Option Investor
Newsletter

Daily Newsletter, Monday, 3/23/2015

Table of Contents

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

Market Wrap

Waiting Waiting Waiting

by Thomas Hughes

Click here to email Thomas Hughes
Trading was quiet as the market sits back to wait for more data.

Introduction

The market was rather quiet today. There was not much in the way of news to grab attention and not much in the way of market movement either, until the last ten minutes of the day. The major indices tread water within tight ranges for most of the day until then, then they sank to the day's low and below last weeks closing prices.

The international markets were just as mixed. Asian indices reached new 15 year highs in the wake of the Fed driven rally of last week. European indices fell as Greece once again meets with Germany over the state of its finances while a round of elections throughout the region have leftists, ultra-right-wingers and socialists back in the spotlight.

Market Statistics

Early indications had the indices opening mildly lower but futures trading gained some strength before the open. There were no economic releases or major earnings reports before the bell so the pre-market session had little to drive it. When the market opened the indices moved slightly higher until hitting the intraday high around 10:45. From that point forward the indices moved sideways ranging between break even and the early high until late afternoon. Then, just before the closing bell, a quick round of selling sent the indices to the lows of the day and into negative territory. The sell-off was a bit of a surprise as there was no obvious reason for it.

Economic Calendar

The Economy

Moody's Survey Of Business Confidence surged 2.3 points to hit a new all time high. This is following new highs set earlier this year and a little wavering in sentiment during the winter months. According to Mark Zandi, Moody's Chief Economist, there have been noticeable improvements around the globe contributing to this week's high level. In his summary he says...

“Business confidence has never been stronger in the history of the survey. Sentiment is strong in the U.S., but it has also improved in recent weeks across the rest of the globe. Businesses are especially upbeat about investment and hiring. Demand for office space is also robust. And pricing is strong, despite heightened deflation concerns in much of the developed world”


Existing home sales was released at 10AM with little impact on the market. Sales rose by 1.2% in February to an annualized rate of 4.88 million. This is a good sign and slightly above consensus which estimated a rate between 470-490 million. On a year over year basis sales are trending 4.7% higher than last year at this time and have been trending higher for the past 5 months. Low inventory levels are leading to a surge in prices that may hinder buying until more homes come on the market and/or new homes can be built. Lawrence Yun, NAR chief economist, says …

"although February sales showed modest improvement, there’s been some stagnation in the market in recent months...Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,”

Inventories of new homes rose by 1.6% in January but are a half percent below last years levels. According to last week's report from the NAHB we can assume increased builder activity over the next few months and into the end of the year. There are only 5 more releases due this week aside from the weekly jobless claims. These include New Home Sales, CPI, Michigan Sentiment, Durable Goods and the 3rd estimate for 4th quarter GDP. The GDP number is likely to get a lot of press time but I think it will not be as important as other data indicating the state of the current quarter. Next week is the first week of April, no fooling, which means another round of monthly auto sales, ISM, construction spending, jobs data and unemployment.

According to data from FactSet Q4 2014 earnings growth stands at 3.7%. Looking forward to the first quarter of 2015 there is still expected to be earnings decline, -4.8% at this time. This is down from the +4% projected at the beginning of the year. If this happens it will be the first quarter of decline since Q3 2012. The decline is being lead by the energy sector as expected. Out of the 500 S&P companies 83 have issued negative guidance for the quarter.

Looking at the sector breakdown it still looks like the market, ex-energy, is going to be OK. Current projections have the 9 sector blended rate at just over +1.0% and if history repeats itself we can expect that to go up by at least 2 or 3% before the season is finished. So far 10 companies have reported and of those 9 have beaten on earnings and 5 have beaten on sales so for now that assumption looks sound. The official start is still a few weeks away however, Alcoa is scheduled for April 8th.


The Oil Index

Oil prices held steady just above $46.50 in what may have been the least volatile day of energy trading in many many weeks. This was a little surprising in light of two new developments out of Saudi Arabia. First, in response to last weeks call from within for OPEC to support prices the Saudi oil minister said OPEC would not do such a thing. Second, the latest reports have Saudi oil production near record levels which should add further pressure to prices.

The Oil Index traded down today, losing over 1%. The index opened above the short term 30 day moving average but was not able to hold the level. Today's move resulted in a net loss and created a black candle but was able set a new two week high in the process. The indicators are now both bullish, MACD making the zero line crossover today, so it looks like it could keep drifting higher. However, there is resistance in the range between 1,350 and 1,400 and two previous areas of support/resistance. It looks like the index is bouncing higher in line with the long term trend, how high it gets is yet to be seen.


The Gold Index

Gold gained about a quarter percent today extending its Fed driven rally. Regardless of the reason, weakening dollar or long term outlook, this rally confirms support at $1150 and could take the metal up to $1200 or higher before meeting resistance. This move may be tied to the dollar so keeping an eye on the Dollar Index isn't a bad idea. If it(the Dollar Index) meets support and/or is able to bounce back then the gold rally could falter.

The gold miners ETF GDX moved higher as well, gaining nearly 2% in today's action. The miners are moving higher in-line with their underlying commodity and look like they are going higher. Today the ETF moved above the short term moving average and is accompanied by bullish indicators. The weak signal that had been shaping up over the past week has gotten stronger; MACD has made a zero line crossover to confirm the bullish crossover already seen on the stochastic. My current target is at or above my resistance line at $20.50 provided it can close the gap created at the beginning of the month.


In The News, Story Stocks and Earnings

The Dollar Index continued to slide from the peak hit last weak just ahead of the FOMC meeting. The index lost -0.90% and moved down to rest on the 30 day moving average. The indicators are bearish and gaining strength which is pointing to lower prices but until the moving average is broken it is support. Looking at two of the biggest components of the index, the Euro and the Yen, it appears as if they are both strengthening within their respective ranges and have some room left to run. If so the Dollar Index could easily break support and move down to test my next target for support just below $95.


The retail sector was hot again today, the Reatail Spyder XRT making a new high. Within the sector names like Target, TJ Maxx and Kohls were making new highs as well. Today's price action is confirmed by the indicators which are both bullish and on the rise. Neither are very high in their ranges so it looks as if it could continue to move higher into the near term.


Lululemon is scheduled to report earnings later this week. The athletic fashion company is expected to earn $0.73 per share, nearly double the previous quarter. Today the apparel maker announced a huge sale with the tweet “wemadetoomuch” and caused a flurry of concern the company is floundering. Analysts are now speculating the company is going to report weak first quarter results, which for them will include the 2014 Christmas holiday season, and weak 2015 guidance. Shares of the stock fell more than 5% on the news but regained much of the loss before the close of trading.


ConAgra Foods is another name scheduled to report later in the week. The national supplier of meat and value added products is expected to earn $0.53 per share, slightly below the $0.61 earned in the previous quarter. Today the stock gained just over a half percent in a move that lifted share price above the short term moving average only to have it halted by a long term resistance level.


The Indices

The indices didn't do very much today, even with the late day sell-off. They tread water just above break even for most of the day and even at the close were only mildly in negative territory, except for one. Today's move was led by the Dow Jones Transportation Index which carried the extra burden of profit warnings from the rail sector. Kansas City Southern warned that first quarter and full year earnings were going to be impacted by weak revenues related to energy. What I read said that overall earnings growth would slow, not end, due to these problems. The announcement sent Kansas City Southern down by roughly -8% and the rest of rail carriers, and the DJT, came down with it.


Today's drop cost the transports nearly -2% and left it sitting at the low of the day. The move has taken the index back below the short term moving average and to the mid-point of the 5 month trading range. The indicators are mixed with bias to the upside; MACD is making a small bullish peak but is receding from the peak, stochastic %K is moving lower while %D is moving higher. This could be indicating a short pause or setting us up for a bullish signal in line with the underlying trend but until that move develops this index looks range bound.


The next biggest decliner today was the NASDAQ Composite with a loss of -0.31%. The tech heavy index lost just over 15 points but is still sitting above the 5,000 mark. This level may prove to be support now that it has moved above it again but that is not certain. The indicators continue to move higher despite today's drop and suggest that the index will move higher as well; MACD has now crossed the zero line and is in confirmation of stochastic and higher prices. There could be some weakness over the next few days but the trend remains up so any shown would be potential entry points in my opinion. The only resistance is the current high and then the all time high at 5,048.


The S&P 500 made the third largest decline of the day, -0.17%. The broad market fell just over 3.5 points after moving to within as many points of the all time high. Today's action created a small bodied candle that looks like one more in a series of small candles that have preceded the past four up-days. The indicators are also bullish and in support of this analysis however, the tiny size of the MACD peak, %K flattening in the upper signal zone and resistance just above the current level are reason to be cautious of any bullish moves until the index can break to new highs. The trend is up, the movement is up and the indicators are pointing higher so I think a test of resistance is very likely in the least.


The Dow Jones Industrial Average made the smallest decline today, only -0.06%, after reaching the highest peak, near +0.6%. The blue chips came within 90 points of the all-time high but fell under the pressure of late afternoon selling. Today's move and that of the last two weeks has been very similar to the S&P 500; both have been ratcheting higher with strong up days followed by short down days. The Dow, however, looks more like an index that could be running out of steam, at least in the near term, as the rallies have been noticeably shorter each time. This may be nothing but with resistance just above the current level caution is warranted. The indicators are bullish so a test of the high looks likely but they aren't very strong so beyond that is yet to be seen. A pull back from this level, if it were to come, would find support along the 18,000 level and the short term moving average only a few points below that.


The indices are trending higher but the move is not definitive. The indicators are weak, technical resistance is just above current levels and there is some important data on the horizon which could keep the rally in check simply because it is prudent to wait and see. This week's data might be a market mover but I don't think so, not with the jobs bundle and other monthly reports due out next week so I don't think we'll see a break out until then, if at all.

Adding to the haze clouding my crystal ball is earnings season. Yes I know we just wrapped one up but the next one starts “officially” in less than 3 weeks. I remain bullish. So long as the data shows improvements, 1st quarter earnings aren't any worse than expected and outlook for the rest of the year remains upbeat I think the market will stay that way too. Sell-offs, pull-backs and corrections remain buying opportunities.

Until then, remember the trend!

Thomas Hughes


New Plays

Customers Are Closing Up Shop

by James Brown

Click here to email James Brown


NEW BEARISH Plays

Hornbeck Offshore Services, Inc. - HOS - close: 18.61 change: -1.05

Stop Loss: 20.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on March -- at $---.--
Listed on March 21, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 851 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
The price of crude oil and its crash over the last several months has been a major story for the financial media. Energy stocks have naturally followed the price of oil lower. One company getting crushed by the oil's fall and its impact on the industry is oil services company HOS.

HOS describes itself as "Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore support vessels primarily in the Gulf of Mexico and Latin America. Hornbeck Offshore currently owns a fleet of 65 vessels primarily serving the energy industry and has eight additional high-spec Upstream vessels under construction for delivery through 2016."

Earnings have taken a dramatic turn for the worse. Last year HOS' Q2 earnings were $0.85 a share. That was 36 cents above estimates with revenues up +24% from a year ago. Their Q3 numbers saw business fade. Earnings were $0.72 a share, which was only one cent above estimates. Q3 revenues did rise +25% but they came in below analysts' estimates. The slowdown really took hold in the fourth quarter. HOS reported earnings of $0.51, which missed estimates by 8 cents. Revenues only rose +10% and again missed expectations.

The problem is low oil prices. The U.S. oil industry has been shutting down oil and gas rigs. Many locations need oil above $60, $70 or even $80 a barrel to make the operation profitable. With oil in the $40 range companies are just shutting down rigs. The number of active rigs has fallen 15 weeks in a row and down -45% from its September 2014 high. Offshore rigs, which really impacts HOS, saw 11 rigs closed down leaving a total of 37. That's a -23% decline in a week.

Wall Street has taken note of falling rig count and analysts have been lowering their earnings expectations for HOS. Traders have noticed as well and the most recent data listed short interest at 16% of the very small 20.4 million share float. That does pose a risk since an unexpected rise could spark a potential short squeeze.

Technically the path of least resistance in shares of HOS has been lower for the last several months. Investors continue to sell the rallies. The bearish trend of lower highs is about to push the stock below key support in the $18.50-19.00 zone. Tonight we're suggesting a trigger to launch bearish positions at $18.20. You may want to use options to limit your risk.

Trigger @ $18.20

- Suggested Positions -

Short HOS stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the JUN $17 PUT (HOS150619P17) current ask $1.30
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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

Daily Chart:



In Play Updates and Reviews

Stocks See A Little Profit Taking

by James Brown

Click here to email James Brown

Editor's Note:
The stock market experienced a little profit taking after last week's big bounce. The common trend today was a sideways consolidation that faded lower into the closing bell. Overall the declines were not that bad. Biotech stocks were the exception with more concentrated profit taking.

NBIX hit our stop loss.

We want to exit our DDD trade tomorrow morning.


Current Portfolio:


BULLISH Play Updates

Best Buy Co. Inc. - BBY - close: 40.86 change: +0.07

Stop Loss: 39.85
Target(s): To Be Determined
Current Option Gain/Loss: +1.5%
Entry on March 06 at $40.25
Listed on March 04, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 6.2 million
New Positions: see below

Comments:
03/23/15: The rally in BBY stalled midday and shares closed almost unchanged on the session. The stock looks like it's headed for $40.00 if this weakness continues.

If you are looking for a new bullish entry point I would wait for a dip near $40.00. Our stop loss is currently at $39.85.

Trade Description: March 4, 2015:
BBY has got a bullish recipe brewing. The company has rising sales, rising earnings, rising dividends, and rising stock buybacks. The company launched a massive turnaround effort when they changed management in 2012. According to Fortune, BBY has "turned around its U.S. operations., shed assets abroad and trimmed expenses to help lift profitability."

If you're not familiar with BBY the company describes itself as "one of the world's largest consumer electronics retailers, offering expert service and unbeatable prices to the consumers who visit its websites and stores more than 1.5 billion times each year. In the United States, more than 70 percent of Americans are within 15 minutes of a Best Buy store. Additionally, the company operates businesses in Canada and Mexico. Altogether, Best Buy employs more than 125,000 people and earns annual revenues of more than $40 billion."

This week BBY has been making headlines thanks to its better than expected Q4 earnings results, which came out on March 3rd. Wall Street was expecting a profit of $1.35 a share on revenues of $14.33 billion. BBY said earnings hit $1.48 a share. That's a +23% increase from a year ago. Their unadjusted earnings were up +75% from a year ago. Q4 revenues were up +1.3% to $14.21 billion. BBY's U.S. same-store sales were up +2.8%. International was down -4% but their online sales surged +9.7%. Their U.S. same-store sales results are noteworthy because it's the second consecutive quarter of same-store sales growth for the first time in five years.

BBY's CEO and President Hubert Joly commented on his company's results saying,

"In the fourth quarter, our teams delivered positive comparable sales, improved profitability and continued progress in our Renew Blue transformation. This resulted in a 1.3% increase in revenue to $14.2 billion and a 23% increase in non-GAAP diluted EPS to $1.48 versus $1.20 last year, primarily driven by growth in the Domestic segment. A compelling merchandise assortment and strong multi-channel execution drove these better-than-expected results as we capitalized on the product cycles in large screen televisions and mobile phones. These two categories were the primary drivers of our year-over-year revenue growth, and more than offset weakness in the tablet category which was impacted by material industry declines."
Joly did warn that in fiscal 2016 BBY will "be facing industry and economic pressures on our business related to deflationary pricing and weak industry demand in certain product categories." However, investors didn't care. They didn't care about the revenue miss or the negative foreign currency headwinds. Everything was overshadowed by BBY's very shareholder friendly capital return initiatives.

The company said they are raising their normal dividend by +21% to 23 cents a share effectively immediately. They are also going to pay a special, one-time dividend of $0.51 a share. Plus they are re-starting their stock buyback program. Previously BBY had a $5 billion stock repurchase program but that halted it back in 2012 to work on their turnaround strategy. Management announced they plan to spend $1 billion on stock buybacks over the next three years.

Multiple analysts firms raised their price target on BBY following the company's earnings results and dividend news. Most of the new targets were in the $45-50 range.

Currently shares of BBY are trading just below key round-number resistance at the $40.00 mark. A breakout here could spark some short covering. The most recent data listed short interest a 10% of the 304 million share float. Tonight we're suggesting a trigger to launch bullish positions at $40.25.

- Suggested Positions -

Long BBY stock @ $40.25

- (or for more adventurous traders, try this option) -

Long MAY $40 CALL (BBY150515C40) entry $1.99

03/17/15 new stop 39.85
03/06/15 triggered @ $40.25
Option Format: symbol-year-month-day-call-strike


BroadSoft, Inc. - BSFT - close: 35.22 change: +0.02

Stop Loss: 33.45
Target(s): To Be Determined
Current Option Gain/Loss: +0.1%
Entry on March 20 at $35.20
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 286 thousand
New Positions: see below

Comments:
03/23/15: It was a quiet session for BSFT. Shares essentially closed unchanged on the session. If you're looking for an entry point then consider waiting for another dip near $34.00 and its 10-dma.

Trade Description: March 18, 2015:
BSFT is in the technology sector. The stock is outperforming the broader market this year and it's up significantly from its 2014 lows.

According to the company, "BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Company's core communications platform enables the delivery of a range of enterprise and consumer calling, messaging and collaboration communication services, including private branch exchanges, video calling, text messaging and converged mobile and fixed-line services."

BSFT has delivered a stomach churning performance since its IPO back in 2010. You can review its performance on the long-term chart below. The stock got off to a slow start but then sprinted from about $9.00 in late 2010 to $55.00 less than six months later. Unfortunately, since the early 2011 peak shares have been nothing but a roller coaster ride of ups and downs (we're talking really, really ugly downs).

It would appear that the tone has changed for BSFT. The company has beaten Wall Street's earnings and revenue estimates the last three quarters in a row. The big rally in early November 2014 was a reaction to its earnings beat with revenues up +27% from a year ago. The prior quarter revenues grew +19%.

The stock rallied big again on February 25th with BSFT reporting Q4 earnings of $0.64 a share, beating estimates by seven cents. Revenues surged +26.5% to $65.8 million. Management offered earnings guidance that was relatively in-line with consensus estimates. However, their revenue guidance was above expectations for both the first quarter and fiscal year 2015. Don't let the in-line earnings guidance fool you. Wall Street is expecting +78% earnings growth this year. The rally off its 2014 lows has produced a long-term target of $51.00 on the point & figure chart.

BSFT has been showing relative strength the last couple of weeks. Tonight we are suggesting a trigger to launch small bullish positions at $35.15. I suggest small positions because shares don't have a lot of volume and history would suggest the stock is prone to wild bouts of volatility.

*small positions to limit risk* - Suggested Positions -

Long BSFT stock @ $35.20

- (or for more adventurous traders, try this option) -

Long MAY $35 CALL (BSFT150515C35) entry $2.78

03/21/15 new stop @ 33.45
03/20/15 triggered at $35.20, suggested entry was $35.15
Option Format: symbol-year-month-day-call-strike


Cabela's Inc. - CAB - close: 58.30 change: +0.19

Stop Loss: 56.65
Target(s): To Be Determined
Current Option Gain/Loss: +1.7%
Entry on March 13 at $57.35
Listed on March 09, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.0 million
New Positions: see below

Comments:
03/23/15: CAB actually tagged a new five-month high before the rally faded. Shares fell back toward $58.00. I'm not suggesting new positions at this time. The rising 10-dma near $57.30 should be short-term support.

Trade Description: March 9, 2015:
Outdoor gear and hunting equipment retailer CAB has been misfiring the last few quarters. They have missed analysts estimates three out of the last four quarters but the stock could be mounting a turnaround.

If you're not familiar with the company, "Cabela's Incorporated, headquartered in Sidney, Nebraska, is a leading specialty retailer, and the world’s largest direct marketer, of hunting, fishing, camping and related outdoor merchandise. Since the Company’s founding in 1961, Cabela’s® has grown to become one of the most well-known outdoor recreation brands in the world, and has long been recognized as the World's Foremost Outfitter®. Through Cabela's growing number of retail stores and its well-established direct business, it offers a wide and distinctive selection of high-quality outdoor products at competitive prices while providing superior customer service. Cabela's also issues the Cabela's CLUB® Visa credit card, which serves as its primary customer loyalty rewards program.

The company has been struggling with slowing sales and disappointing comparable same-store sales growth. They're not the only one. Companies like Dick's Sporting goods have also noted that sales in their hunting category were slow last year.

CAB's most recent report was its 2014 Q4 announcement on February 12th. Earnings of $1.11 a share missed estimates by a wide margin. Revenues were up +7.2%, which met expectations at $1.27 billion. Management said they expect a "return to a low-double-digit growth rate in revenue and a high-single to low-double-digit growth rate in diluted earnings per share for full-year 2015 as compared to full-year 2014 non-GAAP diluted earnings per share of $2.88."

The good news is that firearm sales appear to be stabilizing. After years of torrid sales during Obama's first term as president the pace of firearm sales slowed significantly. The latest data on background checks to buy a gun showed February 2015 to be the second strongest February on record. More than 1.28 million background checks were performed. That's up +1.3% from a year ago. December saw +7.5% surge in checks and January 2015 reported a +8.5% increase in background checks.

On March 3rd, 2015, gun maker Smith & Wesson (SWHC) just reported earnings that were significantly better than expected. SWHC management raised their guidance. That should bode well for CAB too.

Currently shares of CAB have bounced back toward resistance near $57.00 and its simple 200-dma. The stock appears to be breaking through resistance at its year-long trend of lower highs as well. If CAB can breakout the stock might see some short covering. The most recent data listed short interest at 16% of the 51.3 million share float. Currently CAB's point & figure chart is bullish and forecasting at $65.00 target.

Tonight I'm suggesting a trigger to open bullish positions at $57.35, which could be a new four-month high and a breakout past its January resistance.

- Suggested Positions -

Long CAB stock @ $57.35

- (or for more adventurous traders, try this option) -

Long JUN $60 CALL (CAB150619C60) entry $2.70

03/21/15 new stop @ 56.65
03/13/15 triggered @ 57.35
Option Format: symbol-year-month-day-call-strike


Expeditors Intl. of Washington - EXPD - close: 49.16 chg: -0.11

Stop Loss: 48.45
Target(s): To Be Determined
Current Option Gain/Loss: +1.3%
Entry on March 13 at $48.55
Listed on March 12, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.3 million
New Positions: see below

Comments:
03/23/15: EXPD, like most of the market today, churned sideways only to end up with a minor loss. If this weakness continues the nearest support could be the 10-dma near $48.50. Our stop is just below that level.

Trade Description: March 12, 2015:
EXPD is showing relative strength. The stock is up +8% in 2015 versus an S&P 500 that is virtually flat. Meanwhile the Dow Jones Transportation Average is down -1.4%.

EXPD is part of the services sector. According to the company, "Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 186 full-service offices and numerous satellite locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, domestic time-definite transportation services, purchase order management, warehousing and distribution and customized logistics solutions."

The first half of 2014 was forgettable. EXPD delivered mediocre results with earnings a penny above or below estimates and revenues in-line with expectations. Business improved in the second half of last year. EXPD beat earnings estimates by four cents in the third quarter and by two cents in the fourth quarter. Revenues were up almost +11% in Q3 2014 and up +8.8% in the fourth quarter. Both were above Wall Street estimates.

Bradley Powell, Senior Vice President and CFO commented on the fourth quarter, "During the 2014 fourth quarter we saw strong year-over-year increases in both air and ocean freight volumes. Despite the 10 basis point reduction in overall net revenue margin, airfreight and ocean freight net revenues both managed double digit increases, up 10% and 11%, respectively, as overall net revenue increased 9%."

The stock shot higher on its Q4 results. Shares have been relatively resistant to any profit taking during the market's recent pullback. Traders bought the dip exactly where they should have - at prior resistance. Today's bounce looks like a bullish entry point. The stock's rally in 2015 has helped produce a buy signal on the point & figure chart that is forecasting at $66.00 target. Tonight I am suggesting a trigger to open bullish positions at $48.55.

- Suggested Positions -

Long EXPD stock @ $48.55

- (or for more adventurous traders, try this option) -

Long May $50 CALL (EXPD150515C50) entry $1.06

03/21/15 new stop @ 48.45
03/17/15 new stop @ 47.45
03/13/15 triggered @ 48.55
Option Format: symbol-year-month-day-call-strike


Golar LNG Ltd - GLNG - close: 34.88 change: +0.83

Stop Loss: 33.85
Target(s): To Be Determined
Current Option Gain/Loss: -1.0%
Entry on March 17 at $35.25
Listed on March 16, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.3 million
New Positions: see below

Comments:
03/23/15: Traders bought the dip in GLNG at the $34.00 level this morning and the stock rebounded to a +2.4% gain. We are raising our stop loss up to $33.85. Today's intraday high was $35.09. I'd be tempted to launch new bullish positions on a rally above $35.10.

Trade Description: March 16, 2015:
GLNG is part of the shipping industry. Unfortunately demand for shipping has been crushed thanks to a slowing global economy. The surging dollar doesn't help when it comes to commodity prices. Shares of GLNG have seen a significant sell-off with the stock down from $74 in September 2014 to less than $30 in January this year.

According to the company, "Golar is one of the world's largest independent owners and operators of LNG carriers with over 40 years of industry experience. Golar's innovation delivered the world's first Floating Storage and Regasification Units (FSRU) based on the conversion of existing LNG carriers. Golar's latest strategic move is to extend its business model further upstream by deploying its floating liquefaction technology (GoFLNG). The objective is to become the industry's leading integrated midstream LNG services provider, supporting resource owners, gas producers and gas consumers."

Management confessed that demand for charting LNG shipping will likely be weak in the first half of 2015. They expect a significant improvement in the second half of the year. What investors should note is that all the bad news over the last several months seems to be priced in. Cautious comments from management failed to send GLNG stock to new lows.

Earlier this month the stock soared (on March 5th) after GLNG announced it had signed a memorandum of understanding with Russian natural gas giant Rosneft. The company press release states that Rosneft is the third largest gas producer in Russia. Rosneft gas production reached 42.1 bcm in 2013, while the recoverable natural gas reserves topped 6.5 tcm. The company target is to reach 100 bcm of annual gas production by 2020. As investors it's worth noting that Rosneft is 75% owned by the Russian government. The two companies are going to be working together on some of Rosneft's natural gas assets. Shares of GLNG soared on this news.

GLNG did see some profit taking on the big move but investors are have started buying the dip. Now GLNG is poised to breakout past resistance at the $35.00 level. The point & figure chart looks very bullish with a triple-top breakout buy signal forecasting at $48.00 target.

Tonight I'm suggesting a trigger to launch small bullish positions at $35.25. We want to limit our position size to reduce risk. Energy-related names have been tough to trade lately.

*small positions to limit risk* - Suggested Positions -

Long GLNG stock @ $35.25

- (or for more adventurous traders, try this option) -

Long JUN $40 CALL (GLNG150619C40) entry $2.40

03/23/15 new stop @ 33.85
03/17/15 new stop @ 32.85
03/17/15 triggered @ 35.25
Option Format: symbol-year-month-day-call-strike


Prestige Brands Holdings - PBH - close: 41.78 change: -0.68

Stop Loss: 40.35
Target(s): To Be Determined
Current Option Gain/Loss: -1.3%
Entry on March 20 at $42.35
Listed on March 19, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 342 thousand
New Positions: see below

Comments:
03/23/15: PBH encountered some profit taking today and the stock lost -1.6%. Readers may want to wait and see if PBH bounces near $41.00 before launching new positions.

Trade Description: March 19, 2015:
Shares of PBH are outperforming the broader market. The relative strength has lifted the stock to new all-time highs and a +20% gain in 2015.

PBH is part of the services sector. According to the company, PBH "markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, and in certain international markets. Core brands include Monistat® women's health products, Nix® lice treatment, Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada."

The company's most recent earnings report was noteworthy. Analysts were expecting a profit f $0.40 a share on revenues of $190.2 million. PBH delivered $0.48 a share, which is a +60% improvement from a year ago. Revenues were up +36.4% to $197.6 million, another beat. PBH's OTC products saw +37.2% sales growth in North America and +107.8% growth internationally.

Matthew M. Mannelly, President and CEO of PBH commented on his company's performance, "In light of our excellent year to date and third quarter results, we are updating our previously provided outlook for fiscal year 2015. We are tightening our expected adjusted EPS range from $1.75 to $1.85 per share to $1.82 to $1.85 per share, and anticipate revenue growth at the high end of our previously provided outlook of 15-18%. The update is driven by anticipated organic growth in the legacy business during the fourth quarter."

Wall Street analysts are forecasting 2015 Q1 (PBH's Q4) results to see +29% EPS growth and +30% revenue growth.

It's also worth noting that PBH is a potential buyout target. They have been targeted before. Back in 2012 Genomma Lab offered $834 million in cash but PBH rejected the offer, calling it too low.

The better than expected earnings in early February launched PBH above major resistance in the $37.00 area. Shares spent four weeks digesting those gains and now they're back in rally mode. The point & figure chart is bullish and forecasting at $54.00 target. Tonight we are suggesting a trigger to launch bullish positions at $42.35.

- Suggested Positions -

Long PBH stock @ $42.35

- (or for more adventurous traders, try this option) -

Long JUL $45 CALL (PBH150717C45) entry $1.55

03/21/15 new stop @ 40.35
03/20/15 triggered @ 42.35
Option Format: symbol-year-month-day-call-strike


Gentherm Inc. - THRM - close: 48.42 change: +0.28

Stop Loss: 46.85
Target(s): To Be Determined
Current Option Gain/Loss: +2.0%
Entry on March 06 at $47.48
Listed on March 05, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 456 thousand
New Positions: see below

Comments:
03/23/15: THRM bucked the market's down trend today and managed a +0.58% gain. If the broader market is positive tomorrow I'd consider new positions if THRM can rally above $48.70.

Trade Description: March 5, 2015:
I remember the first time I bought a car with heated seats. I vowed to never own another automobile without them. Considering how cold the last couple of winters have been I'm sure a lot of consumers feel the same way. One company that makes the technology behind heated seats and other products is Gentherm.

THRM is in the consumer goods sector. According to the company's marketing material, "Gentherm (THRM) is a global developer and marketer of innovative thermal management technologies for a broad range of heating and cooling and temperature control applications. Automotive products include actively heated and cooled seat systems and cup holders, heated and ventilated seat systems, thermal storage bins, heated automotive interior systems (including heated seats, steering wheels, armrests and other components), cable systems and other electronic devices. The Company's advanced technology team is developing more efficient materials for thermoelectric and systems for waste heat recovery and electrical power generation for the automotive market that may have far-reaching applications for consumer products as well as industrial and technology markets. Gentherm has more than 9,000 employees in facilities in the U.S., Germany, Mexico, China, Canada, Japan, England, Korea, Malta, Hungary and the Ukraine."

THRM has been consistently beating Wall Street's on both the top and bottom line the last four quarters in a row. The exception was their Q4 revenue number. They raised guidance twice last year. Their most recent report was 2014 Q4 earnings announced on February 24th. Earnings were $0.56 a share on revenues of $205.2 million. That beat estimates of $0.48. Revenues were just a hair under estimates of $207 million. Management said their "adjusted EBITDA for the 2014 fourth quarter was $35.7 million, up $10.0 million or 39 percent, compared with Adjusted EBITDA of $25.6 million for the 2013 fourth."

THRM's 2014 gross margins grew to 29.8 percent versus 26.4 percent in 2013. Last year saw THRM's revenues rise +23% over the prior year. Their net income more than doubled. Management expects 2015 to see revenues grow +10-15% above 2014 levels.

Last month saw shares of THRM breakthrough technical resistance at its simple 200-dma. It has also rallied past price resistance near the $44.00 level. Traders just bought the dip at its 10-dma and now THRM looks poised to make a run towards its 2014 highs near $52.00. Tonight we're suggesting a trigger to open bullish positions at $47.30.

- Suggested Positions -

Long THRM stock @ $47.48

- (or for more adventurous traders, try this option) -

Long Jun $50 CALL (THRM150619C50) entry $2.98

03/21/15 new stop @ 46.85
03/06/15 triggered on gap higher at $47.48, trigger was $47.30
Option Format: symbol-year-month-day-call-strike


Steel Dynamics Inc. - STLD - close: 20.40 change: +0.20

Stop Loss: 19.20
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on March -- at $---.--
Listed on March 21, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.6 million
New Positions: Yes, see below

Comments:
03/23/15: STLD displayed relative strength today. Unfortunately the rally struggled at technical resistance at the simple 200-dma. Our suggested entry point to launch bullish positions is at $20.75.

Trade Description: March 21, 2015:
The bad news in the steel industry might be priced in and some are forecasting another turnaround in the second half of 2015. STLD looks like a bullish candidate as shares are outperforming its peers: U.S. Steel (X), Nucor (NUE), and AK Steel (AKS).

STLD is in the basic materials sector. The company describes itself as "Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $8.8 billion in 2014, over 7,700 employees, and manufacturing facilities primarily located throughout the United States (including six steel mills, eight steel coating facilities, two iron production facilities, over 90 metals recycling locations and six steel fabrication plants)."

This past week had a lot of bad news for the steel industry. Three companies issued bearish earnings guidance. STLD, NUE, and AKS all lowered their forecasts. CNBC suggested this industry is on the front lines of the currency war. All three companies blamed a surge in steel imports for hurting results. The rising U.S. dollar makes foreign products cheaper and steel imports into the U.S. rose +38% in 2014. Combine that with a glut of steel from domestic producers and both sales and margins have been hammered lower. The price of rolled steel is already down -20% in 2015. Many analysts are forecasting another tough year for the industry.

On March 18th, 2014, STLD lowered its Q1 guidance into the $0.12-0.16 range compared to Wall Street's estimate of $0.23. This also compares to $0.17 a year ago and $0.40 in the fourth quarter. However, the stock rallied. In addition to its lowered guidance the company offered a positive outlook for the second half of 2015.

Here's an excerpt from the company's press release on March 18th:

"During the first quarter of 2015, two important industry developments occurred:

− Domestic steel product pricing declined to levels that are now globally competitive, which the company believes will result in reduced steel import levels beginning in the second quarter 2015. Despite continued solid domestic steel consumption, product pricing decreased meaningfully due to delayed customer orders caused by the volatility in scrap prices and inventory buildup related to excessive fourth quarter 2014 steel imports. The company believes the surplus inventory can be right-sized in the April and May 2015 timeframe, which coupled with continued demand, should result in increased domestic steel mill utilization.

− Ferrous scrap pricing declined between 25% and 30% during February, which the company believes will benefit metal margin. Ferrous scrap pricing disconnected from iron ore pricing during 2014, as iron ore prices declined dramatically, while scrap prices remained relatively unchanged. Historically these commodities are highly correlated; therefore, a sharp decline in scrap prices was not unexpected.

The company believes these events, coupled with continued strength in domestic steel consumption from the automotive, manufacturing and construction sectors, should support a stronger second quarter, and second half 2015, based on the expectation of reduced domestic steel import levels, reduced raw material costs, and increased orders as customer inventory levels decline. Historically, the construction industry has been the largest single domestic steel consuming sector. The construction market grew during 2014, improving meaningfully from the lows experienced in 2009 and 2010. Despite the first quarter of each year being historically weaker for the construction industry due to seasonality, the company's fabrication operations are expected to achieve solid first quarter 2015 financial results. These results could approach those achieved in the third quarter 2014, which is traditionally the strongest construction quarter of a calendar year. The company believes this is evidence of the continued growth in non-residential construction.

Shares of STLD surged on this outlook and shares are now hovering just below technical resistance at its 200-dma. A breakout here could signal the next leg higher. Currently the point & figure chart is still bearish but a move above $21.00 would generate a new buy signal. Tonight we are suggesting a trigger to open bullish positions at $20.75.

FYI: The stock will begin trading ex-dividend on March 27th. The quarterly cash dividend should be $0.1375 a share.

Trigger @ $20.75

- Suggested Positions -

Buy STLD stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the MAY $20 CALL (STLD150515C20)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Wells Fargo & Co - WFC - close: 55.78 change: -0.23

Stop Loss: 54.85
Target(s): To Be Determined
Current Option Gain/Loss: -0.7%
Entry on March 18 at $56.15
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 15.8 million
New Positions: see below

Comments:
03/23/15: Weakness in banking stocks weighed on the broader market today. WFC struggled to rally past its recent highs. This is twice in a row that WFC has failed near its March high around $56.30. We might want to wait for a breakout past $56.30 or even a close above $56.30 before considering new bullish positions.

Trade Description: March 17, 2015:
Banks had a rough start to the year but one stock leading the pack is WFC. Shares of WFC are up about +2% in 2015 versus a virtually flat financial sector.

According to the company, "Wells Fargo & Company (WFC) is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations."

WFC is very shareholder friendly. Back in 2014 the company said they wanted to pay out 55% to 75% of their net income to shareholders, which was a +34% jump from the prior year. This year WFC's CFO John Shrewsberry said they would like to distribute 50% to 70% of net income through dividends and stock buy backs. The amount of money they can pay in dividends is regulated by the Federal Reserve but WFC has raised their dividend six times in the last five years.

The Fed's annual bank stress test is a big deal and this was just completed a week ago. WFC passed the Fed's very severe stress test. The bank has asked permission to raise their dividend +7% to $0.375 a share (up from $0.35). WFC's consistent dividend might be a reason the stock is one of Warren Buffet's biggest holdings in Berkshire Hathaway.

Some have suggested that WFC could be a way to play the improving U.S. economy and consumer spending. That is because WFC is the biggest residential lender and largest auto lender in America.

The stock's rally has produced a buy signal on the point & figure chart that is forecasting a long-term target of $74.00. Currently the stock is hovering just below resistance at the $56.00 level. We are suggesting a trigger to open bullish positions at $56.15.

- Suggested Positions -

Long WFC stock @ $56.15

- (or for more adventurous traders, try this option) -

Long MAY $55 CALL (WFC150515C55) entry $2.20

03/21/15 new stop @ 54.85
03/18/15 triggered @ 56.15
Option Format: symbol-year-month-day-call-strike




BEARISH Play Updates

Albermarle Corp. - ALB - close: 51.91 change: -0.34

Stop Loss: 53.45
Target(s): To Be Determined
Current Option Gain/Loss: +2.5%
Entry on March 12 at $53.25
Listed on March 11, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.7 million
New Positions: see below

Comments:
03/23/15: The intraday bounce in ALB faded and shares underperformed the market with a -0.65% decline by the closing bell. I am not suggesting new positions at this time.

Trade Description: March 11, 2015:
There's a bear market in this specialty chemical stock. The company has a history of paying a dividend and they just raised their dividend for the 21st year in a row. Unfortunately, that's not drawing much investor attention. High-dividend stocks could become less attractive with the Federal Reserve poised to raise interest rates.

Officially the company describes itself as, "Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a premier specialty chemicals company with leading positions in attractive end markets around the world. With a broad customer reach and diverse end markets, Albemarle develops, manufactures and markets technologically advanced and high value added products, including lithium and lithium compounds, bromine and derivatives, catalysts and surface treatment chemistries used in a wide range of applications including consumer electronics, flame retardants, metal processing, plastics, contemporary and alternative transportation vehicles, refining, pharmaceuticals, agriculture, construction and custom chemistry services."

They are in the final stages of its acquisition of Rockwood Holdings. They announced the $6 billion deal last July and it's expected to close in the first quarter of 2015. Bulls will argue this deal is positive for ALB due to the expected demand for lithium batteries. Rockwood has one of the of the biggest lithium producing operations in North America. On a short-term basis we're not seeing any impact in the stock.

ALB most recent earnings report was January 28th. Wall Street was expecting ALB's Q4 results to be $1.02 a share on revenues of $637 million. The company disappointed with a profit of $0.99 as revenues dropped -6.4% to $598.5 million. Management offered lackluster guidance. Multiple analyst firms have downgraded the stock and started lowering their earnings estimates.

You can see the huge sell-off on the earnings report in late January. During the market's big rally in February ALB slowly climbed back to where it was trading just before the earnings announcement. Now ALB is rolling over again. This conforms to the stock's larger bearish trend (seen on the weekly chart). The point & figure chart is forecasting at $45.00 target.

Tonight I'm suggesting a trigger to open bearish positions at $53.25.

- Suggested Positions -

Short ALB stock @ $53.25

- (or for more adventurous traders, try this option) -

Long JUN $50 PUT (ALB150619P50) entry $1.75

03/19/15 new stop @ 53.45
03/17/15 new stop @ 54.65
03/12/15 triggered @ $53.25
Option Format: symbol-year-month-day-call-strike


3D Systems Corp. - DDD - close: 27.96 change: +0.35

Stop Loss: 28.35
Target(s): To Be Determined
Current Option Gain/Loss: -3.9%
Entry on March 16 at $26.90
Listed on March 10, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.0 million
New Positions: see below

Comments:
03/23/15: We are throwing in the towel on our DDD trade. Shares are not cooperating. The bearish momentum has stalled and DDD appears to be coiling for a bullish breakout above resistance near $35.00 soon.

Tonight we're suggesting an immediate exit at the opening bell tomorrow.

*small positions to limit risk* - Suggested Positions -

Short DDD stock @ $26.90

- (or for more adventurous traders, try this option) -

Long MAY $25 PUT (DDD150515P25) entry $1.56

03/23/15 prepare to exit tomorrow morning
03/17/15 new stop @ 28.35
03/16/15 triggered @ $26.90
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

Neurocrine Biosciences - NBIX - close: 41.67 change: -1.93

Stop Loss: 41.85
Target(s): To Be Determined
Current Option Gain/Loss: +11.2%
Entry on February 17 at $37.65
Listed on February 14, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 937 thousand
New Positions: see below

Comments:
03/23/15: Biotech stocks were hit with some profit taking today. The major biotech ETFs are flashing what might be a bearish reversal, topping formation. Shares of NBIX underperformed the market with a -4.4% decline. The stock did stop at support on its rising 20-dma but our stop loss was hit at $41.85.

*small positions to limit risk* - Suggested Positions -

Long NBIX stock @ $37.65 exit $41.85 (+11.2%)

03/23/15 stopped out
03/21/15 new stop @ 41.85
03/17/15 new stop @ 40.65
03/03/15 new stop @ 38.45
03/02/15 new stop @ 35.75
02/17/15 after the close, announces a secondary offering
02/17/15 triggered @ 37.65
Option Format: symbol-year-month-day-call-strike

chart: