Option Investor
Newsletter

Daily Newsletter, Thursday, 5/14/2015

Table of Contents

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

Market Wrap

Mixed Data Lifts Markets

by Thomas Hughes

Click here to email Thomas Hughes
A round of mixed economic data lifted the market in another Goldilocks rally.

Introduction

Mixed economic data in the form of PPI and jobless claims helped to lift the market today. The PPI numbers were much weaker than expected, pushing out FOMC rate hike expectations, while strong jobless claims numbers support labor market health and expectations for economic uptick. The data also helped to weaken the dollar which in turn has sparked moves in gold, foreign exchange and raised speculation that 2nd quarter earnings will not be as bad as first feared. What was as bad as first feared, maybe worse, is earnings from the retail sector. The reports across the sector have been mixed to negative all week and today was no exception.

Market Statistics

International indices were also mixed. In Asia, Chinese indices were mostly higher while Japan lost about -1% on weak earnings and a stronger yen. In Europe indices began in the red and slowly moved higher throughout the day. Futures trading here in the early pre-opening session saw a lift as well, aided by today's economic data. ,

The indices opened strong with an average gain over 0.5%. From that point forward it was steady buying until 1:30PM when the broad market approached its all time. By 3PM the SPX had moved into all-time high territory and was able to hold that level into the end of the day. I wouldn't call it a break out just yet but one may be about to happen. All of the major indices made significant gains today, led by the techs.

Economic Calendar

The Economy

Today's economic calendar include PPI as well as the weekly jobless claims numbers. The Producer Price Index fell by -0.4% on the headline and -0.2% at the core level. The drop is well below expectations which predicted for it to hold steady at 0.2%. The number is low but good enough to stave off fear of a super imminent FOMC interest rate hike. Low or declining inflation takes more pressure off the Fed's decision making process; this data won't drive them to a rate hike. Micro data within the report show that biggest decline was in finished goods (-0.7%) and gasoline (-4.7%). The report also mentioned noteworthy declines in the prices for jet fuel, diesel and pork.

Initial claims fell 1,000 from last week's upward revision of 1,000. Claims this week were reported as 264,000, just off the long term 15 year low. The four week moving average of claims also fell, to 271,750, and set a new 15 year low. The long term down trend in first time claims has resumed after the volatility we saw during the late winter and early part of the spring.

There may be more volatility but so long as the moving average trends flat to lower I think we're OK here. On a not adjusted basis claims rose by 2.6%, a half percent below the expected 3.1% predicted by the seasonal factors. New York led states with increases with a gain of +810, Massachusetts led those with declines posting a drop of -4,191.


Continuing claims remained unchanged from an upward revision of 1,000, a tiny gain from last week's report but not really. Continuing claims remain at the long term low while the moving average has declined, setting a new 15 year low. This is a continuation of it's long term downtrend and sign that those who lose a job find a job.

The declines in first time and second week claims has contributed to a decline in longer term unemployment. The total number of people on unemployment dropped nearly 80,000 to set a new 5 month low as it approaches it's long term 15 year low. Based on today's labor data the labor market is strong. There may not be a lot of jobs being created but other elements of the market are healthy if not robust. In terms of jobless claims labor market turnover is low, people who are out of work one week find jobs are finding jobs within a week or two and that longer term unemployment levels are in decline. If this is true then its only a matter of time before we get additional signs of economic momentum.


The Oil Index

Oil prices fell today. Prices for WTI lost more than -1.5% while Brent lost only about -0.35%. Today's move takes WTI back below $60. Still no sign of demand pick-up, lots of signs supply is still high. There is also ongoing fighting in Yemen, and the Iran nuclear deal is still simmering on the back burner.

The Oil Index traded slightly higher today, gaining about a half percent. The index traded in a very tight range just below the short term 30 day moving average and resistance near 1,400. It is indicated lower at this time although momentum is in decline. Stochastic is not yet oversold so it appears as if the index has room to move lower, maybe to 1,350 in the near term. The long term trend is still up but the trend line is about 7.5% below today's closing price so it has room to move down from here. Earnings outlook may weigh it down unless or until the oil sector starts to show signs of the expected earnings rebound. This could begin as early as the 3rd quarter, 2nd quarter earnings are still expected to decline but those estimates are likely to change in the coming weeks and could help support the index.


The Gold Index

The PPI gave gold a boost today via the dollar. The numbers, along with the labor data, combined to create a Goldilocks situation for gold bulls and bulls in general. Basically the economy is still gaining strength with little to no inflation, a situation in which there is little expectation for a rate hike. This in caused the dollar to sink and send gold above $1220 to set a new 3 month high. Now that rate hikes are on the back burner dollar values could remain low and send gold prices higher with a target near $1250 in the near to short term.

The gold miners tried to extend the gains they made yesterday. The Gold Miners ETF closed with barely a gain after opening with a small gap and moving higher on an intraday basis. The ETF has begun to move up as previously indicated and today met with some resistance just above $21. This resistance equal to the March peak and a 2 ½ month high for the sector. Rising gold prices are lifting the sector. This could drive the miners higher on improved earnings expectations, even if gold prices only stay at or near $1220.


In The News, Story Stocks and Earnings

The dollar fell this morning when the PPI was released. The Dollar Index lost more then a half percent in early trading but recovered a lot of the loss before the end of the day. Today's move took the index down to test support near $93.25. This support line marks a 3 month low and is anchored to significant price action which occurred in early February, just after the January FOMC meeting and during the time in which the ECB revealed their QE plans. The indicators are bearish and pointing lower but divergence in MACD suggest this level may hold. Stochastic is weak but also deeply oversold following the recent uptrend. If support is broken it could go down as low as $90 which would really boost gold value, as well as earnings outlook for companies doing business in overseas markets.


Kohl's reported a miss on the revenue side that sent shares tumbling. The company managed to beat earnings expectations with a gain of 2 cents over the same period a year ago. Company CEO said that sales were only “modestly” below expectations, mostly due to a weak February, but had been on the rise in the last two months. The company also reported opening two new stores. Shares fell more than -13% to hit potential support at the top of gap opened following the previous earning release.


The retail sector as a whole did not fare much better. The XRT Retail Spyder fell a little over a half percent in a day of volatile trading. Today's action took the index up to test resistance at the 30 day moving average where it was repelled. Later, after dropping more than -1%, it found support and was able to bounce and then close above the daily low. Today's candle shows indecision in the market while it trades above support at $97 and below resistance near $91. The indicators are consistent with support but mixed in terms of near term direction. Momentum is weak, but currently bearish, stochastic is rising in the short term but falling in the near term. Support could be tested, but for now it looks like it will hold. If it breaks the ETF could fall to $95. Resistance is the moving average until broken.


Avon had a wild day today. Reports emerged early that the company was going to be purchased by an investment group. Later it turned out that the investment group was a hoax. A very long paper trail of false documentation was found but as yet no suspects. In between those events volatility sent the stock shooting higher, then lower, with enough force to trigger safety stops to halt trading at least 3 times. Even with the stops the action didn't really stop until the end of the day. Today's range sent it up by 16%, before falling back to close with a gain of only 6%, with about 8 times 30 day average volume.


The Indices

The markets are reaching new highs but you wouldn't be able to tell by looking at the Dow Jones Transportation Index. The index was able to move higher today, about 0.45% compared to 1% moves for the other major indices, but is doing so from the bottom of a long term trading range and well below the all time highs.

The index is also trading just above the long term trend line, support with which it made contact yesterday and today. The indicators are both pointing lower so support and/or the long term trend line could be tested again. however, over the longer term the indicators are consistent with support so for now the trend line looks strong. If the markets are moving higher the heavily downtrodden transportation sector may be the place to be.


Today's gains were led by the NASDAQ Composite. The tech gained 1.39% and moved above the previous all-time but not the current all-time high. Today's action also tested support at the short term moving average. After testing support it moved higher, crossing above 5050 for the first time since setting its new all time high last month. This move is in line with the trend and accompanied by bullish stochastic so could continue higher MACD is at the zero line so will be in confirmation is it crosses. If the index continues higher potential resistance remains until a break above the current all-time high so caution is still warranted. The index has support just below today's candlestick along the moving average and near 5,000.


The S&P 500 made the second largest gain today, 1.08%. The broad market was today's real leader because it set an actual all-time closing high, but not an all time high. Today's action created a long white candle that moved up from the long term trend line, at the very point of the triangle formation I have been following for the past two months. Stochastic fired a week signal earlier this week and is creating a stronger bullish signal now that both %K and %D are moving higher. This signal is about to be confirmed by MACD; MACD is now exactly at the zero line and will confirm a strong trend following signal if the index continues to move higher.

The question now is if it will move higher or if this is just another whipsaw? Today's action is a very positive sign but I think the true test will be when it tries to cross the all time high, just a few points above. If this is broken the index could move as high as 2,150 in the near term.


The Dow Jones Industrial Average gained a little over 1%, 1.06%. The blue chips created a long white candle and looks even more bullish than the SPX, although it too has resistance at its all time high. Today's action broke potential resistance with indicators that are both bullish and rising. Both MACD and stochastic have been bullish for a couple of days and are both gaining strength, if also both still a little weak. It looks like this index will move up to test the all time high at the least. If a breakout occurs the index could move as much as 500 points in the near to short term. Support remains near 18,000.


The market got a double shot of what it wanted today, positive reinforcement the labor market is improving and signs the FOMC won't raise rates real soon. The down side is that this may be bad for the market down the road. Too much of a good thing, in this case labor market expansion without inflation, could lead to a bad thing. A bad thing might be a sudden burst of economic activity or rise in inflation that leads to a rapid pace of FOMC policy tightening and a shock to the market.

Things are looking OK now, and outlook is positive, so I remain bullish. I also remain very cautious. As much as I want to say the market is about to break out we still need to see a little more commitment, a little more decisiveness in the move, before getting really bullish on the summer. I don't think the Fed will raise rates in June but we shouldn't be surprised if they remain on track for a hike in Septmeber. It is very possible the market could remain range bound with all-time highs as the upper end until those signs begin to emerge.

There is a bit of data due out tomorrow and next week that could help the market extend today's gains. Tomorrow is Empire Manufacturing, Michigan Sentiment, Industrial Production and Capacity Utilization. Next week is the housing data; housing starts, building permits and existing home sales. Next week is also the FOMC minutes, Leading Indicators and Philly Fed.

Until then, remember the trend!

Thomas Hughes


New Plays

Driver Assistance

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Mobileye N.V. - MBLY - close: 47.90 change: +0.50

Stop Loss: 44.95
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 14, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.2 million
New Positions: Yes, see below

Company Description

Why We Like It:
The future of hands free driving is a lot closer than you might think. MBLY is leading the charge. Its technology is already in more than three million cars made by companies like BMW, General Motors, and Tesla.

What exactly does this technology due? DAS stands for driver assistance systems. Sometimes you might see it called ADAS for advanced driver assistance systems. This new technology helps drivers avoid collisions with other vehicles, pedestrians, bicyclists, and more while also alerting the driver to road signs and traffic lights.

The company website describes Mobileye as "a technological leader in the area of software algorithms, system-on-chips and customer applications that are based on processing visual information for the market of driver assistance systems (DAS). Mobileye's technology keeps passengers safer on the roads, reduces the risks of traffic accidents, saves lives and has the potential to revolutionize the driving experience by enabling autonomous driving."

MBLY said their technology will be available in 160 car models from 18 car manufacturers (OEMs). Further, Mobileye's technology has been selected for implementation in serial production of 237 car models from 20 OEMs by 2016.

The company is already developing a system for autonomous driving or hands free driving. They currently plan to launch an autonomous system in 2016 that will work at highway speeds and in congested traffic situations.

MBLY stock came to market in August 2014. Demand was strong enough that they upped the number of shares available from around 27 million to 35.6 million shares. They raised the IPO price from the $22 range to $25. This valued MBLY at $5.3 billion. The first day of trading saw MBLY opened at $36.00. Two months later MBLY traded at $60.00.

The IPO excitement has faded but MBLY's valuation has grown. There are now 216.6 million shares outstanding and the company's market cap is now more than $10 billion.

It's easy to see why investors are optimistic on MBLY. Annual revenues have soared from $19.2 million in 2011 to $143.6 million in 2014. Their revenues last year rose +77% from 2013. Currently a poll of analysts by Thomson Reuters is forecasting sales to rise +50% in 2015 to $218.3 million. Earnings are forecasted to surge +95%.

MBLY's most recent earnings report was May 11th. They reported their Q1 results of $0.08 per share, which was a penny above estimates. Revenues were up +28% to $45.6 million, also above estimates.

Last year the New York Post recently ran an article discussing how the White House might generate a bullish tailwind for MBLY. The National Highway Traffic Safety Administration issued a research report that estimated ADAS type of technology could eliminate almost 600,000 left-turn and intersection crashes a year. They report also suggested that adding FCAM and lane departure technology on big vehicles like over the road trucks could reduce accidents with these huge vehicles by up to 25%. Following this report the White House said they would draft new rules that required this sort of tech in new vehicles.

Most of Wall Street analysts seem bullish. Industry experts forecast the camera-based ADAS market to grow +37% CAGR from 2014 to 2020. Goldman Sachs Recently upgraded the stock to a buy. They believe MBLY will see a 34% CAGR in sales through 2020 and will have 65% of the market by then. MBLY also garnered positive comments from a Morgan Stanley analyst who raised their price target to $68. They believe the street's 2015 estimates for MBLY are too low after the company delivered super strong growth in the last couple of quarters.

Technically shares of MBLY look attractive with a bullish trend of higher lows. The point & figure chart is bullish and forecasting at $69.00 target. Currently MBLY is hovering just below its late April highs in the $48.00-48.50 zone. We want to launch positions on a breakout past this region. Tonight we're suggesting a trigger at $48.65.

Trigger @ $48.65

- Suggested Positions -

Buy MBLY stock @ $48.65

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

Buy the JUL $50 CALL (MBLY150717C50) current ask $1.95
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

Closing At Its Highs

by James Brown

Click here to email James Brown

Editor's Note:
The U.S. stock market's major indices all closed near their highs for the session after a widespread rally. This is bullish for tomorrow morning. Investors appear to be looking past disappointing economic data and betting that the Fed will delay their first rate hike.

ATRA and JBLU have been removed.


Current Portfolio:


BULLISH Play Updates

Altisource Portfolio Solutions - ASPS - close: 30.66 chg: +0.44

Stop Loss: 27.75
Target(s): To Be Determined
Current Gain/Loss: -1.4%
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:
05/14/15: ASPS outpaced the broader market with a +1.45% gain on Thursday. At this rate shares are on track for their fourth weekly gain in a row. I am suggesting readers wait for rallies above $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: 37.45 change: +0.82

Stop Loss: 34.75
Target(s): To Be Determined
Current Gain/Loss: +3.9%
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:
05/14/15: ATI also outperformed the broader market. Shares pushed through short-term resistance near $37.00 and closed with a +2.2% gain. Tonight we will raise the stop loss to $34.75. I am not suggesting new positions.

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

05/14/15 new stop @ 34.75
05/11/15 triggered $ 36.05
Option Format: symbol-year-month-day-call-strike


GoPro, Inc. - GPRO - close: 50.62 change: +0.77

Stop Loss: 47.45
Target(s): To Be Determined
Current Gain/Loss: -0.3%
Entry on May 14 at $50.75
Listed on May 13, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 6.5 million
New Positions: see below

Comments:
05/14/15: Our brand new trade on GPRO is open. Shares hit our suggested entry point at $50.75 midday. The stock managed to outperform the major stock market indices with a +1.54% gain. I would consider new positions at current levels.

Trade Description: May 13, 2015:
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.

- Suggested Positions -

Long GPRO stock @ $50.75

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

Long JUL $55 CALL (GPRO150717C55) entry $2.00

05/14/15 triggered @ $50.75
Option Format: symbol-year-month-day-call-strike


Synchronoss Technologies - SNCR - close: 46.80 change: +1.00

Stop Loss: 43.85
Target(s): To Be Determined
Current Gain/Loss: +1.5%
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:
05/14/15: SNCR delivered a strong session. Shares added +2.18% versus the +1.38% gain in the NASDAQ composite. I can't help but notice how the rally stalled at SNCR's simple 50-dma near $47.20 today. 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: 41.33 change: +0.33

Stop Loss: 39.40
Target(s): To Be Determined
Current Gain/Loss: +0.8%
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:
05/14/15: The early morning rally in TSS failed but traders bought the dip near $40.90. The stock reversed course and ended the session at a new closing high.

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: 36.59 change: +0.34

Stop Loss: 41.25
Target(s): To Be Determined
Current Gain/Loss: +2.8%
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:
05/14/15: EMES is still churning sideways. I'm starting to worry. The last few days have developed a trend of higher lows. More conservative traders may want to lower their stop loss.

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



CLOSED BULLISH PLAYS

Atara Biotherapeutics, Inc. - ATRA - close: 37.58 change: -0.86

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: see below

Comments:
05/14/15: ATRA does not want to cooperate. Shares have faded lower the last couple of sessions. The fact that ATRA is not participating in the market's rally is a potential warning signal.

Our trade has not opened yet so we are removing ATRA as a candidate.

Trade did not open.

05/14/15 removed from the newsletter, suggested entry was $40.50

chart:


JetBlue Airways - JBLU - close: 21.48 change: +0.06

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: see below

Comments:
05/14/15: JBLU eked out a very minor gain but shares did not really participate in the market's widespread rally. Considering this relative weakness and yesterday's potential reversal pattern we are choosing to remove JBLU as a candidate.

If JBLU continues to sink then I would watch for a dip toward its trend line of higher lows and maybe consider a bullish entry there.

Trade did not open.

05/14/15 removed from the newsletter, suggested entry was $22.15

chart: