Option Investor
Newsletter

Daily Newsletter, Tuesday, 12/22/2015

Table of Contents

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

Market Wrap

Seller Holiday

by Jim Brown

Click here to email Jim Brown

Sellers left early for the holidays but a few fund managers apparently stuck around to catch up on their window dressing for year-end. Volume was light but nobody is complaining about the gains.

Market Statistics

The markets moved higher at the open and never really looked back. There were some pauses but the gains were constant and measured. It was not a big short covering rally although there were more than likely some shorts that were covering given the bearish sentiment from last week.

There is a saying, "Never short a dull market." There is another saying far less well known, "Never hold shorts over a holiday." When U.S. markets are closed, many of the global markets are open. That is a recipe for a major surprise when the U.S. markets reopen. Given the current terror threat environment I would be surprised if we did not see some selling before Thursday's early close to protect against some event over the Christmas holidays.

The Dow peaked at 17,451 at 3:PM and a gain of just over 200 points. However, at about 3:PM a news story broke about a potential terrorist event in NYC. The Dow dropped about 75 points very quickly but the story was quickly put down. The NY police department sent an email to everyone on the force warning that this was a high stress threat period over the next few days. The email warned everyone to be on high alert. It did not mention any specific threat. One news source picked that up and misreported it according to the latest account. The NYPD also said there were no known threats or events. That shows you how nervous the market is today.

The economic reports were mixed but not enough to cause any market weakness. Existing home sales declined to 4.76 million from 5.36 million annually. That was a -10.5% decline from October. With record setting warm temperatures all across the country you would have expected home sales to be strong. Realtors blamed new regulations that are lengthening closing times and causing it to be harder to buy a home. Sales were down in all four regions.

Single-family home sales declined -12.1% from October while condo and co-op sales increased +1.7% from 600,000 to 610,000. Current inventory totaled 1.81 million homes for sale. That was also down -3.2% from October as some people take their homes off the market in the winter months. The seasonally adjusted home price rose +0.3% to $224,700.

The last revision of the Q3 GDP declined slightly from 2.1% to 1.98%. With Q1 at 0.64%, Q2 at 3.92% and Q3 at 1.98% that makes the year to date GDP 2.18%. We are not exactly setting the world on fire but Q3 was slightly higher than some estimates for the revision. We will not get the first Q4 estimate until January 29th.

Consumption was the biggest plus for the GDP adding +2.04 points but down from +2.4% in Q2. Fixed investment added +0.6% while inventories were a -0.71% drag along with exports at -0.26%. Government activities added +0.32%. Corporate profits declined -1.6% after a +3.5% gain in Q2.

The Q4 GDPNow real time update from the Atlanta Fed will not be updated again until tomorrow. It is currently showing +1.9% for Q4.



The Richmond fed Manufacturing Survey for December rebounded back into positive territory after three months in negative territory. New orders rebounded from -6 to +8 and the biggest gain in five months. Backorders jumped from -16 to zero and also the highest level in five months.

It is hard to get excited about the Richmond manufacturing survey since the chart looks more like an EKG than any kind of positive trend.

The Richmond services survey rose from -1 to zero. That compares to an 18 on the headline number in October. With warm weather and the holiday season in full swing, I would have expected significant improvement. This is not a good sign for January.



The calendar for the rest of the week is lumped into Wednesday but nothing on the list should move the market. There will be nobody at their trading desks to hear the news.


This was a very light day for stock news so this is going to be a short commentary tonight. Google (GOOGL) and Ford (F) are in talks to form a partnership to develop autonomous car technology. This would use the technology from Google and the manufacturing capabilities of Ford. Reportedly, the two sides have been talking for months. If Google is successful in recruiting Ford as a partner the path to an actual production vehicle could be shortened considerably.

Google prototypes have logged more than 1.3 million miles of autonomous driving. An official announcement could be made at the Consumer Electronics Show in early January. Ford's former CEO, Alan Mulally, is a director at Google. In September, Google named John Krafcik as CEO of the self-driving car project. He worked for Ford for 14 years in a number of management positions.

Ford shares spiked +3% on the news and GOOGL shares rose less than 1%.


Steelcase (SCS) rusted out today after reporting earnings that disappointed. Shares fell -23% on earnings of 30 cents compared to estimates for 33 cents. Revenue of $787.6 million also missed estimates for $812.9 million. The company guided for current quarter earnings of 20-24 cents compared to expectations for 26 cents. Revenue forecast of $720-$745 million also missed consensus estimates for $771.9 million.


Caterpillar (CAT) rallied +5% despite news the company was ordered to pay $73.6 million for stealing trade secrets from Miller UK. The two-month trial concluded that Caterpillar copied a coupler that enabled excavator operators to change scoops or other attachments without leaving their vehicles. Miller was supplying these to Caterpillar after designing them in 1998. CAT "developed" their own version in 2008 and ended the arrangement with Miller forcing the company to lay off 75% of its workforce and close an office in Georgia and another in Japan. Miller is asking for attorney's fees and other costs that could raise the total to $100 million.

CAT appeared to find a bottom at $65 over the last two weeks and today's rebound closed at $68.50. I still would not buy it because the low commodity prices and slowing Chinese economy means machine sales are going to be slow in the coming months. On Sunday, Caterpillar said global machine sales were down -11% in November, with world resource industry sales down -28% and construction industry sales down -7%. This does not sound like a buy to me.


Baxalta Inc (BXLT) shares rallied +4.5% on news that it may accept an updated bid of $30 billion from Shire PLC (SHPG). Shire is now offering 40% of the purchase price in cash to go along with the $45 offer. BXLT was trading at $37.50 before the news broke.


Church & Dwight (CHD), makers of Arm and Hammer products, will join the S&P-500 after the close next Monday. The company will replace Altera (ALTR), which is being acquired by Intel (INTC). Shares spiked about 3% to $87.50 in afterhours.


After the bell Nike (NKE) posted earnings of 90 cents that rose +22% and beat estimates for 86 cents. Revenue of $7.7 billion rose +4% but missed estimates for $7.8 billion because of currency issues. Revenue in China rose +24% while North America sales rose +9%. Futures orders, a measure of future sales, rose +20% on a constant currency basis. North American futures were up +14%, China +31% and Western Europe +17%. Futures orders will be delivered between the end of December and April 30th. In the year ago quarter futures orders were up +11%.

For the current quarter, Nike expects revenue growth in the high single-digit to low double-digit rate. On a constant currency basis, growth would be in the mid-teens percentages. Analysts were expecting 8.2%. With the 2016 Summer Olympics to fuel sales in 2016 Jefferies raised the price target to $150. Nike will probably beat that target. I would be a buyer of Nike on any weakness in January. Shares rallied to $134.50 in afterhours.

Under Armour (UA), Finish Line (FINL) and Foot Locker (FL) shares rose in afterhours after the Nike earnings.


Micron (MU) reported earnings of 24 cents compared to estimates for 23 cents. Revenue of $3.35 billion declined -26.7% and missed estimates for $3.46 billion. A 13% decline in DRAM selling prices held back the revenue numbers. The average selling price for Micron products declined -7%. Gross margins of 25% were 2% lower than in the comparison quarter. The company guided for the current quarter for earnings in the range of 5-12 cents and analysts were expecting 23 cents. Revenue forecast for $2.9-$3.2 billion also missed the consensus estimate for $3.47 billion. Continued weakness in PC sales remain a challenge for the sector. Shares fell to $13.75 in afterhours.


Crude prices traded up slightly at $36.41 as the February contract became the front month contract. The removal of the oil export ban last week has already benefitted U.S. oil companies. The price of WTI closed a penny higher than Brent and the first close at parity since the recession. American WTI will be in demand but we will not see any actual exports for several months. There are a lot of details that have to be handled before a tanker takes on a load and heads for Europe. The spread between WTI and Brent has been as high as $5 in recent years.

After the bell API said oil inventories fell -3.6 million barrels in the week ended on Friday. However, inventories at Cushing Oklahoma, the delivery point for WTI futures rose +1.5 million to a new high. The API release caused a 25-cent jump in WTI from the $36.14 close. The real inventory report is the EIA report due out in the morning. Crude normally trades higher on Tuesdays as shorts cover before the EIA report.


Markets

Volume was very light at 6.3 billion shares but we will be lucky to finish over 5 billion on Wednesday. The trading week is over for all practical purposes. There will be some more window dressing and some speculation positions hoping for a January rally but the volume may not be enough to push the markets higher.

Today was mostly shorts covering before they leave for the weekend and fund managers trying to add some winners to their portfolios in hopes of distracting from the worst returns since 1998.

Advancers were 5:2 over decliners and up volume was 3:1 over declining. It was a nice gain because the sellers apparently ran out of stock or they already left for the holidays. With the 12.4 billion shares traded on Friday and 8 billion or more every day last week there were plenty of traders running for the exits with their hair on fire. It is possible that anyone who wanted out before year-end has already made their exit.

The S&P smacked into resistance at 2,040 once again and that is where it closed. That suggests the Wednesday open could be a challenge. S&P futures are down -5 as I type this. If by chance the S&P does get through the resistance at 2,040, 2,075 and 2,095 there is still very strong downtrend resistance at 2100-2105. I think we should be happy just to retest 2,075 and not actually expect a breakthrough. Support is going to be Monday's lows at 2,005.


The stocks pushing the Dow lower last week are the ones lifting it this week with the exception of Exxon and Chevron, which were neutral. Goldman Sachs was the poster child for the biggest loser last week and was third from the top today. Caterpillar was the surprise with two different negative news items and still posting a gain. IBM is also confounding expectations after eight months of declines. It appears the Dogs of the Dow buyers are out in force. That is the strategy that buys the ten worst Dow stocks of this year in hopes they rebound in the coming year. In theory, Dow stocks do not cut their dividends after a bad year and that is the cushion for the next year. Between 1992 and 2011 the Dogs of the Dow strategy returned an average of 10.8% annually and outperformed the S&P with a 9.6% gain. The strategy has been back tested as far back as 1920.

The dog buyers will need to find some friends if they expect to lift the Dow back over 17,800 and downtrend resistance at 17,850. The Dow chart is showing a negative pattern regardless of the seasonal bullishness for this week and next.



The Nasdaq Composite posted a decent gain of +32 points but barely finished over 5,000, which is now psychological resistance with 5,008 just ahead. The high last Wednesday was 5,088 and that becomes a critical level in the days ahead. Another failure at a lower high would be very negative at this point. Support from Monday at 4,935 is the level to watch on the downside.

Apple had another negative day but it was fractional. The biotech sector was also fractionally negative and both those factors held the Nasdaq back.



The Russell 2000 small caps posted a +10 point gain but the index is still just a few points above Friday's lows at 1,120. The small caps are definitely not living up to their seasonal outperformance record. This is going to be a challenge for the big caps if the Russell continues to lag. Real resistance is 60 points above the close so it will be practically impossible for the Russell to breakout to the upside.


I am thrilled to see the markets post back-to-back gains but if you remember, they did that last week too before imploding. The seasonal trend is a bullish bias until December 28th then fade into the last two trading days of the year. I would be cautious about adding a lot of positions. Volume is going to be weak and the markets have definitely been volatile. Moving into and out of year-end could be rocky. January has been down the last two years but it was up strongly the three prior years. Which will it be this time?

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Jim Brown

Send Jim an email

 


New Plays

Beauty & Healthcare Products

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Cynosure, Inc. - CYNO - close: 43.22 change: +1.26

Stop Loss: 39.90
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 22, 2015
Time Frame: Exit PRIOR to earnings in February
Average Daily Volume = 214 thousand
New Positions: Yes, see below

Company Description

Trade Description:
CYNO has a product for the narcissist in all of us. Their products and services can help revitalize the skin, remove scars, remove hair, remove tattoos, treat cellulite and body contouring. Naturally business is booming in the United States.

CYNO is part of the healthcare sector. According to the company, "Cynosure develops, manufactures, and markets aesthetic treatment systems that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, reduce fat through non-invasive and minimally invasive laser lipolysis, reduce cellulite, clear nails infected by toe fungus, ablate sweat glands and improve vaginal health. Cynosure also markets radiofrequency energy-sourced medical devices for precision surgical applications such as facial plastic and general surgery, gynecology, ear, nose, and throat procedures, ophthalmology, oral and maxillofacial surgery, podiatry and proctology. Cynosure's product portfolio is composed of a broad range of energy sources including Alexandrite, diode, Nd:YAG, picosecond, pulse dye, Q-switched lasers, intense pulsed light and radiofrequency technology. Cynosure sells its products globally under the Cynosure, Palomar, ConBio and Ellman brand names through a direct sales force in the United States, Canada, Mexico, France, Morocco, Germany, Spain, the United Kingdom, Australia, China, Japan and Korea, and through international distributors in approximately 120 other countries."

The company was able to grow at more than 30% a year for several years. That growth has slowed down somewhat but they are still seeing significant growth. CYNO has beaten Wall Street's earnings and revenue estimates the last three quarters in a row. Their most recently quarterly report was October 27th. CYNO announced their Q3 results. Earnings were $0.21 a share with revenues rising +9.7% to $78.4 million. That beat expectations of $0.17 a share on revenues of $76.6 million. The results were driven by a +29% jump in North American revenues.

CEO Michael Davin commented on his company's quarter, "Continued momentum in North America drove another quarter of strong top-line growth and increased gross margin for Cynosure. Product revenue in North America was up 29 percent year-over-year to $40.8 million, or 63 percent of total product revenue for the quarter, on strong sales of the PicoSure, Icon and MonaLisa Touch product lines... As we discussed during our September 15th Investor Day, the U.S. pre-launch release of SculpSure, our new hyperthermic laser system for non-invasive fat reduction, is underway... We enter our seasonally strongest quarter with solid momentum. Looking ahead, the full U.S. launch of SculpSure is on schedule for the first quarter of 2016, which is planned to coincide with the rollout of the product to our European direct offices in France, Germany, Spain and the United Kingdom as well as our direct office in Australia. Key objectives for SculpSure for the year ahead include: securing additional international registrations, gaining expanded clearances for treatment areas in addition to the flanks and abdomen, pursuing aesthetic indications beyond non-invasive fat reduction and adding new distribution channels."

Shares of CYNO surged on its earnings results. Since then investors have been buying the dips that eventually pushed the stock up toward its all-time highs in the $42.00-43.00 area. Today shares got a boost from an analyst who reiterated their bullish outlook and raised the price target to $52.00. This helped CYNO outperform the major indices with a +3.0% gain and a breakout to new all-time highs.

Technically the trend is bullish. The breakout past resistance in the $42.00 area is also bullish. The point & figure chart is forecasting at long-term $66.00 target. Tonight we are suggesting a trigger to launch positions at $43.55. I am suggesting small positions to limit risk. CYNO does not see a lot of daily trading volume. I will also point out that CYNO does have options but the spreads look too wide to trade so we'll stick to just the stock.

Trigger @ $43.55 *small positions to limit risk*

- Suggested Positions -

Buy CYNO stock @ $43.55

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

Daily Chart:

Weekly Chart:



In Play Updates and Reviews

Bulls Rejoice With Another Rebound

by James Brown

Click here to email James Brown

Editor's Note:
The short-term oversold bounce in stocks continued on Tuesday with a relatively widespread advance. The NASDAQ is back above the 5,000 mark. The S&P 500 is only 20 points away from breakeven for the year.

SCTY and LUK hit our stop losses today. We closed the COLM trade this morning.


Current Portfolio:


BULLISH Play Updates

Activision Blizzard, Inc. - ATVI - close: 39.21 change: +0.47

Stop Loss: 36.40
Target(s): To Be Determined
Current Gain/Loss: +2.8%
Entry on December 04 at $38.15
Listed on December 03, 2015
Time Frame: Exit prior to ATVI earnings in early February
Average Daily Volume = 10.0 million
New Positions: Yes, see below

Comments:
12/22/15: ATVI surged at the open this morning. Unfortunately the rally stalled near last week's intraday high. Shares still managed to outperform the major indices with a +1.2% gain today.

No new positions at this time.

Trade Description: December 3, 2015
The movie industry gets a lot of press but the video game market is much bigger. One of the biggest companies in this arena is ATVI and they're about to get a lot bigger.

ATVI is part of the technology sector. According to the company, "Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty, Call of Duty Online, Destiny, Skylanders, World of Warcraft, StarCraft®, Diablo®, and Hearthstone. Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world."

Revenues for a video game company like ATVI tend to be lumpy based on new releases throughout the year. The company has managed to beat Wall Street's estimates on the bottom line the last four quarters in a row.

On November 2nd, 2015, ATVI announced they had signed a $5.9 billion deal to buy King Digital Entertainment (symbol: KING). This deal should give ATVI a huge boost in its mobile gaming footprint and could add a significant chunk to earnings in 2016. A Wedbush analyst believes the mobile gaming market is about $24 billion and growing at up to 20% a year for the next five years. They see the KING acquisition as a great fit for ATVI.

Several days later, on November 11th, ATVI announced that their new Call of Duty: Black Ops III game was the biggest entertainment launch of the year with a three-day opening weekend sales above $550 million. That surpassed any other entertainment launch of the year including books, music, or movies (surpassing the movie Jurassic World's massive opening weekend).

Recently a Cowen analyst said videogames are going to be another hot seller this year and they listed ATVI as their top pick in the industry. Multiple analysts have upgraded their stock price on ATVI following the KING acquisition news. Shares of ATVI have shown significant strength this year. The stock is trading at all-time highs and up +86% year to date. The point & figure chart is bullish and forecasting at $49.50 target.

Today's widespread market decline sparked some profit taking in ATVI. The stock found support at its rising 10-dma. If shares bounce from here we want to jump on board. Tonight we are suggesting a trigger to launch bullish positions at $38.15.

- Suggested Positions -

Long ATVI stock @ $38.15

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

Long FEB $40 CALL (ATVI160219C40) entry $1.47

12/04/15 triggered @ $38.15
Option Format: symbol-year-month-day-call-strike


iShares Russell 2000 ETF - IWM - close: 113.35 change: +1.03

Stop Loss: 111.45
Target(s): To Be Determined
Current Gain/Loss: +0.6%
Entry on December 15 at $112.65
Listed on December 12, 2015
Time Frame: 4 to 8 weeks
Option traders: exit prior to January option expiration
Average Daily Volume = 36 million
New Positions: see below

Comments:
12/22/15: The small cap IWM decided to join the big cap stocks in Tuesday's rally. The S&P 500 gained +0.88%. The IWM managed a +0.9% advance. This ETF looks poised to rally tomorrow morning. Levels to watch for potential resistance is $115.00 and $116.00 (with its 50-dma and 100-dma close to $116).

No new positions at this time.

Trade Description: December 12, 2015:
Stocks were hammered last week. The small caps really underperformed with the Russell 2000 small cap index plunging 60 points or -5%. The last two weeks have seen an 80-point drop (-6.7%) in the $RUT.

