Option Investor
Newsletter

Daily Newsletter, Thursday, 4/30/2015

Table of Contents

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

Market Wrap

And The Fed Says...

by Thomas Hughes

Click here to email Thomas Hughes
The market sold off as market participants weigh past weakness, future outlook and another FOMC statement that doesn't really say anything new.

Introduction

Yesterday the Fed delivered more or less as expected, neither raising rates or indicating exactly when a hike would come. The statement was both negative and positive at the same time, noting past weakness and positive expectations in regards to the economy and the rate-hike-time-line. I think, regardless of how you look at it, a June hike is still a possibility and if today's jobless claims numbers are any indication that chance has increased.

Market Statistics

Our indices were indicated lower throughout the early pre-opening session. The trade moderated on the labor data but then retreated back to the early low going into the opening bell. At the bell the indices did indeed open lower and moved lower from there. The SPX found some early support almost precisely at 10AM, near the 2090 level, and began a consolidation that lasted for just over an hour. A little past 11AM the market began to move higher and regained more than half of today's losses before resuming its plunge to support. The selling never really let up, driving the market to its daily low in late afternoon.

Economic Calendar

The Economy

There was quite a bit of data today aside from the weekly jobless claims. On a whole it gave a mixed view of the economy in that it confirmed the weakness we already know occurred in the first quarter as well as positive expectations for rebound this quarter and later in the year.

Personal Income and spending were both in line with expectations. Income held steady with a 0% increase while spending rose by 0.4%. This follows a +0.4% increase in February income and a +0.2% increase in spending.

The employment cost index rose by 0.7% in the first quarter. This is a little hotter than expected and above the previous reading of 0.5%. The increase is attributed to a 0.7% increase in wages/salaries and a 0.6% increase in benefits. I take this as a good sign, in my view it looks like employers are paying up for good help and a sign of underlying economic strength.


On to the labor data. This week initial jobless claims fell by -34,000, about 30,000 more than expected, to a brand new 15 year low. Claims are now 262,000, the four week moving average of claims 283,750. The average did not make a new low this week but I am confident it will in the next week or two providing there is not a huge snap-back in claims. Regardless, the initial claims numbers continue to trend lower despite recent volatility. The volatility could be due to the shift of Easter week this year, it was earlier on the calendar than it was last year.


On a not adjusted basis claims fell by -10.4% versus the 1.2% gain expected by the seasonal factors. On a year over year basis not adjusted claims are -21% lower than this week last year although have been trending relatively flat in between. New York and Connecticut led with increases of +8,902 and +1,831 blamed on lay-offs in transportation, education (Corinthian College?) and warehousing. New Jersey and Pennsylvania led with decreases in claims of -5,997 and -5,566 due to hiring in transportation, education, warehousing, food service and construction.

Continuing claims, the less volatile and slightly more accurate view of labor market turnovers, also made a substantial decline. Continuing claims fell by -74,000 to 2.253 million, another new 15 year low. The four week moving average also fell, making another new 15 year low.

Total claims for unemployment made a slight gain this week, +6,021. This is just off the three month low and in line with the recent down trend in total claims. On a year over year basis total claims are down -13.5% from last this at this time and appear to be heading lower. This figure lags initial claims by 2 weeks so will likely show decline over the next two weeks if not longer.


The monthly macro-labor data is due out next week and I am as eager as ever to see it. Based on the claims data, Moody's weekly Survey of Business Confidence and other forward looking surveys of business I think they, as a bundle will be good if not really good. There could be significant revisions to last month's ADP and NFP as well, both were way below consensus last month and we have seen large revisions just about every month for the past year. I'll be looking to job gains, planned lay-offs, unemployment levels, participation rates, hourly earnings and hours worked. The Fed said they saw softening in the labor market, I just don't buy it. Of course, I'm only an observer of the market and not a maker of policy.

The final piece of today's economic puzzle was the Chicago PMI, released at 9:45AM. The headline number of 52.3 was better than expected, the highest level this year and the second month of advance since hitting the long term low in February. Consensus estimates called for a reading near 50, the previous month's figure was 46.3. Four of the five sub-components made gains this month, led by a double digit increase in new orders which should result in higher production levels in the near future. Also, the employment and production numbers both made substantial increases as well, employment to the highest level this year and production returned to expansion.

The Oil Index

Oil prices rose today, supported by weakening dollar and lower than expected inventory levels. We may have seen the peak in US inventory as declining rig counts begin to have an impact on US production. WTI gained more than 1% today to trade just shy of $60 for the first time since mid-December 2014. There are still no indications of demand pick-up but declining production and supply could support prices in the near to short term. There may also be some fear premium built into the price although it is not getting much coverage. Fighting continues in Yemen and Libya, ISIS is still out of control throughout parts of the middle east.

The Oil Index traded lower today despite the boost in oil prices and much better than expected earnings from Exxon-Mobil. The index was able to open with a small gain and move marginally higher to set a new 5 month intra-day high but was not able to hold the level. This move is indicative of resistance around the 1,430 level which is increasingly looking like a near term top.

The indicators continue to decline and add to this analysis. The MACD is very near to making its bearish crossover, the stochastic already has. This could lead the index to test support near 1,400 and the short term moving average. The long term trend in the index is still up and earnings projections for the sector are positive so any dips will likely be buying opportunities.


The Gold Index

Gold prices took a big hit today despite yesterdays drop in dollar value. The Fed's statement, combined with today's labor data, has led to speculation of future dollar strength and drove the price of gold down by more than -2.5%. Prices dipped into the $1175 region but, as expected, buyers stepped in and pushed prices back above $1180. Day to day gold prices are still being driven by dollar strength and weakness but I remain bullish and a prospective buyer at these levels. My thoughts; an indication the Fed is going to be raising rates is dollar strong and bad for gold, the Fed actually raising the rates will be a sign of strengthening inflation and gold strong.

The gold miners ETF GDX fell a little over -2.25% today but was halted at the short term moving average. Today's drop is in response to the decline in gold prices as well as weaker than expected earnings from GoldCorp and a few of the junior miners. The index is now trading just above $20 and is still being squeezed between rising support and my resistance line at $20.50. Although earnings among the miners have been weaker than expected so far, as a group, they have been indicating an expectation of rising production levels into the end of the year.

The indicators are bullish and still consistent with support although they lack strength. The index still looks like it wants to break higher but I remain cautious while it remains within its narrowing range. I've got a close on eye on resistance as well as support which, for now, is along the short term moving average in the range between $19.50 and $20. Gold prices will of course be the deciding factor, if gold prices move lower future profits among the miners will remain flat at best.


In The News, Story Stocks and Earnings

GoldCorp reported increases in production and cash flow from the comparable period last year but lower earnings due to low realized prices for gold. This is up from $281 million reported last year. Earnings per share came in at $0.01 on an adjusted basis versus the $0.10 predicted by analysts. The company reported sales of 827,500 ounces of gold with cash flow totaling $366 million. All in sustained costs totaled $885 per ounce of gold and are expected to remain in a range between that number and $950 for the full year.

Positives within the report include lower cost and increasing production that is expected to deliver expected full year results. The company reiterated its full year production guidance and announced that several of their ongoing projects have reached commercial production status. The stock lost over -6% in today's session in a move that took it below the short term moving average. The stock is near the long term with indicators consistent with support. Near term support is around $18.50 with longer term support near my line just below $17.50.


Exxon-Mobil reported earnings much better than expected. The world's largest integrated oil company reported earnings of $1.17 versus the expected $0.80. This is still a 46% decline in earnings, not good, but when put in perspective of FactSet's expected decline for the sector (-65%), looks real good. Production for the quarter was up by 2.3% showing the positive addition of upstream projects and the potential for future profits. Shares of the stock responded positively after the news, rising nearly 1% before the market opened to gap open inside a resistance range between $88 and $89. The stock sold off from those levels during the day and closed with a loss near a half percent. The indicators are bullish but weak and losing strength so it looks like this could be a near term peak with possible downside target near $85.


Cardinal Health reported a top and bottom line beat in its earnings statement. The results were so good that company execs reaffirmed guidance in the upper half of the previously given range but the stock sold off anyway. The stock lost a little more than -5% in today's session and looks like it is going lower. The indicators are weak and support a further test of support with a possible target near $80 should the current level not hold.


Visa reported after the bell and beat on the top and bottom lines. The credit and payment processor produced earnings one penny above consensus. The beat was driven by a 7.8% increase in processing fees as card holders made more transactions. The news was not enough to support share prices however, sending the stock down by over 2% in after hours trading.


The Indices

The indices sold off today on a variety of reasons including the Fed, the economy and earnings. The FOMC meeting for one gave us little information beyond what we already knew leaving the market to ponder earnings, the economy and what they mean for the future. On top of that is end of month portfolio reshuffling and the question, “is it time to sell in May and go away”.

Today's move was led by the NASDAQ Composite index and a loss of -1.64%. The tech heavy index moved below the short term moving average and created a candle with wicks on both end suggestive of an active market. The indicators are rolling over and have now confirmed a near term peak. MACD momentum and stochastic are both forming bearish crossovers with today's action, indicative of weakness and possible further weakness, but also possibly leading to another trend following entry. The index may find support tomorrow but if not I now have a downside target near the long term trend line.


The next largest decline in today's session was in the Dow Jones Transportation Average. The Transports fell exactly -1.25% and are now testing support at the bottom of the 6 month range. The indicators are rolling over in indication of that weakness and could lead to a further test. A break below support, along my line near 8,600, would find additional support just below that level along the long term trend line near 8,500. Taking a step back from today's action and looking over the past 6 months it is becoming more and more clear that the index has been in a long term consolidation and return to trend. The trend is still up so I am still bullish but looking for confirmation.


The Dow Jones Industrial Average made the third largest decline today, -1.08%. Today's action took the blue chip index below the 18,000 mark and the short term moving average to tentatively find support near 17,750. The index is accompanied by weakening indicators suggestive of further testing of support. 17,750 may be prove to be support but it looks like stronger support is closer to 17,500 and then near 17,250. This index is still about 4% above its long term trend line which is down around 17,100-17,250 so has plenty of room to run without breaking trend.


The S&P 500 made the smallest decline, only -1.01%. Today's move broke the short term moving average and pierced the long term trend line. The indicators are rolling over and confirm near term weakness in the index. The index is likely to continue testing support along the trend line, which may be broken in the near term. Additional support is just below near 2,050 and a more critical level in terms of potential reversal. The long term trend is still up so until further developments I will be watching for entry points.


We may have begun the next correction but just how deep it may go is questionable. Some of the indices are well above their trend lines while others are already trading near or are testing them. This combination could mean today was the brunt of the move, or it is the precursor to another 3-5% decline. The trends are up so any decline that does occur is a potential buying opportunity.

Today's decline may be more of an unwinding of pre-FOMC positioning than the beginnings of a correction. It also may be due to sector rotations as traders move out of this quarters winners in anticipation of earnings growth in other sectors later this year. At the same time it is the end of the month which can add volatility for a number of reasons including aforementioned portfolio reshuffling and positioning ahead of the macro-economic data due out next week.

I'm still bullish, as hopeless as it may seem, because of labor trends and earnings expectations. Labor trends are good; they're building slowly but I think reaching a critical mass. Earnings expectations are also good, at least positive, for the broad market into the end of the year and will probably increase as we move into the summer. This combination makes it easy for me to think that the bull market is not over despite whatever correction may occur now.

Until then, remember the trend!

Thomas Hughes


New Plays

No Sign Of Fear Yet

by James Brown

Click here to email James Brown

Editor's Note:

No new trades for Premier tonight.

The market accelerated lower with widespread declines. The small cap Russell 2000 index sliced through potential support near 1,240 and plunged to the next support level near 1,220. The next level to watch is the 1,200 area.

I cautioned readers last night about the market flashing potential warning signals. Volume has not picked up yet and the volatility index (VIX), while off its recent lows, is still relatively low. This suggest there could be more selling pressure ahead.

Small Cap Russell 2000 chart:

Volatility index (VIX) chart:




In Play Updates and Reviews

Small Caps Underperform

by James Brown

Click here to email James Brown

Editor's Note:
The U.S. market delivered widespread declines on Thursday. The small cap Russell 2000 index underperformed with a -2.15% loss versus a -1.0% decline in the S&P 500.

DTSI and MBLY both hit our stop loss today.


Current Portfolio:


BULLISH Play Updates

CDW Corp. - CDW - close: 38.59 change: -0.14

Stop Loss: 37.40
Target(s): To Be Determined
Current Gain/Loss: -0.9%
Entry on April 13 at $38.65
Listed on April 09, 2015
Time Frame: Exit PRIOR to earnings on May 7th
Average Daily Volume = 1.0 million
New Positions: see below

Comments:
04/30/15: CDW delivered more of the same today with a little bit more volatility at the opening bell on Thursday. Traders bought the dip again but CDW is having trouble making any progress.

No new positions at this time.

Trade Description: April 9, 2015:
Traders have been consistently buying the dips in information technology stock CDW. Now the stock is poised to breakout to new highs.

The company offers a broad range of hardware, software and integrated IT solutions to its clients. These include mobility, security, cloud computing, virtualization, data center optimization, and more.

Their website describes the company as "CDW is a leading provider of integrated information technology solutions in the U.S. and Canada. We help our 250,000 small, medium and large business, government, education and healthcare customers by delivering critical solutions to their increasingly complex IT needs. A Fortune 500 company, CDW was founded in 1984 and employs more than 7,200 coworkers. In 2014, the company generated net sales of more than $12.0 billion."

Earnings last year were healthy. CDW has consistently beaten Wall Street's earnings and revenue estimates for the last four quarters in a row. Revenues have been showing double-digit growth for the last year. Their most recent report was February 10th when CDW delivered its Q4 results. Analysts were expecting a profit of $0.53 a share on revenues of $2.95 billion. CDW reported $0.59 a share with revenues up +12.4% to $3.05 billion.

Analysts seem optimistic on CDW. Barclays has listed CDW as one of its top picks and noted that the company has very little exposure to Europe or Asia so the strong dollar shouldn't hurt it that bad. Another analyst, with RBC Capital Markets, believes that any softness in the consumer market will be overshadowed by strength in the enterprise market.

Technically the bullish trend of higher lows in CDW has been coiling more tightly. Now, with the stock up four days in a row, CDW is on the verge of breaking through resistance in the $38.00-38.50 area. Tonight we are suggesting a trigger to launch bullish positions at $38.65.

- Suggested Positions -

Long CDW stock @ $38.65

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

Long MAY $40 CALL (CDW150515C40) entry $0.90

04/29/15 new stop @ 37.40
04/13/15 triggered @ 38.65
Option Format: symbol-year-month-day-call-strike


Canadian Solar Inc. - CSIQ - close: 35.40 change: -1.72

Stop Loss: 34.75
Target(s): To Be Determined
Current Gain/Loss: -4.5%
Entry on April 28 at $37.05
Listed on April 23, 2015
Time Frame: Exit prior to earnings in mid May
Average Daily Volume = 2.7 million
New Positions: see below

Comments:
04/30/15: Solar energy stocks were underperformers today. CSIQ really got hammered with a -4.6% drop. The intraday low was $35.01. Odds are good we could see CSIQ hit our stop loss at $34.75 tomorrow thanks to FSLR. Both SPWR and FSLR reported earnings tonight after the closing bell. SPWR beat on the bottom line but missed analysts' revenue estimates. Meanwhile FSLR missed estimates by a wide margin. Solar energy names could see more selling pressure tomorrow morning.

No new positions at this time.

Trade Description: April 23, 2015:
The boom and bust trends in the solar energy industry have been severe. A few years ago there was a supply glut and prices on solar panels plunged by 2/3rds. Investors were fleeing the solar stocks and shares of CSIQ sank toward $2.00 a share. It's a different story today.

China has a HUGE air pollution problem. The country wants to move away from coal-fired energy. That's why China plans to build out 100 gigawatts of solar energy by 2020. India is in a similar bind. They also plan to build out 100 gigawatts of solar energy by 2022. These two countries alone will account for more solar energy production in the next several years than all previous years combined.

China recently announced they had completed 5.04GW of solar capacity in the first quarter of 2015. That puts the country on schedule to meet their 2015 goal of 17.8GW in new solar production.

One company that should benefit from this global build out of solar energy is CSIQ. They are in the technology sector and considered part of the semiconductor industry. According to the company, "Founded in 2001 in Ontario, Canada, Canadian Solar is one of the world's largest and foremost solar power companies. As a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions, Canadian Solar has an industry leading and geographically diversified pipeline of utility-scale solar power projects as well as a track record of successful solar deployment boasting over 9 GW of premium quality modules installed in over 70 countries during the past decade. Canadian Solar is committed to providing high-quality solar products and solar energy solutions to customers around the world."

Their most recent earnings report was March 5th. CSIQ reported Q4 results of $1.28 per share. That missed analysts' estimates. However, revenues soared +84% to $956.2 million, which was above expectations. CSIQ full-year 2014 results saw a record $239 million in earnings with revenues hitting $2.96 billion. They shipped 3.1 gigawatts worth of solar panels. This year CSIQ expects to ship 4.3GW of panels, a +39% improvement.

CSIQ raised their 2015 Q1 guidance above Wall Street estimates, which helps explain the spike in the stock price. Currently the company's full-year guidance is still below street estimates. In spite of this divergence between forecast and analysts' estimates Wall Street is still bullish. All ten of the analysts who cover the stock have a buy rating on CSIQ. The average 12-month price target is near $46.00. The point & figure chart is more optimistic and currently forecasting a long-term target of $66.50.

Technically shares of CSIQ have been building on a bullish trend of higher lows. They're also appear to be breaking out past resistance in the $36.00 area. Further gains could spark some short covering. The most recent data listed short interest at almost 10% of the 41.2 million share float. Tonight I am suggesting a trigger to open bullish positions at $37.05. This will likely be a two or three week trade. CSIQ will report earnings in mid May and we'll plan on exiting prior to the announcement.

- Suggested Positions -

Long CSIQ stock @ $37.05

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

Long MAY $37 CALL (CSIQ150515C37) entry $2.05

04/28/15 triggered @ 37.05
Option Format: symbol-year-month-day-call-strike


Nucor Corp. - NUE - close: 48.86 change: -0.33

Stop Loss: 47.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on April -- at $---.--
Listed on April 28, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.5 million
New Positions: Yes, see below

Comments:
04/30/15: Thursday was a relatively quiet session for NUE. The stock traded inside an 80-cent range. We are waiting on a breakout past resistance.

Trade Description: April 28, 2015:
NUE's management is expecting steel prices to stabilize by the end of the year and that has provide hope for investors. The industry is still struggling with a "flood" of imports.

NUE is in the basic materials sector. According to the company, "Nucor and its affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel piling; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler."

Their 2015 Q1 results were hurt by a -5% drop in average selling price of steel. Wall Street was expecting earnings of $0.14 a share on revenues of $4.66 billion. NUE delivered $0.21, which was a -39% drop from a year ago, but significantly above its mid-March guidance in the $0.10-0.15 range. Revenues were down -14% to $4.4 billion.

NUE management commented on its quarter, "This lower performance is primarily due to lower selling prices and margins resulting from the exceptionally high level of steel imports flooding the domestic market. It is estimated that imports accounted for 33% of the finished steel market in the first quarter of 2015. Import levels in February and March were lower than the peak in January, but remain at the exceptionally high levels experienced during most of 2014. We anticipate selling prices to remain under pressure as the flood of imports continues in the second quarter of 2015. Global overcapacity built by foreign, state-owned enterprises continues to be a significant risk factor to our business."

The stock actually rallied on its earnings report thanks to somewhat optimistic guidance. The company said the automotive market remains strong. They continue to see improving demand in the nonresidential construction markets. NUE did note that the energy market is still troubled. The drop in crude oil and the decline in active rigs has cut demand for tubular goods products (drilling equipment), which has caused a glut of inventory in the sector.

NUE shared the following outlook, "Earnings in the second quarter of 2015 are expected to be somewhat improved from the first quarter of 2015. Although margins in the steel mills segment are expected to improve, they will remain under pressure during the second quarter of 2015 as selling prices have not yet fully stabilized and imports remain at exceptionally high levels. This pricing pressure is expected to mitigate the benefits of lower average raw materials costs in the second quarter. We expect much better performance in the downstream products segment in the second quarter of 2015. The performance of the raw materials segment is expected to decrease in the second quarter of 2015 due to a planned one month outage at our DRI facility in Trinidad. We anticipate an operating loss similar to the first quarter of 2015 at Nucor Steel Louisiana, which, due to the extended length of the time the facility was not operating, will work through higher cost iron ore inventory that was purchased in 2014. Performance in the second half of 2015 is expected to further improve on the strength of continuing improvement in nonresidential construction and its impact on our downstream products businesses and steel mills. Additionally, steel pricing is expected to stabilize and rebound as service center destocking runs its course."

It would appear that the market has priced in the industry's trouble with imports. Now investors are looking ahead toward improvement later this year. The stock has been consolidating sideways in the $46-49 range for several weeks. Shares rallied on its earnings report and now it's on the verge of breaking out from its trading range. The $50.00 level is round-number resistance plus it's strengthened by technical resistance with the simple 200-dma. A breakout past this area would be very bullish. Tonight we're suggesting a trigger to launch bullish positions at $50.50.

Trigger @ $50.50

- Suggested Positions -

Buy NUE stock @ $50.50

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

Buy the JUL $50 CALL (NUE150717C50)

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




BEARISH Play Updates

OvaScience, Inc. - OVAS - close: 24.75 change: -2.12

Stop Loss: 29.45
Target(s): To Be Determined
Current Gain/Loss: +10.5%
Entry on April 28 at $27.65
Listed on April 27, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 725 thousand
New Positions: see below

Comments:
04/30/15: Biotech stocks were underperformers today and OVAS helped lead the way lower. Shares fell to a -7.8% decline and new five-month lows. I would not chase it here.

Trade Description: April 27, 2015:
A report published by Allied Market Research suggested the global in-vitro fertilization (IVF) market was about $9 billion in 2012. Demand is expected to grow the market to more than $21 billion by 2020. OVAS believes their AUGMENT treatment is a huge step in boosting a woman's ability to get pregnant.

Here's a brief description of the company, "OvaScience (OVAS) is a global fertility company dedicated to improving treatment options for women around the world. OvaScience is discovering, developing and commercializing new fertility treatments because we believe women deserve more options. Each OvaScience treatment is based on the Company’s proprietary technology platform that leverages the breakthrough discovery of egg precursor (EggPCSM) cells – immature egg cells found inside the protective ovarian lining. The AUGMENTSM treatment, a fertility option specifically designed to improve egg health, is available in certain IVF clinics in select international regions outside of the United States. OvaScience is developing the OvaPrimeSM treatment, which could increase a woman's egg reserve, and the OvaTureSM treatment, a potential next-generation IVF treatment that could help a woman produce healthy, young, fertilizable eggs without hormone injections."

Excitement over the company's prospects helped drive the stock from less than $10 in August 2014 to an all-time high of $55 in late March 2015. Unfortunately, the stock has reversed lower as the market tries to decipher the data on OVAS' progress. The FDA has prevented OVAS' treatment in the U.S. Critics complain that OVAS has not published any animal studies. There is concern that the procedure might endanger the child. Thus far the handful of tests done outside the U.S. look more like experiments than clinical trials.

Investors have decided to shoot first and ask questions later. That explains the sudden and sharp reversal lower in OVAS' stock. It's not just traders who have turned cautious. Zacks noted that multiple analysts have reduced their estimates on the company.

Technically OVAS is in a bear market with a -47% drop from its closing high. The point & figure chart is bearish with a long-term target at $7.00. The oversold bounce in early April failed and now OVAS is about to breakdown below technical support at its 200-dma. The next stop could be $20.00 if OVAS does close below support near $28.00.

Tonight we are suggesting a trigger to launch small bearish positions at $27.65. We want to limit our position size because this is a high-risk, more aggressive trade. Biotech stocks are normally risky since we never know when the next headline might send the stock soaring or crashing. Traders may want to use options to limit their risk.

- Suggested Positions -

Short OVAS stock @ $27.65

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

Long JUN $25 PUT (OVAS150619P25) entry $2.95

04/29/15 new stop @ 29.45
04/28/15 triggered @ 27.65
Option Format: symbol-year-month-day-call-strike


Solera Holdings - SLH - close: 48.52 change: -0.38

Stop Loss: 49.45
Target(s): To Be Determined
Current Gain/Loss: +1.6%
Entry on April 27 at $49.30
Listed on April 20, 2015
Time Frame: Exit PRIOR to earnings on May 6th
Average Daily Volume = 536 thousand
New Positions: see below

Comments:
04/30/15: SLH did not see any follow through on yesterday's bounce. The stock struggled with the $49.00 level as resistance.

I don't see any changes from yesterday's comments. More aggressive traders may want to keep their stop above $50.00 since $50.00 should be stronger resistance.

Please note that this will be a short-term trade. SLH has earnings coming up on May 6th. We plan to exit prior to their announcement.

Trade Description: April 20, 2015:
Investor sentiment appears to have soured on SLH. The longer-term trend is now down. The company is in the technology sector. They're considered part of the application software industry.

Here's a brief company description, "Solera is a leading provider of risk and asset management software and services to the automotive and property marketplace, including the global P&C insurance industry. Solera is active in over 70 countries across six continents. The Solera companies include: Audatex in the United States, Canada, and in more than 45 additional countries; Informex in Belgium and Greece; Sidexa in France; ABZ and Market Scan in the Netherlands; HPI, CarweB and CAP Automotive in the United Kingdom; Hollander serving the North American recycling market; AUTOonline providing salvage disposition in a number of European and Latin American countries; IMS providing medical review services; Explore providing data and analytics to United States property and casualty insurers; Service Repair Solutions, a joint venture with Welsh, Carson, Anderson & Stowe, that provides solutions for the service, maintenance and repair market; and I&S, a provider of software and business management tools, third-party claims administration, first notice of loss and network management services to the U.S. auto and property repair industries, specializing in glass claims."

Their most recent earnings report was the 2014 Q4 results on February 5th. Wall Street was expecting a profit of $0.79 a share on revenues of $283 million. SLH missed estimates with 40.77 a share. Revenues were up +18% but came in just a hair below expectations (essentially in-line). Unfortunately management lowered their earnings and revenue guidance for 2015 below Wall Street estimates.

Today SLH is trading with a bearish trend of lower highs and lower lows. The point & figure chart is bearish and forecasting at $44.00 target. Currently the stock is hovering just above round-number support at the $50.00 level. Last Friday's intraday low was $49.65. Tonight we are suggesting a trigger to launch bearish positions at $49.40. We'll try and limit our risk with an initial stop loss at $52.15. We will plan on exiting prior to earnings in mid May (no official date yet).

- Suggested Positions -

Short SLH stock @ $49.30

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

Long JUN $50 PUT (SLH150619P50) entry $2.85

04/29/15 new stop @ 49.45
04/27/15 triggered on gap down at $49.30, trigger was $49.40
Option Format: symbol-year-month-day-call-strike


Tessera Technologies Inc. - TSRA - close: 36.11 change: -1.25

Stop Loss: 38.45
Target(s): To Be Determined
Current Gain/Loss: +3.4%
Entry on April 17 at $37.40
Listed on April 16, 2015
Time Frame: Exit PRIOR to earnings on May 5th
Average Daily Volume = 585 thousand
New Positions: see below

Comments:
04/30/15: TSRA accelerated lower with a -3.3% decline. This is a new three-month low for the stock. If the $36.00 level doesn't hold then $34.00 and its 200-dma is the next support level.

I am not suggesting new positions. TSRA has earnings coming up on May 5th and we plan to exit prior to the announcement.

Trade Description: April 16, 2015:
After months of gains and generally bullish news shares of TSRA appear to be correcting lower.

The company is considered part of the semiconductor industry. According to the company, "Tessera Technologies, Inc., including its Invensas and FotoNation subsidiaries, generates revenue from licensing our technologies and intellectual property to customers and others who implement it for use in areas such as mobile computing and communications, memory and data storage, and 3DIC technologies, among others. Our technologies include semiconductor packaging and interconnect solutions, and products and solutions for mobile and computational imaging, including our FaceToolsTM, FacePowerTM, FotoSavvyTM, DigitalApertureTM, face beautification, red-eye removal, High Dynamic Range, autofocus, panorama, and image stabilization intellectual property."

Their earnings report in late October 2014 was better than expected and TSRA raised guidance. They raised guidance again in January. Their earnings news in February helped push the stock to new 52-week highs. Unfortunately momentum appears to have reversed. The semiconductor space has been hit with downgrades and earnings warnings.

Now shares of TSRA has broken below multiple layers of support. The point & figure chart has generated a new triple-bottom breakdown sell signal with a $33.00 target. Today shares of TSRA sit on technical support at the 100-dam. A breakdown from here could portend a drop toward $34 or even $32.00 (near the 200-dma).

Tonight we are suggesting a trigger to launch bearish positions at $37.40. This is going to be a short-term trade. We will plan on exiting prior to earnings on May 5th.

- Suggested Positions -

Short TSRA stock @ $37.40

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

Long MAY $37 PUT (TSRA150515P37) entry $1.55

04/29/15 new stop @ 38.45
04/17/15 triggered @ 37.40
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

DTS Inc. - DTSI - close: 35.85 change: -0.71

Stop Loss: 35.85
Target(s): To Be Determined
Current Gain/Loss: -3.5%
Entry on April 23 at $37.15
Listed on April 22, 2015
Time Frame: Exit PRIOR to earnings on May
Average Daily Volume = 166 thousand
New Positions: see below

Comments:
04/30/15: As we feared the weakness in DTSI continued. A broad-based selloff across the market didn't help. Shares of DTSI slipped -1.9% and traded below what should have been support near $36.00. Our stop was hit at $35.85.

*small positions to limit risk* - Suggested Positions -

Long DTSI stock @ $37.15 exit $35.85 (-3.5%)

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

JUN $40 CALL (DTSI150619C40) entry $0.95 exit $0.45 (-52.6%)

04/30/15 stopped out
04/29/15 new stop @ 35.85, caution: DTSI acts like it could be reversing lower
04/23/15 triggered @ 37.15
Option Format: symbol-year-month-day-call-strike

chart:


Mobileye N.V. - MBLY - close: 44.86 change: -1.44

Stop Loss: 45.35
Target(s): To Be Determined
Current Gain/Loss: -6.0%
Entry on April 27 at $48.25
Listed on April 25, 2015
Time Frame: Exit PRIOR to earnings in late May
Average Daily Volume = 3.1 million
New Positions: see below

Comments:
04/30/15: Shares of MBLY were swept up in the market-wide selloff today. Shares underperformed with a -3.1% decline and hit our stop loss at $45.35 in the process.

- Suggested Positions -

Long MBLY stock @ $48.25 exit $45.35 (-6.0%)

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

JUN $50 CALL (MBLY150619C50) entry $2.40 exit $1.10 (-54.2%)

04/30/15 stopped out
04/29/15 new stop @ 45.35
04/27/15 triggered @ 48.25
Option Format: symbol-year-month-day-call-strike

chart: