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Newsletter

Daily Newsletter, Tuesday, 6/16/2015

Table of Contents

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

Market Wrap

SeeSaw Markets

by Jim Brown

Click here to email Jim Brown

The Dow declined -108 on Monday and rebounded +113 today. The markets are going sideways as we wait for resolution on Greece and the FOMC.

Market Statistics

The S&P futures were down as much as -14 points overnight but rebounded to post a nearly 14 point gain by the close of trading. This is an astounding move given the declines in Asia. China's Shanghai Index fell -3.47%. The U.S. markets were helped by the lack of declines in Europe despite impending doom for Greece.




The U.S. futures were also helped by the New Residential Construction numbers for May. The headline number for housing starts dropped -11.1% from the April revision but it was still a 5.1% gain over the same period in 2014. Starts fell from the 1.165 million pace in April to 1.036 million in May. The April number was a rebound from the weather related depression in February and March that averaged 0.927 million.

Analysts were expecting a pace for May at around 1.1 million. Single-family starts declined-5.4% and multi-family starts fell -20.2%.

Housing permits rose +11.8% in May after a +9.8% rise in April. That suggests the pace of starts will continue to rise. The pace of permits is up +34.6% from May 2014. However, single-family permits rose only 2.6% while multi-family permits rose +24.9%.

Housing completions rose from 0.988 million to 1.034 million or a +4.7% rise. The backlog of houses either permitted or under construction is rising and that should support some additional hiring in the sector.

The housing numbers were good and support the claim that the market is improving. With a threatened rise in interest rates late this year and early 2016 there could be a surge of buying interest in order to lock in a low rate.

The calendar for Wednesday is FOMC all day long. There is nothing else to take the focus off the Fed and that means the market will be transfixed by the Fed expectations.


There is actually a positive market bias for Fed meetings where Janet Yellen has a news conference. Her dovish position has tended to give the market hope and news conference days have been somewhat bullish. The Dow rallied +225 points after the post FOMC press conference on March 18th.

The December FOMC meeting was on the 16th and 17th. On the 16th the Dow closed at a six-week low of 17,068. On the 17th the Dow closed at 17,356 for a gain of +288 points and it went on to gain another +700 points over the next four days.

While we can't reasonably expect that kind of repeat performance this week we can at least hope for a positive result. That is probably what powered the market higher today. Call it the Yellen effect. Eventually she is going to disappoint the market but until then traders appear to be gaming the historical trend.

The healthcare sector was in the news again today as UnitedHealth (UNH) was rumored to be making a bid for Aetna (AET) according to the Wall Street Journal. The Journal said UNH sent Aetna a letter proposal over the last "few" days. Aetna shares rallied another $4 after a $5 gain on Monday.


It is tough to know who is making a play for whom. With five major companies all looking to buy/merge we could end up with only three and one of the five would be left without a date to the prom. Anthem (ANTM) approached Cigna (CI) with a $175 offer and was turned down. Anthem was also interested in Humana (HUM). UnitedHealth was also reported to be a potential acquirer for Cigna and Aetna. Aetna was also rumored as possibly being interested in Humana. There is no doubt somebody is going to be acquired and if they do not want to be acquired then they better be looking at acquiring somebody else really fast.

Anthem has 37.5 million members. Aetna has 46 million. Cigna has 88 million members in 30 countries. Humana has 14.2 million members in plans and 7.4 million in specialty products. UnitedHealth is the largest with $115 billion in market cap and more than 40 million members. Clearly Humana is the runt of the litter. The odds are good that two companies will each buy somebody else and somebody will end up alone.


Coty Inc (COTY) shares spiked +19% after news broke they were in a deal with Proctor & Gamble (PG) to acquire their beauty business in a $12 billion transaction. The deal would transfer brands like Gucci, Hugo Boss, Wella, Clairol, Max Factor and Cover Girl to Coty. For P&G it is part of their plan to narrow its focus on its core products. Coty would become the top seller in the perfume and hair care business. Coty markets Marc Jacobs, Calvin Klein, Chloe as well as various celebrity perfumes. The deal would be structured as a "Reverse Morris Trust" to be tax free to P&G shareholders. The assets would be spun off into a separate company which would then absorb Coty in an all share deal.

Coty only has a market cap of $3 billion but they are paying $12 billion for the P&G brands. Of course paying might not be the right word since the P&G spinoff will end up owning a majority of Coty.


UPS closed fractionally positive after saying they were going to discontinue some holiday shipping discounts. The company is going to discontinue free or heavily discounted shipping on large items because they clog up the shipping system at the sorting centers. Larger packages have to be handled manually while smaller packages zip through the automated systems with no human intervention. UPS had discounted the larger packages because of the increased cost to the shippers prevented many from choosing UPS. Now that UPS does not need the business the big packages are a headache.

UPS also announced it was buying logistics firm Parcel Pro for an undisclosed amount. Parcel Pro provides services and insurance coverage for the transport of jewelry, wristwatches and other luxury goods. The increased amounts of insurance coverage allow companies to ship more items in one package making it more cost effective.


While on the topic of shipping Amazon is experimenting with an application that would allow normal people to pickup packages at brick and mortar retailers and deliver them to Amazon customers on their way to other locations. The service would be called "On My Way."

In theory Amazon would enlist the services of regular retailers in high traffic areas to receive packages for customers near their store. Normal people looking to make a few extra bucks would pick up those packages that needed to be delivered and drop them off during their regular travels. Say you passed store A every morning on your way to work and you traveled the same route every day to get to work. The application would select packages that needed to be delivered along that route and you get paid for making the pickup and drop offs on your way to work or on your lunch break. Amazon gets a break on shipping rates and the driver makes a few bucks extra to pay for gas.

Amazon's shipping costs rose +31% in 2014 and that was faster than sales growth. Amazon ships about 3.5 million packages a day. UPS packages cost an average of $8 each. Amazon said the program is in the planning stages and it is possible it will never be implemented.


Box Inc (BOX) shares rose +3.5% after it announced that deep integration with Microsoft Office will transform "Collaboration" for joint customers. Box will let Microsoft Office users create documents in the cloud. Box said customers already have more than a billion Office documents stored in the Box cloud.

Microsoft sells a competing cloud product called OneDrive but CEO Nadella said they have been working to let clients choose a combination of programs that are capable of operating together. "We are agnostic when it comes to who we integrate with" according to Microsoft. Microsoft also has a partnership with Box competitor Dropbox. Box currently has 47,000 paying companies for their cloud storage product. Companies have all employees store their data in the cloud and that makes backup and retrieval significantly simpler.


Monster Beverage (MNST) was upgraded to the Citigroup Focus List and named a "top pick." Citi analysts are expecting "outsized" earnings and revenue growth over the next five years. Citi also said they see "considerable upside" to the share price from the current levels. Citi put a $155 price target on the stock. Shares rose +4% to $132 on the analyst note.

Monster completed a deal with Coke on June 12th to transfer some brands to Coke in exchange for others from Coke and entered into a global marketing agreement. Coke also completed the purchase of a 16.7% stake in Monster for $2.15 billion as part of the brand swap and marketing agreement. I personally believe Coke will eventually buy the rest of Monster.


Gap Stores (GPS) said it was closing 175 stores in an effort to get back to basics and drive traffic to its remaining locations. The company will close 175 of the 675 Gap stores over the next several years. They expect to lose about $300 million in annual sales from the closures. They are also cutting 250 employees from the San Francisco headquarters.

The company plans to renovate and improve its "digital footprint" in an effort to sell more online and engage with customers who are reluctant to shop in the malls. After the closures Gap will have 500 Gap stores and 300 outlet stores in North America. They do plan on closing some stores in Europe but the numbers have not been decided. They are planning on opening new stores in China where growth has exploded over the last 4 years. China ecommerce sales rose +60% in 2014.


United Rentals (URI) was cut from neutral to underperform by Macquarie. United recently warned that the decline in activity in the energy sector was going to be a drag on earnings and it could last all year. Macquarie expects a 10% decline based on recent guidance. United rents tools and equipment and the energy sector was a good customer.

Just a couple days ago activist investor Jana Partners reported it had taken a 6% stake in the firm.


Oshkosh (OSK) cut its profit forecast for the full year because of bad weather in the prior quarter and a delay in launching a new product. The company cut full year estimates from $4.00-$4.25 to $3.75-$4.00. Shares fell -7% on the news.


Markets

The indexes seesawed today and recovered what they lost on Monday but all bets are off for Wednesday. Analyzing indexes today is almost a waste of time since we are going to be entirely driven by headlines on Wednesday.

The Greek standoff is nearing the crisis point and Greece is either going to stand their ground and run out of money or the EU is going to blink and give them another interim funding deal in order to kick the can farther down the road. Trying to forecast what will happen in Greece and its impact on our markets is a waste of time

The FOMC is not likely to make any changes to interest rates but they are probably going to strongly indicate that they will raise rates in September assuming no major changes in the economy. Currently analysts are expecting a hike in September and again in March and then several months of watching to see if the rates had any impact on the economy.

In theory the market should have already priced in a September rate hike but constantly optimistic investors are operating with blinders on to the potential for a rate hike. There is a large contingent of analysts that do not believe the Fed will hike until mid 2016 regardless of what they say on Wednesday.

That means the closer we get to a hike either in Fed guidance or the September meeting the more nervous those investors will be. Historically the market normally declines on the first rate hike and then rebounds into rally mode for the next year or so. Of course historically the economy is normally running at about twice the current pace of +2.5% annual GDP so we are starting off with a handicap this time around.

I am not going to try and predict the market movement after the Fed meeting. I mentioned earlier that the prior two press conferences produced significant rallies but now that the trend is established that gives hedge funds something to trade against.

The S&P dipped on Monday to retest the 150-day average at 2074 and that remains solid support. The 2075-2080 range as been tested numerous times and has held every time. The critical levels remain 2065 and 2040. Volume was still anemic at only 5.4 billion shares so no conviction yet.


Dow support at 17,800 has eroded to 17,750 but it still exists. The 17,600 level is still the critical area to watch. The majority of the Dow stocks are still in a down trend although the trends are becoming fairly choppy given the volatility over the last couple of weeks.

The merger talk lifted the Dow out of negative territory this morning with gains in UNH and PG. Gains in crude helped turn Exxon and Chevron positive. Goldman was up on the rally in the bank stocks. Only three Dow stocks gained more than $1 so it would be hard to say it was a bullish day. The gains in UNH accounted for about 20 Dow points.

Despite today's gains the Dow is in a down trend with today only one more lower high in the trend. However, a move over 18,100 would negate that.



The Nasdaq continues to vacillate between 5000-5100 and today was another close right in the middle at 5055. "There is nothing to see here, move along" to pull a phrase out of the first Star Wars movie in 1977. Can you believe it was that long ago? Dang I am getting old.

There was nothing to see on the +25 point rebound in the tech index. The gains came from Netflix, Monster and the biotech sector and that is the same pattern for the last several weeks.

The Nasdaq is holding near the highs but struggling slightly at the lower end of the range. It may be slightly weaker but so far it has not been a problem.



As has been the case lately the Russell 2000 is actually holding the market up. The index gained +8 points today to close at 1269 and only 6 points below a new high. It would be VERY hard to paint any kind of bearish picture for the market with the small caps about to break out ahead of an index rebalance.


To emphasize that point on the small caps the Russell Microcap index ($RUMIC) closed at a new high today. This is the smallest of the small caps and clearly, fund managers are not afraid of the summer doldrums. They continue to nibble away on these stocks as the first six months of the year comes to a close.


It is hard to be bearish given the strength in the small caps but the big caps are still lagging. Rather than try to predict direction before/after the FOMC meeting I would rather wait until next week and see what direction the market decided to go.

Today is my 48th wedding anniversary. I have now been married 2.5 times longer than I was single. My wife and I were talking this morning, yes we still communicate, and going back over the highlights and lowlights of the last 50 years. Since we are still married we obviously had more good than bad and we are expecting plenty additional years ahead.

I was scrolling through the news headlines while we were chatting and saw this one. "Kirk Kerkorian, billionaire investor, dies at 98." I mentioned it to her and said it would be nice epitaph to have when I die. "Jim Brown, billionaire investor dies at 98." I thought she was going to fall off her chair laughing. She said I might make the age 98 part but it would be a miracle to make the billionaire part. She never has taken me seriously and I guess that is why we made it 48 years.

Enter passively, exit aggressively!

Jim Brown

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New Plays

A Bundle Of Joy

by James Brown

Click here to email James Brown

Editor's Note:

Additional Trading Ideas:

In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these may need to see a break past key support or resistance:

Bullish ideas: DPLO, GIL, SEE, THRM, MBLY, LBTYA, W (short interest on W is 47% of the float. This stock could see a short squeeze on a breakout higher)

Bearish ideas: CNW, KNX, NAV, TRN, YPF, X,




NEW BULLISH Plays

Natus Medical Inc. - BABY - close: 42.62 change: +0.98

Stop Loss: 40.75
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on June -- at $---.--
Listed on June 16, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 249 thousand
New Positions: Yes, see below

Company Description

Trade Description:
Healthcare stocks are getting a lot of press because of the merger speculation among the big healthcare insurers. One area of healthcare that's doing well without the press is medical equipment makers. The S&P 500 index is up +1.8% year to date. The XHE healthcare equipment ETF is up +8.9%. BABY is in this industry and their stock is up +18% in 2015.

Here is a brief company description, "Founded in 1989, Natus Medical Incorporated is a leading manufacturer of medical devices and software and a service provider for the Newborn Care, Neurology, Sleep, Hearing and Balance markets. Natus products are used in hospitals, clinics and laboratories worldwide. Our mission is to improve outcomes and patient care in target markets through innovative screening, diagnostic and treatment solutions."

BABY has been steadily growing earnings. They have beaten Wall Street's bottom line earning estimate the last four quarters in a row. They raised guidance the last three quarters in a row. Their most recent earnings report was April 22nd.

BABY reported that their Q1 earnings were up +19% from a year ago to $0.31 per share. Revenues were up +3.7% to $94.0 million. Management raised their 2015 guidance above analysts' estimates.

Jim Hawkins, President and Chief Executive Officer of BABY, commented on his company's results, "I am very pleased with our first quarter results as we achieved record revenues and earnings. Revenue came in at the high end of our guidance while earnings exceeded our guidance. I am most satisfied that we were able to achieve these results in the face of approximately $2 million of negative currency effects on revenue during the quarter."

Earlier this month (June 5th) BABY announced they were increasing their stock buyback program. A year ago they launched a $10 million share repurchase program. They just added another $20 million to their program.

Technically BABY has been showing relative strength the last three weeks. The point & figure chart is very bullish and forecasting a long-term target of $73.00. At the moment BABY is hovering just below resistance in the $42.75-43.00 area. Tonight I am suggesting a trigger to launch bullish positions at $43.10.

FYI: I am urging caution on the options. The spreads are pretty wide for all of BABY's October calls.

Trigger @ $43.10

- Suggested Positions -

Buy BABY stock @ $43.10

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

Buy the OCT $45 CALL (BABY151016C45) current ask $2.50
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:

Weekly Chart:



In Play Updates and Reviews

Stocks Rebound Ahead Of The FOMC

by James Brown

Click here to email James Brown

Editor's Note:
The major stock markets in Europe and the U.S. staged a bounce on Tuesday. The situation with Greece is still in the spotlight but traders are focused on tomorrow's FOMC meeting.

TASR hit our bullish entry trigger. We closed the SMCI trade this morning.


Current Portfolio:


BULLISH Play Updates

Hanesbrands Inc. - HBI - close: 33.06 change: +0.66

Stop Loss: 31.45
Target(s): To Be Determined
Current Gain/Loss: +2.2%
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:
06/16/15: HBI displayed some relative strength today with a +2.0% gain and a close above potential short-term resistance at $33.00. I don't see any changes from my recent comments.

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


IMAX Corp. - IMAX - close: 42.44 change: -0.65

Stop Loss: 39.90
Target(s): To Be Determined
Current Gain/Loss: -0.7%
Entry on June 15 at $42.75
Listed on June 13, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 732 thousand
New Positions: see below

Comments:
06/16/15: IMAX snapped a three-day rally with a little bit of profit taking today (-1.5%). Broken resistance near $42.00 should be new support and a dip there could be a new entry point.

Trade Description: June 13, 2015:
It's shaping up to be a blockbuster summer for IMAX. First there was the second Avenger movie in May. Now Jurassic World is stomping its way to box office success while IMAX gets to ride its coattails.

The "Avengers: Age of Ultron" delivered the second biggest opening day with $84.4 million in U.S. sales. That's just below the last Harry Potter movie, which brought in $91 million on its first day. The new Jurassic World movie, the fourth Jurassic Park dinosaur flick, notched the third biggest opening day with $82.8 million. The new dinosaur-themed juggernaut is poised to do $200 million over the weekend.

As of early May, this Avengers 2 movie has already raked in $425 million overseas and is poised to do more than $200 million this weekend. Estimates suggest it could hit $600 million in the U.S. It had already crossed the $1 billion mark for worldwide sales by the middle of May. This movie is produced by Marvel Studios, a division of Disney (DIS), but it also means big business for IMAX. The Ultron movie delivered the biggest opening night sales for any IMAX film ever.

IMAX is part of the services sector. They're considered part of the entertainment industry. According to the company, "IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theatres to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe. IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo, Shanghai and Beijing. As of March 31, 2015, there were 943 IMAX theatres (820 commercial multiplexes, 18 commercial destinations and 105 institutions) in 63 countries."

Today there is a battle for consumer's viewing habits. People consume their content on all sorts of devices from their smartphones, tablets, laptops, desktops, and their big screen TVs at home. Netflix and other streaming services have changed viewer habits and expectations. When consumers choose to go to the movies they want something different. According to IMAX's CEO that's why IMAX tickets are doing so well. It's an experience that can't be replicated at home.

The company had a lot of momentum going into 2015 thanks to huge hits like "American Sniper". IMAX has managed to beat Wall Street's earnings and revenue estimates for the last four quarters in a row. Their most recent earnings report was April 30th. Income surged +50% from a year ago. Analysts were expecting $0.05 a share. IMAX delivered $0.07. Revenues rose +29% to $62.2 million, significantly above estimates for $55.4 million.

IMAX CEO Richard Gelfond commented on their results, "This is a very exciting time for IMAX. Our continued progress in expanding our theatre network globally, along with our strong film performance during the first quarter, resulted in robust financial results with almost 30% revenue growth and over 50% adjusted earnings growth compared to the same period last year. With record results from Furious 7 in April and a great start to the Avenger's sequel internationally, the momentum has continued into the second quarter."

2015 is expected to be a huge year. The "Fast & Furious 7" film kept the momentum going. IMAX will also benefit from high-profile movies like "Avengers: Age of Ultron", Jurassic World, Terminator Genisys, Hunger Games: Mockingjay Part 2, the new James Bond movie, another Mission Impossible film (#5), and the next episode of Star War (#7) this December.

IMAX is rolling out new laser systems and they've signed long-term film deals with Disney and Warner Brothers. IMAX is currently growing at about 120 theaters a year. They're doing well in China. The Chinese movie box office is expected to eclipse the U.S. market by 2020.

Shares of IMAX popped to new all-time highs on May 28th after announcing its majority owned subsidiary, IMAX China Holding Inc., had filed for an IPO in Hong Kong. According to Reuters, IMAX is "looking to benefit from booming entertainment demand in the world's second largest economy." IMAX owns 80% of IMAX China. Shares of IMAX have spent the last couple of weeks churning sideways in the $40-42 zone but with a bullish trend of higher lows.

Friday's breakout past resistance near $42.00 could spark some short covering. The most recent data listed short interest at 18.4% of the 53.7 million share float. We are suggesting a trigger to launch bullish positions at $42.75

- Suggested Positions -

Long IMAX stock @ $42.75

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

Long SEP $45 CALL (IMAX150918C45) entry $1.60

06/15/15 triggered @ $42.75
Option Format: symbol-year-month-day-call-strike


LDR Holding - LDRH - close: 44.47 change: -0.23

Stop Loss: 41.85
Target(s): To Be Determined
Current Gain/Loss: +5.5%
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:
06/16/15: Tuesday turned out to be a very quiet day for LDRH. Shares consolidated sideways in a narrow range.

More conservative traders may want to use a higher stop loss.

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

06/10/15 new stop @ 41.85
06/03/15 triggered @ $42.15


Starbucks Corp. - SBUX - close: 52.97 change: +0.70

Stop Loss: 49.95
Target(s): To Be Determined
Current Gain/Loss: +3.8%
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:
06/16/15: SBUX surged to a new all-time high as the company expands its mobile ordering service. Late last year the company started experimenting with its mobile app. The idea was to let customers order and pay for drinks via the app and all they have to do is drive up and pick up their order. This mobile service when live in March this year for a small part of the SBUX empire. Today the company announced they were adding 21 states to this system. This bumps the number of locations to around 4,000 Starbucks.

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

06/16/15 SBUX expands it mobile service app coverage to more than 4,000 locations
06/04/15 new stop @ 49.95
05/18/15 triggered @ $51.05
Option Format: symbol-year-month-day-call-strike


Seattle Geneitcs, Inc. - SGEN - close: 46.62 change: -0.15

Stop Loss: 45.75
Target(s): To Be Determined
Current Gain/Loss: -1.1%
Entry on June 08 at $47.15
Listed on June 06, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.1 million
New Positions: see below

Comments:
06/16/15: SGEN is starting to appear stuck. The stock has been churning sideways in the $46.00-47.00 zone for the last few days. Shares ignored the rally in biotech stocks today and that's making us a little nervous. Tonight we're raising the stop loss to $45.75.

Trade Description: June 6, 2015:
It has been a very bumpy ride for biotech investors this year. Yet the biotech space continues to outperform the broader market. The IBB biotech ETF is up +20% in 2015 versus the NASDAQ composite's +6.6% gain. SGEN is faring even better with a +45.8% gain this year.

SGEN has been working on its antibody-drug conjugate (ADC) technology for years but it still sounds like science fiction. They can create ADCs that target a specific type of tumor cell in the body. It links up with a cancer cell and then delivers a cytotoxin, which is a cell-killing agent.

According to the company, "Seattle Genetics is a biotechnology company focused on the development and commercialization of innovative antibody-based therapies for the treatment of cancer. Seattle Genetics is leading the field in developing antibody-drug conjugates (ADCs), a technology designed to harness the targeting ability of antibodies to deliver cell-killing agents directly to cancer cells.

The company's lead product, ADCETRIS® (brentuximab vedotin), is a CD30-targeted ADC that, in collaboration with Takeda Pharmaceutical Company Limited, is commercially available for two indications in more than 55 countries, including the U.S., Canada, Japan and members of the European Union.

Additionally, ADCETRIS is being evaluated broadly in more than 30 ongoing clinical trials in CD30-expressing malignancies. Seattle Genetics is also advancing a robust pipeline of clinical-stage programs, including SGN-CD19A, SGN-CD33A, SGN-LIV1A, SGN-CD70A, ASG-22ME, ASG-15ME and SEA-CD40. Seattle Genetics has collaborations for its ADC technology with a number of leading biotechnology and pharmaceutical companies, including AbbVie, Agensys (an affiliate of Astellas), Bayer, Genentech, GlaxoSmithKline and Pfizer."

SGEN has a pretty robust pipeline with multiple therapies in phase 1 to phase 3 trials. That probably makes them a buyout target in this merger happy market. Yet that is just speculation on my part. Here's a list of SGEN's current pipeline (SGEN's pipeline).

I hesitate to mention earnings because most smaller biotech firms don't have any. The earnings they do have tend to be lumpy due to milestone payments from partners. SGEN actually has revenue from sales of its FDA approved therapy (listed above). Yet they continue to run losses every quarter. That's because running so many clinical trials is expensive.

Looking at the last couple of quarters SGEN has reported results that were above Wall Street estimates on both the top and bottom line. Revenues in the fourth quarter were up +10% from a year ago while revenues in the first quarter were up +20% from a year ago.

Recently SGEN has seen some bullish headlines regarding insider buying. The company's largest shareholder, Baker Brothers Advisors, bought more than one million shares of the company. This raised their stake in SGEN from 23.4% to 24.25%. Traditionally insider buying is seen as a big bullish vote of confidence on the company's future.

The stock has been soaring the last few weeks with a run from an intraday low of $33.68 on April 30th to a new 52-week high near $47.00 this Friday. You could definitely argue that SGEN is overbought. I'm sure a big portion of that move could have been short interest. It could be short covering that drives the next move higher. The most recent data listed short interest at 29% of the 92.9 million share float. That's enough for a potential short squeeze. Bears may be panicked with SGEN above resistance near $45.00.

SGEN looks pretty bullish right here. I'd be tempted to buy the stock now. However, tonight we are suggesting bullish positions on SGEN if shares trade at $47.15. Just keep in mind that trading biotech stocks is a higher-risk proposition. Not only do biotech stocks tend to be more volatile but you never know when the right or wrong headline (usually regarding some clinical trial) could send shares of your trade crashing or soaring overnight. Right now the IBB biotech ETF is poised to break through major resistance. That could spark short covering across the biotech space.

- Suggested Positions -

Long SGEN stock @ $47.15

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

Long SEP $55 CALL (SGEN150918C55) entry $2.45

06/16/15 new stop @ 45.75
06/08/15 triggered @ $47.15
Option Format: symbol-year-month-day-call-strike


Silicon Laboratories Inc. - SLAB - close: 56.54 change: +0.29

Stop Loss: 53.95
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on June -- at $---.--
Listed on June 10, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 311 thousand
New Positions: Yes, see below

Comments:
06/16/15: Yesterday's bounce in SLAB carried over into today's session. Shares kept pace with the market's rally and added +0.5%. The stock looks poised to breakout past short-term resistance at $57.00 soon. Our suggested entry point is $57.05.

Trade Description: June 10, 2015:
The Internet of Things (IoT) is poised to surge and SLAB plans to capture its chunk of the IoT pie.

Here's an excerpt from SLAB's explanation on the Iot:

The Internet has come a long way over the last 30 years. Old-fashioned IPv4 is giving way to IPv6 so that every device on the Internet can have its own IP address. Machine-to-machine (M2M) communication is on the rise, enabling devices to exchange and act upon information without a person ever being involved. The scope and scale of the Internet have changed as well: industry leaders predict that the number of connected devices will surpass 15 billion nodes by 2015 and reach over 50 billion by 2020. The challenge for the embedded industry is to unlock the value of this growing interconnected web of devices, often referred to as the Internet of Things (IoT). (You can read more about it here.)

SLAB is part of the semiconductor industry. According to the company, "Silicon Labs (SLAB) is a leading provider of silicon, software and system solutions for the Internet of Things, Internet infrastructure, industrial automation, consumer and automotive markets. We solve the electronics industry's toughest problems, providing customers with significant advantages in performance, energy savings, connectivity and design simplicity. Backed by our world-class engineering teams with unsurpassed software and mixed-signal design expertise, Silicon Labs empowers developers with the tools and technologies they need to advance quickly and easily from initial idea to final product."

SLAB has been beating Wall Street's estimates on both the top and bottom line. Revenues were up +10.8% in the fourth quarter and up +12.4% in the first quarter this year.

The company has recently been considered a takeover target. This speculation helped push SLAB through resistance near the $54.00 level. Shares have been able to maintain these gains. Now SLAB is starting to breakout from its recent sideways consolidation. The point & figure chart is bullish and forecasting at long-term target of $70.00. Today's intraday high was $56.75. We are suggesting a trigger to launch bullish positions at $57.05.

Trigger @ $57.05

- Suggested Positions -

Buy SLAB stock @ $57.05

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

Buy the OCT $60 CALL (SLAB151016C60)

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


Sarepta Therapeutics - SRPT - close: 28.30 change: -0.24

Stop Loss: 24.85
Target(s): To Be Determined
Current Gain/Loss: +2.4%
Entry on June 10 at $27.65
Listed on June 09, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.2 million
New Positions: see below

Comments:
06/16/15: SRPT suffered some profit taking with a -0.84% decline. I don't see any changes from my recent comments. No new positions at this time. Readers may want to start raising their stop loss.

The nearest support looks like the $27.00 level.

Trade Description: June 9, 2015:
Often biotech stocks can turn into a binary trade. You win big or lose big based on the company's clinical trials and success or failure with the FDA. SRPT is one such stock. Shares have seen some tremendous, gut-wrenching moves, both up and down, over the last couple of years.

If you're not familiar with SRPT they are a biotech stock (part of the healthcare sector). According to the company, "Sarepta Therapeutics is a biopharmaceutical company focused on the discovery and development of unique RNA-targeted therapeutics for the treatment of rare, infectious and other diseases. The Company is primarily focused on rapidly advancing the development of its potentially disease-modifying DMD drug candidates, including its lead DMD product candidate, eteplirsen, designed to skip exon 51. Sarepta is also developing therapeutics for the treatment of drug-resistant bacteria and infectious, rare and other human diseases."

SRPT does not have any products on the market, which is another reason they might be viewed as a binary trade. If they don't succeed with their Eteplirsen treatment for Duchenne Muscular Dystrophy (DMD) then its stock could collapse. DMD is a very rare disease. Only about 20,000 people a year are diagnosed with it in the U.S. It can be fatal by age 30.

SRPT made headlines on May 20th and the stock surged almost $10 with a +60% move to new eight-month highs. The reason behind the pop in the stock was the company's plan to submit a rolling New Drug Application (NDA) with the FDA for its Eteplirsen. This is a big deal. SRPT tried to get FDA approval to file an NDA back in 2013 but the regulators rejected their application saying they needed more data.

Now that SRPT can start the NDA process they should be able to meet with an advisory committee in the fourth quarter of this year, which could really generate a lot of volatility based on the committee's decision.

It's important to note that SRPT is facing competition from larger biotech firm BioMarin Pharmaceuticals (BMRN) who is working on a treatment for the same disease. If BMRN's treatment gets approved first it could send SRPT shares crashing.

Canaccord Genuity's analyst, Adam Walsh, issued an opinion on this SRPT news and multiple news outlets quoted him. According to Walsh,

"Looking forward, we see two potential catalysts to drive shares higher: 1) FDA acceptance of the NDA filing (60 days post-filing — est. late third quarter 2015); and 2) FDA announcement of Adcom to review the eteplirsen NDA. On the first, we fully expect FDA to accept the filing for review, given its blessing to submit the NDA. On the second, we believe an Adcom would allow for powerful testimony from DMD patients, parents, and advocacy groups in support of eteplirsen, which could sway committee members toward recommending approval. Thus, while we acknowledge that significant approval risks still remain, we would expect Sarepta shares to trend higher into an expected fourth quarter of 2015 Adcom."
The advisory panel is a major event for SRPT. One analyst suggested that if SRPT won approval their stock could shoot into the $40s. A different analysts said approval could launch SRPT's stock toward $100. Both said that another FDA rejection could send SRPT shares toward $10.

Part of the reason behind SRPT's big move in May was short covering. The most recent data listed short interest at 33% of the relatively small 35.8 million share float. Currently shares of SRPT are consolidating in a bullish pattern with resistance near $27.00-27.50. A breakout here could spark another wave of short covering.

There has been some speculation that SRPT is a buyout target although I did not see a lot of discussion about any potential suitors.

We are suggesting a trigger to launch small bullish positions at $27.65. We want to limit our position size because SRPT can be very volatile. I would consider this a higher-risk, more aggressive trade.

*small positions to limit risk* - Suggested Positions -

Long SRPT stock @ $27.65

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

Long AUG $30 CALL (SRPT150821C30) entry $3.00

06/10/15 triggered @ $27.65
Option Format: symbol-year-month-day-call-strike


TASER Intl. Inc. - TASR - close: 34.60 change: -0.31

Stop Loss: 32.25
Target(s): To Be Determined
Current Gain/Loss: -1.7%
Entry on June 16 at $35.20
Listed on June 15, 2015
Time Frame: Exit PRIOR to earnings in late July
Average Daily Volume = 2.3 million
New Positions: see below

Comments:
06/16/15: Our new trade on TASR is open. The stock saw a little bit of movement this morning and managed to tag our suggested entry point at $35.20. Unfortunately the rally didn't last. After the initial 45 minutes of trading shares of TASR fell into a stupor for the rest of the session.

I'd wait for a rally past today's high ($35.22) before initiating new positions.

Trade Description: June 15, 2015:
50,000 volts. That's what a TASER electro-muscular disruption (EMD) device shoots through your body to override the central nervous system. Your body freezes as all of your skeletal muscles contract at once.

Their website describes the company as "TASER International makes communities safer with innovative public safety technologies. Founded in 1993, TASER first transformed law enforcement with its electrical weapons. TASER continues to define smarter policing with its growing suite of technology solutions, including AXON body-worn video cameras and EVIDENCE.com, a secure digital evidence management platform."

They may have started with electrical weapons but now the company is expanding to mobile video cameras worn on a law enforcement officer's gear. The company was in the news earlier this year thanks to President Obama. Back in January Obama announced he wanted to spend $75 million over the next three years to outfit the nation's police force with body-worn cameras.

The White House believes that body-worn cameras on police will help reduce violence and avoid another event like the one in Ferguson, MO. As of January 2015 estimates suggest there are only 70,000 police wearing cameras now. Obama's plan would almost double that. Industry analysts are forecasting significant growth if the federal government approves Obama's plan. There are nearly 800,000 policemen in the U.S. There's plenty of room to grow. Plus TASR is expanding internationally.

The bears will argue that TASR's stock is priced for perfection and very expensive with a P/E near 77. There is no denying that. However, the body-camera business could soar. Currently it's less than 8% of their annual sales. The real winner could be TASR's Evidence.com ecosystem. This is a subscription service for law enforcement to back up and manage all the data from TASER electric weapons, body-worn cameras, and more.

In the last few months we've seen more and more police departments announcing they are spending millions on body camera systems. It's not just the U.S. The London police force just announced they were buying 20,000 body cameras for their policemen although they didn't say what brand they were choosing. We do know they were testing TASR's products.

Technically shares of TASR have been showing relative strength. The stock is up three weeks in a row and tagged new all-time highs last week. Traders bought the dip today at short-term technical support on the 10-dma. TASR bounced with a +2.69% gain that outperformed the major indices.

If this rally continues it could spark a potential short squeeze. The most recent data listed short interest at 25% of the 52.1 million share float. Tonight we are suggesting a trigger to launch bullish positions at $35.20. Please keep in mind that TASR can be a volatile stock. Traders may want to use small positions to limit their risk.

*consider using small positions to limit risk*

- Suggested Positions -

Long TASR stock @ $35.20

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

Long SEP $37 CALL (TASR150918C37) entry $2.65

06/16/15 triggered @ $35.20
Option Format: symbol-year-month-day-call-strike


Tempur Sealy Intl. - TPX - close: 64.88 change: +0.79

Stop Loss: 59.25
Target(s): To Be Determined
Current Gain/Loss: +2.7%
Entry on June 10 at $63.15
Listed on June 08, 2015
Time Frame: 6 to 8 weeks
Average Daily Volume = 890 thousand
New Positions: see below

Comments:
06/16/15: Shares of TPX bounced off its short-term trend line of higher lows this morning. The rebound carried TPX to a +1.2% gain and another multi-year high.

Trade Description: June 8, 2015:
Activist investors seek to influence management to incorporate major changes in a company with the expectation of unlocking shareholder value. Sometimes the mere mention of an activist investor buying a stock can get shares to move. In TPX's case the activists have won a major battle with management.

TPX is in the consumer goods sector. According to the company, "Tempur Sealy International, Inc. (NYSE: TPX) is the world's largest bedding provider. Tempur Sealy International develops, manufactures and markets mattresses, foundations, pillows and other products. The Company's brand portfolio includes many of the most highly recognized brands in the industry, including Tempur, Tempur-Pedic, Sealy, Sealy Posturepedic, OptimumTM and Stearns & Foster. World headquarters for Tempur Sealy International is in Lexington, KY."

TPX's most recent earnings report was April 28th. They announced their 2015 Q1 results with earnings of $0.55 per share. That was seven cents above estimates. Revenues were up +5.4% to $739.5 million. This was also above expectations. Management raised their 2015 forecast for both earnings and sales. The stock popped to new multi-year highs on this news. Yet the real story is probably the activist investors involved.

Hedge fund H Partners has been urging change with TPX management for months. TPX executives choose to fight. It came down to a proxy fight and shareholders voted to oust the CEO. Two more directors, who were under fire by H Partners have also left the board. H Partners built a website to inform shareholders their opinion on the company (www.fixtempursealy.com). There they posted their 90 page slideshow on why TPX needed a management change. You can see their presentation at this webpage.

The stock has been oscillating sideways in the $58-63 zone the last few weeks. It's starting to look like the consolidation may be over. TPX displayed relative strength last week and it held up today as well while the rest of the market was sinking. If TPX can trade over $63.00 it will generate a new quadruple top breakout buy signal on the P&F chart. We are suggesting a trigger to launch bullish positions at $63.15.

- Suggested Positions -

Long TPX stock @ $63.15

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

Long SEP $65 CALL (TPX150918C65) entry $3.50

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.

06/10/15 triggered @ $63.15
Option Format: symbol-year-month-day-call-strike


Zoetis Inc. - ZTS - close: 49.71 change: +0.44

Stop Loss: 47.90
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on June -- at $---.--
Listed on June 11, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.3 million
New Positions: Yes, see below

Comments:
06/16/15: ZTS outperformed the major market indices with a +0.89% gain. The stock is nearing resistance at $50.00 again. A breakout from this two-week consolidation would be bullish. Currently our suggested entry trigger is $50.50.

Trade Description: June 11, 2015:
ZTS is in the healthcare sector but they are not your average healthcare stock. The company is the world's biggest manufacturer of medicine and vaccinations for livestock and pets. They were spun off from pharmaceutical giant Pfizer (PFE) back in 2013. Last year ZTS' stock was a big performer with a gain of more than +50%. That outperformance continues this year with ZTS up +15.9% in 2015.

According to the company, "Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 60 years of experience in animal health, Zoetis discovers, develops, manufactures and markets veterinary vaccines and medicines, complemented by diagnostic products and genetic tests and supported by a range of services. In 2014, the company generated annual revenue of $4.8 billion. With approximately 10,000 employees worldwide at the beginning of 2015, Zoetis has a local presence in approximately 70 countries, including 27 manufacturing facilities in 10 countries. Its products serve veterinarians, livestock producers and people who raise and care for farm and companion animals in 120 countries."

ZTS CEO Juan Ramon Alaix recently spoke at an investor conference. He said the domestic pet and livestock market has hit $100 billion. While the market for animal health is currently at $24 billion and is expected to reach $33 billion by 2020. Alaix told investors that the animal health industry is extremely resilient and has continued to grow regardless of global economic conditions.

While Alaix has a bullish long-term outlook for his industry they company's sales growth seemed to stall last quarter. ZTS reported earnings on May 5th. 2015 Q1 results were $0.41 per share, which beat analysts' estimates. Yet revenues were flat at $1.10 billion. Guidance was in-line with Wall Street estimates.

What is noteworthy is that within their earnings press release the company discussed plans to cut costs and boost profits. ZTS will cut up to 25% of its workforce. They will exit several of its manufacturing plants. Plus they plan to discontinue several underperforming products. This is expected to generate $300 million in cost saves by 2017 and boost their adjusted operating margins from 25% in 2014 to 34% in 2017.

Why is ZTS launching its first major restructuring? Odds are Bill Ackman had an influence here. Mr. Ackman is the founder and CEO of Pershing Square Capital Management, an activist hedge fund. Late last year Pershing bought a big stake in ZTS. They currently own about 8% of the company or 41.8 million shares, valued around $2 billion. Since the hedge fund has jumped into ZTS they now have two board seats.

Looking at the bullish trajectory on ZTS' stock it appears that the rest of Wall Street is along for the ride and they expect Ackman to unlock more shareholder value out of ZTS. There has been some speculation that ZTS is actually a takeover target. Both Bayer and Sanofi have been rumored to be possible suitors.

The rally in ZTS stalled at round-number resistance near $50.00. Now after consolidating sideways in the $48-50 zone for the last several days ZTS looks poised to breakout. We are suggesting a trigger to open bullish positions at $50.50.

Trigger @ $50.50

- Suggested Positions -

Buy ZTS stock @ $50.50

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

Buy the Oct $55 CALL (ZTS151016C55)

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

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




BEARISH Play Updates

CenturyLink, Inc. - CTL - close: 32.22 change: -0.15

Stop Loss: 33.65
Target(s): To Be Determined
Current Gain/Loss: +4.2%
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:
06/16/15: CTL underperformed the market again with a -0.4% decline. Shares did bounce once they neared last week's lows. More conservative traders may want to lower their stop loss closer to $33.00 or maybe $32.80.

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


On Deck Capital - ONDK - close: 12.61 change: +0.13

Stop Loss: 13.25
Target(s): To Be Determined
Current Gain/Loss: +12.1%
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:
06/16/15: Hmm.... has ONDK suddenly found a bottom? Yesterday the stock plunged -8.6% on volume of 2.19 million shares. That's about five times the stock's normal volume. Could yesterday have been a capitulation sell-off? Today saw ONDK spiked down to a new low at $12.09 and quickly bounce. The rebound found resistance at $12.70, which was resistance yesterday afternoon. The rest of today saw the ONDK consolidate sideways in a very, very narrow range. This would suggest shares could see a big move one way or the other soon.

We are going to try and protect ourselves by lowering the stop loss down to $13.25.

No new positions at this time.

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

06/16/15 new stop @ 13.25
06/15/15 new stop @ 14.25
06/10/15 new stop @ 15.15
06/02/15 triggered @ $14.35
Option Format: symbol-year-month-day-call-strike


CLOSED BULLISH PLAYS

Super Micro Computer - SMCI - close: 32.57 change: -0.35

Stop Loss: 32.45
Target(s): To Be Determined
Current Gain/Loss: -2.5%
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:
06/16/15: We were unhappy with SMCI's recent performance. In last night's newsletter we decided to exit this trade at the opening bell today. SMCI opened at $32.81 and fell toward its exponential 200-dma near $32.00 before paring its losses.

- Suggested Positions -

Long SMCI stock @ $33.65 exit $32.81 (-2.5%)

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

JUL $35 CALL (SMCI150717C35) entry $1.50 exit $0.60 (-60.0%)

06/16/15 planned exit
06/15/15 prepare to exit tomorrow morning
06/04/15 new stop @ 32.45
05/22/15 triggered @ 33.65
Option Format: symbol-year-month-day-call-strike

chart: