Option Investor
Newsletter

Daily Newsletter, Wednesday, 5/13/2015

Table of Contents

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

Market Wrap

Wake Me When the Logjam Breaks

by Keene Little

Click here to email Keene Little
To say the choppy go-nowhere market is getting old would be a gross understatement. It would appear many traders are now sitting back and just waiting for the market to make a decision and do something. So far there's no answer from the market.

Wednesday's Market Stats

It's getting very old writing about a choppy market that's been range bound for 2-1/2 months and I know it's even worse if you're trying to trade it. About the only thing that's working is selling options above and below the trading range and then let the options expire worthless. Anyone who's trying to trade the market directionally probably has very little hair left to pull out. Hopefully you haven't been chopped to pieces with multiple stop-outs in both directions (in which case your broker thanks you). This too shall pass but at this point it can't be soon enough.

Equity futures climbed higher during the overnight session but then became a little volatile in the pre-market session, holding just above breakeven until a buy program hit at the opening bell (pretty common lately). But there was no follow through to the buy program (also pretty common lately) and the market sold off before the indexes spent most of the day trying to hold in the green. The techs were a little stronger while the small caps were weaker, which just added to the sense that this market is not going anywhere. The metals were the big movers today (up).

This morning's economic reports included retail sales, which weakened from March into April. Sales dropped from +1.1% in March to flat in April and sales ex-auto dropped from +0.7% to +0.1%. It's just more evidence that the consumer is not consuming enough. Shame on all of you -- do your patriotic duty and get out there and spend!

Export and import prices dropped in April, -0.7% and -0.4%, respectively, which probably frustrates the Fed since it's further evidence of "disinflation." Import prices dropped -0.4% in March, much of which was "blamed" on the drop in oil prices but with the strong bounce back up in oil (+43% from about 42 to 60) they can't use oil as the excuse for an even larger drop in import prices. Global deflation anyone? Nah, the Fed, ECB, BOJ, and the other tens of central banks will surely "protect" us from that with all their money printing.

In reality, despite what the central banks have been attempting to do, the drop in prices shows what a powerful force deflation is and how the central banks have only been able to slow it down (and drag out the correction that could have already been over by now if they let the market dictate the rules). With all of the government debt they're all trying to inflate their way out but they're all failing and the piper will soon have to be paid. The best thing we can all do to be prepared for deflation is to be out of debt since the value of debt increases while all other asset classes depreciate in a deflationary environment.

Heading into today it was important for the bulls to at least prevent any further selling in the techs. I'll start tonight's review with the NDX to show the short-term bullish setup to complete its longer-term rally. But the bulls need to keep the rally going in the coming week in order to prevent it from turning bearish sooner rather than later.

The weekly NDX chart below shows that since August 2014 price has been pressing against the top of its parallel up-channel that it's been in since 2010. From a wave count perspective there are a few ways to count the move up from its low in November 2008 but the best fit has it in its final 5th wave of a big A-B-C corrective rally, which is the leg up from the February 2nd low at 4094. That low was another test of its uptrend line from the March 2009 low through the June 2013 low (labeled in green). The line has been supporting each pullback since February, including Tuesday's low, and it's currently near 4388. Since the November 2014 high it has been making marginal new price highs but with bearish divergence as it hammers out a rising wedge for the final leg of its rally.

Nasdaq-100, NDX, Weekly chart

The rising wedge since the November 2014 high can be better seen on the daily chart below. All of the choppy price action we've seen since last November helps confirm that this final 5th wave, starting off the February 2nd low, is an ending diagonal (rising wedge) and the negative divergence supports the bearish interpretation that we're into the final wave. Ideally we'll see one more new high to complete the pattern, which is depicted in green and points to a final high near 4600, possibly next week.

Nasdaq-100, NDX, Daily chart

Key Levels for NDX:
- bullish above 4511
- bearish below 4333

At the moment NDX is struggling with its short-term downtrend line from April 27th, which it marginally broke above this morning (thanks to the gap up). The failure to close above the line, currently near today's close near 4427, has it looking vulnerable to a further decline but it can't tolerate much more selling before turning more immediately bearish. Two equal legs down from Monday morning's high points to 4372 so a drop below that level would be a bearish heads up, especially since it would be another break of its uptrend line from March 2009. Below 4343 would suggest we're into a least a much larger pullback and further upside would be in doubt.

Nasdaq-100, NDX, Daily chart

Yesterday morning SPX tested its 2009-2011 uptrend line, currently near 2090, and got a strong bounce off it, although the rally then fizzled a bit following the strong buy program and SPX wasn't able to hold above its broken 20-dma, near 2102. Today it gapped up above its 20-dma but again wasn't able to hold above it and instead chopped sideways before dropping back below it this afternoon. It's hard to decipher any small movements in this frustratingly choppy market but so far the pattern remains bullish if the bulls can defend yesterday's low at 2085. One more leg up to about 2135 would do a nice job finishing off the shallow rising wedge pattern for the rally off the March 11th low (bold blue lines on the daily chart below).

S&P 500, SPX, Daily chart

Key Levels for SPX:
- stay bullish above 2078
- bearish below 2067

I hesitate to show anything less than a daily chart because of all the choppy price action. Trying to predict the next move out of this mess is very difficult but I'll try anyway (because I'm a market masochist). In the shallow rising wedge shown on the daily chart, which is shown closer with the 60-min chart below, the 5th wave (the leg up from May 6th) should be a 3-wave move (or something a little more complex but still corrective) and I've currently got it labeled as an a-b-c, with the c-wave being the leg up from Tuesday morning. This afternoon's low held the uptrend line from May 6th and if the buyers return Thursday morning we should see a rally that will likely at least test the 2120 resistance level again.

S&P 500, SPX, 60-min chart

On the chart above I depict a small rising wedge for the final move up from Tuesday but that's obviously just a guess at this time. The way it's starting is what has me thinking it will chop its way up to a final high. Two equal legs up from May 6th points to 2135, which is close to the top of its shallow rising wedge (bold blue line). Note that this pattern suggests a break above 2120 resistance will turn into a bull trap of the worst kind -- a very strong decline should follow it and trap all those who buy the breakout and don't use stops. This of course assumes that we'll get the rally as depicted.

The DOW looks the same as SPX and NDX -- it has been chopping sideways since its March 2nd high but in reality it has been chopping its way marginally higher since jamming higher off last October's low. It too looks to be in an ending diagonal (rising wedge) for its final 5th wave. The final leg up should be the rally off the May 6th low and I have two upside projections for it at 18397 and 18506. Assuming we'll get the rally as depicted I should be able to get a tighter target zone as the rally pattern develops a little further. The bulls would be in serious trouble if the DOW instead breaks down through the May 6th low at 17733.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 18,289
- bearish below 17,733

The RUT remains odd man out. It's sharp decline from April 27th could have been the 1st wave down in what will become a much more significant decline, in which case the bounce off May 6th low will only be a correction to the decline before heading lower in a 3rd wave. Two equal legs up from May 6th points to 1250.81, which is only slightly higher than price-level resistance near 1248. There's a way to interpret the May decline as the completion of a pullback correction and the RUT will join the others to a new high but at the moment I'm reluctant to suggest the RUT will see a new high from here. Instead I'm watching for a bounce setup to short the RUT.

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 1262
- bearish below 1206

Bond prices have been crushed over the past 3 weeks and that has driven yields higher. The Fed might not be ready to raise rates but it appears the market is ahead of them on that. But at the moment I'm not sure if the rise in yields is going to hold. I haven't yet abandoned my opinion that we'll see lower yields into the fall of this year but the recent rally in yields is now near a make or break time for the bond market.

The weekly chart of TYX (30-year yield) below shows a price projection at 3.089%, which is where the bounce off the January 30th low has two equal legs up. That level was achieved yesterday with a brief morning high at 3.099% before reversing hard for the rest of the day. Today's rally in TYX (selling in bonds) got it back up to 3.081% so we'll soon find out if the rise will continue or if instead the 3-wave bounce correction off the January low will be followed by another decline, which is what I'm depicting on the chart. TYX has broken its downtrend line from December 2013, near 2.93%, so any pullback to that level and then higher again would leave a bullish pattern and I'd back off my expectation for lower yields (higher bond prices).

30-year Yield, TYX, Weekly chart

The 10-year yield (TNX) has the same pattern as TYX but it hasn't made it up to its similar projection for two equal legs up from January, at 2.451% (yesterday's high was 2.335%). However, yesterday it did tap its downtrend line from December 2-13 and the hard reversal left a bearish candlestick at resistance.

TLT, the 20+ year Treasury ETF, is also near an important level -- 117.23 is where the decline from January 30th would have two equal legs down. Today's low was 118.64 so it's getting close but with short-term bullish divergences staring to show there is the potential for at least a bounce back up. If TLT does start another rally from here it would have an upside target at 141.71, which is where the 2nd leg of its rally from December 2013 would be 62% of the 1st leg. It's also where it would again test the trend line along the highs from December 2008 - July 2012 (and it would likely leave a bearish divergence against the January high).

20+ Year Treasury ETF, TLT, Weekly chart

The banking index, BKX, has a very interesting setup here and we could soon find out which direction it will head. It has now pushed right up against the top of an expanding triangle for price action since March 2014, shown on its weekly chart below. At the same location, near today's high at 75.73, is its broken uptrend line from March 2009 - October 2011. There's also a broken uptrend line from October 2013 - May 2014 (gray) that it's back-testing. That's a lot of trendline resistance for the bulls to punch through. But as highlighted on MACD and RSI, the downtrend lines from August 2013 are now being broken and that's a bullish sign. Now all the bulls need to do is keep the rally in the banks going, which would be a positive sign for the broader indexes.

KBW Bank index, BKX, Weekly chart

Countering the potentially bullish picture for the banks (although admittedly I wouldn't be buying the banks with the index pressed up against resistance) is the potentially bearish pattern for the TRAN. How many times can the TRAN pound on support before it breaks? That's the question that comes to mind as it once again tests price-level support near 8580, which it closed marginally below today. If it breaks below its April 6th low near 8527 it would be a bearish heads up for the rest of the market. I would expect the TRAN to at least then drop to its uptrend line from March 2009 - November 2012, near 8395. Give the bulls a few more Cheerios here and see if that helps.

Transportation Index, TRAN, Daily chart

The U.S. dollar has also now reached an inflection point now that it has dropped back down to the top of its parallel up-channel from 2008-2011, near today's low at 93.50, which is shown on its weekly chart below. The top or bottom of a channel is usually support/resistance after price breaks through and comes back for a retest so the bullish setup here is for the dollar to start back up. Since its March high I've been looking for a multi-month consolidation and we could see price stay trapped between 93.50 and its March high at 100.78 for the rest of this year. That's the bullish pattern. It would turn at least potentially more bearish if it drops below 93.50, in which case I would expect to see it drop down to a price projection and its 200-dma, both near 90.50, over the next couple of weeks, before either setting up another bounce or consolidating before heading lower.

U.S. Dollar contract, DX, Weekly chart

Gold's strong rally today has it looking like it will head for at least the 1251.30 projection for two equal legs up from March 17th. That would be a little better than a 62% retracement of its January-March decline, at 1244. At the moment gold is close to testing its 200-dma near 1220 and if it breaks above it I don't think it will last any longer than it did back in January.

Gold continuous contract, GC, Daily chart

This morning's crude inventories report showed another decline of 2.2M barrels but that didn't help price, which dropped today. After peaking at 62.58 last Wednesday oil pulled back and broke its uptrend line from March 18th, indicating its rally is likely done or very close to being done (it might have one more minor new high to back-test the broken uptrend line and show us bearish divergence in the process). It did find support at price-level S/R near 58.50 on the pullback into last Friday's low but I think the bounce attempt will fail and a drop back below 58.50 will likely lead to another decline. The downside potential is for at least a retest of its March 18th low at 42.03.

Oil continuous contract, CL, Daily chart

Tomorrow morning we'll get some inflation data through the PPI reports before the bell. They're not expected to change from the March readings of +0.2% for both PPI and Core PPI. The market might react a little if the number is way off the mark, especially if the number comes in much higher than expected (prompting worry about the Fed raising rates) but more than likely the market will already be reacting to whatever goes on overseas.

Economic reports and Summary

Conclusion

The market remains a choppy mess and there's very little to recommend at the moment. The larger price pattern suggests to me that we will get one more new high in the next week or two to complete the bull market rally off the 2008/2009 lows. The longer-term setup is therefore very bearish since I don't believe the market highs, once they're put in, will be seen for many years (possibly decades). Predicting the next move this week is hard enough so predicting the next move over the next several years is obviously extremely difficult. But the multi-decade pattern suggests those who hold through the next decline will rue the day they decide to just buy and hold and keep buying on the way down. In the next few years those with capital will have a buying opportunity of a lifetime but we're soon approaching the time when I think we'll have a selling opportunity of a lifetime.

Shorter term (this week and possibly into the end of the month) I'm continuing to expect higher prices but we could see those new highs come with more chop and whipsaw price action. Based on this and the downside risk I don't think it's worth trying the long side. Upside potential is dwarfed by downside risk, especially if new highs don't come in the next week. Keep an eye on the TRAN and RUT since they could be the bear's canary indexes. Playing the short side will take a unique set of brass ones because the central banks around the world will keep trying to goose the market back up, either verbally or with actual money (probably both) and that will mean strong short-lived rallies and then the resumption of selling once the buying fails to get follow through. You'll need to decide how you want to play those moves (sell-and-hold vs. trying to catch all the squiggles). In the meantime let's see if Ms. Market can give us a new high and set us up with a shorting opportunity.

Good luck and I'll be back with you next Wednesday.

Keene H. Little, CMT

In the end everything works out and if it doesn't work out, it is not the end. Old Indian Saying


New Plays

Short Squeeze Candidate

by James Brown

Click here to email James Brown


NEW BULLISH Plays

GoPro, Inc. - GPRO - close: 49.85 change: +0.28

Stop Loss: 47.45
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 13, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 6.5 million
New Positions: Yes, see below

Company Description

Why We Like It:
GPRO looks like a short squeeze waiting to happen. This company is the premier brand for wearable "action" cameras.

Here's the company's rather self-confident description, "GoPro, Inc. is transforming the way consumers capture, manage, share and enjoy meaningful life experiences. We do this by enabling people to self-capture engaging, immersive photo and video content of themselves participating in their favorite activities. Our customers include some of the world's most active and passionate people. The quality and volume of their shared GoPro content, coupled with their enthusiasm for our brand, virally drives awareness and demand for our products.

What began as an idea to help athletes document themselves engaged in their sport has become a widely adopted solution for people to document themselves engaged in their interests, whatever they may be. From extreme to mainstream, professional to consumer, GoPro has enabled the world to capture and share its passions. And in doing so the world, in turn, is helping GoPro become one of the most exciting and aspirational companies of our time."

GPRO came to market with its IPO in June 2014. The stock opened for trading at $28.65 and by October 2014 shares were nearing $100 per share. That proved to be the peak. GPRO spent the next six months correcting lower and finally bottomed near $37 in March this year. Now the stock is building on a steady trend of higher lows as investors digest the company's massive growth.

GPRO reported their 2015 Q1 results on April 28th. Wall Street was expecting a profit of $0.18 per share on revenues of $341.7 million. GPRO beat estimates with a profit of $0.24 a share. Revenues were up +54% from a year ago to $363 million.

Management said it was their second highest revenue quarter in history. Their GAAP results saw gross margins improve from 40.9% in Q1 2014 to 45.1% today. Their net income attributable to common stockholders increased 98.2% compared to the first quarter of 2014. International sales surged +66% and accounted for just over half of total sales in Q1 2015. GPRO shipped 1.3 million devices in the first quarter. This was the third quarter in a row of more than one million units.

GPRO management raised their guidance. They now expect 2015 Q2 revenues in the $380-400 million range with earnings in the $0.24-0.26 region. Analysts were only forecasting $335 million with earnings at $0.16 a share.

The better than expected Q1 results and the upgraded Q2 guidance sparked several upgrades. Multiple analysts raised their price target on GPRO. New targets include: $56, $65, $66, $70, and $76.

There are plenty of bears who think GPRO is overpriced with P/E above 47 and rising competition. The biggest argument against GPRO is competition from a Chinese rival Xiaomi who has produced a competitive action camera that they're selling for less than half of GPRO's similar model. GPRO critics are worried this could kill GPRO's growth in China and the rest of Asia. It's too early to tell who will be right but momentum is currently favoring the bulls.

The most recent data listed short interest at 24% of the 55.5 million share float. That's plenty of fuel to send GPRO soaring. Right now the stock is hovering around the psychological resistance level at $50.00. We are suggesting a trigger to launch bullish positions at $50.75.

Trigger @ $50.75

- Suggested Positions -

Buy GPRO stock @ $50.75

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

Buy the JUL $55 CALL (GPRO150717C55) current ask $1.85
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 Close Little Changed

by James Brown

Click here to email James Brown

Editor's Note:
The major U.S. indices ended the session close to unchanged on Wednesday. The early morning gains in stocks faded as nervous traders continue to eye the weakness in the bond market.


Current Portfolio:


BULLISH Play Updates

Altisource Portfolio Solutions - ASPS - close: 30.22 chg: -0.21

Stop Loss: 27.75
Target(s): To Be Determined
Current Gain/Loss: -2.8%
Entry on May 11 at $31.10
Listed on May 09, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 777 thousand
New Positions: see below

Comments:
05/13/15: Shares of ASPS suffered some profit taking this morning. Fortunately traders stepped in to buy the dip near its rising 10-dma. ASPS almost made it back to unchanged before the closing bell.

Traders may want to see a new rally past $31.00 before considering new bullish positions.

Don't forget that this is a higher-risk, more aggressive trade.

Trade Description: May 9, 2015:
Shares of ASPS have been crushed from its highs near $170 a share back in late 2013 to almost $12 a share in March this year. That is thanks to the incestuous relationship that ASPS has with a handful of companies all founded by one man - William Erbey. One such company, Ocwen (OCN), is in danger of going out of business as authorities investigate the company on charges of misconduct. There is a risk to ASPS since a large chunk of ASPS revenues come from a relationship it has with OCN. It's not a surprise to see the slide in ASPS shares. However, the sell-off appears to be overdone and the stock may have found a bottom.

ASPS is in the services sector. According to the company, "Altisource Portfolio Solutions S.A. is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. Altisource leverages proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants. Altisource has been named to Fortune’s fastest growing global companies two years in a row."

Their most recent earnings report was April 23rd. Earnings soared +72% from a year ago to $0.56 a share even as revenues fell -1.0% to $207.8 million, which was significantly below estimates.

One of the most alluring features for traders to be short-term bullish on ASPS is the opportunity for a short squeeze. The most recent data listed short interest at 41% of the very small 9.6 million share float. That's very high and provides plenty of fuel for a short-covering fueled rally. Of course there is a risk. If OCN loses its legal battle with authorities it could go out of business and that will crush ASPS but that seems unlikely in the short-term. Meanwhile the broader market is pushing higher and poised to breakout, which could help fuel more short covering in ASPS.

The stock is pushing against resistance near $30-31. We are suggesting a trigger to launch small bullish positions at $31.10. I'm suggesting small positions to limit risk because ASPS can be volatile.

*small positions to limit risk* - Suggested Positions -

Long ASPS stock @ $31.10

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

Long JUN $30 CALL (ASPS150619C30) entry $3.00

05/11/15 triggered @ 31.10
Option Format: symbol-year-month-day-call-strike


Allegheny Technologies - ATI - close: 36.63 change: +0.81

Stop Loss: 33.85
Target(s): To Be Determined
Current Gain/Loss: +1.6%
Entry on May 11 at $36.05
Listed on May 05, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.0 million
New Positions: see below

Comments:
05/13/15: ATI reversed yesterday's losses. The stock opened higher but sadly failed at resistance near $37.00 for the second time in three days. On the plus side ATI displayed relative strength with a +2.2% gain.

Trade Description: May 5, 2015:
It looks like shares of ATI have put in a bottom.

The company is in the industrial goods sector. According to ATI, "Allegheny Technologies Incorporated is one of the largest and most diversified specialty materials and components producers in the world with revenues of approximately $4.4 billion for the last twelve months. ATI has approximately 9,600 full-time employees world-wide who use innovative technologies to offer global markets a wide range of specialty materials solutions. Our major markets are aerospace and defense, oil and gas/chemical process industry, electrical energy, medical, automotive, food equipment and appliance, and construction and mining."

ATI's most recent earnings report was April 21st. Management said their Q1 2015 earnings were $0.09 a share. Depending on who you polled ATI's nine cent profit was either one cent above or one cent below analysts' estimates. Whatever the case their $0.09 profit was a big improvement from the $0.19 loss a year ago. Revenues for Q1 2015 were up +14% from a year ago to $1.13 billion, which was above analysts' estimates.

ATI saw a big improvement from their Q4 with sales up +7% sequentially. This helped drive a +25% improvement in operating profits.

ATI President and CEO Rich Harshman commented on their results, "Aerospace market sales increased 14% in the first quarter 2015 compared to the fourth quarter 2014. We saw double-digit demand growth from both jet engine and airframe customers of 14% and 22%, respectively. First quarter aerospace demand was led by organic growth of our mill products. Sales of our nickel-based alloys and specialty alloys increased 15% and sales of our titanium alloys grew 16% with a good mix of value-added mill products. We expect sales growth of our precision forgings, castings, and components to begin later this year supported by the build ramp of next-generation jet engines."

Looking ahead ATI expects demand from the oil and gas market to remain soft. However, demand from the airframe and jet engine makers should be strong throughout 2015.

The stock broke out from a consolidation pattern on its better than expected Q1 earnings. This helped generate a buy signal on the point & figure chart, which is currently forecasting at $47.00 target. Shares of ATI spent a few days struggling with technical resistance at its 200-dma but they have broken out past this level as well. The past seven months looks like a massive bottoming process for the stock. Now shares are on the verge of breaking out past key resistance in the $35-36 area. We want to use a trigger at $36.05 to launch bullish positions.

FYI: ATI's next dividend ($0.18) is this month. The ex-dividend date is May 22nd. The shareholder record date is May 27th.

- Suggested Positions -

Long ATI stock @ $36.05

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

Long JUL $37.50 CALL (ATI150717C37.50) entry $1.25

05/11/15 triggered $ 36.05
Option Format: symbol-year-month-day-call-strike


Atara Biotherapeutics, Inc. - ATRA - close: 38.44 change: -1.80

Stop Loss: 36.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 12, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 161 thousand
New Positions: Yes, see below

Comments:
05/13/15: ATRA had a rough morning. Shares gapped down and fell to a -7.5% loss before bouncing. ATRA pared its loss to -4.4% by the closing bell. Currently we are on the sidelines with a suggested entry point to launch bullish positions at $40.50.

Why We Like It:
Sometimes trading biotech stocks is very binary. They're either on or they're off. You win big or you lose big. Of course we try to limit any potential losses with stop losses but they don't always work as intended. ATRA looks interesting and could be poised for its next big move.

The company was spun off from biotech giant Amgen (AMGN) last year. They were initially funded by Kleiner Perkins Caufield & Byers (KPCB). ATRA is a clinical stage biotech firm. That means they don't have any significant revenues. That makes the stock extremely susceptible to any headline news (good or bad).

The company describes itself here, "Atara Biotherapeutics, Inc. is a biopharmaceutical company focused on developing innovative therapies for patients with debilitating diseases. Atara's lead programs target myostatin and activin, members of the TGF-beta family of proteins that have demonstrated the potential to have therapeutic benefit in a number of clinical indications. In September 2014, Atara Biotherapeutics entered into an exclusive option agreement with Memorial Sloan Kettering Cancer Center (MSK), under which it has the right to license (pursuant to a negotiated form of license agreement) the exclusive, worldwide rights to three clinical stage T-cell programs, including Epstein-Barr virus-targeted cytotoxic T lymphocytes, which recently received breakthrough therapy designation from the Food and Drug Administration, as well as other T-cell programs that are discovered or developed by MSK pursuant to sponsored research funded by the company."

Looking at the daily chart you can see that shares of ATRA took off in early March and rallied from about $21 to $64 in less than two months. That's was a reaction to news out on March 2nd. Here's an excerpt from the company's press release, "Atara Biotherapeutics, Inc. (ATRA) today announced that its collaborative partner, Memorial Sloan Kettering Cancer Center (MSK) has received breakthrough therapy designation from the U.S. Food and Drug Administration (FDA) for Atara's optioned cytotoxic T lymphocytes activated against Epstein-Barr Virus (EBV-CTL) in the treatment of patients with rituximab-refractory, EBV-associated lymphoproliferative disease (EBV-LPD), a type of malignancy occurring after allogeneic hematopoietic cell transplantation (HCT). Allogeneic HCT is also commonly called a bone marrow transplant."

ATRA initial public offering was the middle of October 2014. It's six-month share lock up expiration was April 14th. That probably played a part in the stock's correction lower. They company also raised capital with a secondary offering back in February. Hopefully that means they won't do another secondary for a while.

Without any earnings to speak of it's tough to build a real fundamental story on ATRA. This looks more like a technical trade. The correction from its April high just stopped at the 61.8% Fibonacci retracement level. Now it's starting to bounce. We are suggesting small bullish positions if ATRA trades at $40.50. More conservative traders may want to wait for a rally past its simple 50-dma instead (currently near $41.00). I am labeling this a more aggressive, higher-risk trade. The stock is volatile and doesn't see a lot of volume. Plus the stock could see extreme moves on any positive or negative headlines.

Trigger @ $40.50 (small positions to limit risk)

- Suggested Positions -

Buy ATRA stock @ $40.50


JetBlue Airways - JBLU - close: 21.42 change: -0.29

Stop Loss: 20.40
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 11, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 7.9 million
New Positions: Yes, see below

Comments:
05/13/15: Most of the major airline stocks struggled on Wednesday. Delta (DAL) was the exception after the company announced a huge $5 billion stock buyback program and a higher dividend.

Shares of JBLU actually tagged a new relative high this morning but missed our entry point by a penny. Technically today's move in JBLU is a bearish engulfing candlestick reversal pattern but it needs to see confirmation. If the stock continues to sink tomorrow we may drop it. Our suggested entry point remains $22.15 for now.

Trade Description: May 11, 2015:
The XAL airline index has been a disappointment this year. The XAL has been churning sideways for all of 2015 and is currently down -1.9% year to date. Meanwhile JBLU is soaring with the stock up +37.6% in 2015. These are ten-year highs.

JBLU is in the services sector. They're part of the regional airline industry. According to the company, "JetBlue is New York's Hometown Airlineâ„¢, and a leading carrier in Boston, Fort Lauderdale-Hollywood, Los Angeles (Long Beach), Orlando, and San Juan. JetBlue carries more than 32 million customers a year to 88 cities in the U.S., Caribbean, and Latin America with an average of 825 daily flights." JBLU is also the first major U.S. airline that has launched flights to Cuba since the U.S. government relaxed travel restrictions a few months ago.

The company has delivered quite a turnaround. They reported their 2015 Q1 results on April 28th. Earnings were one cent above estimates at $0.40 a share. That's a huge jump from a profit of just $0.01 a year ago. JBLU's operating margins surged from 3.1% a year ago to 16.6%. Revenues roes +12.9% to $1.52 billion in the first quarter. Not bad for a first quarter that suffered terrible winter weather on the East Coast.

JBLU said they are seeing success with their premium Mint service. Mint features lie-flat seats and is priced cheaper than rivals' business-class services. JBLU also said that their revenue for every seat flown one mile would rise 3% to 4% in April. That's a stark contrast to American Airlines, Delta, and United who all sais that revenue per seat would decline between 2% to 6% in the second quarter.

Analysts at JPMorgan have turned bullish on the airlines. They believe the U.S. airline industry has evolved. The major players have all matured and with discipline have boosted airline margins to record levels. Combine that with record-setting stock buybacks and the industry's stocks have performed well (i.e. they're up sharply in the last couple of years even though 2015 has been mediocre). The JPM team upgraded shares of JBLU to overweight and raised their price target from $19 to $28.

The rally in JBLU should have the shorts running scared. The most recent data listed short interest at 16% of the 308 million share float. Currently JBLU is hovering just below short-term resistance near $22.00. A breakout here could spark more short covering. Tonight we are suggesting a trigger to open bullish positions at $22.15.

Trigger @ $22.15

- Suggested Positions -

Buy JBLU stock @ $22.15

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

Buy the SEP $24 CALL (JBLU150918C24)

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


Synchronoss Technologies - SNCR - close: 45.80 change: +0.03

Stop Loss: 43.85
Target(s): To Be Determined
Current Gain/Loss: -0.7%
Entry on May 11 at $46.10
Listed on May 09, 2015
Time Frame: Exit prior to June option expiration
Average Daily Volume = 527 thousand
New Positions: see below

Comments:
05/13/15: SNCR has spent the last few days just treading water near the $46.00 level. The lack of follow through on its spike this morning is disappointing. I am not suggesting new positions at this time.

Trade Description: May 9, 2015:
This trade is not for the faint of heart. Shares of SNCR have produced some rollercoaster like moves in the last six months. We want to use that volatility to our advantage.

SNCR is part of the technology sector. According to the company, "Synchronoss Technologies, Inc. (SNCR), is the mobile innovation leader that provides cloud solutions and software-based activation for connected devices across the globe. The company's proven and scalable technology solutions allow customers to connect, synchronize and activate connected devices and services that empower enterprises and consumers to live in a connected world."

Earnings and revenue growth has been impressive. SNCR has beaten Wall Street's earnings estimate the last four quarters in a row. Meanwhile sales have been growing at a strong double-digit pace. Looking at the last four quarters SNCR reported sales growth of +23.6%, +39.6%, +34.7%, and most recently +34.9%.

SNCR's 2015 Q1 report was announced on April 29th. Earnings rose +26% from a year ago. SNCR's Founder and CEO Stephen Waldis commented on his company's results, "Synchronoss delivered a strong start to 2015, highlighted by first quarter results that were at or above the high end of expectations. During the quarter, both sides of our business contributed to the strong performance, particularly our Cloud Services, which grew by 63% year-over-year. Mobile Operators around the world are capitalizing on the success of how personal cloud can drive important benefits to their valuable subscribers. We are pleased with our successful formula for helping our customers gain adoption and success with our personal cloud platform."

The stock was crushed from $52 to $44 (-15%) during the market's most recent swoon in the last several days of April. The sell-off was also a reaction to SNCR's earnings results. It looks like the sell-off was overdone and investors have started buying the stock near technical support at its rising 200-dma.

Tonight we are suggesting a trigger to launch small bullish positions at $46.10. More conservative traders may want to wait for a rally past the 10-dma instead (above 46.33). We'll try and limit our risk with a stop at $43.85. Keep in mind this is an aggressive play due to SNCR's volatility.

*small positions to limit risk* - Suggested Positions -

Long SNCR stock @ $46.10

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

Long JUN $50 CALL (SNCR150619C50) entry $0.90

05/11/15 triggered @ 46.10
Option Format: symbol-year-month-day-call-strike


Total System Services, Inc. - TSS - close: 41.00 change: -0.08

Stop Loss: 39.40
Target(s): To Be Determined
Current Gain/Loss: +0.0%
Entry on May 08 at $41.02
Listed on May 07, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 843 thousand
New Positions: see below

Comments:
05/13/15: TSS shot higher this morning. Unfortunately the rally failed near its recent highs in the $41.40-41.50 area. The path of least resistance seems to be higher but I would hesitate to launch new positions at this time.

Trade Description: May 8, 2015:
Consistently beating Wall Street's earnings estimates has driven shares of TSS to new all-time highs. The company is in the financial sector. The XLF financial ETF is down -1.2% for the year. TSS is up +19% for the year.

According to the company, "At TSYS® (TSS), we believe payments should revolve around people, not the other way around. We call this belief People-Centered Payments®. By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend®, A TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions. TSYS' headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific."

This company has beaten analysts' estimates on both the top and bottom line the last four quarters in a row. Their most recent earnings report was April 28th. Earnings per share soared +41% to $0.54. That was eight cents above estimates. Revenues were up +11.7% to $662.2 million.

A few months ago (January 2015) TSS announced a new 20 million share stock buyback program to replace their old one. Last quarter they repurchased 1.45 million shares. When you include the company's dividend they paid out 73% of their available free cash flow to shareholders.

TSS' President and CEO, Mr. M. Troy Woods, commented on their recent results saying, "As a result of the great start to the year, we are revising our adjusted EPS guidance to grow between 12-14% from the previous range of 11-13%."

Shares of TSS surged to new highs on its earnings report. Since then traders have been buying the dips and the stock set a record closing high today. Tonight we're suggesting a trigger to launch bullish positions at $40.85.

FYI: TSS will hold an analyst day on May 20th.

- Suggested Positions -

Long TSS stock @ $41.02

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

Long AUG $40 CALL (TSS150821C40) entry $2.50

05/08/15 triggered on gap open at $41.02, suggested entry was $40.85
Option Format: symbol-year-month-day-call-strike




BEARISH Play Updates

Emerge Energy Services - EMES - close: 36.25 change: +0.45

Stop Loss: 41.25
Target(s): To Be Determined
Current Gain/Loss: +3.7%
Entry on May 07 at $37.65
Listed on May 06, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 413 thousand
New Positions: see below

Comments:
05/13/15: EMES bounced to the tune of +1.25% on Wednesday. I would keep an eye on the $37 level. EMES has been churning sideways in the $35.00-37.00 zone the last few days.

I am not suggesting new positions at this time.

Trade Description: May 6, 2015:
The bubble in fracking sand and proppant stocks popped in 2014. The top in the fracking sand producers was just a couple of months after crude oil peaked last year. The impact of crude oil's decline and the industry's reaction to the oversupply-pricing issue will still be felt for months to come. Just as the oil and gas producers are cutting expenses, mothballing rigs, and delaying new projects, the proppant companies are forced to do the same. EMES recently announced they were canceling plans to build a new silica sand processing facility.

EMES is in the basic materials sector. They're part of the oil services industry. According to the company, "Emerge Energy Services LP (EMES) is a growth-oriented limited partnership engaged in the businesses of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells. Emerge Energy also processes transmix, distributes refined motor fuels, operates bulk motor fuel storage terminals, and provides complementary fuel services. Emerge Energy operates its sand segment through its subsidiary Superior Silica Sands LLC and its fuel segment through its subsidiaries Direct Fuels LLC and Allied Energy Company LLC."

The earnings picture has been damaged by a very rough pricing environment for EMES' sand. Their Q4 2014 earnings, announced on March 2nd, were $1.01 per share. That was 12 cents below expectations. Q4 revenues were down -1.4% to $242.6 million compared to analysts' estimates of $301 million. That's a huge revenue miss.

The weakness continued in the first quarter. Wall Street was expecting EMES to report Q1 2015 earnings of $0.83 a share on revenues of $264 million. The company only delivered $0.39 per share with revenues down -25.5% to $204 million. The rest of 2015 is expected to remain challenging.

The stock was hammered again on April 24th when EMES management reduced their dividend from $1.41 per share down to $1.00.

The $40.00 level has been support and now shares are breaking down. The most recent data listed short interest at 13% of the very small 14.6 million share float. This time the shorts are probably right but the high short interest could make this a volatile trade. EMES' recent attempt at a bounce has been failing. We want to catch the next leg lower. Tonight we are suggesting a trigger to launch bearish positions at $37.65.

- Suggested Positions -

Short EMES stock @ $37.65

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

Long JUN $35 PUT (EMES150619P35) entry $2.35

05/07/15 triggered @ 37.65
Option Format: symbol-year-month-day-call-strike