Editor's Note:

The stock market volatility hit extremes last week. According to the research teams at Bespoke Investment Group, the market's volatility hasn't been this bad in the last 75 years. You can't plan for events like this. You trade with stop losses and hope they work to reduce risk our risk but they are not guarantees.

The market's sell-off was so bad on Monday that all of our active trades were stopped out but it also triggered our buy-the-dip trade on Visa.


Closed Plays


ATVI, CELG, DHR, GD, ITB, and STZ were stopped out.



Play Updates


Visa Inc. - V - close: 72.46

Comments:
08/30/15: The market volatility last Monday was crazy and it impacted our Visa entry in a big way.

We had Visa on the watch list with a suggested entry point to buy the January 2017 $80 call on a dip at $70.50 and an initial stop loss at $66.25. The market sell-off was so bad on Monday, August 24th, that shares of Visa gapped open lower at $64.16, which opened our play. Shares spiked down to $60.00 at its worst levels on Monday before closing at $68.36. By Friday's closing bell V was up to $72.46.

So now what do we do?

Visa still has a six-week bearish trend of lower highs and I am not convinced the market correction is over already. Odds are good that Visa will revisit the $70.00 region and potentially the 200-dma (currently around $67.65). Therefore, I am not suggesting new positions at this time.

More aggressive or nimble investors may want to consider buying a dip in the $68-70 range, however, I would definitely wait for signs of a bounce first before initiating new positions.

At the moment I am removing any stop loss. You can try and limit your risk by reducing your position size.

Trade Description: August 9, 2015:
The world is moving closer and closer to a cash-less society. Big payment processing companies like Visa and MasterCard will benefit from this transition.

According to the company, "Visa Inc. (NYSE:V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world's most advanced processing networks - VisaNet - that is capable of handling more than 56,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products."

It's important to note that V does not extend credit to consumers. There's no credit risk for bad loans here. V makes money on transactions. That business is booming.

On July 23rd V report its Q3 results, which were $0.74 per share. That beat estimates by 16 cents. Revenues were also higher than expected at $3.52 billion, up +11.5%. Management offered strong guidance and upped their EPS estimates into the mid teen percentage range. Long-term V is expected to grow earnings at almost 15%.

One of the big stories to come out of V's recent earnings report was news of a merger brewing. Visa is talking to former subsidiary Visa Europe. Estimates suggest the price target could be in the $15-20 billion range. Wall Street is positive on the deal and Visa expects it would add to earnings in fiscal 2017.

Another reason to be bullish on Visa is the fact that China recently opened its market to foreign companies to participate in clearing domestic bank card transactions. Previously only Chinese companies could do this. Now giants like V and MasterCard can compete in a market valued at more than $6.8 trillion. Considering V's expertise in this field we should expect them to grab a healthy chunk of the market.

Shares of V recently surged to new all-time highs and traded above $76 per share. After four up weeks in a row V posted a loss last week. Technically it produced a bearish engulfing candlestick reversal pattern on its weekly chart. If shares do correct lower we want to take advantage of the pullback. Broken support near $70.00 should be support. Tonight we are suggesting a buy-the-dip trigger at $70.50.

- Suggested Positions -
AUG 24, 2015 - entry price on V @ 64.16, option @ 2.76
symbol: V170120C80 2017 JAN $80 call - current bid/ask $5.40/5.75

08/30/15 Remove the stop loss
08/24/15 triggered on gap down at $64.16, suggested entry was a buy-the-dip trigger at $70.50.
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: n/a
Play Entered on: 08/24/15
Originally listed on the Watch List: 08/09/15




CLOSED Plays


Activision Blizzard, Inc. - ATVI - close: 29.22

Comments:
08/30/15: The stock market's extreme volatile has generated huge moves in ATVI. The range for the week was $27.22 down to $24.04 and back up to $30.00 by Friday.

This trade was stopped out on Monday's market collapse at $24.90.

- Suggested Positions -
JUL 21, 2015 - entry price on ATVI @ 26.25, option @ 2.23
symbol: ATVI170120C30 2017 JAN $30 call - exit $1.32 (-40.8%)

08/24/15 stopped out
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

Chart

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


Celgene Corp. - CELG - close: 124.04

Comments:
08/30/15: The volatility in CELG last week was pretty amazing. Shares plunged to $92.98 on Monday morning. Yet by Friday's close the stock was up to $124.04. That is a $5.00 gain for the week and a +33% rally off its low.

We were stopped out on Monday morning at the open. Our stop was $114.75 but CELG gapped open lower at $104.28.

- Suggested Positions -
AUG 21, 2015 - entry price on CELG @ 121.00, option @ 7.15
symbol: CELG160115C130 2016 JAN $130 call - exit $1.96 (-72.5%)

08/24/15 stopped out on gap down at $104.28, stop was $114.75.
08/21/15 triggered. Buy-the-dip entry point at $121.00
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: 114.75
Play Entered on: 08/21/15
Originally listed on the Watch List: 08/09/15


Danaher Corp. - DHR - close: 88.06

Comments:
08/30/15: DHR is another victim of Monday's market madness. Shares gapped open lower at $82.67. Our stop was $84.50. Monday's open happened to be the low for the week.

I'd keep DHR on your radar screen. The stock has potential.

- Suggested Positions -
AUG 21, 2015 - entry price on DHR @ 88.25, option @ 5.50
symbol: DHR170120C100 2017 JAN $100 call - exit $3.70 (-32.7%)

08/24/15 stopped out on gap down at $82.67, stop was $84.50
08/21/15 Triggered on gap down at $88.25, suggested entry was a dip at $88.50
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: 84.50
Play Entered on: 08/21/15
Originally listed on the Watch List: 08/16/15


General Dynamics - GD - close: 144.53

Comments:
08/30/15: The volatility in shares of GD over the last two weeks has been ridiculous. The stock fell from the $153 area down to $132.00 in about three days. That erased four month's worth of gains.

Our trade was stopped out on Monday morning when GD gapped down at $136.01. Our stop loss was $144.75.

- Suggested Positions -
JUL 16, 2015 - entry price on GD @ 148.00, option @ 2.85
symbol: GD160115C160 2016 JAN $160 call - exit $0.20 (-92.9%)

08/24/15 stopped out on gap down at $136.01
08/23/15 Caution - GD could hit our stop at $144.75 on Monday morning
08/16/15 new stop @ 144.75
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

Chart

Current Target: To Be Determined
Current Stop loss: 144.75
Play Entered on: 07/16/15
Originally listed on the Watch List: 07/12/15


iShares US Home Construction ETF - ITB - close: 27.60

Comments:
08/30/15: The relative strength in homebuilding stocks vanished on Monday. The ITB spiked down to $23.50 on Monday morning (Aug. 24th). Shares haven't traded that low since October 2014.

We had a stop loss at $26.75, which was hit pretty early on Monday.

- Suggested Positions -
FEB 11, 2015 - entry price on ITB @ 27.09, option @ 1.70
symbol: ITB160115C30 2016 JAN $30 call - exit $0.70 (-58.8%)

08/24/15 stopped out
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

Chart

Current Target: ITB @ TBD
Current Stop loss: 26.75
Play Entered on: 02/11/15
Originally listed on the Watch List: 01/11/15


Constellation Brands Inc. - STZ - close: 127.94

Comments:
08/30/15: The trade in STZ has also been very intense. The stock collapsed from $130 to almost $114 in less than a week as the market plunged. Then when stocks bounced STZ rebound back to $128.

We had a stop loss at $117.75. Unfortunately our play was closed on Monday's gap down at $115.27.

I would keep STZ on your radar screen. Wait for a pullback and look for support in the $122-124 region.

- Suggested Positions -
AUG 21, 2015 - entry price on STZ @ 123.50, option @ 11.60
symbol: STZ170120C130 2017 JAN $130 call - exit $6.40 (-44.8%)

08/24/15 stopped out on gap down at $115.27, stop was $117.75
08/21/15 triggered at $123.50
08/16/15 adjust the buy-the-dip trigger from $122.00 to $123.50
Option Format: symbol-year-month-day-call-strike

Chart

Current Target: To Be Determined
Current Stop loss: 117.75
Play Entered on: 00/00/15
Originally listed on the Watch List: 08/09/15