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Daily Newsletter, Thursday, 6/4/2015

Table of Contents

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

Market Wrap

Waiting, Watching

by Thomas Hughes

Click here to email Thomas Hughes
The market fell back today while traders wait for NFP/unemployment data, developments from Greece and a meeting of OPEC.

Introduction

The market fell back today while we all wait on several major events scheduled for tomorrow. US non-farm payrolls and a meeting of OPEC members both have the power to move the market and will likely cause some volatility.

Asian indices were mixed, and volatile. Signs of tightening margin requirements in China have spooked investors and increased fear the Chinese bull market is at an end. Indices throughout the region closed flat to slightly positive, led by the Shanghai index. It closed with a gain of 0.76% after dropping more than -4% on an intraday basis.

European markets were jittery as well, spurred by yesterday's comments from Mario Draghi and the ever present Greece debt issue. The news remains mixed; PM Tsipras says negotiations are going well, creditors say they aren't and a deadline scheduled for tomorrow has been postponed until later this month. Greece has chosen to bundle tomorrow's payment to the IMF with others due this month in what could be a sign it isn't able to pay. The move gives them more time to negotiate but also ups the stakes in terms of Greece's need to reach an agreement. If they can't pay now without help they won't be able to pay later without help, and that's not counting payments to the ECB due later this summer.

Market Statistics

Futures were indicating a negative open right from the start. Positive labor data did not have the power to lift them and early lows were held into the opening bell. The initial post opening sell-off was met by buyers who pushed the indices up to break-even levels but were not able to sustain the move. By 10AM the market was moving lower once again and didn't stop until mid afternoon. The drop was slowing by 1PM and may have bottomed but the late day announcement Greece was seeking to bundle payments helped it regain momentum and sent the market to today's lows.

Economic Calendar

The Economy

Challenger Gray & Christmas released their monthly report of planned lay-offs in the early morning. According to them the pace of planned lay-offs fell by -33% from last months peak. The financial and government sectors led with gains in planned job cuts. May's 41,000 is -23% below last May but brings the year to date total to +13% over last year. Oil only accounted for 1,000 lay-offs this month, down from 20,000 last month. So far this year there have been 69,000 job cuts blamed directly on oil prices, up from 3,000 in 2014. If we back out the energy impact on job cuts the year-to-date gain reverses to a decline of -17%.

Initial claims for unemployment fell more than expected. The number of first time claims dropped -8,000 to hit 276,000. This is not a new low but is just above it. Last week's figure was revised up by 2,000. The four week moving average gained 2,750 and is now 274,750. On a not adjusted basis claims fell by -9.2%, the seasonal factors had predicted a decline of -6.7%, and are -15% below last years level. Kansas had the biggest increase in claims, 2,716, Washington had the biggest decline, -507.


Continuing claims shed -30,000 to hit 2.196 million and another new 15+ year low. The four week moving average also hit a new low. Last week's figure was revised up by 4,000 but remains low. Continuing claims have not yet bottomed and are trending lower despite the recent bounce in initial claims, an indication that while the rate of job turnover remains stable it is getting easier and easier to find another job when one is lost.

Total claims also fell, losing a meager -735. Total claims are now at a new 8 month low and approaching the long term low set last September. They are also -15% lower than last year at this time. Based on this and all the other labor data it looks to me like jobs creation remains steady if not strong, and unemployment is still declining. Current estimates for NFP are in the range of 225,000 with the chance it could be higher. Unemployment is expected to remain steady at 5.4%, but I think we could get a surprise drop.


Productivity and labor costs data were also released today. This the final revision to 1st quarter data and shows productivity dropped more than first predicted, -3.1%. This is down from the previous estimate of -1.9% and the second quarter of decline. The decline is due to a -1.6% drop in output, and a +1.6% increase in hours worked. On a year-over-year basis productivity is up when compared to the first quarter of 2014. Labor costs rose by a whopping 6.7% following the 5% increase we saw in the fourth quarter of last year. This is due to a +3.3% increase in hourly earnings and the -3.1% decline in productivity.

Christine Lagarde and the IMF think the Fed shouldn't raise rates until 2016. They think the move should be put on hold until signs of inflation are more evident, and that policy shouldn't be used to stifle growth in the financial sector. They suggest regulation and oversight should be “strengthened”.

The Oil Index

High supply and expectations for OPEC to maintain current production targets combined to cause oil prices to fall sharply today. Both Brent and WTI lost more than -2.7%. Adding to this was an unexpected build in natural gas stockpiles and a new study from the EIA which says US production could rise 5-10% in the next ten years, depending on the level of technological advances. WTI is now trading near $58.

The Oil Index fell more than -1.25% in today's action. The index is extending its recent near term down trend with the long term trend line as a target. Today's decline in oil prices is likely why the index fell today, poor expectations for 2nd quarter earnings are likely why it has been falling over the last few weeks. MACD momentum is still bearish and stochastic is weak at the bottom of the range but divergence in both suggest the downside movement is weakening. However there is no sign of the downswing ending yet. The long term outlook is positive and near term expectations are improving so I will be looking for support and a possible bounce from the trend line, somewhere in the 1,250 to 1,300 range.


The Gold Index

Gold prices fell near -1% today even as the dollar weakened. Positive economic data and Fed rate hike speculation may have played a role. Price fell below $1180 and bounced off support near $1170 to settle at $1177.10. Today's move is the 2nd day of decline from the $1200 level but as yet nothing more than the same churn we have been seeing over the past couple of months. Prices are being affected in the near term by dollar fluctuation and economic data, and will likely continue to be until the next Fed meeting. At that time they may give an indication that will break the dollar and gold out of their trading ranges. Strong NFP and/or unemployment data could send gold back to test $1170 with the chance of a dip back to the long term low near $1150.

The gold miners ETF GDX fell by -1.55% in response to gold's fall to support. The move has taken it below my rising support line and increased the chances the sector will pull back to the long term low near $17.50. The indicators are bearish and ticking lower, pointing to lower prices, but any move is going to be tied to gold prices. I'm still bullish on the sector for the long term but cautious in the near to short term.


In The News, Story Stocks and Earnings

The SEC announced it was filing suit against the people responsible for the fake Avon buy-out offer that hit the market last month. The filing ties the Avon scandal to several other similar events centered on the Tower Group, Rocky Mountain Chocolate and other publicly traded companies. The SEC is targeting 6 firms linked to false press releases and other documents posted on the SEC's EDGAR site. Today Avon lost another -1.23% and hit a new 20 year low.


Dish Network and T-Mobile announced the possibility of merger today. This is the latest in a string of merger/acquisitions between a broadcast and telecommunications company including the ATT purchase of DirectTV. The move is seen as a positive for both companies and not likely to be snubbed by regulators. The news sent both stocks higher. Dish gained more than 5% intraday, closing with a gain of 4.86%. The stock is moving higher with rising indicators and a target about 7% above today's close.


T-Mobile gained close to 5% intraday but sold off from the peak. The stock closed with a gain of 2.6% and bullish indicators but it may pull back to support before moving higher. Momentum is diverging from price, even with today's huge gain, and stochastic is forming a bearish crossover that make a test of support appear likely. Possible targets are near $38.25 which would close the gap opened today, and then below that near $37.50.


Bird flu is still raging through the mid-west. The epidemic is leading to an increase in food prices due to a shortage of eggs that is not expected to end anytime soon. An estimated 10% or more of the egg-laying hen population has been affected with more cases popping up everyday. Egg-producers like Cal-Maine may see a benefit from higher egg prices that could show up in earnings reports as soon as this quarter. The stock has already seen a substantial rally related to positive earnings growth and ongoing expansion plans, rising egg prices could add momentum to this trade. MACD and stochastic are both convergent with the May peak, suggesting a retest of that peak if not a new high is likely. Support is currently near $55.


The Indices

The indices fell today, perhaps farther than would have had not Greece thumbed its nose at the IMF. The declines had been moderating until that news hit the airwaves. At that time early support levels failed and new daily lows, and in some cased a new monthly low, were made. Today's move was led by the Dow Jones Industrial Average which shed -0.94%. Today's move broke support at 18,000 and set a new 4 week low. The indicators are bearish and gaining strength so it looks like a deeper correction is on the way, possibly as deep as 17,500 or to the long term trend line near 17,250 which would be roughly 6% from the peak set last month.


The S&P 500 and Dow Jones Transportation Average tied for 2nd largest decline, -0.86%, but I will start with the transports. Today's move looks ominous for us bulls as it may be confirming the transportation index break below the long term trend line. The index fell from previous support now turned resistance following the break through. The indicators are bearish and could lead to further downside if buyers don't step back in to support the market. The indicators are also consistent with the early stages of a trend following signal so I am not quite ready to go full bear on this index quite yet.


The S&P 500 set a new 3 week low in a move that took it below 2,100 to the 2,095 support level. The indicators are bearish and gaining strength so it looks like support will be tested further. The index is now below the long term trend line and in danger forming a deeper correction. A break below 2,095 could take it as low as 2,050 in the near term. That being said the index is still above long term support with indicators consistent with that support and setting up for a possible trend following entry.


The NASDAQ Composite made the smallest decline, -0.79%, and is the strongest looking index of them all. Today's action was to the downside, but remains above support levels, the 30 day moving average and did not set a new low. This index is still trending higher in the near and short term although, based on the indicators and other indices, it may have crested its peak. MACD has just crossed the zero line and stochastic is dropping below the upper signal line following a bearish crossover, both indications of weakness and possible lower prices. A drop below support and the moving average could take this index down to the long term trend line, about 4% below the recently set all-time high.


The indices are still trending higher in the long term but it is looking increasingly like a correction or pullback of some variety is in the works now. The transports have already made a 10% correction and may be heading lower, the other indices are still near recent peaks but could easily lose 4-5% by simply correcting to trend. This correction could be due to near term fear, poor earnings expectations for the 2nd quarter, Fed rate hike speculation or a combination of all three.

In the mean time there a couple of things to remember. One is that near term fear is near term, and not likely to reverse the market no matter how worrying it may be. Another is that poor 2nd quarter earnings expectations are followed by positive expectations for the 3rd and 4th quarter, and robust expectations for 2016 which fits in with the idea of a correction to trend within a greater bull market. Yet another is that no matter when the Fed raises interest rates, and how it will lead eventually to the end of the bull market, this is just the first of many hikes to come over the next 5-10 years and a sign that our economy is stable with healthy outlook. . . not a reason for the market to reverse.

The NFP report is going to be a big market mover and may wind up confusing the market. A high number is a good sign of economic health and reason to rally, except that it may also mean rate hikes come sooner, which could give the market an excuse to sell-off. A low number is a sign of stalling economic recovery and a reason to sell, except it may mean rate hikes come later than expected, which has been reason enough to rally up until now.

I am betting on the NFP being at least as good as expected with a chance the market will correct regardless of what the number is. I remain bullish long term but cautious at the moment, waiting to see what tomorrow and the next two weeks will bring us. The FOMC meeting is less than two weeks away, June 16th and 17th, which is when I think the market will show us what it really wants to do.

Until then, remember the trend!

Thomas Hughes


New Plays

Ignoring The Market Weakness

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Hill-Rom Holdings - HRC - close: 52.36 change: +0.30

Stop Loss: 50.75
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on June -- at $---.--
Listed on June 04, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 335 thousand
New Positions: Yes, see below

Company Description

Trade Description:
HRC is a midcap stock that's outperforming both the big cap indices and the midcap index. The S&P 500 index is up +1.8% year to date The MDY midcap ETF is up +5%. Yet HRC is up +14.7% this year and just set a new multi-year closing high today.

HRC is in the healthcare sector. According to the company, "Hill-Rom is a leading global medical technology company with more than 7,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Hill-Rom's people, products, and programs work towards one mission: Every day, around the world, we enhance outcomes for patients and their caregivers."

Their most recent earnings report was May 5th. HRC announced its fiscal Q2 results with earnings up +12% to $0.64 a share. Analysts were only expecting $0.60. Revenues were up +14% to $475 million. On a constant currency basis revenues were up +21%. Estimates were at $471.7 million.

HRC President and CEO John Greisch commented on his company's quarterly results, saying, "We are pleased to report another quarter of strong revenue and adjusted earnings growth. Organic revenue growth was the strongest in three years, as our North America and Surgical/Respiratory Care businesses performed well. In addition, we launched several important new products. Despite incremental currency headwinds, we are raising our full-year outlook, reflecting our improved operational execution."

Management lowered their Q3 guidance below estimates but they countered that by raising their full year 2015 guidance above Wall Street expectations. The company now sees revenues growing at +10% to +11% this year.

Investors have been buying the dips in HRC for a long time. That bullish trend of higher lows has pushed the stock toward resistance in the $52.00 area. Today we saw HRC ignore the market's widespread weakness and breakout past this area. We want to hop on board if this momentum continues. Today's intraday high was $52.37. We are suggesting a trigger to open bullish positions at $52.55.

Trigger @ $52.55

- Suggested Positions -

Buy HRC stock @ $52.55
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.

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

Stocks Retreat Ahead of Friday's Headlines

by James Brown

Click here to email James Brown

Editor's Note:
Friday's session will be filled with headlines about the jobs report and the OPEC meeting. Investor reaction to the jobs report will be key. Will a strong jobs number fuel a rally or a sell-off?


Current Portfolio:


BULLISH Play Updates

GoPro, Inc. - GPRO - close: 58.88 change: -0.15

Stop Loss: 54.65
Target(s): To Be Determined
Current Gain/Loss: +16.0%
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:
06/04/15: GPRO held up pretty well. Traders bought the dip this morning and shares pared their loss to just -0.25%. If the market happens to see a sell-off tomorrow we can look for support near the 10-dma around $56.20.

No new positions at this time.

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

06/01/15 new stop @ 54.65
05/28/15 new stop @ 51.45
05/20/15 new stop @ 49.25
05/14/15 triggered @ $50.75
Option Format: symbol-year-month-day-call-strike


Hanesbrands Inc. - HBI - close: 32.05 change: +0.02

Stop Loss: 31.45
Target(s): To Be Determined
Current Gain/Loss: -0.9%
Entry on May 21 at $32.35
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.74 million
New Positions: see below

Comments:
06/04/15: HBI ignored the market's widespread decline on Thursday and closed virtually unchanged. While that's arguably a show of relative strength HBI is still stuck inside its trading range.

No new positions at this time.

Trade Description: May 20, 2015:
HBI was founded back in 1901. Today you will find Hanes products in more than 80 percent of U.S. homes.

HBI is in the consumer goods sector. According to the company, "HanesBrands, an S&P 500 company, is a socially responsible leading marketer of everyday basic apparel in the Americas, Europe and Asia under some of the world’s strongest apparel brands, including Hanes, Champion, Playtex, DIM, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra, Nur Die/Nur Der, Lovable and Gear for Sports.

We sell bras, panties, shapewear, sheer hosiery, men's underwear, children's underwear, socks, T-shirts and other activewear in the United States, Canada, Mexico and other leading markets in the Americas, Asia and Europe. In the United States, we sell more units of intimate apparel, male underwear, socks, shapewear, hosiery and T-shirts than any other company."

What makes HBI different than most of its competitors is that HBI owns and operates its own manufacturing facilities. About 90% of their apparel comes from company-run plants. That helps them control costs throughout the production process.

This year the company has been very shareholder friendly. Back in January they raised their dividend 33% and announced a 4-for-1 split. The stock split took place in March this year.

HBI's most recent earnings report was April 23rd. HBI reported their Q1 earnings were up +16% from a year ago to $0.22 a share. That missed estimates of $0.23. Revenues were up +14% to $1.21 billion. This was just below expectations of $1.22 billion.

In the company press release HBI Chairman and CEO Richard Noll commented on their results, saying, "We are off to a great start in 2015, once again delivering a double-digit increase in EPS, while tracking to our full-year growth plans. Our acquisition strategy continues to create value with DBApparel, Maidenform and Gear for Sports all contributing substantially to our double-digit growth. In addition, we are raising our 2015 performance outlook to reflect the recent acquisition of Knights Apparel."

Management raised their earnings guidance for 2015 from $1.58-1.63 to $1.61-1.66 per share. Wall Street estimates were at $1.64. HBI also raised their 2015 revenue guidance from $5.78-5.83 billion to $5.90-5.95 billion. Consensus estimates were already at $5.95 billion.

The stock was hammered on the earning miss as investors ignored the improved earnings and revenue guidance. The stock corrected from about $34.60 to under $31.00 in four days (-10 correction).

Analysts' reaction to HBI's results have been positive. Some have noted that Q1 is normally a slower season for HBI. They see the pullback in HBI's stock as a buying opportunity. Multiple firms have raised their price target since the earnings report (new targets are $37, $38, and $40 per share).

Technically HBI has been consolidating sideways in the $30.50-32.00 zone the last several days and have just recently started to breakout from this trading range. We want to hop on board if this bounce continues. Tonight we're suggesting a trigger to open bullish positions at $32.35.

Long HBI stock @ $32.35

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

Long JUL $32.50 CALL (HBI150717C32.50) entry $1.05

05/30/15 new stop @ 31.45
05/21/15 triggered @ 32.35
Option Format: symbol-year-month-day-call-strike


LDR Holding - LDRH - close: 43.16 change: +0.31

Stop Loss: 39.45
Target(s): To Be Determined
Current Gain/Loss: +2.4%
Entry on June 03 at $42.15
Listed on June 02, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 231 thousand
New Positions: see below

Comments:
06/04/15: LDRH spent the first half of the day in rally mode and was up +3.2% at its peak. That put its two and a half day rally at +10.6%. When the market accelerated lower this afternoon LDRH pared its gains for the session to just +0.7%.

No new positions at this time.

Trade Description: June 2, 2015:
The worldwide market for nonfusion spinal devices is expected to triple by in the next seven years. That's according to Millennium Research Group (MRG), who said, "the global market for spinal nonfusion devices will almost triple in size through 2022, surpassing $1.6 billion. This market will be driven largely by emerging products and approvals, as well as high growth in emerging regions, such as Asia Pacific and Brazil, India and China (BIC)." (
source.)

One company leading the charge in this industry is LDRH. They are in the healthcare sector. According to the company, "LDR Holding Corporation is a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders. LDR's primary products are based on its exclusive VerteBRIDGE(R) fusion and Mobi non-fusion technology platforms and are designed for applications in the cervical and lumbar spine. These technologies are designed to enable products that are less invasive, provide greater intra-operative flexibility, offer simplified surgical techniques and promote improved clinical outcomes for patients as compared to existing alternatives. In August 2013, LDR received approval from the U.S. Food and Drug Administration (FDA) for the Mobi-C cervical disc replacement device, the first and only cervical disc replacement device to receive FDA approval to treat both one-level and two-level cervical disc disease."

The recent earnings history for LDRH has been very bullish. They have beaten Wall Street's earnings and revenue estimates the last four quarters in a row. Plus, the company has raised its guidance the last four quarters in a row. Revenues have been surging in the +25% to +30% range the last year.

The company's most recent earnings report was May 6th. They reported their Q1 results after the closing bell. Analysts were expecting a loss of ($0.20) per share. LDRH reported a loss of ($0.12). Revenues were up +25.7% to $39.1 million, above the $36.6 million estimate. Gross margins improved from 83.1% to 83.5%.

LDRH management said that foreign exchange rates would hurt revenues by 5% to 6% in 2015. Yet they still raised their 2015 revenue guidance into the $166.7-168.1 million range, above analysts' estimates of $160.5 million.

The stock shot higher on its May 6th earnings report and bullish guidance. Shares recently peaked near $42.00 and spent the last several days consolidating sideways in the $40-42 zone. This sideways consolidation has alleviated some of LDRH's overbought conditions. The point & figure chart is very bullish and forecasting at $64.00 target.

We like how shares were showing relative strength today. The stock is poised to breakout past short-term resistance at $42.00. Tonight we are suggesting a trigger to launch bullish positions at $42.15. The stock does not trade a lot of volume and it has been somewhat volatile in the past. I would consider this a slightly more aggressive, higher-risk trade.

NOTE: Options are available but the spreads are a little too wide to trade comfortably.

- Suggested Positions -

Long LDRH stock @ $42.15

06/03/15 triggered @ $42.15


Starbucks Corp. - SBUX - close: 51.72 change: -0.40

Stop Loss: 49.95
Target(s): To Be Determined
Current Gain/Loss: +1.3%
Entry on May 18 at $51.05
Listed on May 15, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 5.8 million
New Positions: see below

Comments:
06/04/15: SBUX is flirting with a breakdown below its simple 10-dma. If that occurs the $51.00 area might be the next level of support but odds are $50.00 is stronger support. Tonight we are moving our stop loss up to $49.95.

No new positions at this time.

Trade Description: May 16, 2015:
The world seems to have an insatiable appetite for coffee. Starbucks is more than happy to help fill that need. The first Starbucks opened in Seattle back in 1971. Today they are a global brand with locations in 66 countries. SBUX operates more than 21,000 retail stores with more than 300,000 workers.

A few years ago Business Insider published some facts on SBUX. The average SBUX customer stops by six times a month. The really loyal, top 20% of customers, come in 16 times a month. There are nearly 90,000 potential drink combinations at your local Starbucks. The company spends more money on healthcare for its employees than it does on coffee beans.

The company's earnings results were only mediocre most of 2014 year. You can see the results in SBUX's long-term chart below. After incredible gains in 2013 SBUX has essentially consolidated sideways in 2014. SBUX broke out of that sideways funk after it reported earnings in January 2015.

Five-Year Plan

In late 2014 SBUX announced their five-year plan to increase profitability. Here's an excerpt from a company press release:

"The seismic shift in consumer behavior underway presents tremendous opportunity for businesses the world over that are prepared and positioned to seize it," Schultz said (Howard Schultz is the Founder, Chairman, President, and CEO of Starbucks). "Over the next five years, Starbucks will continue to lean into this new era by innovating in transformational ways across coffee, tea and retail, elevating our customer and partner experiences, continuing to extend our leadership position in digital and mobile technologies, and unlocking new markets, channels and formats around the world. Investing in our coffee, our people and the communities we serve will remain at our core as we continue to redefine the role and responsibility of a public company in today's disruptive global consumer, economic and retail environments."

"Starbucks business, operations and growth trajectory around the world have never been stronger, and we are more confident than ever in our ability to continue to drive significant growth and meet our long term financial targets," said Troy Alstead, Starbucks chief operating officer. "We have more customers visiting more stores more frequently, both in the U.S. and around the world, than at any time in our history. And we expect both the number of customers visiting our stores and the amount they spend with us to accelerate in the years ahead. With a robust pipeline of mobile commerce innovations that will drive transactions and unprecedented speed of service, Starbucks is ushering in a new era of customer convenience. We believe the runway of opportunity for Starbucks inside and outside of our stores is both vast and unmatched by any other retailer on the planet."

The company believes they can grow revenues from $16 billion in FY2014 to almost $30 billion by FY2019. To do that they will expand deeper into regions like China, Japan, India, and Brazil. SBUX expects to nearly double its stores in China to over 3,000 locations in the next five years

They're also working hard on their mobile ordering technology to speed up the experience so customers don't have to wait in line so long at their busiest locations. This will also include a delivery service.

Part of the five-year plan is a new marketing campaign called Starbucks Evening experience. The company wants to be the "third place" between home and work. After 4:00 p.m. they will start offering alcohol, mainly wine and beer, in addition to new tapas-like smaller plates.

The company recently launched its first ever Starbucks Reserve Roastery and Tasting Room in Seattle, near their iconic first retail store. The new roastery is supposed to be the ultimate coffee lovers experience. CEO Schultz said they will eventually open up about 100 of these Starbucks Reserve locations.

SBUX is having a pretty good 2015 so far with the stock up +23%, outperforming the broader market. A lot of this gain was thanks to a post-earnings pops. SBUX reported its Q1 2015 results on January 22nd. Adjusted earnings, backing out one-time charges, were $0.80 a share. That's in-line with estimates. Revenues were up +13.3% to $4.8 billion, also in-line with estimates.

It was a very strong holiday period for SBUX thanks in part to astonishing gift card sales. The amount of money loaded onto SBUX gift cards during the holidays surged +17% to a record $1.6 billion. One out of every seven Americans received a SBUX gift card. The company also saw significant growth overseas with its China and Asia-Pacific business soaring +85% to sales of $495 million. Their mobile transactions have reached seven million transactions a week. Investors applauded the news in spite of the in-line results and sent SBUX soaring to new all-time highs the next day.

This earnings scenario, where SBUX delivers results in-line with estimates and rallies anyway, just happened again in late April. Of course it's worth noting that even in-line results still represent exceptional growth.

SBUX reported its Q2 (2015) on April 23rd. Earnings of $0.33 a share were in-line with estimates. Revenues were up +17.8% to $4.56 billion, slightly above expectations. It was their strongest growth in four years. Customers are responding well to new drink options and an updated food menu. They're also developing new delivery options, mobile pay options, and alcoholic drinks available at select locations.

Worldwide same-store sales grew +7%. This was significantly above estimates. It also marked the 21st consecutive quarter where SBUX's comparable store sales were +5% or more.

The company issued mixed guidance. The stronger dollar is having an impact. They see fiscal 2015 results in the $1.55-1.57 range. That compares to Wall Street estimates for $1.57 per share. However, the company's revenue estimates are more optimistic. They're forecasting +16-18% sales growth into the $19.1-19.4 billion zone compares to analysts' estimates of $19.1 billion.

SBUX popped to new highs following its results and then spent the next week consolidating lower. Investors started buying the dips again at its bullish trend of higher lows. It looks like the consolidation is over and SBUX is pushing higher. We want to hop on board. Tonight we are suggesting a trigger to open bullish positions at $51.05.

- Suggested Positions -

Long SBUX stock @ $51.05

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

Long JUL $50 CALL (SBUX150717C50) entry $2.07

06/04/15 new stop @ 49.95
05/18/15 triggered @ $51.05
Option Format: symbol-year-month-day-call-strike


Super Micro Computer - SMCI - close: 33.52 change: -1.44

Stop Loss: 32.45
Target(s): To Be Determined
Current Gain/Loss: -0.4%
Entry on May 22 at $33.65
Listed on May 18, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 622 thousand
New Positions: see below

Comments:
06/04/15: Ouch! SMCI had been holding up pretty well this week. That changed with a -4.1% plunge today. The stock closed below what should have been short-term support near $34.00 and its 10-dma.

I don't see any news behind the sell-off. It could just be profit taking ahead of a potentially volatile Friday session. If we're lucky the 50-dma or the 200-dma will act as the next level of support. Just in case they do not we are raising the stop loss to $32.45.

Trade Description: May 18, 2015:
Sometimes the market's expectations get too high. When a company fails to meet these rising expectations the stock can get punished.

SMCI is in the technology sector. According to the company, "Supermicro® (SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro is committed to protecting the environment through its 'We Keep IT Green' initiative and provides customers with the most energy-efficient, environmentally-friendly solutions available on the market."

It's easy to see why investors might have big expectations for SMCI. Looking at three of their last four earnings reports SMCI has beaten Wall Street estimates on both the top and bottom line and raised guidance three quarters in a row. It was their most recent report where results seemed to stumble.

SMCI report its fiscal Q3 results on April 21st, after the closing bell. Earnings were up 25% from a year ago to $0.47 a share. Yet analysts were expecting SMCI to report earnings in the $0.49-0.50 range. Revenues were up +26% from a year ago to $471.2 million, but this also missed expectations.

Guidance was also a little soft. Traders were used to SMCI raising their guidance. This time guidance for the current quarter (their Q4) was generally below consensus estimates.

The market overreacted to the disappointment. Shares crashed from $35 to almost $28 following its earnings news. Then traders started buying SMCI in the $29-30 region a couple of weeks ago. The rebound has lifted SMCI back above technical resistance at its 200-dma and back above price resistance near $32.00. We are betting this rebound continues. Tonight we're suggesting a trigger to open bullish positions at $33.65.

- Suggested Positions -

Long SMCI stock @ $33.65

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

Long JUL $35 CALL (SMCI150717C35) entry $1.50

06/04/15 new stop @ 32.45
05/22/15 triggered @ 33.65
Option Format: symbol-year-month-day-call-strike


Thoratec Corp. - THOR - close: 45.65 change: -0.34

Stop Loss: 43.85
Target(s): To Be Determined
Current Gain/Loss: -1.1%
Entry on June 01 at $46.15
Listed on May 27, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 602 thousand
New Positions: see below

Comments:
06/04/15: THOR, like most of the market today, spent the session fading lower. I don't see any changes from my recent comments.

I would wait for a rally past Monday's intraday high ($46.29) if you're looking for a bullish entry point.

Trade Description: May 27, 2015:
Shares of THOR are trading at multi-year highs thanks to a bullish outlook for 2015 results. THOR is in the healthcare sector. They make medical instruments.

According to the company, "Thoratec is a world leader in therapies to address advanced-stage heart failure. The company's products include the HeartMate II® and HeartMate III™ LVAS (Left Ventricular Assist Systems) and Thoratec® VAD (Ventricular Assist Device) with more than 20,000 devices implanted in patients suffering from heart failure. Thoratec also manufactures and distributes the CentriMag®, PediMag®/PediVAS®, and HeartMate PHP™ product lines. HeartMate III and HeartMate PHP are investigational devices and are limited by US law to investigational use. HeartMate PHP is currently in development and not approved for sale. Thoratec is headquartered in Pleasanton, California."

The last couple of earnings results have come in better than expected. You can see the rally in THOR's chart back in February. This was a reaction to the company's 2014 Q4 results. Analysts were expecting a profit of $0.24 a share on revenues of $106.8 million. THOR's results came in significantly above estimates with a profit of $0.39 on revenues of $127.9 million. Gross margins were 70.5% versus 65.5% a year ago.

The stock popped again on May 8th following another better than expected earnings report. Wall Street was expecting a profit of $0.26 a share on revenues of $111 million. THOR managed to beat estimates with a profit of $0.38 on revenues of $121 million. More importantly management raised their 2015 revenue guidance above estimates. THOR now expects revenues of $465-475 million versus consensus estimates around $463 million.

Yesterday the company announced that the FDA had provided a conditional approval for an IDE clinical trial to "investigate use of the HeartMate PHP acute catheter-based heart pump in patients undergoing a high-risk percutaneous coronary intervention."

Aside from a two-week correction in the second half of April the up trend in THOR's stock price has been pretty steady. The point & figure chart is bullish with a long-term target of $86.00. Currently shares of THOR are hovering just below potential resistance near $46.00. We are suggesting a trigger to launch bullish positions at $46.15.

- Suggested Positions -

Long THOR stock @ $46.15

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

Long JUL $45 CALL (THOR150717C45) entry $2.40

06/01/15 triggered @ $46.15
Option Format: symbol-year-month-day-call-strike




BEARISH Play Updates

CenturyLink, Inc. - CTL - close: 32.83 change: -0.16

Stop Loss: 33.65
Target(s): To Be Determined
Current Gain/Loss: +2.4%
Entry on May 26 at $33.65
Listed on May 23, 2015
Time Frame: 8 to 12 weeks (less for option traders)
Average Daily Volume = 4.4 million
New Positions: see below

Comments:
06/04/15: CTL did see some volatility this morning. The stock gapped open lower but then it bounced at $32.72 and immediately spiked up to $33.30. Just as quickly the bounce faded. The $32.70 area has been support twice this week. A breakdown below this level should reaffirm the down trend. Tonight we are moving the stop loss to $33.65.

I am not suggesting new positions at this time.

Trade Description: May 23, 2015:
The earnings picture for CTL appears to be deteriorating and the stock has fallen as a result. CTL is in the technology sector.

They are part of the telecom services industry. According to the company, "CenturyLink (CTL) is a global communications, hosting, cloud and IT services company enabling millions of customers to transform their businesses and their lives through innovative technology solutions. CenturyLink offers network and data systems management, Big Data analytics and IT consulting, and operates more than 55 data centers in North America, Europe and Asia. The company provides broadband, voice, video, data and managed services over a robust 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network."

Looking at the last few earnings reports the guidance picture has been getting worse. Back in November 2014 they reported their Q3 results that beat the bottom line estimate by one cent but management lowered guidance. Then in February this year CTL reported their Q4 results that missed estimates. Revenues were also below estimates and managed lowered their guidance.

Their most recent earnings report was May 5th. CTL delivered their 2015 Q1 report with earnings of $0.67 per share. That was nine cents better than expected. Yet revenues fell -1.9% from a year ago to $4.45 billion and that was below Wall Street estimates. If that wasn't bad enough they also lowered guidance again (if you're counting, that's the third quarter in a row they lowered guidance).

The stock is nearing bear-market territory, down about 19% from its 2014 highs near $42.00 (not counting the spike in July). Bulls could argue that CTL is an income play. They do have a big dividend yield, currently about 6.3%, but their dividend has been this high for weeks and shares have not managed a sustainable rebound.

Technically CTL looks poised to breakdown below support in the $34.00 area and could drop toward the $30-28 region. We are suggesting a trigger to open bearish positions at $33.65.

- Suggested Positions -

Short CTL stock @ $33.65

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

Long JUL $32 PUT (CTL150717P32) entry $0.55

06/04/15 new stop @ 33.65
05/26/15 triggered @ $33.65
Option Format: symbol-year-month-day-call-strike


Gulfport Energy Corp. - GPOR - close: 43.43 change: -0.98

Stop Loss: 45.35
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 30, 2015
Time Frame: 8 to 12 weeks (option traders should exit prior to expiration
Average Daily Volume = 1.5 million
New Positions: Yes, see below

Comments:
06/04/15: We were expecting GPOR to move lower today but it did so a lot quicker than expected. That might be due to the -2.5% drop in crude oil prices in today's session. Investors are expecting the OPEC meeting to drive oil prices lower.

Meanwhile shares of GPOR gapped down at $44.02 and closed with a -2.2% loss. Our suggested entry point for bearish trades is at $42.75.

Trade Description: May 30, 2015:
Normally a weaker dollar is bullish for commodities. Yet the U.S. dollar's decline from March into May did not help the price of natural gas very much. The price of natural gas did bounce for three weeks in May but it's already reversed much of these gains. Now the U.S. dollar is on the rise and expected to keep climbing thanks to weaker foreign currencies.

Another problem for oil and gas explorers like GPOR is falling demand for natural gas. Weather has been mild this spring and that has decreased demand for natural gas from utilities, who are big consumers. At the same time inventories for natgas in the U.S. are building.

The EIA, the U.S. Energy Information Administration, said that current natgas inventories is up +59% from the same time a year ago and it's up +1.7% from the five-year average. Right now natural gas futures are trading around $2.64 per MMBtu (British thermal units in millions) and they look like they're headed for the 2012 lows near $2.00.

GPOR is in the basic materials sector. According to the company, "Gulfport Energy Corporation is an Oklahoma City-based independent oil and natural gas exploration and production company with its principal producing properties located in the Utica Shale of Eastern Ohio and along the Louisiana Gulf Coast. In addition, Gulfport holds a sizeable acreage position in the Alberta Oil Sands in Canada through its 24.9% interest in Grizzly Oil Sands ULC."

Their exposure to Canada's oil sands isn't helping them at the moment. In their most recent earnings report GPOR said that their production in Canada is currently halted due to low commodity prices.

Speaking of earnings, the company has delivered some strong results in recent quarters. Back in November they reported Q3 results above expectations. Revenues soared +146% from the year ago quarter. They reported similar results in February (their Q4 report). This is because GPOR's production has surged. In the fourth quarter of 2014 their oil and gas production was up +282% from the year ago period.

GPOR's most recent earnings report was announced on May 5th. The company reported a loss of ($0.08) per share. Analysts were expecting a loss of ($0.09). Revenues did come in above expectations but traders sold the news. Shares plunged and broke their three-month bullish trend of higher lows.

GPOR's stock price has been unable to recover. Traders have been selling the rallies. Goldman Sachs didn't help when they downgraded GPOR from "neutral" to a "sell" rating on May 18th. The point & figure chart on GPOR is bearish and forecasting at $36.00 target.

This past week was technically bearish with GPOR's relative weakness and breakdown below support in the $44.00 area. Tonight I am suggesting a trigger to open bearish positions at $42.75.

Traders should note that OPEC does have a meeting coming up next Friday. Their decision on oil production could influence the price of natural gas. GPOR produces both oil and gas but most of its business is natural gas.

Trigger @ $42.75

- Suggested Positions -

Short GPOR stock @ $42.75

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

Buy the JUL $40 PUT (GPOR150717P40)

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


World Fuel Services - INT - close: 49.13 change: -0.77

Stop Loss: 51.25
Target(s): To Be Determined
Current Gain/Loss: +1.2%
Entry on June 01 at $49.75
Listed on May 26, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 468 thousand
New Positions: see below

Comments:
06/04/15: INT accelerated lower with a -1.5% decline to new three-month lows. This should confirm the breakdown below support at $50.00. The net hurdle for bears is potential technical support at its simple 200-dma near $48.00.

Trade Description: May 26, 2015:
The correction in shares of INT is not over yet. The stock saw a big run from its 2014 lows near $36 to all-time highs near $58 in March this year. That proved to be the peak.

INT is in the basic materials sector. According to the company, "Headquartered in Miami, Florida, World Fuel Services is a global fuel logistics, transaction management and payment processing company, principally engaged in the distribution of fuel and related products and services in the aviation, marine and land transportation industries. World Fuel Services sells fuel and delivers services to its clients at more than 8,000 locations in more than 200 countries and territories worldwide."

Their 2014 Q4 earnings were better than expected with a profit of $0.96 per share versus estimates for $0.77. Yet revenues fell -6.0% from a year ago to $9.78 billion. Analysts had been forecasting $11.36 billion. That's quite a miss.

We see the same pattern in INT's Q1 results. The company reported on April 30th. Analysts were expecting a profit of $0.82 a share on revenues of $9.2 billion. INT delivered $0.83 a share but revenues plunged -30% to $7.34 billion. This time investors took notice and shares of INT dropped sharply on its results.

The stock has been trying to find support near the $50.00 level but traders keep selling the bounces. Now the bearish trend of lower highs is about to push shares of INT through this critical support level at $50.00. Tonight we are suggesting a trigger to launch bearish positions at $49.75.

NOTE: The option spreads are a bit wide. INT does have July options but there's no volume and no open interest on the puts yet.

- Suggested Positions -

Short INT stock @ $49.75

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

Long AUG $50 PUT (INT150821P50) entry $2.50

06/01/15 After the close, INT announces a $100 million stock buyback program
06/01/15 triggered @ $49.75
Option Format: symbol-year-month-day-call-strike


On Deck Capital - ONDK - close: 14.90 change: -0.34

Stop Loss: 16.25
Target(s): To Be Determined
Current Gain/Loss: -3.8%
Entry on June 02 at $14.35
Listed on June 01, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 431 thousand
New Positions: see below

Comments:
06/04/15: Good news! It looks like the oversold bounce in ONDK may be over. Shares tried to rally this morning but they reversed into a -2.2% decline. I would be tempted to launch new bearish positions on a move below $14.70.

Trade Description: June 1, 2015:
You know something is wrong when a stock is down -50% from its post-IPO peak in less than six months.

ONDK is part of the financial sector. Here's how the company describes itself:

"OnDeck (ONDK), a leading platform for small business loans, is committed to increasing Main Street's access to capital. OnDeck uses advanced lending technology and analytics to assess creditworthiness based on actual operating performance and not solely on personal credit. The OnDeck Score®, the company's proprietary small business credit scoring system, evaluates thousands of data points to deliver a credit decision rapidly and accurately. Small businesses can apply for a line of credit or term loan online in minutes, get a decision immediately and receive funds in as fast as the same day. OnDeck also partners with small business service providers, enabling them to connect their customers to OnDeck financing. OnDeck's diversified loan funding strategy enables the company to fund small business loans from various credit facilities, securitization and the OnDeck Marketplace®, a platform that enables institutional investors to purchase small business loans originated by OnDeck.

Since 2007, OnDeck has deployed more than $2 billion to more than 700 different industries in all 50 U.S. states, and also makes small business loans in Canada. The company has an A+ rating with the Better Business Bureau and operates the website BusinessLoans.com which provides credit education and information about small business financing. On December 17, 2014, OnDeck started trading on the New York Stock Exchange under the ticker ONDK."

The company charges outrageous interest rates on its short-term loans. According to the SEC filings these can range from 20% to 99% APRs. They get away with this by only loaning to businesses and not individual consumers. Rising defaults are an issue. The company expects about 7% of their loans to go into default but some of the latest numbers suggest reality is closer to 20%. There is a concern that companies like ONDK will face future regulations that will limit how much interest they can charge. Another bear argument is valuations.

The company was valued around $1.4 billion at its IPO. Even with the decline it's still valued near $1 billion today. That's for a company without any profits. They lost ($0.01) per share in the fourth quarter and that jumped to a loss of ($0.05) per share in the first quarter.

Another potential landmine for shareholders is ONDK's six-month lockup expiration. Currently there are about 13.2 million shares outstanding. On June 15th, 2015 another 56 million shares are unlocked.

The stock broke down on its earnings report in early May. Now it's breaking down below its 2015 lows in the $14.50-15.00 zone. The point & figure chart is bearish and forecasting at $7.00 target.

The stock has seen some volatile moves. I would consider this a more aggressive, higher-risk trade. Tonight I am suggesting a trigger to launch bearish positions at $14.35. Traders may want to use put options to limit their risk.

- Suggested Positions -

Short ONDK stock @ $14.35

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

Long AUG $14 PUT (ONDK150821P14) entry $1.80

06/02/15 triggered @ $14.35
Option Format: symbol-year-month-day-call-strike