Editor's Note:
The small cap Russell 2000 index bounced with a +1.58% gain, outperforming the major indices.

We want to exit our MSFT trade on Monday.


Current Portfolio:


BULLISH Play Updates

Microsoft Corp. - MSFT - close: 44.69 change: +0.16

Stop Loss: 43.85
Target(s): To Be Determined
Current Gain/Loss: + 6.8%

Entry on June 17 at $41.85
Listed on June 14, 2014
Time Frame: 10 to 12 weeks
Average Daily Volume = 23 million
New Positions: see below

Comments:
07/19/14: MSFT had a big week with shares surging more than six percent. The stock is trading at multi-year highs. The company is due to report earnings on Tuesday, July 22nd. After such a strong run already MSFT could see some post-earnings profit taking.

We are suggesting an exit on Monday, July 21st, at the closing bell.

FYI: Current bid/ask on the option is $2.04/2.10.

current Position: long MSFT stock @ $41.85

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

Long 2015 Jan $45 call (MSFT150117c45) entry $1.16

07/19/14 prepare to exit on Monday at the close
07/17/14 new stop @ 43.85
06/30/14 new stop @ 39.90
06/17/14 triggered @ 41.85
Option Format: symbol-year-month-day-call-strike

chart:



Micron Technology - MU - close: 33.15 change: +0.10

Stop Loss: 32.65
Target(s): To Be Determined
Current Gain/Loss: - 4.2%

Entry on July 16 at $34.60
Listed on July 15, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 31 million
New Positions: see below

Comments:
07/19/14: It was a disappointing week for MU bullish. The stock broke out to new highs and then reversed sharply on Thursday. The bounce reversed on Friday as well. The larger trend is still bullish but short-term the stock looks like it might be in trouble.

We are going to try and reduce our risk by raising the stop loss to $32.65. I am not suggesting new positions at this time.

More aggressive traders may want to leave their stop below the simple 30-dma, which is near the bottom of MU's rising bullish channel (see chart below).

Earlier Comments: July 15, 2014:
The group of "old tech" stocks have been outperforming the market. Names like Microsoft (MSFT) and Intel (INTC) and Micron (MU) are seeing a lot of interest, especially has PC sales come in a lot better than expected. There appears to be a revival of the PC at least from business clients. One thing all of those PCs need is memory.

Micron Technology describes themselves as a global leader in advanced semiconductor systems. Micron's broad portfolio of high-performance memory technologies—including DRAM, NAND and NOR Flash—is the basis for solid state drives, modules, multichip packages and other system solutions. Backed by more than 35 years of technology leadership, Micron's memory solutions enable the world's most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications.

DRAM prices have been rising and that's good news for MU. The memory making industry has changed significantly in the last few years. Instead of multiple firms all beating themselves up on pricing the DRAM market is down to just three big companies. The major players are Samsung, Hynix, and Micron.

MU reported earnings back on June 23rd. Analysts were expecting a profit of 70 cents a share on revenues of $3.88 billion. MU delivered 79 cents a share and revenues rose +71.8% to $3.98 billion. The better than expected results has sparked some analyst upgrades and new price targets in the $38.00 to $50.00 range. MU is considered too cheap by some analysts. They're currently trading at just 10.5 times forward earnings. The broader market is trading for about 15.5 times. Shares of MU have been playing catch up the trend will likely continue.

After the closing bell tonight Intel reported earnings and beat analysts estimates thanks to better than expected demand for business computers. The mobile phone and tablet revolution has cannibalized PC sales for years. According to Intel tonight it looks like PC sales have stabilized and the "worst is over". That should be good news for companies like Micron.

Shares of MU are already in an up trend. The stock looks poised to breakout past its early July highs near $34.50. Tonight we're suggesting a trigger to launch bullish positions at $34.60, which would be a new twelve-year high for the stock.

Current Position: Long MU stock @ $34.60

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

Long Oct $35 call (MU141018C35) entry $2.59*

07/19/14 new stop @ 32.65
07/16/14 triggered @ 34.60
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

chart:



SoftBank Corp. - SFTBY - close: 38.06 change: +0.66

Stop Loss: 35.35
Target(s): To Be Determined
Current Gain/Loss: +3.7%

Entry on June 17 at $36.68
Listed on June 16, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 499 thousand
New Positions: see below

Comments:
07/19/14: SFTBY delivered a decent bounce on Friday with a +1.75% gain. Lack of follow through on Thursday's reversal is a good sign. SFTBY remains underneath resistance at $38.50.

Keep in mind that Alibaba is still expected to IPO this summer. There has been some speculation it could happen later this month. Others believe Alibaba wants to IPO on the "lucky" date of August 8th. The number eight is considered a lucky number is Chinese culture. However, there has been new speculation that Alibaba may not IPO until after Labor Day (September 1st).

