Editor's Note:
The stock market's early morning rally faded on Tuesday as investors digested new sanctions on Russia.

FIVE has been removed. FRGI hit our stop loss.


Current Portfolio:


BULLISH Play Updates

Hewlett-Packard Co. - HPQ - close: 35.94 change: +0.34

Stop Loss: 33.20
Target(s): To Be Determined
Current Option Gain/Loss: +1.7%
Listed on July 19, 2014
Entry on July 23 at $35.35
Time Frame: 8 to 12 weeks
Average Daily Volume = 8.9 million
New Positions: see below

Comments:
07/29/14: The relative strength in shares of HPQ continues. The stock raced higher this morning and traded above $36.00. HPQ eventually pared advanced and settled with a +0.95% gain.

After a decent three-day rally investors may want to wait for a pullback before considering new positions.

Earlier Comments: July 22, 2014:
Hewlett-Packard was famously started by two Stanford University students back in 1939 in a rented garage. The business that started inside a one-car garage has grown into a massive $65 billion company. Today the company makes printers, personal computers, software, IT services and infrastructure.

It has been a good year for old school technology companies. Microsoft (MSFT) is up +19.8% this year. Intel (INTC) is up +31.2%. HPQ is currently up +23.3%. All three of them are outperforming the major U.S. indices. What's also noteworthy is that all three appear to be benefitting from MSFT's decision to discontinue technical support for its Windows XP operating system.

In April this year Microsoft announced they would stop providing support for XP after 13 years. Instead of upgrading their software the data suggests that many consumers and business have chosen to upgrade their entire computer. Why is that significant? As of April over 25% of computers connected to the Internet were still using XP.

This upgrade cycle was definitely a boon for Intel (INTC). INTC recently reported significantly better than expected earnings and a lot of that was due to stronger PC sales, especially from business clients. This same story will probably be bullish for HPQ as well.

Shares of HPQ have been slowly marching higher and currently sit at two and a half year highs. The stock looks poised to breakout past its mid-June peak. Today's high was $35.29. We are suggesting a trigger to open bullish positions at $35.35.

The Point & Figure chart is forecasting a long-term target of $47.00. We probably won't hold on to HPQ that long since the company is scheduled to report earnings on August 20th.

- Suggested Positions -

Long HPQ stock @ $35.35

- or -

Long Sep $35 call (HPQ140920C35) entry $1.49*

07/23/14 triggered @ 35.35
*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


SoftBank Corp. - SFTBY - close: 37.03 change: +0.04

Stop Loss: 35.75
Target(s): To Be Determined
Current Gain/Loss: +0.9%

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:
07/29/14: SFTBY is virtually unchanged on the session after retreating from its 100-dma intraday. The stock remains inside its $36.00-38.50 trading range.

I would hesitate to open new positions at this time.

Alibaba IPO -- Previously there was hope that Alibaba might IPO in July. Then there was speculation that they might IPO on August 8th since the number eight is a lucky number in China. Now the most recent update suggests that Alibaba will not IPO until September.

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

07/24/14 new stop @ 35.75
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.



BEARISH Play Updates

DSW Inc. - DSW - close: 26.21 change: -0.13

Stop Loss: 28.25
Target(s): To Be Determined
Current Gain/Loss: + 2.6%

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:
07/29/14: Jim Cramer thinks DSW could be a takeover candidate. Thus far the stock is not acting like it. No one seems to be rushing in to buy it on speculation DSW will be acquired. Instead DSW followed the S&P 500 lower today.

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



Cepheid - CPHD - close: 39.50 change: +0.31

Stop Loss: 41.10
Target(s): To Be Determined
Current Option Gain/Loss: -0.8%
Entry on July 28 at $39.20
Listed on July 26, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 680 thousand
New Positions: see below

Comments:
07/29/14: Shares of CPHD rallied this morning after the company issued a press release stating they just finished a record-setting shipment of 774 GeneXpert systems to one country in one quarter. That country is China. The country faces a serious issue with tuberculosis (TB) with one million new cases of TB each year. Altogether CPHD has sold 970 GeneXpert systems to China.

The stock briefly rallied above $40.00 on this news but retreated twice to settled back below $40.00. I would watch for a new drop under $39.25 as an entry point for bearish positions.

Earlier Comments: July 26, 2014:
CPHD is in the technology sector. If you look deeper the company operates in the scientific and technical instruments industry. According to the company's website, "Cepheid is a leading molecular diagnostics company that is dedicated to improving healthcare by developing, manufacturing, and marketing accurate yet easy-to-use molecular systems and tests. By automating highly complex and time-consuming manual procedures, the company's solutions deliver a better way for institutions of any size to perform sophisticated genetic testing for organisms and genetic-based diseases. Through its strong molecular biology capabilities, the company is focusing on those applications where accurate, rapid, and actionable test results are needed most, such as managing infectious diseases and cancer."

CPHD, like most of the U.S. stock market, had a great 2013. Unfortunately the rally peaked in February-March 2014. This stock set its all-time highs in the $55-56 zone. Market watchers already know that momentum and high-growth names were crushed during the March-April market pullback. CPHD was no exception. The stock corrected from $55 to $40. It looked like CPHD was on the path to recovery but then the stock collapsed again in the last two weeks.

The problem is CPHD's earnings. The company reported earnings on July 17th. Their adjusted results for the second quarter of 2014 was a loss of 10 cents a share. That was better than Wall Street's estimate for a loss of 13 cents a share. CPHD delivered pretty solid revenue growth. Sales in the second quarter surged +21.4% to $116.5 million. That came in better than analysts were expecting. Yet CPHD's net results were down -40% from a year ago.

Listening to the company's management paints an optimistic outlook. CPHD's CEO John Bishop said they sold a record-setting 1,084 of their GeneXpert systems last quarter. That's more than all of 2012. Gross margins improved as well with margins rising from 45% to 49%. So why did the stock fall?

Investors sold the stock on disappointing guidance. CPHD expects 2014 revenues in the 4452-461 million zone. That's relatively close to Wall Street's $459 million estimate. Yet CPHD is forecasting EPS of 10 cents to 13 cents. That is significantly lower than analysts' estimates of 20 cents. You can see the reaction in CPHD stock with the big drop on July 18th.

The post-earnings sell-off continues and now CPHD is breaking down under significant support at the $40.00 level. The next stop could be the $36-35 area or lower. Currently the point & figure chart is bearish and forecasting at $29.00 target.

I would consider this a more aggressive trade. The latest data listed short interest at 16.8% of the 68.9 million share float.

Friday's low was $39.26. We're suggesting a trigger to open bearish positions at $39.00.

- Suggested Positions -

Short CPHD stock @ $39.20

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

Long SEP $40 PUT (CPHD140920P40) entry $2.35

07/28/14 triggered @ 39.20
Option Format: symbol-year-month-day-call-strike


Voxeljet AG - VJET - close: 18.33 change: +0.66

Stop Loss: 19.05
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on July -- at $---.--
Listed on July 28, 2014
Time Frame: 2 to 3 weeks
Average Daily Volume = 1.0 million
New Positions: Yes, see below

Comments:
07/29/14: Something sparked a rally in the 3-D printing stocks. What that something is remains a mystery since I couldn't find any specific news for VJET, XONE, DDD, and SSYS. All of these stocks were outperforming the market today.

Currently we are waiting for a new relative low in VJET to launch new bearish positions (trigger: 17.45).

Earlier Comments: July 28, 2014:
Supporters of 3-D printing believe the technology will revolutionize the manufacturing industry. The technology is spreading. Normally 3D printers work with plastics and metals. Now there are companies trying to use 3D printers to make food. One company even hopes to 3D print human organs.

VJET is a German technology company that makes 3D printers on an industrial scale. A normal 3D printer can sit on your desk. VJET's largest printer has a workspace of 4x2x1 meters and is about the size of a garage.

This stock went public in 2013 during the initial 3D printing craze. Unfortunately the euphoria has worn off. VJET has tumbled from $70.00 in late 2013 to $13.00 just a couple of months ago. This industry saw a significant rally in June but it peaked in early August. Now VJET is retreating lower again.

VJET's latest earnings report in May was a disappointment. Wall Street was hoping for a loss of 6 cents with revenues of $3.79 million for the March quarter. VJET reported a loss of 22 cents and revenues only hit $2.7 million.

The 3D printing stocks stumbled again today after Amazon.com (AMZN) announced their 3D printing online store. This could spell trouble for 3D companies. AMZN is a tough competitor. Now it looks like AMZN's initial foray into 3D printing is small nicknacks for consumers. They're selling the end product and not printers. This is unlikely to affect VJET's business.

The bigger threat might be Hewlett-Packard (HPQ), which announced earlier this year that they were entering the 3D printing market and planned to build printers for businesses, not the consumer. That's not good news for VJET.

Today shares of VJET are breaking support near $18.00. We think the decline continues. I do want to point out that investors should consider this a more aggressive, higher-risk trade. That is because the short interest in VJET is up to 44% of the very small 9.6 million share float. That does pose a risk of a short squeeze (just like the rally VJET saw in June).

Tonight we're suggesting a trigger to open bearish positions at $17.45. We are not setting a target yet but the point & figure chart is bearish with a $14.00 target.

Considering buying the put option instead of shorting the stock. Buying a put will limit your risk to the cost of the put.

Traders should also keep in mind our time frame. This trade may only last two or three weeks. The company reports earnings in mid August but there is no confirmed announcement date yet.

Trigger @ $17.45

- Suggested Positions -

Short VJET stock @ $17.45

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

Buy the Sep $17 PUT (VJET140920P17)

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


CLOSED BEARISH PLAYS

Five Below, Inc. - FIVE - close: 36.10 change: +0.83

Stop Loss: 36.10
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
Entry on July -- at $---.--
Average Daily Volume = 1.0 million
Listed on July 21, 2014
New Positions: see below

Comments:
07/29/14: Shares of FIVE are not cooperating. The stock displayed relative strength today with a +2.3% gain. Maybe support at $34.00 will hold again this time.

Our trade has not opened. Tonight we are removing FIVE as a candidate.

Trade did not open.

07/29/14 removed from the newsletter, suggested trigger was $33.75

chart:


Fiesta Restaurant Group Inc. - FRGI - close: 46.09 change: +1.41

Stop Loss: 45.10
Target(s): To Be Determined
Current Gain/Loss: -3.1%

Entry on July 21 at $43.75
Listed on July 19, 2014
Time Frame: Exit PRIOR to earnings on Aug 5th
Average Daily Volume = 271 thousand
New Positions: see below

Comments:
07/29/14: The bounce in FRGI has turned into a reversal although only the market gods know why. You would think that the new IPO of El Pollo Loco would be sucking up all the investor money looking for food franchise trades.

FRGI outperformed the market with a +3.1% gain today and hit our stop loss at $45.10.

closed Position: short FRGI stock @ $43.75 exit $45.10 (-3.1%)

07/29/14 stopped out
07/24/14 new stop @ 45.10
07/21/14 triggered @ 43.75

chart: