Editor's Note:

CVS, DIS, and MSFT all graduated from our watch list to active plays last week. Unfortunately the volatility in DIS was too extreme and the play is already closed.

NOTE: We want to exit half of our NKE trade on Monday morning, Aug. 10th.


Closed Plays


AAPL, DIS, and LGF hit our stop losses.



Play Updates


Adobe Systems - ADBE - close: 82.69

Comments:
08/09/15: ADBE displayed relative strength and managed a gain for the week. Traders bought the dip on Friday near some short-term technical support (5 & 10 dma). Shares look poised to re-challenge resistance in the $84.00 area.

FYI: ADBE has earnings coming up in mid September.

Trade Description: May 3, 2015:
ADBE is in the technology sector. According to the company's website, "Adobe is changing the world through digital experiences. Content built and optimized with Adobe products is everywhere you look — from websites, video games, and smartphones to televisions, tablets, and beyond. Adobe® Creative Cloud® software offers the most innovative tools for creating digital media, while Adobe Marketing Cloud delivers groundbreaking solutions for data-driven marketing. Our leadership in these two emerging categories, Digital Media and Digital Marketing, provides our customers with a real competitive advantage, positioning Adobe for continued growth well into the future. As one of the largest software companies in the world, Adobe achieved revenue of more than US$4 billion in 2013."

The company's most recent earnings report was March 17th. Results were $0.44 a share, which was five cents better than expected. Revenues were up +10.9% to $1.11 billion, also above expectations. The company continues to see success with their subscription model and added 517,000 new creative cloud subscriptions, a +28% improvement from a year ago.

Technically the stock is in a long-term up trend. Shares just spent the last few weeks consolidating sideways and looks ready for the next move higher. A rise past $78.00 would generate a new buy signal on the point & figure chart.

I am suggesting we wait for ADBE to close above $77.75 and then buy calls the next morning with a stop loss at $71.85. More conservative investors may want to wait for ADBE to close over short-term resistance at $80.00 as an alternative entry point for bullish positions.

- Suggested Positions -
MAY 15, 2015 - entry price on ADBE @ 80.00, option @ 4.60
symbol: ADBE160115C85 2016 JAN $85 call - current bid/ask $4.60/4.80

08/02/15 new stop @ 77.65
06/28/15 new stop @ 74.75
06/20/15 new stop @ 73.90
05/15/15 trade begins. ADBE opens at $80.00
05/14/15 triggered. ADBE closed @ $79.43, above our trigger of $77.75
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 77.65
Play Entered on: 05/15/15
Originally listed on the Watch List: 05/03/15


Activision Blizzard, Inc. - ATVI - close: 28.78

Comments:
08/09/15: ATVI was a big winner last week thanks to its earnings report. The company announced its Q2 results on August 4th. Analysts were expecting a profit of $0.08 per share on revenues of $666.6 million. ATVI beat estimates with a profit of $0.13 per share. Revenues were up +15% to $759 million. Management raised their 2015 earnings guidance above Wall Street estimates.

The stock soared on this report with a breakout past its 2015 highs. Multiple analyst firms have raised their price target on ATVI into the $30-33 range. Shares managed to hold up very well during the market sell-off on Thursday.

I would expect ATVI to see profit taking if the broader market continues to sink.

This is a long-term trade with the 2017 calls. We're going to keep our stop loss relatively wide. Tonight we'll adjust the stop up to $24.90.

No new positions at this time.

Trade Description: May 24, 2015:
Consumer spend more money on video games than they do at the movie theater. ATVI is the biggest with annual sales of $4.58 billion. Electronic Arts (EA) is hot on its heels with revenues of $4.52 billion a year.

ATVI is home to some of the biggest franchises in video game history. According to the company, "Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty , Call of Duty Online, Destiny , Skylanders, World of Warcraft , StarCraft , Diablo, and Hearthstone: Heroes of Warcraft. Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world."

Investors have been pretty forgiving when it comes to ATVI's recent earnings reports. On February 5th they beat the bottom line estimate but missed the revenue number. Revenues were down -2.6% from a year ago. ATVI blamed currency headwinds for the revenue miss since half of their sales are outside the U.S. and represent a significant chunk of their profits. Plus, the video game business is prone to lumpy quarters as sales rise and fall on new releases and expansions. Management lowered their Q1 and 2015 guidance.

ATVI just reported its Q1 results on May 6th. Earnings per share fell -15.7% from a year ago to $0.16 but that was actually 9 cents better than expected. Revenues fell again, this time down -8.9%. Management lowered their Q2 guidance but they raised their fiscal 2015 earnings guidance above Wall Street estimates. That was enough to send shares of ATVI higher. A few analysts have commented that ATVI's 2015 guidance is too conservative.

Bobby Kotick, Chief Executive Officer of Activision Blizzard, commented on his company's quarterly results, "...This deepening level of engagement with a widening base of players across our franchises is what drove another successful quarter. We delivered better-than-expected Q1 results, increased our 2015 non-GAAP revenue outlook to $4.425 billion and earnings per share outlook to $1.20. Last quarter, on a non-GAAP basis, we delivered record higher-margin digital revenues of over half a billion dollars a Q1 record on an absolute basis and an all-time high on a percentage basis."

There were a number of headlines about how ATVI's Warcraft MMORPG saw its subscriber numbers fall from 10 million to 7.1 million in the last quarter. Investors don't seem to care. The Warcraft game is a cash cow but it's 11 years old. Investors could be looking forward.

ATVI said their new Destiny sci-fi shooter game and the Blizzard's fantasy card game have more than 50 million registered players (between them) with over $1 billion in sales.

ATVI also has several new titles coming out. They're on the verge of releasing "Heroes of the Storm", which will take on the current category champion "League of Legends" for the MOBA-style video game. More than ten million people have already signed up for the Heroes beta. ATVI has announced the next iteration of their Call of Duty franchise (CoD), which will be "Call of Duty: Black Ops III", which is another major cash-generating franchise. ATVI is also launching a new game called "Overwatch" and they'll release a new version of "Guitar Hero", which had 40 million players at its peak.

Currently shares of ATVI are up three weeks in a row and look a little bit overbought. Broken resistance near $24.00 should be significant support. Tonight I am suggesting a buy-the-dip trigger at $24.25 with a stop loss at $21.85.

- Suggested Positions -
JUL 21, 2015 - entry price on ATVI @ 26.25, option @ 2.23
symbol: ATVI170120C30 2017 JAN $30 call - current bid/ask $3.10/3.25

08/09/15 new stop @ 24.90
08/04/15 ATVI beats estimates on both the top and bottom line and raises guidance.
07/21/15 Trade begins. ATVI opens at $26.25
07/20/15 ATVI closed @ $26.25, above our trigger of $26.15
07/12/15 new entry strategy: Wait for a close above $26.15, then buy calls
Use the 2017 Jan $30 call
06/28/15 adjust the entry trigger to $23.75 and the stop to $21.85.
06/21/15 move the stop loss to $22.85
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 24.90
Play Entered on: 07/21/15
Originally listed on the Watch List: 05/24/15


CVS Health - CVS - close: 107.74

Comments:
08/09/15: CVS is a watch list candidate that has graduated to our active play list.

The plan was to buy calls on a dip at $107.00. We were expecting some profit taking when CVS reported earnings on August 4th. The company delivered Q2 earnings of $1.19 per share, which were six cents above estimates. Revenues were up +7.4% to $37.17 billion, which was in-line with expectations. CVS raised their 2015 guidance above Wall Street estimates. Yet the stock sold off anyway. Shares gapped open lower at $110.74 and spiked down to $106.56. Our trigger was hit at $107.00. Since then the intraday bounce in CVS has failed and shares are once again testing the $107 area.

Technically last week's decline has produced a potential bearish reversal pattern on the weekly chart but it needs to see confirmation.

Nimble investors may want to consider buying calls on dips in the $105-106 area but I am not suggesting new positions at this time.

Trade Description: July 19, 2015:
Healthcare stocks have been strong performers this year. CVS is no exception with the stock up +14% year to date.

According to the company, "CVS Health is a pharmacy innovation company helping people on their path to better health. Through its 7,800 retail pharmacies, nearly 1,000 walk-in medical clinics, a leading pharmacy benefits manager with more than 70 million plan members, and expanding specialty pharmacy services, the company enables people, businesses and communities to manage health in more affordable, effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care costs."

Their most recent earnings report was May 1st. CVS announced its Q1 results were $1.14 per share. That beat estimates by six cents. Revenues were up +11% to $36.33 billion, also above estimates. CVS did lower their Q2 guidance but left their 2015 forecast unchanged.

Wall Street loves a deal and CVS has been busy making deals. On May 21st the company announced they were buying Omnicare (OCR) for $12.7 billion. OCR is a pharmacy benefits provider to seniors citizens. This deal is expected to close by the end of 2015. CVS believes OCR will add 20 cents in earnings to their fiscal 2016. CVS CEO Larry Merlo commented on the deal, "The acquisition of Omnicare significantly expands our business, providing CVS Health access into a new pharmacy dispensing channel. It also creates new opportunities for us to extend our high-quality, innovative pharmacy programs to a broader population of seniors and chronic care patients."

CVS didn't stop there. On June 15th they announced a deal to buy all of the pharmacies inside Target stores (TGT). Here's an excerpt from the company's press release explaining the Target pharmacy deal:

CVS Health to acquire Target's pharmacy and clinic businesses for approximately $1.9 billion. Through this agreement, CVS Health will acquire Target's more than 1,660 pharmacies across 47 states and operate them through a store-within-a-store format, branded as CVS/pharmacy. In addition, a CVS/pharmacy will be included in all new Target stores that offer pharmacy services. Target's nearly 80 clinic locations will be rebranded as MinuteClinic, and CVS Health will open up to 20 new clinics in Target stores within three years of the close of the transaction. The new clinics will be part of CVS/minuteclinic's plan to operate 1,500 clinics by 2017. In addition, CVS Health and Target plan to develop five to 10 small, flexible format stores over a two-year period following the deal close, which will each be branded as TargetExpress and include a CVS/pharmacy.
Wall Street also reacted positively to the Target pharmacy news.

Rival pharmacy operator WBA reported earnings on July 9th that beat estimates by 15 cents and WBA raised their guidance. That should bode well for CVS who reports earnings on August 4th.

Shares of CVS are trading at all-time highs near $110. We don't want to chase it here. Tonight I am listing a buy-the-dip entry trigger to jump in on a pullback. Prior to the July rally the June high was $106.88. I'm suggesting a buy-the-dip trigger at $107.00.

- Suggested Positions -
AUG 04, 2015 - entry price on CVS @ 107.00, option @ 2.45
symbol: CVS160115C115) 2016 JAN $115 call - current bid/ask $2.26/2.36

08/04/15 CVS hit our buy-the-dip trigger at $107.00
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: 103.40
Play Entered on: 08/04/15
Originally listed on the Watch List: 07/19/15


Dunkin' Brands Group - DNKN - close: 53.35

Comments:
08/09/15: DNKN lost about half a point for the week. The rally on Monday failed the very next day. Sadly this looks like a new lower high and doesn't bode well for DNKN on a short-term basis. If the market continues to sink we could see DNKN fall toward $52.00 and that puts this trade in danger of being stopped out (current stop is $51.85).

No new positions at this time.

Trade Description: May 31, 2015:
Investors appear to be in the mood for donuts this year. Shares of DNKN are significantly outperforming the broader market with its stock up about +26% year to date versus the S&P 500's +2.3% gain.

The company is in the services sector. According to the company, "Founded in 1950, Dunkin' Donuts is America's favorite all-day, everyday stop for coffee and baked goods. Dunkin' Donuts is a market leader in the hot regular/decaf/flavored coffee, iced coffee, donut, bagel and muffin categories. Dunkin' Donuts has earned the No. 1 ranking for customer loyalty in the coffee category by Brand Keys for nine years running. The company has more than 11,300 restaurants in 37 countries worldwide. Based in Canton, Mass., Dunkin' Donuts is part of the Dunkin' Brands Group, Inc. (DNKN) family of companies."

DNKN also owns the Baskin Robbins franchise, which has more than 7,500 retail locations in almost 50 countries.

The company seems to be undergoing a turnaround in its earnings results. Back in December shares plunged on an earnings warning when management lowered their 2015 guidance. When they reported their Q4 results in February they missed by a penny with revenues in-line (+5.5%). Their donut store comps were +1.4% but their ice cream store comps were +9.3%. Management raised their dividend +15% and announced a $700 million stock buy back program.

Results improved significantly in the first quarter of 2015. Analysts were expecting a profit of $0.35 a share on revenues of $180.7 million. DNKN reported earnings of $0.40 a share, which is a +21% improvement from a year ago. Margins improved 310 basis points to 47.1%. Their revenues rose +8.1% to $185.9 million, above estimates. Their donut store comps improved to +2.7% while their ice cream store comps hit +8.0%. Management raised their 2015 earnings estimates above Wall Street's consensus.

The stock soared to new all-time highs following this earnings report in late April. Since then shares have seen a correction but investors have bought the dip. Analysts have begun to raise their price targets. The point & figure chart is very bullish with a long-term target of $78.00. Currently shares of DNKN are hovering below resistance in the $54.00 area. Tonight I am suggesting we wait for DNKN to close above $54.25 and buy calls the next morning.

- Suggested Positions -
JUN 24, 2015 - entry price on DNKN @ 54.83, option @ 1.60
symbol: DNKN160115C60 2016 JAN $60 call - current bid/ask $0.70/1.05

07/19/15 new stop @ 51.85
06/24/15 Trade begins. DNKN opens at $54.83
06/23/15 DNKN closed at $54.96, above our trigger of $54.35
06/21/15 adjust entry trigger to a close above $54.35
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 51.85
Play Entered on: 06/24/15
Originally listed on the Watch List: 05/31/15


Facebook, Inc. - FB - close: 94.30

Comments:
08/09/15: With a show of strength on Wednesday it looked like FB was ready to breakout higher. Then the market reversed sharply lower on Thursday and FB along with it. The stock's move on Thursday produced a bearish engulfing candlestick reversal pattern. I'm worried shares could be headed toward $90.00 if the broader market continues to sink.

No new positions at this time.

Earlier Comments: March 22, 2015:
Facebook probably needs no introduction. It's the largest social media platform on the planet. As of December 31st, 2014 the company reported 1.19 billion monthly active users and 890 million daily active users. If FB were a country that probably puts them as the third most populous country on the planet (behind India and China).

This past week the company announced a new mobile payment service through FB's messenger app. The new service will compete with similar programs through PayPal, Apple Pay, and Google Wallet.

The announcement combined with a broad market rally helped fuel a +7% gain in FB's stock last week. FB's market cap has risen past $230 billion making it the tenth largest company in the S&P 500.

Growth has been phenomenal. According to IBD, FB's Q4 earnings were up +69% form a year ago. Revenues were up +49%. Wall Street is expecting FB's profit to rise +12% in 2015 and +32% in 2016.

Technically shares of FB have broken out from a very significant consolidation pattern. The point & figure chart is bullish and forecasting at $96.00 target. I think it will go higher. After a five-day run we do not want to chase it here. I'm suggesting a buy-the-dip entry trigger at $82.00 with a stop loss at $74.75.

- Suggested Positions -
APR 01, 2015 - entry price on FB @ 81.00, option @ 4.92
symbol: FB160115C90 2016 JAN $90 call - current bid/ask $10.40/10.50

07/26/15 new stop @ 88.85
07/20/15 Planned exit to sell half. FB opened @ $95.85.
Our 2016 call option opened at $11.01 (+123.7%)
07/19/15 plan on exiting half of our FB call option on Monday (July 20th) to lock in potential gains.
07/19/15 new stop @ 87.45
06/28/15 new stop @ 78.45
04/23/15 Q1 earnings report
04/01/15 triggered @ 81.00
03/29/15 move the buy-the-dip trigger from $82.00 down to $81.00
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 88.85
Play Entered on: 04/01/15
Originally listed on the Watch List: 03/22/15


General Dynamics - GD - close: 149.72

Comments:
08/09/15: GD spent the week churning sideways but managed to eke out a gain anyway. I would hesitate to launch new positions. If the market continues to sink we could see GD decline toward what should be support in the $146.00 area.

No new positions at this time.

Trade Description: July 12, 2015:
The last time we had GD in the newsletter was back in November 2014. Shares have spent the last seven months building a massive consolidation in the $130-146 range. The stock could be poised for a major breakout higher.

GD is considered part of the industrial goods sector. The company is a huge aerospace and defense company. They have four significant segments: aerospace, combat systems, information systems, and marine systems (ships and submarines). The defense industry in the U.S. has been saddled with significant budget cuts due to the 2011 sequestration deal that will shave $500 billion from U.S. defense spending from 2012 through 2021. The industry has managed to thrive in spite of these budget cuts.

GD has beaten Wall Street's earnings estimates seven quarters in a row. They're also beating analysts revenue estimates as well. Margins have been steadily improving.

The world isn't getting any safer and the major defense contractors have been working on boosting their overseas sales just in case the U.S. decides to cut defense spending again. Considering the current state of world affairs with a growing military rival in China, a new cold war brewing with Russia, and an openly hostile ISIS, defense spending should stay healthy.

I mentioned earlier that GD had consolidated sideways for the last seven months. Today it's on the verge of a bullish breakout higher. The point & figure chart is already bullish and forecasting at $175.00 target.

Friday's intraday high was $146.98. I am suggesting we wait for GD to close above $147.00 and then buy calls the next morning with a stop loss at $141.75.

- Suggested Positions -
JUL 16, 2015 - entry price on GD @ 148.00, option @ 2.85
symbol: GD160115C160 2016 JAN $160 call - current bid/ask $2.80/3.00

07/16/15 trade begins. GD opens at $148.00
07/15/15 Triggered. GD closed at $147.25, above our $147.00 trigger
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 141.75
Play Entered on: 07/16/15
Originally listed on the Watch List: 07/12/15



Henry Schein, Inc. - HSIC - close: 144.83

Comments:
08/09/15: The stock market's broad-based decline helped push HSIC back toward support in the $143-144 area. HSIC should rally from here but I would hesitate to launch new positions. Let's give it a week and see how the stock performs.

No new positions at this time.

Trade Description: July 12, 2015:
HSIC has been relatively resistant to the market's ups and downs lately. That's a good thing considering some of the recent volatility in stocks.

HSIC is in the services sector. They're part of the medical equipment industry. According to the company, "Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners. The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites. A FORTUNE 500 Company and a member of the S&P 500 and NASDAQ 100 Indices, Henry Schein employs more than 18,000 Team Schein Members and serves more than one million customers.

The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a selection of more than 100,000 branded products and Henry Schein private-brand products in stock, as well as more than 150,000 additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.

Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 30 countries. The Company's sales reached a record $10.4 billion in 2014, and have grown at a compound annual rate of approximately 16 percent since Henry Schein became a public company in 1995.

HSIC has managed to beat Wall Street estimates the last couple of quarters. Revenue growth has been negatively impacted by foreign currency headwinds but they're still seeing growth. Analysts are only forecasting +3.3% revenue growth in 2015 but they expect that to almost double in 2016 to +6.4%.

Technically the stock looks bullish with a breakout from a major consolidation pattern back in June. The point & figure chart shows a quadruple top breakout buy signal with a $195.00 target.

Shares of HSIC have been churning sideways in the $142-146 range the last couple of weeks. If it can breakout we want to be ready. Tonight I am suggesting a trigger to buy calls if HSIC can close above $146.50.

- Suggested Positions -
JUL 14, 2015 - entry price on HSIC @ 147.00, option @ 3.90
symbol: HSIC160115C155 2016 JAN $155 call - current bid/ask $2.50/3.10

08/02/15 new stop @ 141.75
07/14/15 trade begins. HSIC opens at $147.00
07/13/15 HSIC closed @ $146.53, above our trigger of $146.50
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 141.75
Play Entered on: 07/14/15
Originally listed on the Watch List: 07/12/15


iShares US Home Construction ETF - ITB - close: 27.48

Comments:
08/09/15: Once again I'm starting to lose my patience with ITB. After a four-day rally the prior week this ETF reversed with a four-day decline. It managed a short-term oversold bounce on Friday.

No new positions at this time.

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 $0.40/0.70

08/02/15 new stop @ 26.75
07/12/15 new stop @ 25.90
06/28/15 last week new home sales surged to their best levels since early 2008
06/15/15 the NAHB confidence survey hits 9-month highs
05/31/15 the ITB is not performing well. Investors may want to consider an early exit.
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: 26.75
Play Entered on: 02/11/15
Originally listed on the Watch List: 01/11/15


MasterCard Inc. - MA - close: 97.77

Comments:
08/09/15: MA managed to ignore some of the market's weakness last week. Shares consolidated sideways in the $96-99 zone, near its highs. Friday's bounce lifted shares back into positive territory for the week.

I'm encouraged by MA's performance last week so we are raising the stop loss from $89.75 to $91.75.

I am not suggesting new positions at this time.

Trade Description: May 3, 2015:
We are adding MA back to the watch list. Here's our recent watch list play description from April:

Do you have a credit card? How about a debit card? Odds are you do. About 70% of Americans have a credit card and many have more than one. Inside the United States there are over 500 million credit cards between American Express, MA, and Visa. There's more than 1.12 billion globally (not counting the U.S.). There's also another 572 million MA or Visa debit cards in the U.S. (MasterCard has more than 144 million). Not counting America there are more than 1.2 billion debit cards around the world.

Now what if you could charge a small percentage for consumers using their plastic every time they make a purchase? That's MA's business model. As of 2013 their market share of global transactions (credit or debit) was about 27%. They are the second biggest credit and debit card company behind Visa (V). According to the company, "MasterCard (MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world's fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard's products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone."

MA has been delivering steady growth. They reported their Q3 results on October 30th with earnings up +19% from a year ago to $0.87 a share. That beat estimates. Revenues were up +12.8% to $2.5 billion, also above expectations. The bullish trend continued when MA reported its 2014 Q4 results on January 30th. Earnings per share soared +32% from a year ago to $0.69 and revenues grew +13.6% to $2.42 billion. Both metrics were above Wall Street expectations.

The company did warn that the surge in the U.S. dollar was impacting results but they still see strong single-digit revenue growth for 2015. They reaffirmed +20% earnings growth.

Meanwhile one of MA's biggest rivals, American Express (AXP), is not having a good year. AXP lost its exclusive deal with Costco (COST) last month. This deal generated 20% of AXP's loans and about 10% of their annual card growth. AXP is also losing its partnership with JetBlue (JBLU). AXP's losses will likely be MA's and Visa's gain.

Recently MA announced it had signed a 10-year deal with Citigroup. Not only is Citigroup one of the biggest banks on the planet they are the largest credit card issuer in the world. The press release states "Citi will begin aligning the company's consumer proprietary credit and debit portfolios to the MasterCard network in 2015." One analyst has already opined that the deal should provide a "decent tailwind for EPS growth" (for MA). Speaking of opinions, a couple of analysts at Nomura believe that MA is cheap at current valuations and could be seen as safe haven investment given their steady earnings growth.

"Despite a mixed global economy, we delivered solid results for the quarter and for the full year in 2014," said Ajay Banga, president and CEO, MasterCard. "This year is off to a good start with several new wins, as well as renewals of some important customer agreements, with more in the pipeline. Looking ahead, we will continue to be at the forefront of our industry by driving payment innovation with solutions such as MasterPass, and by increasing electronic payments usage globally as demonstrated by our significant expanded acceptance footprint across Africa."

Shares of MA look like a potential trade again. The company recently reported earnings on April 29th. The beat estimates on the bottom line with a profit of $0.89 per share. Revenues were only up +2.7% to $2.23 billion, which was below expectations. Part of the challenge were currency headwinds.

Wall Street seems to think that MA will do well in spite of the tough business environment. The spike higher on April 22nd was news that the country of China was going to open up their market to foreign companies. Previously companies like MA and Visa could only do business in China by partnering with a domestic firm (China UnionPay). Now the Chinese government is opening up the bank card-clearing market to foreigners. This is huge. The Chinese market for this business was $6.8 trillion in transactions last year. Now MA gets a chance to compete for its share of this business.

Shares of MA still have resistance near $93.00. We want to see MA close above $93.25 and then buy calls the next morning with a stop loss at $88.00.

- Suggested Positions -
MAY 11, 2015 - entry price on MA @ 93.48, option @ 5.95
symbol: MA160115C95 2016 JAN $95 call - current bid/ask $6.70/6.90

08/09/15 new stop @ 91.75
07/10/15 EU files charges against MA regarding excessive fees
06/21/15 new stop @ 89.75
05/11/15 trade begins. MA opens at $93.48
05/08/15 triggered with a close @ $93.51 (above $93.25)
Option Format: symbol-year-month-day-call-strike

Current Target: MA @ TBD
Current Stop loss: 91.75
Play Entered on: 05/11/15
Originally listed on the Watch List: 05/03/15


Microsoft Corp. - MSFT - close: 46.74

Comments:
08/09/15: MSFT is another watch list candidate that graduated to our active play list. The plan was to wait for MSFT to close in the $47.50-48.50 range and then buy calls the next morning. The stock's rally on Tuesday qualified with a close at $47.54. Our trade opened the next morning. MSFT was not immune to the market's weakness on Thursday but traders were in a buy-the-dip mood on Friday.

At this time I would wait for another close above $47.50 before considering new bullish positions.

Trade Description: August 2, 2015:
Microsoft is a technology titan. They were founded in 1975. Today they have grown into a behemoth in multiple industries.

A few of MSFT's businesses include: computer operating system software, Microsoft Office, Windows Phone operating system, Xbox gaming business, Xbox live subscriptions, Commercial software business includes Windows Server, Microsoft SQL server, Visual Studio, and more. They also own Skype. The company has jumped headfirst into cloud computing

This focus on cloud has changed the way MSFT now describes itself. According to the company, "Microsoft is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more."

The company has been getting a lot of press lately for its Windows 10 launch. The software went live on July 29th. MSFT is offering it for free to consumers who have Windows 7 or 8. In the first 24 hours over 14 million copies were downloaded. Reviews of the new operating system have been positive, many claiming it is a major upgrade from Windows 8.

Barron's recently published a bullish article on MSFT. The author suggested that MSFT is moving toward a subscription model. Adobe Systems (ADBE) has seen huge success moving from an upfront license fee for their software to a monthly subscription model. MSFT appears to be moving more and more toward this model. Although as I mentioned earlier you can download an upgrade to Windows 10 for free (currently available in 190 countries). The Barron's article also suggested that MSFT is cheap with a 2.7% dividend yield and trading at 16x trailing free cash flow vs. the S&P 500 average of 20x free cash flow.

MSFT's most recent earnings report was July 21st. It was the company's fiscal Q4 report. Earnings of $0.62 per share beat estimates of $0.57. Revenues were down -5% to $22.18 billion, but that was still above estimates. Currency headwinds were a big negative last quarter. Highlight was its commercial cloud computing revenues, which surged +88% (almost 100% if you account for currency headwinds).

MSFT management guided lower, which would normally be the kiss of death for the stock price. However, the reaction to their lowered guidance was minor. Shares of MSFT a couple of points and found support. That's in spite of a rough week for the market two weeks ago. Now investors are buying the dip and shares appear to have produced a tradable bottom. The point & figure chart is still bullish and forecasting at $67.00 target.

Tonight I am suggesting we buy calls on MSFT if the stock can close in the $47.50-48.50 range. Wait for the stock to close in this window and then buy calls the next morning. This is a long-term trade. We're using the 2017 calls.

Breakout trigger: Wait for MSFT to close in the $47.50-48.50 range
Then buy calls the next morning with a stop loss at $43.75.

BUY the 2017 Jan $50 call (MSFT170120C50) current ask $3.10

- Suggested Positions -
AUG 05, 2015 - entry price on MSFT @ 47.98, option @ 4.00
symbol:MSFT170120C50 2017 JAN $50 call - current bid/ask $3.10/3.25

08/05/15 trade begins. MSFT opens at $47.98
08/04/15 MSFT closed at $47.54, inside our $47.50-48.50 entry range
Option Format: symbol-year-month-day-call-strike

Chart of MSFT:

Current Target: MSFT @ TBD
Current Stop loss: 43.75
Play Entered on: 08/05/15
Originally listed on the Watch List: 08/02/15


Nike, Inc. - NKE - close: 114.51

Comments:
08/09/15: After nine up weeks in a row shares of NKE finally encountered some profit taking. Most of the pullback was thanks to the market sell-off on Thursday. NKE did pierce technical support at its rising 20-dma on Friday but managed to bounce and trim its loss by the closing bell.

I am worried the broader market could be poised for a decline and NKE remains overbought. Therefore tonight I am suggesting we exit half of our call position on Monday morning, August 10th, to lock in a potential gain. We will also raise our stop loss to $109.40.

I am not suggesting new positions at this time.

Earlier Comments: March 29, 2015:
In Greek mythology Nike is the winged goddess of victory. It's an appropriate brand name for the American athletic wear giant. Nike is the 800-pound gorilla in the industry with annual sales of more than $30 billion.

If you're not familiar with the company, "NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiaries include Converse Inc., which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International LLC, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories."

The company's most recent earnings report was March 19th, after the closing bell. NKE reported its Q3 2015 results. Analysts were expecting a profit of $0.84 a share on revenues of $7.62 billion. NKE delivered a profit of +0.89 a share or +16% from a year ago. Revenues were up +7% to $7.46 billion. However, if you back out the currency headwinds, their revenues were up +13%.

The company reported sales growth across every geographical region. Their gross margins improved 140 basis points to 45.9 percent. Management said their online sales are soaring. Nike.com saw its revenues jump +42% last quarter.

The current quarter is NKE's 2015 Q4 (March-July) and the company said orders for Q4 in North America are up +15%, which is above analysts' estimates of +11.6%. Orders from China are up +11%, also above estimates. In the company's earnings release NKE said, "As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel scheduled for delivery from March 2015 through July 2015 were 2 percent higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 11 percent."

One big concern is the U.S. dollar. Sales in Europe were up +21% but when you factor in euro weakness and dollar strength that sales growth drops to +10%. The strength in the U.S. dollar is a major headwind but after NKE's Q3 results Wall Street feels that the company is managing the currency impact very well. The company is forecasting low double digit sales growth in the current quarter.

Wall Street applauded the results and shares of NKE gapped open higher on March 20th to hit all-time highs. There was a parade of bullish analyst comments. Several firms raised their price target on NKE. Here's a brief list of new price target: $106, $110, $115, $116.00. The point & figure chart is more optimistic as it is forecasting at $125.00 target.

Shares of NKE have seen some profit taking, which isn't a surprise considering the market's recent decline. However, now that NKE has filled the gap, traders jumped in to buy the dip. The stock looks poised to breakout past round-number resistance at $100.00 (again). Tonight I am suggesting investors wait for NIKE to close above $101.00 and then buy calls the next morning with a stop loss at $94.45.

- Suggested Positions -
MAY 11, 2015 - entry price on NKE @ 102.42, option @ 4.20
symbol: NKE160115C110 2016 JAN $110 call - current bid/ask $8.75/8.90

08/09/15 new stop @ 109.40, Exit HALF of our position on Monday, Aug. 10th to lock in a potential gain
07/19/15 new stop @ 107.75
07/12/15 new stop @ 104.25
07/05/15 new stop @ 103.25
06/28/15 new stop @ 102.25
06/25/15 NKE beats earnings and revenue estimates
06/21/15 new stop @ 99.50
06/07/15 new stop @ 97.85
05/31/15 NKE down last week on rumors it might be involved in the FIFA scandal
05/11/15 trade begins. NKE opens at $102.42
05/08/15 Triggered with a close @ $102.44 (above 102.00)
05/03/15 move the stop loss from 95.75 to 97.45
04/12/15 Strategy update: adjust the trigger to a close above $102.00 and the stop loss to $95.75 (from a close above $101.00 and a stop at $94.45)
Option Format: symbol-year-month-day-call-strike

Current Target: NKE @ TBD
Current Stop loss: 109.40
Play Entered on: 05/11/15
Originally listed on the Watch List: 03/29/15


Starbucks Corp. - SBUX - close: 57.20

Comments:
08/09/15: SBUX is actually hold up reasonably well. Shares only lost 73 cents for the week. That was all thanks to the market drop on Thursday. SBUX should have short-term support near $56.00 and again in the $54.00 area.

I am not suggesting new positions at this time.

Trade Description: April 26, 2015:
SBUX shares are soaring to new all-time highs.

The world seems to have an insatiable appetite for coffee. Starbucks is more than happy to help fill that need. 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.

A few years ago Business Insider published some facts on SBUX. The average SBUX customer stops by six times a month. The really loyal, top 20% of customers, come in 16 times a month. There are nearly 90,000 potential drink combinations at your local Starbucks. The company spends more money on healthcare for its employees than it does on coffee beans.

The company's earnings results were only mediocre most of 2014 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 the consolidation is over.

Five-Year Plan

Late last year SBUX announced their five-year plan to increase profitability. Here's an excerpt from a company press release:

"The seismic shift in consumer behavior underway presents tremendous opportunity for businesses the world over that are prepared and positioned to seize it," Schultz said (Howard Schultz is the Founder, Chairman, President, and CEO of Starbucks). "Over the next five years, Starbucks will continue to lean into this new era by innovating in transformational ways across coffee, tea and retail, elevating our customer and partner experiences, continuing to extend our leadership position in digital and mobile technologies, and unlocking new markets, channels and formats around the world. Investing in our coffee, our people and the communities we serve will remain at our core as we continue to redefine the role and responsibility of a public company in today's disruptive global consumer, economic and retail environments."

"Starbucks business, operations and growth trajectory around the world have never been stronger, and we are more confident than ever in our ability to continue to drive significant growth and meet our long term financial targets," said Troy Alstead, Starbucks chief operating officer. "We have more customers visiting more stores more frequently, both in the U.S. and around the world, than at any time in our history. And we expect both the number of customers visiting our stores and the amount they spend with us to accelerate in the years ahead. With a robust pipeline of mobile commerce innovations that will drive transactions and unprecedented speed of service, Starbucks is ushering in a new era of customer convenience. We believe the runway of opportunity for Starbucks inside and outside of our stores is both vast and unmatched by any other retailer on the planet."

The company believes they can grow revenues from $16 billion in FY2014 to almost $30 billion by FY2019. To do that they will expand deeper into regions like 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. This will also include a delivery service.

Part of the five-year plan is a new marketing campaign called Starbucks Evening experience. The company wants to be the "third place" between home and work. After 4:00 p.m. they will start offering alcohol, mainly wine and beer, in addition to new tapas-like smaller plates.

The company recently launched its first ever Starbucks Reserve Roastery and Tasting Room in Seattle, near their iconic first retail store. The new roastery is supposed to be the ultimate coffee lovers experience. CEO Schultz said they will eventually open up about 100 of these Starbucks Reserve locations.

SBUX is having a pretty good 2015 so far with the stock up +26%, outperforming the broader market. A lot of this gain was thanks to a post-earnings pops. SBUX reported its Q1 2015 results on January 22nd. Adjusted earnings, backing out one-time charges, were $0.80 a share. That's in-line with estimates. Revenues were up +13.3% to $4.8 billion, also in-line with estimates. It was a very strong holiday period for SBUX thanks in part to astonishing gift card sales. The amount of money loaded onto SBUX gift cards during the holidays surged +17% to a record $1.6 billion. One out of every seven Americans received a SBUX gift card. The company also saw significant growth overseas with its China and Asia-Pacific business soaring +85% to sales of $495 million. Their mobile transactions have reached seven million transactions a week. Investors applauded the news anyway and sent SBUX soaring to new all-time highs the next day.

That whole scenario just happened again on Friday with the company delivering exceptional growth. SBUX reported its Q2 (2015) on April 23rd. Earnings of $0.33 a share were in-line with estimates. Revenues were up +17.8% to $4.56 billion, slightly above expectations. It was their strongest growth in four years. Customers are responding well to new drink options and an updated food menu. They're also developing new delivery options, mobile pay options, and alcoholic drinks available at select locations.

Worldwide same-store sales grew +7%. This was significantly above estimates. It also marked the 21st consecutive quarter where SBUX's comparable store sales were +5% or more.

The company issued mixed guidance. The stronger dollar is having an impact. They see fiscal 2015 results in the $1.55-1.57 range. That compares to Wall Street estimates for $1.57 per share. However, the company's revenue estimates are more optimistic. They're forecasting +16-18% sales growth into the $19.1-19.4 billion zone compares to analysts' estimates of $19.1 billion.

The stock market applauded SBUX's results and shares popped to new highs. We do not want to chase it. Shares will likely fill the gap from Friday morning. Tonight I am suggesting a buy-the-dip trigger at $50.00. More nimble traders may want to consider a trigger closer to $49.70 instead.

- Suggested Positions -
APR 28, 2015 - entry price on SBUX @ 50.00, option @ 1.59
symbol:SBUX160115C55 2016 JAN $55 call - current bid/ask $4.55/4.65

08/02/15 new stop @ 53.75
07/26/15 new stop at $53.25
Investors may want to exit now and lock in potential gains
07/23/15 SBUX reports earnings above estimates.
07/19/15 new stop @ 51.85
06/29/15 Sold half, SBUX gapped down. Option exit $2.67 (+67.9%)
06/28/15 Sell half of our call position on Monday, June 29, to lock in a potential gain
06/21/15 new stop @ 49.65
06/07/15 new stop @ 49.25
05/31/15 new stop @ 48.25
04/28/15 triggered @ 50.00
Option Format: symbol-year-month-day-call-strike

Current Target: SBUX @ TBD
Current Stop loss: 53.75
Play Entered on: 04/28/15
Originally listed on the Watch List: 04/26/15


Under Armour, Inc. - UA - close: 97.93

Comments:
08/09/15: UA had rallied to new all-time highs prior to Thursday's market-wide sell-off. Traders bought the dip on Friday but I am not convinced the pullback is over. If we had the 2017 calls I'd probably leave our stop loss pretty wide. However, we don't. We are using the January 2016 calls. Therefore tonight we'll raise the stop loss to $93.25, just below the intraday low from its gap higher on July 23rd.

No new positions at this time.

Trade Description: June 14, 2015:
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 Fitness 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 reported their 2014 Q4 results on 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.

There was a steady stream of analysts raising their price targets on UA after its February earnings report. The company's most recent earnings report was April 21st when UA announced Q1 results. After raising guidance back in February the company reported earnings of $0.05 per share, which was in-line with Wall Street's new estimates. Revenues were up +25.4% to $804.9 million, which beat expectations.

UA management raised their outlook again. They expect 2015 operating income to improve +13-to-15%. UA expects 2015 revenues to rise +23% to $3.78 billion. The stock has rallied sharply into its earnings report and shares suffered some post-earnings depression with a -$12.00 drop (-13.6%) in the next two weeks. The price target upgrades continued but UA spent most of May consolidating sideways inside a narrow range. Finally on June 5th shares of UA broke out past multiple layers of resistance on another upgrade. The stock was upgraded to a "buy" with a $91 price target. Since then UA has been digesting its gains in a sideways consolidation between what should be support at $80 and short-term resistance near $82.00.

Tonight I am suggesting we wait for UA to close above $82.25 and then buy calls the next morning with a stop loss at $75.90.

FYI: I am listing the 2016 calls but investors may want to consider the 2017 January calls if you're willing to pay for the time premium.

- Suggested Positions -
JUN 17, 2015 - entry price on UA @ 83.06, option @ 4.50
symbol: UA160115C90 2016 JAN $90 call - current bid/ask $12.00/12.70

08/09/15 new stop @ 93.25
07/27/15 Sold half @ the open. Option exit $10.50 (+133.3%)
07/26/15 new stop @ 89.00, EXIT half or our UA calls on Monday, July 27th, to lock in a potential gain
07/19/15 new stop @ 82.40
07/12/15 new stop @ 79.75
06/28/15 new stop @ 78.90
06/17/15 trade begins: UA opens at $83.06
06/16/15 Triggered: UA closed at $82.78, above our trigger at $82.25
Option Format: symbol-year-month-day-call-strike

Current Target: UA @ TBD
Current Stop loss: 93.25
Play Entered on: 06/17/15
Originally listed on the Watch List: 06/14/15




CLOSED Plays


Apple Inc. - AAPL - close: 115.52

Comments:
08/09/15: The profit taking in AAPL continued last week and shares broke down below major support in the $120.00 area. AAPL hit our stop loss at $118.00 on August 3rd (Monday).

The research team at Bespoke Investment noted that AAPL is having its longest correction (165 days as of Friday) since Steve Jobs introduced the iPod in October 2001. They are looking at AAPL's all-time closing high of $133.00 in February 2015. Shares have gotten close to this level and traded above it on an intraday basis.

There has been plenty of speculation on where AAPL will find a bottom. Last week I heard a lot of talk about maybe the $105.00 area.

- Suggested Positions -
DEC 09, 2014 - entry price on AAPL @ 110.19, option @ 9.55
symbol: AAPL160115C120 2016 JAN $120 call - exit $7.00 (-26.7%)

08/03/15 stopped out @ 118.00
07/22/15 Big gap down as the market reacts to AAPL's earnings
06/20/15 AAPL underperformed the broader market this past week. Shares look like they could break support in the $125 area
04/27/15 AAPL crushes earnings estimates (again)
04/12/15 new stop @ 118.00
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

Chart

Current Target: To Be Determined
Current Stop loss: 118.00
Play Entered on: 12/09/14
Originally listed on the Watch List: 11/02/14


The Walt Disney Co. - DIS - close: 109.35

Comments:
08/09/15: It was an ugly week for shares of DIS. Shares fell more than $10.00 for the week, erasing about three month's worth of gains. The big move was a reaction to DIS' earnings report.

DIS reported their Q3 earnings on August 4th. Wall Street was expecting a profit of $1.42 per share on revenues of $13.2 billion. DIS delivered a profit of $1.45 per share. Revenues were up +5% to $13.1 billion - a miss.

This is a huge company firing on all cylinders. Yet the market freaked out over some small subscriber losses in DIS' ESPN cable TV unit. Shares gapped open lower at $110.83 on August 5th. That immediately triggered this play since we had DIS on the watch list with a buy-the-dip trigger at $113.55. It looked like a great entry point.

Now the bad news. DIS' big drop crushed the major media stocks on Wednesday. On Thursday shares of Viacom (VIAB) were hit on similar fears about cable customers cutting their subscriptions and moving to more streaming services (like Netflix). Both VIAB and DIS spiked lower again on Thursday. Shares of DIS fell toward technical support at its 200-dma near $104 (the intraday low was 104.24). Our brand new call play on DIS was stopped out at $107.00.

I am still long-term bullish on DIS but the volatility this past week was extreme. I'm suggesting we give DIS some space and let the dust settle. We can re-evaluate the stock again in a few weeks.

- Suggested Positions -
AUG 05, 2015 - entry price on DIS @ 110.83, option @ 6.25
symbol: DIS170120C125) 2017 JAN $125 call - exit $5.70 (-8.8%)

08/06/15 stopped out at $107.00
08/05/15 triggered on gap down at $110.83
07/12/15 adjust the trigger to $113.55
07/05/15 move the trigger to $112.00
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: 107.00
Play Entered on: 08/05/15
Originally listed on the Watch List: 06/21/15


Lions Gate Entertainment - LGF - close: 37.61

Comments:
08/09/15: I was expecting LGF's earnings report to be a risk for our trade. Instead it was the widespread market decline that killed our LGF play.

As of July 31st the stock was at all-time highs. Shares reversed into a four-day slide that accelerated on Thursday with a plunge to $34.63. The broader market experienced a sharp sell-off on Thursday so the move in LGF was probably exaggerated. Our stop loss was hit at $34.65. I found it interesting that traders bought the dip in LGF at $34.63 three times on Thursday.

On Thursday night LGF reported earnings. LGF beat estimates by 19 cents with a profit of $0.31 per share. Yet revenues were down -9.0% to $408.9 million, which was below estimates. Investors ignored the revenue miss and bought LGF on Friday with shares rebounding +6.4%.

Our play has been stopped out but readers may want to keep LGF on their radar screen for a few days and see how it performs once this volatility cools off.

- Suggested Positions -
JUL 23, 2015 - entry price on LGF @ 38.50, option @ 2.15
symbol: LGF160115C40 2016 JAN $40 call - exit $1.05 (-51.1%)

08/06/15 stopped out @ 34.65
07/23/15 LGF hit our intraday trigger at $38.50
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: to be determined
Current Stop loss: 34.65
Play Entered on: 07/23/15
Originally listed on the Watch List: 07/19/15