Earlier Comments: June 16, 2014:
SoftBank Corp. has been referred to as the Warren Buffet of Technology although a better comparison is probably to Buffet's Berkshire Hathaway. They are a holding company with hundreds of businesses. According to the company website SFTBY has 235 subsidiaries and 108 affiliates (including 150 consolidated subsidiaries and 83 equity method companies). SoftBank Group possesses both advanced infrastructure and diverse services and content, and invests in promising companies working in the Internet field.

SFTBY owns 80.2% of Sprint Corp., 33.3% of eAccess Ltd., 100% of WILLCOM, Inc., 33.3% of Wireless City Planning Inc., 58.5% of GungHo Online Entertainment, and 42.5% of Yahoo Japan Corp. They also own 34% of Renren Inc., which is considered the Chinese version of Facebook. They also own 36.7% of Alibaba Corp., which is a much larger and more profitable version of Amazon.com. That's on top of owning SoftBank Telecom, SoftBank BB Corp. and SoftBank Mobile.

SFTBY's combined telecom assets makes the company one of the largest telecom/wireless players in Japan. In 2013 they added 4.1 million new subscribers and more than double the 1.19 million subscriber gain by NTT DoCoMo and 2.8 million for AU, which is owned by KDDI. Softbank added 47% of the Android phones activated in Japan and 39% of the iPhone 4s and 5c models. Both metrics are the largest in Japan and shows how Softbank is gaining market share.

Their Renren investment could be a big. China already has the largest Internet audience on the planet and it's only going to get bigger. Currently Renren has about 200 million users. This will grow. Like Facebook, Renren is developing its mobile platform. Renren is currently valued at about $8 per user but this seems extremely low considering what Facebook paid for WhatsApp.

SFTBY's majority stake in Sprint is starting to pay off. Sprint has had a rough few years working through its merger with Nextel. Sprint later acquired Clearwire. It looks like Sprint is now in recovery mode after adding +477,000 subscribers in Q4 2013 versus losing -337,000 in Q4 2012. SFTBY wants to acquire T-Mobile and combine it with Sprint. Currently 75% of U.S. customers are on AT&T or Verizon. SFTBY calls them an American duopoly but they believe by combining Sprint, the third largest carrier, with T-Mobile, the fourth largest, the combined company could compete with AT&T and Verizon, which would be good for competition and ultimately consumers.

Today the real allure of SFTBY is its 37% ownership of Alibaba. Amazon.com (AMZN) is an Internet powerhouse with sales of $86 billion in 2013 and a net profit of $274 million. Alibaba dwarfs AMZN with 2013 sales of $160 billion and a profit of $2.16 billion. Right now it looks like Alibaba will IPO this summer. Analysts have been estimating they could be the biggest IPO in history with a value of $160 to 185 billion.

There were new numbers out on Alibaba today with the company stating that its Q4 revenues only rose +39% to $1.9 billion. That's down from 62% growth in Q3. Margins retreated from 51.3% to 45.3% on higher marketing costs. This spooked investors today into thinking that maybe the valuation may not be in the $160-185 billion range.

We believe that SFTBY's shares are very undervalued and when the Alibaba IPO does hit this stock could soar. Tonight we're suggesting investors launch positions tomorrow morning at current levels. Depending on your trading style this could be an aggressive entry point. Technically SFTBY still has resistance in the $38-39 zone. More conservative investors may want to wait for SFTBY to close above $39.00 before initiating new positions. The risk of not launching positions now is that we do not know when Alibaba is going to announce its IPO. It could be any day and likely in the next few weeks. We will plan on exiting after Alibaba's first day of trading.

Current Position: Long SFTBY stock @ $36.68

07/11/14 News hits that SFTBY might buy T-Mobile soon.
06/30/14 new stop $ 35.35
06/17/14 trade opens. SFTBY gapped down at $36.68
note: SFTBY does not have options.

chart:



BEARISH Play Updates

Coach, Inc. - COH - close: 34.25 change: +0.16

Stop Loss: 34.60
Target(s): To Be Determined
Current Gain/Loss: -2.4%

Entry on July 16 at $33.45
Listed on July 14, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 10.7 million
New Positions: see below

Comments:
07/19/14: COH did not see much follow through on Thursday's bounce. The stock added +0.4% on Friday but the major indices were all up 1% or more. The simple 10-dma and 20-dma remain overhead resistance.

I am not suggesting new positions at current levels. Our stop loss remains at $34.60.

Earlier Comments: July 14, 2014:
Coach started in a Manhattan loft back in 1941. Their focus on high-quality leather goods has expanded to handbags, men's bags, women's and men's small leather goods, footwear, outerwear, watches, weekend and travel accessories, scarves, sunwear, fragrance, jewelry and related accessories. As of last year COH had almost 1,000 stores with more than 500 in North America and more than 400 in Asia.

It used to be that COH was the big brand in luxury items. It seemed like they could do no wrong with strong growth. It appears they out grew their exclusivity. It did not help that rival Michael Kors (KORS) was beginning to hits its stride and steal the spotlight from Coach.

It has been a tough year for retail companies. 2014 started with a very harsh winter that kept consumers indoors. COH was not immune to this effect. However, normal retailers could lay blame at the rising cost of gasoline or food items. That shouldn't apply to COH, which was always seen as a retailer to the higher-end consumer.

Desperate to stop the slide in sales COH resorted to promotions and discounts. This seemed to backfire. While the promotions may have increased foot traffic in their stores it helped sully their appearance as a luxury brand. Today COH is trying to turn things around. They're going to revamp their stores and go back to full luxury pricing. This could be expensive and pressure their margins as they try to turn things around.

COH held an investor day on June 19th. They told analysts that Coach would close 70 underperforming stores in North America as part of the turnaround plan. Most analysts leaving the meeting with COH turned bearish. In the three weeks following the analyst day shares of COH were downgraded six times.

Analysts have been reducing their earnings estimates on COH and that's never a good sign. Yet that could set up for an upside surprise when COH does report earnings on August 5th. Thus we do not want to hold over the announcement.

The June 2014 low was $33.60. I am suggesting a trigger to launch bearish positions at $33.45. Short-term traders may want to target a drop toward $30.00, which might be round-number support.

current Position: short COH stock @ $33.45

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

Long AUG $33 PUT (COH140816P33) entry $1.10*

07/16/14 triggered @ 33.45
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

chart:



DSW Inc. - DSW - close: 27.66 change: +0.71

Stop Loss: 28.25
Target(s): To Be Determined
Current Gain/Loss: - 2.8%

Entry on July 16 at $26.90
Listed on July 12, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.5 million
New Positions: see below

Comments:
07/19/14: DSW was showing relative strength on Friday with a +2.6% gain. The bounce may have been a reaction to comments from Jim Cramer who speculates that DSW might be a target to be taken private.

The bounce stalled at technical resistance at DSW's 40-dma. We are adjusting our stop loss to $28.25. I would not launch new positions at the moment.

Earlier Comments: July 12, 2014:
DSW Designer Shoe Warehouse runs over 400 company-owned stores. They also participate in hundreds of other shoe departments in regional department stores through their Affiliated Business Group.

There appears to be a bear market in designer shoes. At least that is the picture if you're looking at shares of DSW Inc. The stock has actually been a big winner for investors if you have owned it the past few years. On a post 2-for-1 split adjusted basis DSW traded down to $3.33 in 2009. It peaked in 2013 with a close at $47.22 in November last year. That's a huge run (more than 1,400%). Unfortunately last November was indeed the peak. DSW has been stuck in a bearish trend of lower highs and lower lows since then.

DSW lowered its earnings guidance back in February 2014. Of course back then just about all of the retail companies were warning about lack of sales and blaming it on the extremely cold winter weather. That was after weeks of worry over the 2013 holiday shopping season.

The U.S. economy is slowly recovering but consumer spending has not. There are still large chunks of the consumer who continue to struggle. The sharp rise in food prices this year combined with elevated gasoline prices has not helped. There seems to be a bifurcation in the consumer spending. There has been strong demand for big ticket items like housing and cars. Yet smaller discretionary spending is just not there.

The overall retail industry saw some improvement in May. There was hope that June same-store sales would come in better than expected. Analysts and investors were a bit disappointed when the retail industry delivered June numbers that were only in-line with estimates.

Meanwhile DSW continues to struggle. The company reported earnings on May 28th. Wall Street was expecting a profit of $0.48 per share on revenues of $622.9 million. DSW announced earnings of 42 cents on revenues of $599 million. A miss on both counts. Management then lowered their 2015 guidance. The company blamed the weather (again) and said they were facing an intense promotional retail environment. The Container Store (TCS) has a completely different product mix but recently mirrored DSW's troubles and said they were experiencing a retail "funk" (i.e. lack of sales).

Shares of DSW dropped from $32.50 to $23.60 on its earnings miss and earnings warning late May. Since then the stock has bounced but it has found new resistance in the $28.50 area. Now DSW looks like it is rolling over again.

Friday's low was $27.20. I am suggesting a trigger to open bearish positions at $26.90. If triggered I'm expecting DSW to at least test its May lows if not breakdown to new lows.

We will plan on exiting prior to DSW's late August earnings report.

current Position: short DSW stock @ $26.90

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

Long OCT $25 PUT (DSW141018P25) entry $1.05

07/18/14 new stop @ 28.25
07/16/14 triggered @ 26.90
Option Format: symbol-year-month-day-call-strike

chart: