current bid/ask $ 3.00/3.30

03/08/15 new stop @ 47.65
02/20/15 trade begins. SWI opens at $51.54
02/19/15 SWI closed at $51.68, above our trigger of $51.25
Option Format: symbol-year-month-day-call-strike

Current Target: SWI @ TBD
Current Stop loss: 47.65
Play Entered on: 02/20/15
Originally listed on the Watch List: 02/15/15


Toyota Motor Corp. - TM - close: 134.89

Comments:
03/08/15: TM had a quiet week in spite of positive car sales numbers. On Tuesday the major car makers released their February sales. TM said their Toyota-branded car sales rose +12.1% while Lexus sales soared +22% from a year ago. Their total U.S. sales rose +13.3%. This news didn't have much impact on the stock. Shares are down less than 50 cents for the week but they are down two weeks in a row. I would not be surprised to see a dip into the $130.00-132.50 region.

I am not suggesting new positions at this time.

Earlier Comments: November 30, 2014:
TM is considered part of the consumer goods sector. The company is a major automotive manufacturer. Headquartered in Japan, TM was founded back in the 1930s. The company now has sales around the globe.

The company led the industry in greener cars with their Prius model of electric-gasoline hybrids. Now they're leading the industry again with a hydrogen fuel cell vehicle. TM unveiled the Mirai, which means "future" in Japanese, as is the first zero-emission vehicle for consumers. The vehicle will go from 0 to 60 MPH in 9 seconds. It has a range of 400-430 miles. The only emission is water vapor.

The Mirai will not be a big seller to start. TM only expects to sell a few hundred units next year. The challenge is the infrastructure so consumers can refuel the hydrogen fuelcell. It will take a few years to really catch on but they're going to get help from various government agencies. The state of California is one example. California hopes to have 1.5 million zero-emission cars on the road by 2025.

I'm not suggesting bullish positions on TM for the Mirai. Hydrogen fuelcell vehicles are not even a drop in the bucket for the global auto market. What should capture investor attentions is the combination of TM's strong sales combined with a central bank stimulus efforts.

TM has already seen strong sales this year. They reported their first half results on November 5th. TM beat estimates and raised their revenue guidance. Falling gas prices boosted sales of SUVs. TM is also seeing sharp growth in China. This past October TM saw their sales in China soar +27% from a year ago. That is on top of a +26% increase in September and a +9% jump in August. New estimates suggest TM is poised to outsell most of its rivals in the U.S. in November too, including big competitors like General Motors, Ford, and Nissan.

TM's secret weapon could be the currency devaluation by the Bank of Japan. The Japanese government is desperate to jump start their economy and avoid deflation. They have launched a massive QE program that is crushing the value of their currency. The yen ended the week at multi-year lows. This is an advantage for a company like TM who exports a lot of their product.

I do have to mention the risk of recall headlines. It seems that the big automakers are being super careful after seeing the Ford fiasco in the last couple of years. Now companies are recalling vehicles all the time. Right now the entire industry is dealing with a defective Takata airbag recall. The top ten automakers all use Takata airbags so it's something that will affect everyone. There is always the risk of another company-specific recall that could hurt TM.

Technically shares of TM have been showing strength and outperforming many of its peers. Shares have actually broken out past resistance near its 2014 July and early November highs. I would be tempted to buy calls now. However, I'd like to see a little more follow through. Tonight I am suggesting we wait for TM to close above $124.00 and then buy calls the next day.

I will warn investors that the prior highs near $135 and $138 could be potential resistance but the point & figure chart is very bullish and forecasting a long-term target of $160.00.

- Suggested Positions -
DEC 02, 2014 - entry price on TM @ 126.56, option @ 8.75
symbol: TM160115C130 2016 JAN $130 call - current bid/ask $10.05/10.85

03/03/15 U.S. sales +13.3% in February
02/22/15 new stop @ 127.25
02/15/15 new stop @ 124.50
02/04/15 TM delivers better than expected earnings results and raises guidance
12/07/14 new stop @ $119.00
12/02/14 trade begins. TM opens at $126.56
12/01/14 trade is triggered. TM closes at $124.94, above our 124.00 trigger
Option Format: symbol-year-month-day-call-strike

Current Target: TM @ TBD
Current Stop loss: 127.25
Play Entered on: 12/02/14

Originally listed on the Watch List: 11/30/14


Textron Inc. - TXT - close: 44.78

Comments:
03/08/15: TXT displayed some relative strength last week thanks to an analyst upgrade. Shares rallied +1.7% on Friday while the rest of the market was sinking. Friday's intraday high was $45.27. I suggest waiting for a close above this level before initiating new positions.

Earlier Comments: February 15, 2015:
TXT is in the industrial goods sector. They deal mostly in the aerospace industry. According to the company, "Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems."

The earnings picture last year was mixed. Better than expected results and bullish guidance helped power a big rally last October. Their most recent earnings report was January 28th. TXT's earnings of $0.76 a share were up +26% from a year ago but 1 cent worse than Wall Street estimates. Revenues were up +16.8% to $4.1 billion, also below estimates.

It's interesting how TXT missed Wall Street's earnings estimates on both the top and bottom line and management lowered their guidance for all of 2015. Yet the stock did not sell off. Normally an earnings miss or weak guidance would spark significant selling. Instead investors just calmly bought the dip and now TXT is breaking out to new multi-year highs.

If bad news like that can't shake the stock lower then the path of least resistance is definitely higher. The last couple of months look like a significant consolidation pattern and now TXT has produced a bullish breakout past resistance in the $44.00-44.50 zone. The point & figure chart is bullish and forecasting a long-term target at $67.00.

Tonight I am suggesting small bullish positions if TXT can close above $45.10. Wait for shares to close above this level and then buy calls the next morning.

- Suggested Positions -
FEB 25, 2015 - entry price on TXT @ 45.30, option @ 3.00
symbol: TXT160115C50 2016 JAN $50 call - current bid/ask $2.33/2.69

02/25/15 trade begins. TXT opens at $45.30
02/24/15 TXT closed @ $45.33, above our trigger of $45.10
Option Format: symbol-year-month-day-call-strike

Current Target: TXT @ TBD
Current Stop loss: 39.90
Play Entered on: 02/25/15
Originally listed on the Watch List: 02/15/15


Under Armour, Inc. - UA - close: 74.80

Comments:
03/08/15: UA was caught up in the market's decline and shares lost $2.20 for the week. I suggested the $75.00 region was potential support and that's where UA closed. A bounce from here could be a new entry point. However, I'm not convinced the market's pullback is over. You may want to wait for a dip closer to the $72.50 zone as a potential buy-the-dip entry point.

Earlier Comments: February 22, 2015:
We have had UA on our radar screen for a long time. Now we're finally seeing an entry point. UA is in the consumer goods sector. They make shoes and athletic wear. According to the company, "Under Armour (UA), the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. The Under Armour Connected Fitnessâ„¢ platform powers the world's largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal."

The athletic shoe and athletic apparel business is very competitive. Nike (NKE) has dominated the space for years. UA is about 10% the size of NKE but it's actively fighting for market share and recently overtook Adidas as the second biggest athletic wear brand inside the United States. Nike had sales of $27.8 billion in 2014. UA is a fraction of that with 2014 sales of $3.08 billion but they saw growth of +32%.

UA has been firing on all cylinders with its earnings results. Most of last year saw the company not only beating Wall Street's estimates but also raising guidance. UA's most recent earnings report was February 4th. The company reported a profit of $0.40 a share with revenues climbing +31% to $895 million, which was above estimates for $849 million. UA's CEO Kevin Plank, in a recent interview, said his company will grow at 20%-plus in 2015. The company's current estimates are $3.76 billion in sales for the year.

Technically shares of UA have recently broken through resistance in the $73.00 area. Now after consolidating sideways the last couple of weeks the stock ended at all-time closing highs. The point & figure chart is bullish and forecasting at $101.00 target.

Wait for UA to close above $75.75 and then buy calls the next morning with a stop loss at $68.25.

- Suggested Positions -
FEB 24, 2015 - entry price on UA @ 75.87, option @ 5.60
symbol: UA160115C85 2016 JAN $85 call - current bid/ask $4.60/5.10

02/24/15 Trade begins. UA opened at $75.87
02/23/15 UA closed at $75.87, above our trigger at $75.75
Option Format: symbol-year-month-day-call-strike

Current Target: UA @ TBD
Current Stop loss: 68.25
Play Entered on: 02/24/15
Originally listed on the Watch List: 02/22/15




CLOSED Plays


The Walt Disney Company - DIS - close: $103.82

Comments:
03/08/15: If you're just looking at price then DIS held up pretty well last week. However, the action last week still looks like a potential top. Our plan was to exit this trade on Monday, March 2nd.

I'm still long-term bullish on DIS. I'd keep it on your watch list. A dip near $95.00 could be a new entry point.

- Suggested Positions -
DEC 01, 2014 - entry price on DIS @ 92.63, option @ 5.00
symbol: DIS160115C100 2016 JAN $100 call - exit $9.25 (+85.0%)

03/02/15 planned exit
03/01/15 Take profits now! Prepare to exit on Monday morning
02/15/15 new stop @ 89.75
02/08/15 DIS has soared to new highs following strong earnings results
12/14/14 Caution: DIS has created a potential reversal pattern on its weekly chart
12/01/14 trade begins. DIS opens at $92.63
11/28/14 DIS closes at $92.51, above our suggested trigger, above $92.25
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: DIS @ TBD
Current Stop loss: 89.75
Play Entered on: 12/01/14
Originally listed on the Watch List: 11/09/14


Wal-Mart Stores Inc. - WMT - close: 82.59

Comments:
03/08/15: The weakness in WMT continues. Shares posted another weekly decline and the stock is now down four weeks in a row. We were unhappy with the stock's performance and our plan was to exit positions on Monday, March 2nd.

- Suggested Positions -
JAN 14, 2015 - entry price on WMT @ 87.50, option @ 3.97
symbol: WMT160115C90 2016 JAN $90 call - exit $1.57 (-60.4%)

03/02/15 planned exit
03/01/15 prepare to exit WMT on Monday morning
02/19/15 WMT lowers earnings and revenue forecast for Q1 and all of 2016
01/14/15 triggered @ 87.50
01/11/15 Strategy Update Move the buy-the-dip trigger from $81.50 to $87.50. Move the stop loss to $81.90. Move the option strike from 2016 Jan. $85 call to the 2016 Jan. $90 call. Option Format: symbol-year-month-day-call-strike

Chart

Current Target: WMT @ TBD
Current Stop loss: 81.90
Play Entered on: 01/14/15
Originally listed on the Watch List: 12/14/14



Watch

Content Delivery & HD Video

by James Brown

Click here to email James Brown


New Watch List Entries

AKAM - Akamai Technologies

AMBA - Ambarella Inc.


Active Watch List Candidates

EWG iShares Germany ETF

SWKS - Skyworks Solutions

WBA - Walgreens Boots Alliance


Dropped Watch List Entries

LVLT graduated to our active play list.

UNP has been removed.



New Watch List Candidates:

Akamai Technology - AKAM - close: 69.96

Company Info

If you surf the Internet then you're probably seeing content delivered by AKAM's technology. They help customers speed up online content and have a fast-growing security business.

The company is part of the technology sector. They provide cloud services for delivering content across the Internet. Customers include 47% of the Global 500 companies.

AKAM describes itself as "the global leader in Content Delivery Network (CDN) services, Akamai makes the Internet fast, reliable and secure for its customers. The company's advanced web performance, mobile performance, cloud security and media delivery solutions are revolutionizing how businesses optimize consumer, enterprise and entertainment experiences for any device, anywhere."

Last year was a strong one for earnings and revenue growth. AKAM beat Wall Street estimates on both the top and bottom line the past four quarters in a row. They raised guidance twice. AKAM's average revenue growth last year was +24.5%. Their most recent report was on February 10th where AKAM delivered a profit and revenue number above expectations. Several analyst firms raised their price target on AKAM following its Q4 results.

Management hosted an investor day in late February. They expect sales growth to be in the high teens for 2015. They forecasting sales to hit $5 billion by 2020 compared to about $2 billion in 2014. AKAM reported that their cyber security business is surging with +191% growth last year.

This week AKAM disclosed in their 10-K filing that they were conducting an internal probe into their sales practices in a foreign country. They didn't say which country. This is a potential risk if the U.S. government decides to do their own investigation but the stock didn't really react that much to the news.

It is worth noting that there has been some speculation that AKAM is a buyout target. One analyst suggested that Amazon.com (AMZN) could be a suitor.

After a big rally in February the upward momentum in AKAM has stalled. Shares look like they could see a correction lower. If that occurs then prior resistance near $65.00 should be significant support. We want to be ready to take advantage of the weakness.

Tonight I'm suggesting a buy-the-dip trigger to buy calls if AKAM dips to $65.25. We'll start this trade with a stop at $59.75.

Buy-the-dip trigger @ $65.25
Start with a stop at $59.75

BUY the 2016 Jan $75 call (AKAM160115C75) current ask $5.50

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

Chart of AKAM:

Originally listed on the Watch List: 03/08/15


Ambarella, Inc. AMBA - close: 64.22

Company Info

2014 was a great year for AMBA with significant sales growth. The company is part of the technology sector. They're probably best known for making the low-power, HD video and image processing semiconductors that go inside GoPro's (GPRO) action cameras.

According to the company, "Ambarella, Inc. (AMBA), is a leading developer of low-power, high-definition (HD) and Ultra HD video compression and image processing solutions. The company's products are used in a variety of professional and consumer applications including security IP-cameras, sports cameras, wearable cameras, flying cameras and automotive video processing solutions. Ambarella compression chips are also used in broadcasting TV programs worldwide."

Looking at the last four quarters for AMBA the company beat Wall Street's earnings estimates on both the top and bottom line. They guided higher the last three quarters in a row. 2014 Q2 revenues were up +24.7%. Q3 revenues grew +42.8%. Their most recent earnings report was March 3rd. AMBA announced their Q4 2014 revenues soared +61.8% to $64.7 million, above estimates for $59.3 million. Their Q4 earnings surged +161% to $0.68 a share. That's 19 cents above expectations. Q4 gross margins were 64.3% versus 64.1% a year ago.

AMBA's CEO Fermi Wang commented on their results saying, "Our strong fourth quarter and fiscal year results reflect the steady expansion of our product offerings and customer growth across our core markets, as well as early growth in new markets. During the fourth quarter we had strong year-over-year growth in our wearable, IP Security and automotive aftermarket revenues."

AMBA expects a lot more growth and opportunity in the body-worn security cameras (think police officers), consumer home security cameras, intelligent cameras for the automobile market, as well as cameras for drone. The company guided Q1 revenues in the $64-68 million range versus analysts' estimates of $59 million. They're growth to remain above 50%. Multiple analysts raised their price target on AMBA's stock after these strong Q4 results.

The stock soared to new record highs thanks in part to short covering. The most recent data listed short interest at 37% of the small 29 million share float. The point & figure chart is bullish and forecasting a long-term target of $107.00. AMBA's growth should continue. They don't just provide video chips to GoPro but they're also selling them to GoPro rivals like Xiaomi.

We don't want to launch positions yet. The stock looks short-term overbought and the market's weakness could be used to our advantage. Tonight I am suggesting a buy-the-dip entry point at $60.00. We'll start this trade with a stop loss at $54.00. More conservative traders could cross their fingers and hope for a dip close to $58-59 as an entry point instead of $60.

Buy-the-dip trigger @ $60.00
Start with a stop at $54.00

BUY the 2016 Jan $75 call (AMBA160115C75) current ask $6.80

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

Chart of AMBA:

Originally listed on the Watch List: 03/08/15


Active Watch List Candidates:



iShares MSCI Germany - EWG - close: 29.04

Comments:
03/08/15: The pullback in stocks was not limited to the U.S. German stocks retreated as well. The EWG broke a seven-week winning streak with last week's decline.

The upward momentum should return. The ECB launches its 60 billion euro a month QE program on Monday, March 9th. The basis premise is that QE helps lift asset prices.

We want to see a breakout past $30.00.

Earlier Comments: February 22, 2015:
The EWG is an exchange traded fund (ETF) that mimics the MSCI Germany index. This includes small, mid, and large-cap companies.

The U.S. market has enjoyed several years worth of QE programs that helped fuel market gains. Now that the U.S. QE program is over Europe is about to start on their own QE program. The European Central Bank (ECB) will start its quantitative program in March this year. The central bank will purchase about €60 billion a month through September 2016 but they've already announced that they will extend this deadline if they need to.

This is significant. After years of promising to do something about the Eurozone economy and fight the threat of deflation the ECB is finally acting. They might be too late to fend off deflation but investors seem to have hope that Europe can turn things around.

Germany should be a prime beneficiary of this program. The ECB's QE will continue to pressure the euro lower and that makes Germany's exports more competitive. Investors are have already starting betting on an improvement in the Germany market with a significant bounce in the EWG.

Today the EWG has broken through technical resistance at its simple 200-dma. Now it's about to challenge resistance near the $30.00 mark. Tonight I am suggesting investors wait for the EWG to close above $30.00 and then buy calls the next morning with a stop loss at $26.85.

FYI: If you want a broader European ETF I did consider the VGK but about half of its holdings are British and Swiss companies and may not see the same benefit from a weaker euro.

Breakout trigger: Wait for EWG to close above $30.00
Then buy calls the next morning with a stop at $26.85 .

BUY the 2016 Jan $30 call (EWG160115c30)

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

Originally listed on the Watch List: 02/22/15


Skyworks Solutions - SWKS - close: 90.75

Comments:
03/08/15: SWKS bucked the market's down trend and continued to rally last week. This can't last forever and eventually SWKS will correct. Tonight we will adjust our buy-the-dip trigger from $83.00 to $85.00. We will also adjust the option strike from the January 2016 $90 calls to the $100 calls.

Earlier Comments: March 1, 2015:
SWKS is in the semiconductor industry. They're probably best known for being a supplier to Apple Inc. (AAPL).

According to the company, "Skyworks Solutions, Inc. is empowering the wireless networking revolution, connecting virtually everyone and everything, all the time. Our highly innovative analog semiconductors are linking people, places, and things spanning a number of new and previously unimagined applications within automotive, broadband, cellular infrastructure, the connected home, industrial, medical, military, smartphone, tablet and wearable markets."

The stock has been soaring from its 2013 lows. That's because business is booming. SWKS has beaten Wall Street's earnings estimates and raised guidance for the last four earnings reports in a row. Their sales growth is accelerating with sales up +13.1%, 34.6%, 50%, and 59.4% over the last four quarters (results are year over year).

SWKS' most recent report was January 22nd. Earnings were $1.26 a share on revenues of $805.5 million. Management guided higher and expects Q2 results of $1.12 a share on revenues of $750 million. That's versus Wall Street estimates of $1.04 and revenues of $707 million.

Today shares of SWKS are at all-time highs. We don't want to chase it. I suspect the market could see a pullback soon. We want to be ready to take advantage of any pullback. Tonight I am suggesting a buy-the-dip trigger to buy calls at $83.00. We'll try and limit our risk with a stop loss at $79.00.

NOTE: I would start with small positions. SWKS could be volatile after such strong gains.

Buy-the-dip trigger @ $85.00, use a stop at $79.00

BUY the 2016 Jan $100 call (SWKS160115c100)

03/08/15 adjust the trigger from $83.00 to $85.00
03/08/15 adjust the option strike from the 2016 $90 to the January $100 calls
Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 03/01/15


Union Pacific Corp. - UNP - close: 116.45

Comments:
03/08/15: The transportation stocks have been showing relative weakness. UNP has seen its pullback accelerate. The stock is hitting new five-week lows. Shares still have a long-term up trend but UNP could be headed for support near $110 and its 200-dma.

Tonight we are removing UNP as a watch list candidate but you may want to keep it on your radar screen for a bounce from $110.00.

Trade did not open.

03/08/15 removed from the watch list, suggested entry was a close above $125.00

Originally listed on the Watch List: 02/22/15


Walgreens Boots Alliance - WBA - close: $82.35

Comments:
03/08/15: It was a relatively quiet week for shares of WBA. I don't see any changes from last week's watch list entry. We want to buy calls on a dip at $80.00. More conservative investors could wait for a dip closer to the 50-dma instead (currently near $77.00).

Earlier Comments: March 1, 2015:
Drug store stocks have been healthy this year. Both CVS and WBA are trading near all-time highs. WBA is now an international competitor after completing its merger with Boots.

According to a company press release, "Walgreens Boots Alliance (WBA) is the first global pharmacy-led, health and wellbeing enterprise in the world.

The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years.

The company employs over 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the USA and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with over 12,800 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with over 340 distribution centers delivering to more than 180,000† pharmacies, doctors, health centers and hospitals each year in 19 countries. In addition, Walgreens Boots Alliance is the world's largest purchaser of prescription drugs and many other health and wellbeing products.

Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7 and Botanics. More company information is available at www.walgreensbootsalliance.com."

This stock has been showing significant relative strength. Their last earnings report was back in December and they beat analysts' estimates on both the top and bottom line. That was before Walgreens had finished its merger. Expectations are building for margins to improve thanks to synergies between the two companies. In the prior quarter synergies were about $140 million. The company is estimating synergies could reach $650 million in fiscal 2015.

The trend is obviously bullish. The point & figure chart is forecasting at $95.00 target. You could argue that WBA is a buy right now with last week's breakout past resistance near $80.00. However, instead of chasing new highs I am suggesting a buy-the-dip trigger to buy calls at $80.00. More conservative traders could aim lower and hope for a dip near $78 or $79 instead.

Buy-the-dip trigger @ $80.00, use a stop at $74.75

BUY the 2016 Jan $90 call (WBA160115c90)

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

Originally listed on the Watch List: 02/22/15