Last week's sell-off looks pretty ugly especially with Friday's breakdown below short-term support near 1,140 on the $RUT index. We think the weakness is overdone.

Normally the middle of December sees some tax-loss selling ahead of yearend. Last week the tax-loss selling was exacerbated by serious weakness in crude oil. Oil's plunge to new seven-year lows crushed the energy sector. There is also some general uneasiness about the Fed's likely decision to raise rates in the week ahead.

Historically the mid-December dip is a buying opportunity. The next two or three weeks is typically bullish and small caps often outperform. We want to be ready if that happens. One way to play the small caps is the Russell 2000 ETF, the IWM.

Friday saw the IWM sink -2.2% to close at $111.91. Tonight we are suggesting a trigger to launch bullish positions at $112.65. If triggered we'll try and limit our risk with a tight stop loss at $111.45, just under Friday's low.

- Suggested Positions -

Long the IWM @ $112.65

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

Long JAN $115 CALL (IWM160115C115) entry $1.18

12/15/15 triggered @ 112.65
Option Format: symbol-year-month-day-call-strike


Microsoft Inc. - MSFT - close: 55.35 change: +0.52

Stop Loss: 53.20
Target(s): To Be Determined
Current Gain/Loss: +1.4%
Entry on November 04 at $54.60
Listed on November 03, 2015
Time Frame: 6 to 8 weeks.
Average Daily Volume = 35.4 million
New Positions: see below

Comments:
12/22/15: MSFT extended its bounce to two days in a row with Tuesday's +0.9% gain.

No new positions at this time.

Trade Description: November 3, 2015:
MSFT is more than just a software company. MSFT is in the technology sector. It is considered part of the business software industry. According to the company, "Microsoft is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more."

The company is run under three segments. They have their productivity and business processes segment. This includes commercial office software, personal office software, and more. One of their fastest growing segments is MSFT's Intelligent Cloud business, which includes their server software and enterprise services. Then they have their "More Personal Computing" segment. This includes their Windows operating software, MSN display advertising, Windows phones, smartphones, tablets, PC accessories, Internet search, and their Xbox platform.

The stock has been dead money for almost a year. MSFT peaked near round-number resistance at $50.00 back in November 2014. Shares channeled sideways between support at $40 and resistance at $50 for months. That changed last month.

MSFT reported its 2016 Q1 results on October 22nd. Analysts were expecting a profit of $0.59 a share on revenues of $21.04 billion. MSFT beat both estimates with a profit of $0.67 a share. Revenues came in at $21.66 billion. Their Intelligent Cloud segment saw sales rise +8% but it was actually +14% on a constant currency basis.

Shares of MSFT soared the next day with a surge to 15-year highs. The big rally is based on investors' belief that MSFT and its relatively new management is successfully transitioning away from declining PC sales and moving quickly towards the cloud (and mobile).

Normally I would hesitate to buy a stock like MSFT after a big gap higher. Too often stocks tend to fill the gap. However, shares of MSFT have been able to levitate sideways in the $52.50-54.50 zone as traders keep buying the dips. Odds are growing we could see MSFT rally toward its all-time highs near $60.00 a share from December 1999. The big gain in October produced a buy signal on the point & figure chart, which is now forecasting a long-term target of $82.00. Tonight we are suggesting a trigger to launch bullish positions at $54.60.

- Suggested Positions -

Long MSFT stock @ $54.60

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

Long 2016 JAN $55 CALL (MSFT160115C55) entry $1.54

12/01/15 new stop @ $53.20
11/04/15 triggered @ $54.60
Option Format: symbol-year-month-day-call-strike


SolarEdge Technologies - SEDG - close: 27.68 change: -0.17

Stop Loss: 24.95
Target(s): To Be Determined
Current Gain/Loss: +29.0%
Entry on December 15 at $21.45
Listed on December 14, 2015
Time Frame: 6 to 8 weeks
Average Daily Volume = 790 thousand
New Positions: see below

Comments:
12/22/15: SEDG held up pretty well today. Most solar energy stocks dropped about -4% as the group suffered some overdue profit taking. Traders bought the dip in SEDG and shares pared their loss to -0.6%.

The intraday low was $27.00. More conservative investors may want to move their stop closer to this level. No new positions at this time.

Trade Description: December 14, 2015:
The world is changing. Over the weekend 195 countries signed a pledge to help cut greenhouse gas emissions and stall global warming. It doesn't matter if you're a climate change skeptic or a diehard supporter, governments are going to implement policies that change how we consume energy. It should be bullish for solar energy companies.

SEDG is in the technology sector. They're considered part of the semiconductor industry. According to the company, "SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. The SolarEdge system consists of power optimizers, inverters and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations."

The company is growing fast. Their Q2 results, announced on August 12th, beat estimates on both the top and bottom line. Revenues were up +120% from the prior year and management raised their Q3 guidance.

Q3 results were announced on November 4th. Analysts were expecting a profit of $0.29 a share on revenues of $110 million. SEDG beat both estimates. Earnings were $0.36 a share. Revenues were up +16.9% from the prior quarter and up +71.8% from a year ago to $115.1 million. Gross margins improved from 28.7% in Q2 to 29.1% in Q3.

Guy Sella, the founder, Chairman, and CEO of SolarEdge, commented on their quarter, "We are very satisfied with another strong quarter of record revenues and improved gross margins. In addition to our very positive financial results, this quarter we introduced our new HD Wave inverter topology, demonstrating our technological leadership in the market. We are confident that our global presence and expanded product offering position us well for continued growth." Management then raised their full-year 2015 revenue guidance.

The stock appears to have bottomed with the lows in the $15-16 area. The last few weeks have seen the trend reverse higher with a pattern of higher lows and higher highs. Shares recently broke through significant resistance at $20.00, at its 50-dma, and its trend line of lower highs. The point & figure chart is bullish and forecasting at $27.00 target.

The stock displayed relative strength today. We are suggesting a trigger to launch small bullish positions at $21.20. SEDG has been volatile in the past. I consider this a more aggressive, higher-risk trade.

- Suggested Positions -

Long SEDG stock @ $21.45

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

Long MAR $25 CALL (SEDG160318C25) entry $2.10

12/21/15 new stop @ 25.85
12/16/15 new stop @ 24.95
12/15/15 new stop @ 19.25
12/15/15 triggered on gap open at $21.45, trigger was $21.20
Option Format: symbol-year-month-day-call-strike


Strayer Education Inc. - STRA - close: 61.39 change: +0.76

Stop Loss: 57.45
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 21, 2015
Time Frame: Exit PRIOR to earnings in February
Average Daily Volume = 118 thousand
New Positions: Yes, see below

Comments:
12/22/15: STRA continued to rally but it wasn't quiet enough to hit our entry trigger. Traders bought the dip this morning at $59.20 and the stock surged back to new highs and flirted with the $62.00 area. Our suggested entry point to launch bullish positions is $62.05.

Trade Description: December 21, 2015:
STRA has been outperforming the market since its bottomed in the low $40s in July this year. The stock is currently up about +45% from its 2015 lows.

STRA is in the services sector. According to the company, "Strayer Education, Inc. is an education services holding company that owns Strayer University. Strayer's mission is to make higher education achievable for working adults in today's economy. Strayer University is a proprietary institution of higher learning that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice to working adult students. The University includes Strayer@Work, which serves corporate clients by delivering the next generation of performance improvement and workforce development. Strayer University also offers an executive MBA online and corporate training program through its Jack Welch Management Institute. The University is committed to providing an education that prepares working adult students for advancement in their careers and professional lives."

The for-profit education stocks have had a hard time in recent years. Accusations of predatory practices and misleading advertising has prompted tougher government oversight, new regulations, and fueled investor concerns (and lots of selling). Last year (July 2014) rival Corinthian Colleges unexpectedly shut their doors without warning and left students without a diploma and lots of student debt. Then several weeks ago, in early October, Apollo Education (APOL), the group that runs University of Phoenix, disclosed it was on probation with the Department of Defense and no longer allowed to recruit students on U.S. military installations. Shares of APOL plunged -10% on the headlines and it pressured the rest of the group lower.

STRA has managed to rally past these concerns, albeit after a very rough start to 2015. Looking at the last couple of years STRA soared in 2014 with a rally from the $33 area up to $80 by November 2014. That was the peak. STRA plunged from November 2014 until July 2015. Then suddenly shares reversed sharply higher following a better than expected earnings report.

It was July 29th when STRA announced their Q2 earnings results. Wall Street was expecting a profit of $0.99 a share on revenues of $108.1 million. STRA beat estimates with a profit of $1.11 a share. Revenues were down -2.6% but better than expected at $109.8 million. The company beat estimates again in October. STRA's Q3 results were $0.32 a share on revenues of $99.1 million, both above expectations.

The stock displayed relative strength last week. That relative strength continued today with a +2.8% gain and a breakout above round-number resistance at $60.00. If STRA can breakout past its recent intraday highs I wouldn't be surprised to see it rally toward $70. At the moment the point & figure chart is bearish but a rise above $62.00 will produce a new triple-top breakout buy signal.

Today's intraday high was $61.12. The November 30th intraday high was $61.62. Tonight we are suggesting a trigger to launch small positions at $62.05. We want to keep positions small to limit risk. STRA have proven over and over again that it can be a volatile stock. That's probably why the option spreads are so wide (and makes the options a little less appetizing).

A note on student debt - ballooning student debt has been a major financial concern for the U.S. over the last few years. Today student debt is about $1.2 trillion. That's more than auto loans or credit card debt and is only second to mortgage debt. Prognosticators have been warning about the bubble bursting in student debt for a while. It hasn't happened yet. I doubt it will happen in the next few weeks but investors should be aware that shares of STRA might be sensitive to any negative headlines regarding the subject.

Trigger @ $62.05 *small positions to limit risk!*

- Suggested Positions -

Buy STRA stock @ $62.05

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

Buy the APR $65 CALL (STRA160415C65)

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

Ctrip.com International - CTRP - close: 48.53 change: -0.17

Stop Loss: 50.55
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 15, 2015
Time Frame: 6 to 8 weeks
Average Daily Volume = 3.7 million
New Positions: Yes, see below

Comments:
12/22/15: CTRP is still drifting sideways along short-term support at $48.00.

Our entry point to launch bearish positions is currently at $47.65.

Trade Description: December 15, 2015:
Occasionally stocks can get ahead of themselves. Investor enthusiasm can become too frothy that drives a stock too high and shares eventually fall back to earth. That could be the case with CTRP.

CTRP is part of the services sector. According to the company, "Ctrip.com International, Ltd. is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. It is the largest online consolidator of accommodations and transportation tickets in China in terms of transaction volume. Ctrip enables business and leisure travelers to make informed and cost-effective bookings by aggregating comprehensive travel related information and offering its services through an advanced transaction and service platform consisting of its mobile apps, Internet websites and centralized, toll-free, 24-hour customer service center. Ctrip also helps customers book vacation packages and guided tours. In addition, through its corporate travel management services, Ctrip helps corporate clients effectively manage their travel requirements."

First the good news, CTRP is in a growing business. According to a Goldman Sachs analyst, the online travel market in China could triple to $200 billion by 2020. In October this year CTRP made a deal with rival online Chinese travel company Qunar, which was owned by Baidu.com (BIDU). The two companies merged and together will control 70% to 80% of the hotel and air ticket market in China. BIDU now owns 25% of CTRP. Larger rival Priceline.com (PCLN) is also investing in CTRP. PCLN recently invested $500 million in a convertible bond deal with CTRP, which could eventually lead to PCLN owning about 15% of CTRP.

CTRP is also seeing strong business results. Their Q3 earnings, which came out on November 18th, were way above expectations. Management then raised their Q4 guidance above Wall Street estimates. The stock also had a 2-for-1 split, which occurred on December 1st. If that wasn't enough good news the stock is also being added to the NASDAQ-100 on Monday, December 21st.

The merger news with Qunar produced the gap higher in October. The strong Q3 earnings and bullish guidance produced the big gap higher in November. With a rally from $30 in late September to $57 in mid November it appears CTRP just ran too far too fast. The stock has started to correct lower.

The stock split has taken place and it is common for stocks to see a post-split depression. They can also see a post-earnings depression after a big rally on the news. One could argue that all the good news has been priced into CTRP. What's the next catalyst to buy it?

Technically shares are breaking down. The bounce today failed at round-number resistance at $50.00. Shares did not participate in the market's rally yesterday or today. It looks like the pullback in CTRP is not over yet. The point & figure chart is bearish and forecasting at $41.00 target.

Now eventually CTRP will find support and shares will rebound again but support could be all the way down in the $37-40 zone. Yesterday's intraday low was $47.74. We are suggesting a trigger to launch bearish positions at $47.65. Please note this is an aggressive, higher-risk trade. The stock can be very volatile. Use small positions to limit risk.

Trigger @ $47.65 *small positions to limit risk*

- Suggested Positions -

Short CTRP stock @ $47.65

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

Buy the MAR $45 PUT (CTRP160318P45)

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


Eagle Materials Inc. - EXP - close: $58.94 change: -0.01

Stop Loss: 61.65
Target(s): To Be Determined
Current Gain/Loss: -0.5%
Entry on December 21 at $58.65
Listed on December 19, 2015
Time Frame: Exit PRIOR to earnings in February
Average Daily Volume = 800 thousand
New Positions: see below

Comments:
12/22/15: EXP slipped to new lows before bouncing back and closing virtually unchanged on the session. Keep an eye on the $60.00 level for short-term overhead resistance.

Trade Description: December 19, 2015:
The outlook for homebuilders has soured and the XHB homebuilders ETF has sunk toward multi-month lows. Meanwhile the energy sector is getting crushed as crude oil falls to six-year lows. Together they make a tough environment for EXP who serves both homebuilders and the energy industry.

EXP is in the industrial goods sector. According to the company, "Eagle Materials Inc. manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, Concrete and Aggregates, and Oil and Gas Proppants from 40 facilities across the US. Eagle is headquartered in Dallas, Texas."

The company has struggled to meet Wall Street earnings estimates all year long. The last three quarters in a row have seen EXP miss both the earnings estimate and the revenue estimates. Their most recent report was October 26th. Analysts were looking for a profit of $1.18 per shares on revenues of $336.6 million. EXP only delivered $1.11 a share, which was a -40% drop from a year ago. Revenues were up +15.5% from a year ago to $329.0 million, below expectations.

Technically the stock is in a bear market. The market's bounce on Tuesday and Wednesday produced an oversold bounce in shares of EXP but this has failed with the market's reversal lower in the last two sessions. The point & figure chart is bearish and forecasting at $47.00 target. EXP has broken down below what should have been round-number support at $60.00. The next support level could be the $50.00 region. Tonight we are suggesting a trigger to launch bearish positions at $58.65.

- Suggested Positions -

Short EXP stock @ $58.65

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

Long FEB $55 PUT (EXP160219P55) entry $2.18

12/21/15 triggered @ $58.65
Option Format: symbol-year-month-day-call-strike


GameStop Corp. - GME - close: 28.60 change: -0.15

Stop Loss: 31.25
Target(s): To Be Determined
Current Gain/Loss: +5.4%
Entry on December 11 at $30.22
Listed on December 10, 2015
Time Frame: 6 to 8 weeks
Option traders exit prior to January expiration
Average Daily Volume = 2.1 million
New Positions: see below

Comments:
12/22/15: GME continues to underperform the broader market. Shares lost -0.5% on Tuesday.

No new positions at this time.

Trade Description: December 10, 2015:
The future of video game purchases is digital downloads. That is why shares of GME have struggled the last couple of years. Their retail business model is in serious jeopardy.

GME is in the services sector. According to the company, "GameStop Corp., a Fortune 500 and S&P 500 company headquartered in Grapevine, Texas, is a global, multichannel video game, consumer electronics and wireless services retailer. GameStop operates more than 6,800 stores across 14 countries. The company's consumer product network also includes www.gamestop.com; www.Kongregate.com, a leading browser-based game site; Game Informer® magazine, the world's leading print and digital video game publication and the recently acquired Geeknet, Inc., parent company of ThinkGeek, www.thinkgeek.com, the premier retailer for the global geek community featuring exclusive and unique video game and pop culture products. In addition, our Technology Brands segment includes Simply Mac and Spring Mobile stores. Simply Mac, www.simplymac.com, operates 72 stores, selling the full line of Apple products, including laptops, tablets, and smartphones and offering Apple certified warranty and repair services. Spring Mobile, http://springmobile.com, sells post-paid AT&T services and wireless products through its 590 AT&T branded stores and offers pre-paid wireless services, devices and related accessories through its 69 Cricket branded stores in select markets in the U.S."

The company's earnings results have been mixed. Their Q2 report, announced on August 27th, came in better than expected. GME beat analysts' estimates on both the top and bottom line. Management raised their 2016 guidance. Guess what? Traders sold the news anyway.

Fast-forward to November. The stock has already reversed under major resistance near $48 again. Shares plunge on November 13th following an analyst downgrade. Ten days later GME reports their Q3 earnings results. Their profit was $0.54 a share. Not only is that 5% decline from a year ago but it's five cents below estimates. Revenues were down -3.6% to $2.02 billion, another miss. Hardware sales plunged -20% in the third quarter. Software sales were down -9%. GME's comparable store sales fell -1.1%, which was below guidance. If that wasn't enough management lowered their Q4 guidance below Wall Street estimates. Following this Q3 report the stock garnered several analyst downgrades.

One of GME's biggest challenges is digital downloads where customers do not have to leave their home (or dorm room) to purchase new games. They can just purchase it online over the Internet and have it immediately downloaded and start gaming. Not only does this jeopardize GME's new game sales but it also hurts a major portion of their business, which is reselling used games. If fewer people are buying hard copy discs of their video games then that means fewer people selling their used games back to GME, which the company resells at a healthy margin.

The trend of digital downloads started years ago but they are growing in popularity. The bearish story on GME is not a secret. That's probably the biggest risk. There are already a lot of bears in the name. The most recent data listed short interest at 53% of the 103 million share float. That much short interest can make the stock volatile to any potentially positive headlines. I think the bears are right and GME is headed lower as their business continues to struggle.

Another risk is valuation. The stock has fallen -33% in the last few weeks. Most of the analyst action in GME has been bearish with several downgrades. The stock currently trades with a P/E around 8.6. Eventually some analyst firm might decide to upgrade it on a valuation basis and the stock could see a short-term rally on this sort of headline. Fortunately traders usually sell the rallies in GME.

Currently GME is flirting with a breakdown below major support in the $31.50-32.00 area. A breakdown here could see the current downtrend accelerate. The point & figure chart is bearish and forecasting at $19.00 target. Tonight we are suggesting a trigger to open bearish positions at $31.40. Please note that this is an aggressive, higher-risk trade. GME can be a volatile stock. I am removing our normal entry point disclaimer regarding gap downs. Due to potential volatility traders may want to use the options instead of trying to short the stock. I am listing the January puts. You might want to consider the April puts (next available month).

- Suggested Positions -

Short GME stock @ $30.22

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

Long JAN $30 PUT (GME160115P30) entry $2.44

12/17/15 new stop @ 31.25
12/11/15 triggered on gap down at $30.22, suggested entry was $31.40
Option Format: symbol-year-month-day-call-strike


Harley-Davidson, Inc. - HOG - close: 45.48 change: +0.26

Stop Loss: 47.35
Target(s): To Be Determined
Current Gain/Loss: +0.6%
Entry on December 11 at $45.75
Listed on December 09, 2015
Time Frame: Exit prior to earnings in January
Average Daily Volume = 3.15 million
New Positions: see below

Comments:
12/22/15: HOG bounced off short-term support near $45.00 again and ended the session with a +0.5% gain.

If you're looking for an entry point consider waiting for a drop under $45.00.

Trade Description: December 9, 2015:
HOG was a big winner during the market's rally off the 2009 bear-market low. Shares surged from about $8 in early 2009 to over $74.00 in 2014. Unfortunately that bullish momentum is long gone.

HOG is in the consumer goods sector. According to the company, "Harley-Davidson, Inc. is the parent company of Harley-Davidson Motor Company and Harley-Davidson Financial Services. Since 1903, Harley-Davidson Motor Company has fulfilled dreams of personal freedom with custom, cruiser and touring motorcycles, riding experiences and events and a complete line of Harley-Davidson motorcycle parts, accessories, general merchandise, riding gear and apparel. Harley-Davidson Financial Services provides wholesale and retail financing, insurance, extended service and other protection plans and credit card programs to Harley-Davidson dealers and riders in the U.S., Canada and other select international markets."

The company has seen sales slow down. Their most recent earnings report was October 20th. Q3 earnings growth was flat (+0%) from a year ago at $0.69 a share. That missed estimates by 8 cents. Revenues only rose +0.9% to $1.14 billion, which also missed estimates. The company said their dealer new motorcycle sales were down -1.4% worldwide from a year ago. Their U.S. sales fell -2.5%. Shipments came in below guidance.

Matt Levatich, President and Chief Executive Officer, said, "We expect a heightened competitive environment to continue for the foreseeable future." The company lowered their shipment guidance for 2015. They also lowered their margin guidance. The stock reacted with a big drop on the earnings miss and lowered guidance. Multiple analyst firms downgraded the stock in response to the news.

Technically HOG is in a bear market. Shares have a bearish trend of lower highs and lower lows. HOG spent most of November struggling with resistance at $50.00. The recent weakness has pushed shares to new two-year lows. The next drop could push HOG toward $40 or lower. Tonight we are suggesting a trigger to launch bearish positions at $45.75.

My biggest concern is some analyst deciding that HOG looks "cheap" on valuation. At this point HOG could be a value trap. Cheap stocks can always get cheaper.

- Suggested Positions -

Short HOG stock @ $45.75

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

Long FEB $45 PUT (HOG160219P45) entry $2.59

12/16/15 new stop @ 47.35
12/11/15 triggered @ $45.75
Option Format: symbol-year-month-day-call-strike


iPath S&P500 VIX Futures ETN - VXX - close: 19.74 change: -1.02

Stop Loss: None, no stop at this time.
Target(s): $16.65
Current Gain/Loss: + 9.5%
2nd position Gain/Loss: +32.0%
Entry on August 25 at $21.82
2nd position: September 2nd at $29.01
Listed on August 24, 2015
Time Frame: to be determined
Average Daily Volume = 50 million
New Positions: see below

Comments:
12/22/15: Another widespread rally for the stock market pushed the VXX to a -4.9% decline.

No new positions at this time.

Trade Description: August 24, 2015
The U.S. stock market's sell-off in the last three days has been extreme. Most of the major indices have collapsed into correction territory (-10% from their highs). The volatile moves in the market have investors panicking for protection. This drives up demand for put options and this fuels a rally in the CBOE volatility index (the VIX).

You can see on this long-term weekly chart that the VIX spiked up to levels not seen since the 2008 bear market during the financial crisis. Moves like this do not happen very often. The VIX rarely stays this high very long.

(see VIX chart from the August 24th play description)

How do we trade the VIX? One way is the VXX, which is an ETN but trades like a stock.

Here is an explanation from the product website:

The iPath® S&P 500 VIX Short-Term Futures® ETNs (the "ETNs") are designed to provide exposure to the S&P 500 VIX Short-Term FuturesTM Index Total Return (the "Index"). The ETNs are riskier than ordinary unsecured debt securities and have no principal protection. The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity or upon redemption, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. An investment in the ETNs involves significant risks, including possible loss of principal and may not be suitable for all investors.

The Index is designed to provide access to equity market volatility through CBOE Volatility Index® (the "VIX Index") futures. The Index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects market participants' views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. Owning the ETNs is not the same as owning interests in the index components included in the Index or a security directly linked to the performance of the Index.

I encourage readers to check out a long-term chart of the VXX. This thing has been a consistent loser. One market pundit said the VXX is where money goes to die - if you're buying it. We do not want to buy it. We want to short it. Shorting rallies seems to be a winning strategy on the VXX with a constant trend of lower highs.

Today the VXX spiked up to four-month highs near $28.00 before fading. We are suggesting bearish positions at the opening bell tomorrow. The market volatility is probably not done yet so we are not listing a stop loss yet. Our time frame is two or three weeks (or less).

- Suggested Positions -

Short the VXX @ $21.82

Sept. 2nd - 2nd position (Double Down On The September 1st Spike)

Short the VXX @ $29.01

11/07/15 adjust exit target to $16.65
11/02/15 adjust exit target to $16.50
10/19/15 add an exit target at $16.25
10/15/15 planned exit for the October puts
10/14/15 if you own the options, prepare to exit tomorrow at the close
09/02/15 2nd position begins. VXX gapped down at $29.01
09/01/15 Double down on this trade with the VXX's spike to 6-month highs
08/25/15 trade begins. VXX gaps down at $21.82
Option Format: symbol-year-month-day-call-strike


Western Digital Corp. - WDC - close: 59.69 change: +0.63

Stop Loss: 60.45
Target(s): To Be Determined
Current Gain/Loss: -1.4%
Entry on December 18 at $58.85
Listed on December 17, 2015
Time Frame: Exit PRIOR to earnings in late January
Average Daily Volume = 3.5 million
New Positions: see below

Comments:
12/22/15: WDC slipped to new multi-year lows this morning when the stock pierced the $58.00 level. Unfortunately the weakness didn't last very long. WDC bounced. The good news is that the rebound stalled at round-number resistance near $60.00 midday. If shares breakout past $60.00 it could be trouble for bearish investors. Tonight we are adjusting our stop loss down to $60.45. More aggressive traders may want to keep their stop loss above the 10-dma (currently $60.66) or above the 20-dma (currently $61.80) as alternative stop loss placements.

No new positions at this time.

Trade Description: December 17, 2015:
Increased competition has turned hard drives into a commodity business. Prices for drives are falling. WDC is trying to move into higher-margin business with its acquisition of SanDisk (SNDK) but the action in the stock suggest Wall Street is concerned.

WDC is in the technology sector. According to the company, "Founded in 1970, Western Digital Corp., Irvine, Calif., is an industry-leading developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content. It is a long-time innovator in the storage industry. Western Digital Corporation is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers."

WDC, and its rivals, face an industry wide challenge. Consumer demand for personal computers (PCs) has been slowing down for years. PCs were replaced by laptops. Now laptop demand is in jeopardy because they are being replaced by tablet PCs. At the same time growth in technology and disk drive creation has generated the ability to produce huge disk drives with massive amounts of storage. That means consumers and businesses need to buy fewer drives for the storage they need.

Another issue has been the trend in solid state drives (SSD). Buyers prefer SSD drives because normally they are faster, thinner, and use less power than traditional spinning hard drives. Selling hard drives to PC and laptop makers is the majority of WDC's business (more than 40%). WDC recently announced plans to buy SanDisk (SNDK) who has a strong SSD business. That makes sense because demand for SSDs are replacing demand for normal hard drives. One problem is just like all computer hardware, it becomes cheaper to make as technology improves. The price of SSD drives has fallen sharply and the spread between SSD and normal hard drives will continue to narrow.

WDC's deal to buy SNDK is valued around $19 billion. The company is planning to borrow $17-to-$18 billion for the deal. The surge in debt has some analysts concerned about WDC. Another potential challenge is that WDC is also in the process of a deal with Unisplendour, which is a China-based company trying to make a $3.8 billion investment into WDC. At the time this Unisplendor investment was valued at $92.50 per share (for about 15% of WDC). You may have noticed that shares of WDC are now trading near $60.

WDC announced the SNDK deal on October 21st. Shares declined on the news. Actually shares of WDC were already in decline on speculation they might buy SNDK (for the record, the NASDAQ was in rally mode). There are concerns that WDC may have paid too much for SNDK.

Shares of WDC have been trying to find support in the $60-65 zone for the last few weeks. Now it looks like WDC is breaking down from this trading range and the next support level could be $50.00. Shares underperformed the market today with a -2.5% decline. Any further weakness could be an entry point for bearish trades. The point & figure chart is bearish and forecasting at $36.00 target. Monday's intraday low (Dec. 14th) was $59.06. Tonight we are suggesting a trigger to launch bearish positions at $58.85.

- Suggested Positions -

Short WDC stock @ $58.85

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

Long FEB $55 PUT (WDC160219P55) entry $2.62

12/22/15 new stop @ 60.45
12/18/15 triggered @ $58.85
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

SolarCity Corp. - SCTY - close: 51.32 change: -3.77

Stop Loss: 52.30
Target(s): To Be Determined
Current Gain/Loss: +37.1%
Entry on December 14 at $38.15
Listed on December 12, 2015
Time Frame: 6 to 8 weeks
Option traders: Exit prior to January option expiration
Average Daily Volume = 3.7 million
New Positions: see below

Comments:
12/22/15: Solar energy stocks experienced some profit taking today. SCTY plunged -6.8% after a massive run from its mid-December levels. Our stop loss was hit at $52.30.

*small positions to limit risk* - Suggested Positions -

Long SCTY stock @ $38.15 exit $52.30 (+37.1%)

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

JAN $40 CALL (SCTY160115C40) entry $2.78 exit $12.45 (+347.8%)

12/22/15 stopped out
12/21/15 new stop @ 52.30
12/17/15 new stop @ 51.85
12/16/15 new stop @ 50.85
12/14/15 new stop @ 35.85
12/14/15 triggered @ $38.15
Option Format: symbol-year-month-day-call-strike

chart:



CLOSED BEARISH PLAYS

Columbia Sportswear - COLM - close: 45.60 change: +0.01

Stop Loss: 46.25
Target(s): To Be Determined
Current Gain/Loss: -2.7%
Entry on December 08 at $44.75
Listed on December 07, 2015
Time Frame: Exit prior to earnings in February
Option traders exit prior to January expiration
Average Daily Volume = 284 thousand
New Positions: see below

Comments:
12/22/15: Shares of COLM were not cooperating. Last night we decided to exit positions this morning. Unfortunately the stock gapped open higher at $45.95 this morning, negatively impacting our exit.

- Suggested Positions -

Short COLM stock @ $44.75 exit $45.95 (-2.7%)

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

JAN $45 PUT (COLM160115P45) entry $2.80 exit $1.65 (-41.1%)

12/22/15 planned exit
12/21/15 plan on exiting tomorrow morning
12/18/15 COLM rallies on an upgrade
12/16/15 new stop @ 46.25
12/08/15 triggered @ $44.75
Option Format: symbol-year-month-day-call-strike

chart:


Leucadia National Corp. - LUK - close: 16.85 change: +0.24

Stop Loss: 16.85
Target(s): To Be Determined
Current Gain/Loss: +4.8%
Entry on November 30 at $17.70
Listed on November 28, 2015
Time Frame: 6 to 9 weeks
Average Daily Volume = 2.1 million
New Positions: see below

Comments:
12/22/15: LUK's oversold bounce continued with shares rising for a third day in a row. The stock hit our newly lowered stop loss at $16.85.

- Suggested Positions -

Short LUK stock @ $17.70 exit $16.85 (+4.8%)

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

MAR $18 PUT (LUK160318P18) entry $1.20 exit $1.55 (+29.2%)

12/22/15 stopped out
12/21/15 new stop @ 16.85
12/14/15 new stop @ 17.16
12/12/15 new stop @ 17.55
11/30/15 triggered @ $17.70
Option Format: symbol-year-month-day-call-strike

chart: