Option Investor
Newsletter

Daily Newsletter, Thursday, 7/23/2015

Table of Contents

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

Market Wrap

Some Disappointment from Earnings

by Keene Little

Click here to email Keene Little
The market has done very well ignoring signs of a global economic slowdown but some recent earnings disappointment has forced investors to question the high market valuation and that's causing some profit taking. But so far it's only profit taking and it's not hard to argue for the bullish case.

Wednesday's Market Stats

Earnings from the bigger companies continue to disappoint, including MMM, AXP and CAT, and that had the stock market selling off again. Each company missed on revenues and has lowered their forecast for the remainder of the year. The strength of the U.S. dollar is getting much of the blame but sales in general are slowing, another indication that the global economies are slowing. I think any discussion of an economic expansion for the U.S. is premature since even a short-term improvement in the U.S. (if it's improving) will not be able to stand by itself against a global slowing. The good news for tomorrow, if the after-hours reaction holds into tomorrow morning, is that we could see the selling get reversed.

While indexes are near their multi-year highs the earnings picture is not as bright as had been expected. Of the companies reporting so far, 75% beat expectations and that's better than the 63% beat rate since 1994. The trouble is earnings expectations have been ratcheted down and a beat rate is not necessarily a good metric. Meeting revenue forecasts is a better metric (but even those forecasts are usually understated so that they have a better chance at producing an upside surprise) and only 52% of the reporting companies have thus far beat their forecasts, which is below the 61% average beat rate since 2002. Earnings for the current quarter are expected to dip 1% and therefore the market's high prices doesn't appear to be factoring in, yet, this earnings decline.

Today was light on economic reports, with only the unemployment data as the highlight (non-market moving). The good news about unemployment claims is that the 255K initial claims was less than the 279K expected and more importantly is now at the lowest level in over 41 years (for you match challenged, that's back in 1974). Continuing claims came in at 2207K, which was also less than the 2213 expected. One of the reasons why these numbers are not market moving is because they lag the market so much. A trough in unemployment claims tends to follow a peak in the stock market. The drop in unemployment claims also has many thinking it will embolden the Fed to raise rates sooner rather than later so a September hike is getting more press time.

I'll jump right into the charts since they've quickly moved from resistance to potential support and what happens on Friday could tell us how next week will go. The DOW's weekly chart below shows it has dropped down near its uptrend line from October 2011 - October 2014, which was last tested July 7-9. On June 30th it also tested its 50-week MA and then again July 6-10. It's currently at 17646, about 60 points below today's low, and that coincides with the 2011-2014 uptrend line. Then below that is an uptrend line from the February low, near 17530, which could be the bottom of a bullish sideways triangle. Not until the DOW gets below the February low at 17037 would the pattern turn definitively bearish (telling us the top is in place) but in the meantime it's simply been way too choppy since February to get a good sense about the next big move.

Dow Industrials, INDU, Weekly chart

The choppy price action since February is much easier to see on the daily chart below and the important thing to remember in this kind of chop is that the price pattern tends to be 3-wave moves (or something a little more complex but "corrective"). It's the reason we've seen so little follow through to what appears at the time to be a sustainable move. Usually, just when one side feels we're getting started with a tradable move the sharp reversal catches both sides leaning the wrong way. We might not be out of that environment yet. Even though the DOW closed slightly below its 200-dma, near 17745, today, it could quickly recover with a morning rally. At the moment, with futures up, it's looking like that could happen.

Dow Industrials, INDU, Daily chart

Key Levels for DOW:
- bullish above 17,050
- bearish below 17,650

While the DOW is testing its 200-dma, having already broken its 50-dma on Tuesday, SPX is now testing its 50-dma, which is near 2102.50. It broke and closed below it today so the bulls need a quick recovery tomorrow to keep that support level alive. If it drops lower it would test its 20-dma and uptrend line from March-June, both near 2090. A close below 2090 would make it more bearish but at the moment the bulls could still pull a baby bull out of the hat and start another rally leg to new highs (potentially to the 2150 area). The bearish pattern calls for a choppy consolidation following today's decline and then another leg down before getting a larger bounce into the end of the month and then down hard in August. The jury is still out with their decision which it will be -- a rally to a new high in August or a test of the July low near 2044 instead (and probably lower).

S&P 500, SPX, Daily chart

Key Levels for SPX:
- bullish above 2115
- bearish below 2089

Yesterday SPX consolidated around price-level S/R near 2115 but lost the battle this morning to hold on. It dropped quickly to the next price-level S/R line near 2100 and at this point it's not hard to see the move down from Monday as a sharp 3-wave move down. A 3-wave move down to support is the reason bears need to be cautious here since it is possible the pullback from Monday is just a correction to the rally, which will continue from here. Until we get an impulsive 5-wave move down from Monday, which would indicate at least an intermediate-term trend change, neither side can claim any kind of ownership of this market.

S&P 500, SPX, 60-min chart

The Nasdaq looks bearish following its gap up last Friday and then the gap down on Wednesday, which leaves an island reversal at resistance (the top of a parallel up-channel from March). But it bounced off support at its March 2000 high at 5132 with today's low at 5137. There's a trend line along the highs since January 2004 - October 2007, near 5125, which the Naz has been cycling around since February and therefore a break below 5125 would be more bearish. But it has plenty of trendline support and its 20- and 50-dma's coinciding near 5070 and not until it gets below 5000 would it begin to look more strongly bearish. At the moment, as long as it holds above 5132, it remains bullish and that looks like no problem for tomorrow if the futures are any indication. NDX futures (NQ) have already retraced today's decline (thanks mostly to AMZN).

Nasdaq Composite Index, COMPQ, Daily chart

Key Levels for COMPQ:
- bullish above 5232
- bearish below 5132

While the RUT was showing some relative strength the past few days, which was indicating a possible bullish reversal, it sold off sharp midday with the rest of the market and finished weaker than the others. It's in a parallel down-channel for its decline from last week and hit the bottom of the channel with this afternoon's low. So it could be ready for a bounce within the down-channel, the top of which is currently near 1260 (about 3 points below this morning's high), but I don't see enough bullish divergence to suggest I should be switching to the long side. A rally above this morning's high near 1263 would however have been turning at least short-term bullish.

Russell-2000, RUT, Daily chart

Key Levels for RUT:
- bullish above 1263
- bearish below 1249

The banks have remained relatively strong the past few days (although not today) while the broader indexes stalled, which is a result of more talk about a coming rate hike since higher rates make it more profitable for banks. But I strongly suspect the bank rally is premature and with inflation running low, if not negative, and so many signs of global slowing, I don't think the Fed will have what they need to justify starting to raise rates. The last thing they'd need is to raise rates and then turn around and lower them again. That would panic the market big time. Also, the chart suggests there might not be much more to the upside before the BKX runs into resistance. Where it's currently trading should be a reason for caution by the bulls and a reason to tighten up their stops.

The BKX weekly chart below shows the rally has now reached the 61.8% retracement of the 2007-2009 decline, at 80.86, with this morning's high at 80.87. Today's selloff following the morning high MIGHT have been the start of its reversal back down. I'd want to see it above the trend line along the highs from March-June, currently near 81.60, before thinking it's got much higher to go. Bearish divergence against the lower June high suggests resistance is going to hold and the larger pattern suggests the reversal could lead to a much larger decline than we've seen over the past two years.

KBW Bank index, BKX, Weekly chart

The Trannies had a bad day, down a little more than -2% and the big red candle on its daily chart shows the sharp reversal following the test of its downtrend line from April. It snapped its 20-dma, near 8186, with its close at 8127. I show a projection down to the 7800 area before it will set up a larger bounce correction next month but a rally above this morning's high at 8325 would be more immediately bullish (the same as for BKX).

Transportation Index, TRAN, Daily chart

The U.S. dollar has pulled back a little this week and today's low at 96.95 tested its uptrend line from June 18th. As long as that level holds as support we could get one more minor new high, near 98.40, to test its downtrend line from March-April, which is the line that I'm thinking will hold as the top of a sideways triangle for the dollar's consolidation this year. Above 98.40 would suggest another rally leg might be in the works instead.

U.S. Dollar contract, DX, Weekly chart

Commodity prices in general have dropped to lows not see since 2002 and the high dollar is getting the blame. But even as the dollar has consolidation since the high in March we've seen commodity prices slipping lower. It's part of the deflationary cycle and a reason I don't believe the Fed will be raising rates this year or next year. They're stuck in the corner into which they've painted themselves.

Gold also dropped lower this week (it got slammed lower on Monday) but there is the potential for at least a higher bounce if support at 1089-1090 holds. This is the 50% retracement of the 2001-2011 rally (1090) and the trend line along the lows since December 2013 (1089). The bearish wave pattern calls for gold to consolidate near this level and then head lower, probably down to about 1000 as it stair-steps lower. But if gold gets back above the previous shelf of support near 1141 we could see a much larger bounce/rally.

Gold continuous contract, GC, Weekly chart

On July 7th silver broke price-level support near 15.25, which was a shelf of support since last November. Now it's trying to hold support near 14.65, which is price-level S/R from 2006-2010. There are hints of bullish divergence showing up and support could hold here. If you're interested in trying to buy support you can at least keep your stop fairly tight (perhaps no lower than 14). A loss of support here could mean a continuation down to the $12 area. Silver would turn short-term bullish above its 50-day MA, currently near 15.95, but if it stays trapped between 14.50 and 15.25 it will stay bearish.

Silver continuous contract, SI, Weekly chart

Oil has continued its decline for 4 weeks running now and a little lower, near 44.33 it would again test its projection where the 2nd leg of the decline from 2005 is 62% of the 1st leg down. It would be part of a large sideways triangle if support there holds. At most I don't expect to see oil much below 40 before setting up a larger bounce.

Oil continuous contract, CL, Weekly chart

We'll get New Home Sales tomorrow morning, which is expected to improve slightly, but that will be the only report. Reaction to earnings is the bigger driver at the moment.

Economic reports and Summary

Conclusion

Visa (V), Amazon (AMZN) and AT&T (T) reported after the bell and AMZN gets the gold star for after-hour trading -- it's up +85 (+17.6%) to 567. Visa got a nice reaction as well, up +4.33 (+5.9%) to 75.99, while T jumped +0.76 (+2.1%) to 34.66. The after-hours reports had equity futures jumping higher, especially NQ, following the late-day rally and that might be pointing to an immediate bounce Friday morning. But futures started a bit of a pullback later in the evening and ES (SPX futures) was approaching the flat line (at its post-16:00 higher close) and the initial morning start is not guaranteed to be to the upside.

The decline from Monday looks sharp and therefore bearish but it's not hard to argue it's just a sharp 3-wave move down and as such it could be reversed from here. It's what this market has been doing to traders -- just as a move gets started and traders feel like they have a direction to trade they get slapped silly with a spike reversal. The choppy whippy price action since February has been full of this kind of price action and we don't know yet if it has ended or will continue into next month. A new high still can't be ruled out. But at the moment, until we see evidence of a reversal back up, the setup looks good for lower prices, perhaps after a consolidation on Friday. I'd stick with the short side (short the bounces) until it's proven that buying the dips is back in style.

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

Keene H. Little, CMT

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


New Plays

Significant Relative Strength

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Globant S.A. - GLOB - close: 34.20 change: +1.00

Stop Loss: 31.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on July -- at $---.--
Listed on July 23, 2015
Time Frame: Exit PRIOR to earnings on August 13th
Average Daily Volume = 251 thousand
New Positions: Yes, see below

Company Description

Trade Description:
One year ago GLOB priced its IPO at $10.00 per share. It opened at $12.95 on July 18th, 2014. Today the stock is up +164% from its first trade. Investors have been buying the dips and now GLOB is poised for another bullish breakout.

GLOB is in the technology sector. According to the company, "Globant (GLOB) is a new-breed technology services provider focused on delivering innovative software solutions by leveraging emerging technologies and trends. Globant combines the engineering and technical rigor of IT services providers with the creative approach and culture of digital agencies. Customers select Globant as the place where engineering, design and innovation meet scale. In only 12 years, Globant has grown into a company with more than 4,000 professionals working for customers like Google, JWT, EA and Coca-Cola, among others, has been recognized as one of the Top 10 Most Innovative Companies in South America by FastCompany, was included in the 2010 Cool Vendor in Business Process Services Report by Gartner, and has been featured in case studies at Harvard, MIT and Stanford."

As a relatively new public company GLOB does not have a big earnings history but what we do see is positive. Their first report as a public company was November 2014 where GLOB beat the earnings estimates while revenues were in-line. In February 2015 they reported their Q4 results that beat estimates. Revenues were up +19% to $55.1 million, which was also above expectations. Management guided in-line.

Their most recent report was May 14th. GLOB beat estimates on both the top and bottom line. Management guided 2015 earnings in-line with analysts' estimates but they raised their 2015 revenue estimate to $244-250 million, which was above expectations.

Shares of GLOB are currently testing resistance at the $35.00 level. We want to launch positions on a breakout. I'm suggesting a trigger at $35.15. The $32.00 level has been recent support so we'll start with a stop loss at $31.85. I am suggesting small positions. GLOB only has a float of 19 million shares and trades about 250,000 shares a day, which is not very much.

Trigger @ $35.15 *small positions to limit risk*

- Suggested Positions -

Buy GLOB stock @ $35.15

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:



In Play Updates and Reviews

Discouraging Earnings Undercuts The Market

by James Brown

Click here to email James Brown

Editor's Note:
Another day of high-profile earnings disappointments help drive the market lower on Thursday. Transportation stocks led the decline. Meanwhile commodities sank as well.

GWRE and VNET hit our entry trigger.


Current Portfolio:


BULLISH Play Updates

Benefitfocus, Inc. - BNFT - close: 45.72 change: +1.57

Stop Loss: 42.85
Target(s): To Be Determined
Current Gain/Loss: +4.7%
Entry on July 14 at $43.65
Listed on July 13, 2015
Time Frame: Exit PRIOR to earnings on August 3rd
Average Daily Volume = 173 thousand
New Positions: see below

Comments:
07/23/15: Good news! BNFT ignored the market's widespread weakness today and erased yesterday's losses. Shares rallied +3.5% and look ready to breakout past short-term resistance near $46.00 soon.

No new positions at this time.

Trade Description: July 13, 2015:
BNFT was founded 15 years ago with a dream to simplify understanding your healthcare benefits. They went public in 2013. Now they're the #1 cloud-based benefits management platform.

The company is considered part of the technology sector, specifically the application software industry. According to the company, "Benefitfocus, Inc. (BNFT) is a leading provider of cloud-based benefits software solutions for consumers, employers, insurance carriers and brokers. Benefitfocus has served more than 25 million consumers on its platform that consists of an integrated portfolio of products and services enabling clients to more efficiently shop, enroll, manage and exchange benefits information. With a user-friendly interface and consumer-centric design, the Benefitfocus Platform provides one place for consumers to access all their benefits. Benefitfocus solutions support the administration of all types of benefits including core medical, dental and other voluntary benefits plans as well as wellness programs."

Revenue growth has been pretty strong. BNFT reported its Q4 results back on February 24th. Earnings were a loss of ($0.39) per share. That was 23 cents better than expected. Revenues were up +32.7% to $40.2 million, which was above estimates. Management raised their Q1 guidance.

On May 6th the company announced its Q1 results, which were a loss of ($0.48) per share. That beat estimates by four cents. Revenues were up +39% from a year ago to $42.7 million, again this was above expectations. This time guidance was a little soft for Q2 and in-line with estimates for 2015.

Shares started to rally in June. That rally accelerated mid June thanks to an analyst upgrade. Now after a -18% correction from its June highs shares of BNFT look poised to run again. A rally from here could spark some short covering. The most recent data listed short interest at 32% of the very small 18.37 million share float. Tonight we are suggesting a trigger to open bullish positions at $43.65. More conservative traders may want to use a trigger at $44.05 instead. Our short-term target is the $50.00 area but we will plan on exiting prior to BNFT's earnings report in mid August (no firm date yet).

- Suggested Positions -

Long BNFT stock @ $43.65

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

Long AUG $45 CALL (BNFT150821C45) entry $2.85

07/16/15 new stop @ 42.85
07/14/15 triggered @ $43.65
Option Format: symbol-year-month-day-call-strike


Burlington Stores, Inc. - BURL - close: 55.09 change: -1.66

Stop Loss: 53.65
Target(s): To Be Determined
Current Gain/Loss: -1.7%
Entry on July 16 at $56.05
Listed on July 15, 2015
Time Frame: Exit PRIOR to earnings in September
Average Daily Volume = 1.6 million
New Positions: see below

Comments:
07/23/15: Ouch! What happened to BURL? Shares completely erased yesterday's big rally. The stock reversed with a -2.9% decline. Furthermore today's move has generated a bearish engulfing candlestick reversal pattern on the daily chart. That's potentially bad news for our trade. Another decline tomorrow would confirm the reversal but BURL should have support at its 100-dma.

More conservative traders may want to raise their stop loss.

I am not suggesting new positions at this time.

Trade Description: July 15, 2015:
Investors seem to be in a forgiving mood with BURL. The company's most recent earnings report was a disappointment but the stock has recovered. Now it looks like the longer-term bullish trend is poised to resume.

BURL is in the services sector. According to the company, "The Company, through its wholly-owned subsidiaries, operates a national chain of off-price retail stores offering ladies’, men’s and children’s apparel and accessories, home goods, baby products and coats, principally under the name Burlington Stores."

BURL's Q4 results were pretty good. The company announced these on March 17th. Earnings of $1.43 per share beat estimates and revenues were up +12% to $1.5 billion, also above estimates. Q4 comparable store sales surged +6.7% while gross margins improved 50 basis points. Management did warn that Q1 results would not be so hot but the stock didn't react to the negative guidance.

Shares did react when their chief merchandising officer resigned. This news hit on March 24th and shares of BURL peaked the next day. Shares fell more than 15% with a drop toward round-number support near $50 over the next few weeks. Then BURL reported its Q1 earnings on June 9th. Their bottom line results of $0.41 per share met estimates. Revenues were up +4.9% to $1.18 billion but that missed expectations.

The biggest miss was comps. BURL said their comparable store sales were only +0.8% versus the company's previous guidance of +2-3% and below analysts' estimates of +4%. Management issued mixed guidance for the second quarter and soft guidance for fiscal year 2016. They tried to soften the blow of bad news by announcing a $200 million stock buyback program to be completed over the next 24 months.

Wall Street was not happy over the terrible comps. Analysts are also concerned how a wage hike might impact margins. Wal-Mart, Target, the Gap, and TJX have all raised their minimum wage and other retailers are feeling pressure to raise theirs to retain employees. BURL announced they were raising their minimum wage to at least $9.00 an hour.

BURL's CEO Tom Kingsbury commented on their results, "We are pleased with our 64% increase in adjusted EPS which was driven by a robust gross margin expansion. While our comp sales were positive for the ninth consecutive quarter, we were negatively impacted by the timing of IRS tax refunds, lower markdown sales due to significantly less markdown inventory, increased store closures due to weather, and receipt flow issues in three key Easter businesses."

Naturally the market's reaction to bad news was to sell the stock. BURL plunged more than -8% posting its worst one-day loss since going public in 2013.

Fortunately for investors the sell-off was short-lived. BURL found support near $48.00 and its rising 200-dma. Now six weeks later the stock is above its pre-earnings highs and poised to breakout past potential resistance near $56.00. The long-term up trend looks poised to resume. Tonight we're suggesting a trigger to launch bullish positions at $56.05.

- Suggested Positions -

Long BURL stock @ $56.05

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

Long SEP $60 CALL (BURL150918C60) entry $1.30
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.

07/23/15 Caution: BURL has produced a bearish engulfing candlestick reversal pattern
07/16/15 triggered @ $56.05
Option Format: symbol-year-month-day-call-strike


Coherus Biosciences - CHRS - close: 35.99 change: -1.47

Stop Loss: 34.85
Target(s): To Be Determined
Current Gain/Loss: -4.0%
Entry on July 21 at $37.50
Listed on July 20, 2015
Time Frame: Exit PRIOR to earnings in early August
Average Daily Volume = 327 thousand
New Positions: see below

Comments:
07/23/15: It looks like traders were in the mood to sell CHRS today. The stock plunged from $38.00 to $35.10 (a -7.6% decline) before shares bounced. CHRS settled with a -3.9% loss on the day. I don't see any company-specific news to account for this relative weakness.

Technically today's move has generated a bearish engulfing candlestick reversal pattern on the daily chart. Tonight we'll raise our stop loss to $34.85.

No new positions at this time.

Trade Description: July 20, 2015:
Biotech stocks remain some of the best performers this year. The IBB biotech ETF is up +31% year to date. That compares to +10% for the NASDAQ composite and +3.4% for the S&P 500 index. CHRS is outperforming these indices and ETF by a wide margin with a +127.8% gain year to date.

CHRS is in the healthcare sector. According to the company, "Coherus is a pure-play biosimilar platform company that develops and commercializes high-quality therapeutics for major regulated markets. Biosimilars are intended for use in place of existing, branded biologics to treat a range of chronic and often life-threatening diseases, with the potential to reduce costs and expand patient access. Composed of a team of proven industry veterans with world-class expertise in process science, analytical characterization, protein production and clinical-regulatory development, Coherus is positioned as a leader in the global biosimilar marketplace. Coherus is advancing three late-stage clinical products towards commercialization, CHS-1701 (pegfilgrastim biosimilar), CHS-0214 (etanercept biosimilar) and CHS-1420 (adalimumab biosimilar), as well as developing a robust pipeline of future products."

I see this as a simple momentum play in one of the market's best-performing industries. CHRS is up seven weeks in a row and is not showing any signs of slowing down. The $35.00 level was briefly overhead resistance but now it seems to be support. Traders were quick to buy the dip this morning near CHRS' rising 5-dma.

I consider this an aggressive, higher-risk trade. We're suggesting a trigger to launch bullish positions at $37.50. We'll try and limit our risk with a stop at $34.40. More conservative traders may want to use a higher stop loss. Just remember that biotech stocks carry an added risk. We never know when the wrong headline could send shares gapping lower. Of course the right headline could send it soaring.

FYI: Earnings should be coming up in early August and we'll plan on exiting prior to the announcement. CHRS does have options but the spreads were a little wide. If you're an option trader you may want to use them to limit your risk.

- Suggested Positions -

Long CHRS stock @ $37.50

07/23/15 new stop @ 34.85, Caution - CHRS has produced a bearish engulfing candlestick reversal pattern
07/21/15 triggered @ $37.50


Guidewire Software, Inc. - GWRE - close: 60.08 change: +2.60

Stop Loss: 56.40
Target(s): To Be Determined
Current Gain/Loss: +3.1%
Entry on July 23 at $58.25
Listed on July 21, 2015
Time Frame: Exit PRIOR to earnings on Sept. 1st
Average Daily Volume = 368 thousand
New Positions: see below

Comments:
07/23/15: Our GWRE trade is open and off to a great start. Shares gapped open higher at $58.22 and quickly hit our suggested entry point to launch bullish positions at $58.25. The stock surged to $60.86 intraday before settling with a +4.5% gain.

I do not see any company-specific news behind today's surge higher but the breakout past resistance at $58.00 is bullish. We will raise our stop loss to $56.40.

No new positions at this time.

Trade Description: July 21, 2015:
The NASDAQ composite is up +10% year to date. GWRE is outperforming with a +13.3% gain. Shares spent three months, March-May, consolidating lower after the rally failed at resistance near $55.00. GWRE's direction changed after its latest earnings report.

GWRE is in the technology sector. According to the company, "Guidewire builds software products that help Property/Casualty insurers replace their legacy core systems and transform their business. Designed to be flexible and scalable, Guidewire products enable insurers to deliver excellent service, increase market share and lower operating costs. Guidewire InsuranceSuite provides the core systems used by insurers as operational systems of record. Additional products provide support for data management, business intelligence, anytime/anywhere access and guidance and monitoring. More than 180 Property/Casualty insurers around the world have selected Guidewire."

Last December GWRE reported its fiscal Q1 results that beat Wall Street estimates on both the top and bottom line. Management raised their Q2 guidance. On March 2nd GWRE reported earnings and revenues that beat analysts' estimates again. GWRE management then raised their fiscal year 2015 estimates. This earnings beat was not enough to lift the stock higher. Shares drifted lower for three months.

Shares of GWRE came alive again following its Q3 report on June 2nd. Earnings actually missed estimates by a penny with a profit of $0.04 per share. Revenues were only up +4% to $85.4 million, although that did beat expectations. The company provided lackluster Q4 guidance but guided for +20% revenue growth in fiscal 2016. The stock soared.

The rally off its June lows has pushed GWRE through multiple layers of resistance. Now the stock is setting new all-time closing highs. The point & figure chart is bullish and forecasting a long-term target of $80.00.

On a very short-term basis the $58.00 level appears to be resistance. We are suggesting a trigger to launch bullish positions at $58.25.

- Suggested Positions -

Long GWRE stock @ $58.25

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

Long OCT $60 CALL (GWRE151016C60) $2.80

07/23/15 new stop @ 56.40
07/23/15 triggered @ $58.25
Option Format: symbol-year-month-day-call-strike


Luxoft Holding, Inc. - LXFT - close: 63.33 change: +1.33

Stop Loss: 59.75
Target(s): To Be Determined
Current Gain/Loss: +1.6%
Entry on July 17 at $62.31
Listed on July 16, 2015
Time Frame: Exit PRIOR to earnings on August 12th
Average Daily Volume = 215 thousand
New Positions: see below

Comments:
07/23/15: LXFT was also showing relative strength on Thursday. Shares rallied +2.1% and closed above short-term resistance at $63.00. Investors could use this breakout to new highs as an alternative entry point to launch positions.

Trade Description: July 16, 2015:
Software stocks, based on the big software ETFs, are outperforming the major indices. One stock in that group is LXFT. The NASDAQ is up +8.3% year to date while LXFT is up +60%.

LXFT is part of the application software industry. According to the company, "Luxoft Holding, Inc. is a leading provider of software development services and innovative IT solutions to a global client base consisting primarily of large multinational corporations. Luxoft's software development services consist of core and mission critical custom software development and support, product engineering and testing, and technology consulting. Luxoft's solutions are based on its proprietary products and platforms that directly impact its clients' business outcomes and efficiently deliver continuous innovation. The Company develops its solutions and delivers its services from 24 dedicated delivery centers worldwide. It has over 9,500 employees across 27 offices in 15 countries in North America, Mexico, Western and Eastern Europe, Asia Pacific, and South Africa."

Please note that LXFT is a subsidiary of IBS Group Holding Limited. IBS is a Russian information technology company. Thus far the sanctions from the U.S. and Europe do not seem to be impacting LXFT. However, should the situation get worse between Russia and its neighbors there is no guarantee that LXFT will continue to ignore it.

Earnings and sales growth have been impressive at LXFT. Looking at the last four quarterly reports, LXFT has beaten earnings estimates three out of the last four quarters. They did beat Wall Street revenues estimate four quarters in a row. Revenue growth has been consistently in the +30% range this past year.

LXFT's most recent report was May 13th. The company delivered their 2015 Q4 results with earnings up +27.7% from a year ago to $0.46 per share. This was the first earnings miss in a long time. Analysts were expecting $0.49. Revenues were up +29.2% to $137.3 million, above estimates. Management reported full year sales of $520.5 million in their fiscal 2015. They're forecasting 2016 sales to be $625 million. That's a +20% improvement (actually +26% on a constant currency basis).

The stock's recent breakout past $60.00 is bullish. Traders just bought the dip at $60.00 today and the bounce looks like an entry point. We want to see a little follow through higher before we hop on board. Tonight we're suggesting a trigger to buy the stock at $62.15.

NOTE: LXFT does not trade a lot of volume. Investors may want to limit their position size to reduce risk. Low volume stocks can be more volatile.

*small positions to limit risk* - Suggested Positions -

Long LXFT stock @ $62.31

07/17/15 triggered on an intraday gap higher at $62.31.
Option Format: symbol-year-month-day-call-strike


Mobileye N.V. - MBLY - close: 60.66 change: +0.00

Stop Loss: 59.45
Target(s): To Be Determined
Current Gain/Loss: +7.4%
Entry on July 09 at $56.50
Listed on July 07, 2015
Time Frame: Exit PRIOR to earnings in early August
Average Daily Volume = 3.8 million
New Positions: see below

Comments:
07/23/15: MBLY tried to rally this morning but momentum stopped at $61.50. Shares spent the rest of the day drifting sideways and eventually closed unchanged on the session. Closing flat on the day when the rest of the market was sinking is okay with me. I'm still worried that MBLY has been forming a top over the last four days.

More conservative traders may want to take profits now. No new positions.

Trade Description: July 7, 2015:
The future of hands free driving is a lot closer than you might think. MBLY is leading the charge. Their technology is already in more than three million cars made by companies like BMW, General Motors, and Tesla.

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

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

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

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

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

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

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

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

Most of Wall Street analysts seem bullish. Industry experts forecast the camera-based ADAS market to grow +37% CAGR from 2014 to 2020. Goldman Sachs Recently upgraded the stock to a buy. They believe MBLY will see a 34% CAGR in sales through 2020 and will have 65% of the market by then. MBLY also garnered positive comments from a Morgan Stanley analyst who raised their price target to $68. They believe the street's 2015 estimates for MBLY are too low after the company delivered super strong growth in the last couple of quarters. A couple of weeks ago another analyst firm raised their price target on MBLY to $67.00.

The stock has displayed significant strength with a big bounce from its March 2015 lows near $32. The rally accelerated in mid June with a breakout past resistance in the $48.00 area. Traders quickly bought the dip last week on the market's big selloff (June 29th). Bulls bought the dip again today and MBLY looks poised to hit new multi-month highs tomorrow. Tonight we're suggesting a trigger to launch bullish positions at $56.40.

- Suggested Positions -

Long MBLY stock @ $56.40

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

Long AUG $60 CALL (MBLY150821C60) entry $2.00

07/21/15 new stop @ 59.45
07/16/15 new stop @ 57.75, readers may want to take some money off the table right here.
07/14/15 new stop @ 55.85
07/11/15 new stop @ 53.85
07/09/15 triggered on gap open at $56.50
Option Format: symbol-year-month-day-call-strike


21Vianet Group, Inc. - VNET - close: 20.71 change: +0.23

Stop Loss: 18.85
Target(s): To Be Determined
Current Gain/Loss: -0.2%
Entry on July 23 at $20.75
Listed on July 22, 2015
Time Frame: Exit PRIOR to earnings on August 25th
Average Daily Volume = 996 thousand
New Positions: see below

Comments:
07/23/15: The Chinese market rallied again today and that probably gave VNET a boost. Shares gapped higher at $20.58 and tagged the $21.00 level before paring its gains. VNET settled with a +1.1% gain. Our trigger to launch positions was hit at $20.75.

Trade Description: July 22, 2015:
Buckle your seatbelt. We are adding a fast-moving Chinese Internet stock to the play list tonight. This trade is not for the faint of heart. The Chinese market has been very volatile in recent weeks. This has been exacerbated by merger and acquisition news.

VNET is in the technology sector. According to the company, "21Vianet Group, Inc. is a leading carrier-neutral internet data center services provider in China. 21Vianet provides hosting and related services, managed network services, cloud services, content delivery network services, last-mile wired broadband services and business VPN services, improving the reliability, security and speed of its customers' internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet's data centers and connect to China's internet backbone through 21Vianet's extensive fiber optic network. In addition, 21Vianet's proprietary smart routing technology enables customers' data to be delivered across the internet in a faster and more reliable manner. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 2,000 customers that span numerous industries ranging from internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises."

The Wall Street Journal recently noted in June that seven U.S.-listed Chinese companies had been approached with offers to go private. That's a big spike in buyout offers. From January through May this year there had only been five such offers. One of the companies recently approached is VNET.

On June 10th VNET was approached with a preliminary non-binding proposal by Kingsoft Corp. and Tsinghua Unigroup International to go private for $23.00 per American depositary share ("ADSs"). That's the stock we can trade on the NASDAQ. Naturally the stock surged on this announcement. On June 16th VNET announced they had formed a special committee to review this proposal.

Unfortunately for shares of VNET and most Chinese stocks the Shanghai market in China had peaked in mid June and began to crash. The next three weeks saw a -30% plunge in the Shanghai market. The sell-off really accelerated in the first week of July. We can see the impact this market plunge was having on VNET with the big declines in early July.

Shares of VNET produced a huge bounce on July 9th when they announced the company had hired financial advisors and legal counsel to help them review the proposal to go private. In their press release they warned investors that "no decision has been made" nor is there any assurance that any "definitive offer will be made". This warning didn't stop the rally in VNET's stock which has continued to rise.

The Chinese government has thrown billions of dollars at their market to stop the crash and it seems to be working. The fever seems to have broken and this should provide a less dangerous environment for shares of VNET to trade in. We suspect VNET will continue to rally as the M&A talk heats up. However, this is an aggressive, higher-risk trade. There is no guarantee of a deal. Shares of VNET are clearly very volatile. I suggest small positions to limit risk.

NOTE: VNET does have options but the spreads are too wide to trade them.

*small positions to limit risk* - Suggested Positions -

Long VNET stock @ $20.75

07/23/15 triggered @ $20.75




BEARISH Play Updates

Cabot Corp. - CBT - close: 35.83 change: +0.10

Stop Loss: 36.85
Target(s): To Be Determined
Current Gain/Loss: +1.6%
Entry on July 20 at $36.40
Listed on July 18, 2015
Time Frame: Exit PRIOR to earnings on August 4th
Average Daily Volume = 457 thousand
New Positions: see below

Comments:
07/23/15: CBT spent Thursday's session consolidating sideways and managed to close with a +0.2% gain. Traders may want to use a new drop below $35.60 as an alternative entry point.

Trade Description: July 18, 2015:
The last couple of years have been rough for CBT investors. The stock peaked near $60.00 a share back in 2014. Today CBT is down -38% from its high and down -16% year to date.

CBT is in the basic materials sector. According to the company, "Cabot Corporation is a global specialty chemicals and performance materials company, headquartered in Boston, Massachusetts. The company is a leading provider of rubber and specialty carbons, activated carbon, inkjet colorants, cesium formate drilling fluids, fumed silica, and aerogel."

CBT's business seems to be slowing down. That's the picture I get looking at their last four earnings reports. 2014 Q3 revenues were up +4.3%. That slowed down to just +1.7% in 2014 Q4. Revenues fell -9.6% in Q1 2015. The slowdown accelerated in the second quarter. CBT reported its Q2 earnings on April 29th and revenues fell -22.7% to $694 million, significantly below analysts' estimates for $824 million. Q2 earnings were $0.53 a share, which missed estimates by 10 cents.

Three of CBT's four business segments saw declining sales. Reinforcement materials saw the biggest drop in the second quarter. Performance chemicals and specialty fluids also saw sales declines. Their purification solutions reported a small rise in sales.

Cabot President and CEO Patrick Prevost commented on his company's results, "We experienced a challenging quarter as the macroeconomic and competitive environment negatively affected our Reinforcement Materials and Specialty Fluids segments. Our volumes held up relatively well on a global basis, but we experienced margin pressure in Reinforcement Materials from lower contract pricing and feedstock-related effects. Purification Solutions results improved as customer orders rose for our mercury removal products in anticipation of the Mercury and Air Toxics Standards (MATS) implementation."

The MATS regulation did not work out well for CBT. That big drop in the stock price on June 29th was a reaction to the U.S. Supreme Court ruling on the EPA's attempt to regulate coal-fired power plant emissions. The market is interpreting the court's decision to mean less demand for CBT's chemicals that help power plants curb mercury emissions.

Technically CBT is in a bear market. The oversold bounce from the late June sell-off just failed. Now CBT is breaking down to new multi-year lows. We want to hop on board since the next support level looks like it could be $32 or lower. Tonight we're suggesting a trigger to launch bearish positions at $36.40. We will plan on exiting prior to CBT's earnings report on August 4th.

- Suggested Positions -

Short CBT stock @ $36.40

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

Long AUG $35 PUT (CBT150821P35) entry $0.75

07/22/15 new stop @ 36.85
07/20/15 triggered @ $36.40
Option Format: symbol-year-month-day-call-strike


Continental Resources, Inc. - CLR - close: 35.67 change: +0.54

Stop Loss: 36.85
Target(s): To Be Determined
Current Gain/Loss: +18.5%
Entry on June 22 at $43.75
Listed on June 20, 2015
Time Frame: Exit prior to earnings on August 5th
Average Daily Volume = 8.8 thousand
New Positions: see below

Comments:
07/23/15: Crude oil continues to sink but that didn't stop some of the oversold energy stocks from bouncing today. CLR rallied +1.5% but found resistance near $36.00.

The simple 10-dma has fallen to $36.60. We'll adjust our stop loss down to $36.85.

No new positions at this time.

Trade Description: June 20, 2015:
There are a lot of currents moving the oil industry these days. Currency moves, OPEC production, access to capital, falling rig counts, and potential bankruptcies. The stock performance for U.S. shale oil drillers have been suffering. CLR is one such stock.

CLR is in the basic materials sector. According to the company, "Continental Resources (CLR) is a Top 10 independent oil producer in the United States and a leader in America's energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and one of the largest producers in the nation's premier oil field, the Bakken play of North Dakota and Montana. The Company also has significant positions in Oklahoma, including its SCOOP Woodford and SCOOP Springer discoveries and the Northwest Cana play."

Earnings have taken a hit. CLR reported their Q1 results on May 6th. They reported a net loss of $186 million or 36 cents a share. That's a big drop from a 61-cent profit a year ago. After adjusting for writedowns and one-time items CLR said their quarterly earnings were a loss of ($0.09) per share. That was actually four cents better than analysts' estimates for a ($0.13) loss. Revenues plunged -41% to $592.89 million even though CLR's production surged +36% from a year ago.

Bullish investors could argue that crude oil put in a bottom earlier this year and the commodity should rally toward year end. Bulls can also point to falling production costs as a tailwind for the industry. CLR said their completion costs for wells dropped -15% from the end of 2014. Obviously this makes the company more profitable (or at least cuts their losses). Optimistically CLR expects their cost reductions to hit 20% by mid-year. There are some on Wall Street who think the industry has seen a bottom. Shares of CLR were upgraded by Goldman Sachs to a "buy" in May.

Bulls also note that the plunge in active rigs should be bullish for oil and thus oil companies. Weekly rig count, compiled by Baker Hughes, showed that the number of active oil and gas rigs fell again last week. This is the 28th week in a row that the number of rigs has declined. We're now down to 857 active oil and gas rigs, which hasn't been this low since early 2003.

Naturally you might think that a plunge to 12-year lows for active rigs means that U.S. oil production would shrink as well. That hasn't happened yet. While costs are going down oil producers are actually more efficient at pumping per well so production is going up. The low rig count is a leading indictor that production will eventually decline but it could be months from now. The U.S. EIA doesn't expect U.S. production to fall until early next year.

A bigger problem for the oil industry is competition. The recent OPEC meeting showed that the Saudis are willing to pump as much oil as they can to maintain their market share regardless of the price of oil. These are state-run oil companies and don't have to report to shareholders like American drillers. Plus the average cost per barrel of oil is a lot lower in Saudi than the U.S.

Another challenge for many drillers is capital. Drilling shale oil wells and fracking costs a lot of money. The drop in crude oil prices has made lenders less likely to loan money to drillers. To compensate for the lack of capital the oil drillers might be forced to sell more stock to raise capital and this would dilute current shareholders and drive stock prices lower. This past week the Cowen research company said, ""We expect ... E&Ps to issue additional equity in 2H2015 to fund 2016 capex as borrowing bases will be declining and debt metrics deteriorating."

The issue of debt and access to capital could be a fatal one. There are growing predictions that we will see up to a dozen publicly traded oil and gas companies file for bankruptcy between July 2015 and June 2016. Now CLR is not on the list but if we see smaller rivals start to go bankrupt it is going to put pressure on all the oil-industry stocks.

Oil stocks are also going to react to currency moves. The Federal Reserve wants to raise rates and that will lift the dollar. Even if the Fed doesn't raise rates the QE programs in Japan and Europe could drive the yen and euro lower, which boosts the dollar. A rising dollar pressures commodity prices lower.

A lot of investors are already betting on CLR to decline. The most recent data listed short interest at 17.9% of the 84.8 million share float. We think the bears are right. CLR has been underperforming the broader market. The point & figure chart is bearish and forecasting at $35.00 target. I suspect the 2015 lows near $42.00 could be support. Tonight we are suggesting a trigger to open bearish positions at $43.75.

- Suggested Positions -

Short CLR stock @ $43.75

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

Long SEP $40 PUT (CLR150918P40) entry $2.00

07/23/15 new stop @ 36.85
07/20/15 new stop @ 37.75
07/16/15 new stop @ 39.25
07/06/15 new stop @ 40.65
07/04/15 new stop @ 43.55
06/27/15 new stop @ 44.85
06/25/15 new stop @ 48.35
06/22/15 triggered @ $43.75
Option Format: symbol-year-month-day-call-strike


Murphy Oil - MUR - close: 34.51 change: -0.13

Stop Loss: 35.75
Target(s): To Be Determined
Current Gain/Loss: +16.1%
Entry on July 01 at $41.15
Listed on June 29, 2015
Time Frame: Exit PRIOR to MUR earnings on July 29th
Average Daily Volume = 1.9 million
New Positions: see below

Comments:
07/23/15: We are going to close this trade on MUR next week prior to its earnings report on July 29th. More conservative traders may want to just take profits now, especially if you have the option.

Tonight we will adjust the stop loss down to $35.75, just above yesterday's high.

No new positions at this time.

Trade Description: June 29, 2015:
The crash in crude oil prices in the second half of 2014 was pivotal turning point for the U.S. energy industry. Suddenly the booming oil and gas sector had its future being question with the price of oil now unprofitable for many drillers. Oil has managed a bounce from its 2015 lows while many of the oil and gas producers are still seeing their stocks decline.

MUR is in the basic materials sector. According to the company, "Murphy Oil Corporation is an independent exploration and production company with a strong, oil-weighted portfolio of global offshore and onshore assets. Exploration activities are focused in four main regions: Deepwater Gulf of Mexico, the Atlantic Margin, Southeast Asia and Australia."

The company reduced its 2015 capex outlook by -33% when they reported their 2014 Q4 results back in January. MUR's Q1 results came out in May. Profits evaporated with MUR delivering a loss of ($1.11) per shares versus a profit of $0.96 a year ago.

Management is trying to prop up their floundering stock price. On May 20th the company announced an accelerated stock buyback program of $250 million. This is part of a previously announced $500 million repurchase program from August 2014. The buyback doesn't seem to be working.

Goldman Sachs downgraded MUR to a "sell" in late May. Nearly a month later UBS has also downgraded MUR to a "sell". The UBS analyst expressed concern that MUR's production would likely decline in 2015 and 2016 since the company has cut back on investment.

The stock's attempt at an oversold bounce failed near $44 a couple of weeks ago and now shares are breaking down to new multi-year lows. The point & figure chart is bearish and forecasting at $34.00 target. Tonight we are suggesting a trigger to open bearish positions at $41.15.

- Suggested Positions -

Short MUR stock @ $41.15

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

Long AUG $40 PUT (MUR150821P40) entry $1.30

07/23/15 new stop @ 35.75
07/22/15 new stop @ 36.85
07/21/15 new stop @ 37.65
07/20/15 new stop @ 38.25
07/16/15 new stop @ 40.85
07/14/15 new stop @ 41.55
07/06/15 new stop @ 42.35
07/01/15 triggered @ $41.15
Option Format: symbol-year-month-day-call-strike


Noble Energy, Inc. - NBL - close: 36.70 change: -0.20

Stop Loss: 38.25
Target(s): To Be Determined
Current Gain/Loss: +4.9%
Entry on July 13 at $38.60
Listed on July 11, 2015
Time Frame: Exit PRIOR to earnings on August 3rd
Average Daily Volume = 4.2 million
New Positions: see below

Comments:
07/23/15: NBL tagged a new low before paring its losses. Shares closed down -0.5%. We will move the stop loss down to $38.25.

No new positions at this time.

Trade Description: July 11, 2015:
Crude oil prices are down sharply the last two weeks and its putting pressure on the oil stocks. NBL is an oil company who has seen its stock plunge to new multi-year lows.

According to the company, "Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa."

There are several issues impacting the price of oil, which is pressuring oil stocks lower. Back in April we saw crude oil inventories in the U.S. hit 80-year highs. They stayed elevated for awhile before eventually fading. Summer time is driving season. A lot of people are on the road for vacation. The weather is more favorable. This time of year demand for oil rises as oil refiners boost their production of gasoline and other fuels.

Given the seasonality of U.S. oil demand normally rising in summer it was a surprise to see oil inventories rising instead of falling. The U.S. Energy Information Administration (EIA) has reported an inventory build the last two weeks in a row. Their most recent report was for the week ending July 3rd. Analysts were expecting oil inventories to drop 1 million barrels. Yet the EIA said inventories rose almost 300,000 barrels.

This EIA news was followed on Friday with a report from the International Energy Agency (IEA) who downgraded their global oil demand growth forecast from +1.4 million barrels per day in 2015 to +1.2 million barrels in 2016. That is still growth but the world is currently facing oversupply issues. If demand falls it's going to put pressure on oil prices.

Saudi Arabia, the biggest member of Organization of the Petroleum Exporting Countries (OPEC) made it clear that they are willing to sacrifice price to maintain their market share. At the June 4th meeting OPEC left their output quota unchanged at 30 million barrels a day.

Crude oil is off its 2015 lows but the weakness this year has wreaked havoc in the oil sector. NBL reports its Q4 results in February. They beat the bottom line by three cents but revenues were down -19.4% from a year ago to $1.07 billion. That missed estimates by $233 million.

The sales decline accelerated in the first quarter. NBL reported its Q1 results on May 5th. They beat the bottom line by a penny but revenues crashed -45% to $759 million. That was $140 million below estimates.

If the oversupply issue wasn't bad enough the industry now faces a potential deal with Iran and the P5+1 nations. These countries are currently negotiating over Iran's nuclear program. If they do get a deal done it will unlock sanctions on Iran, which would allow the country to bring millions of barrels of oil to a market that is already struggling. Of course the opposite could occur. If the quarrelsome talks breakdown, and they could since they're already on their umpteenth postponed deadline, then crude oil prices could rally. That's probably our biggest risk on a bearish play in the oil sector. If the Iran talks breakdown it could fuel a big spike in the price of oil.

Technically NBL looks very weak. On the weekly chart below you can see the bear-flag consolidation pattern and the breakdown. On the daily chart there is what appears to be a bearish head-and-shoulders pattern. Plus, the simple fact that NBL continues to underperform, continues to sink, with the path of least resistance being lower. The point & figure chart is bearish and forecasting at $34.00 target.

The $38.70-38.80 area appears to be short-term support. Tonight we are suggesting a trigger to launch bearish positions at $38.60.

- Suggested Positions -

Short NBL stock @ $38.60

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

Long AUG $37.50 PUT (NBL150821P37.5) entry $1.40

07/23/15 new stop @ 38.25
07/20/15 new stop @ 39.05
07/16/15 new stop @ 40.15
07/13/15 triggered @ $38.60
Option Format: symbol-year-month-day-call-strike


Tessera Technologies - TSRA - close: 35.00 change: -0.03

Stop Loss: 36.65
Target(s): To Be Determined
Current Gain/Loss: +1.1%
Entry on July 16 at $35.40
Listed on July 09, 2015
Time Frame: Exit PRIOR to earnings in early August
Average Daily Volume = 518 thousand
New Positions: see below

Comments:
07/23/15: TSRA rallied more than +2% intraday but the rally failed near $35.80, just above its 10-dma. The stock reversed and closed virtually unchanged on the session. This is a small victory for the bears and reaffirms the bearish trend.

I am not suggesting new positions at this time.

Trade Description: July 9th, 2015:
TSRA claims that their technology is in 100% of today's smartphones. The stock was a pretty big winner last year with a rally from $18 to almost $36 in 2014. Shares appear to have peaked in March this year.

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

TSRA is not a widely followed stock on Wall Street. Their most recent earnings report managed to beat the estimates for the few analysts that follow the stock. Revenues were above expectations at $79.85 million but sales fell -9.6% from a year ago. Management did guide higher for the second quarter but the market reaction to this news was muted.

Shares of TSRA had been stuck under resistance near $40 for weeks. Unfortunately for shareholders TSRA began to breakdown in the last few days, possibly due to weakness in the semiconductor stocks. The point & figure chart has turned bearish and is forecasting at $29.00 target.

Today TSRA is hovering above key support near $35.00 and its simple 200-dma. A breakdown here could signal a drop toward round-number support at $30.00. Tonight we're suggesting small bearish positions at $35.40. We want to limit our positions size because TSRA has seen some sharp one-day spikes in the past.

*small positions to limit risk* - Suggested Positions -

Short TSRA stock @ $35.40

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

Long Aug $35 PUT (TSRA150821P35) entry $1.20

07/20/15 new stop @ $36.65
07/16/15 triggered @ $35.40
Option Format: symbol-year-month-day-call-strike