Editor's Note:
Our bearish play on GNC was closed on Friday when shares hit our new stop loss. The market's big rally helped fuel an oversold bounce. Of course the rally was great for our bullish candidates.

We closed BITA and ITCI on Friday at the closing bell.

AMAG and GNC hit our stop loss. XPO has been removed.

We want to exit our SBUX trade on Monday morning.


Current Portfolio:


BULLISH Play Updates

Delta Air Lines - DAL - close: 51.00 change: +0.19

Stop Loss: 47.75
Target(s): To Be Determined
Current Gain/Loss: -0.4%
Entry on October 23 at $51.23
Listed on October 22, 2015
Time Frame: Exit prior to earnings in early January
Average Daily Volume = 9.8 million
New Positions: see below

Comments:
10/24/15: Our new trade on DAL is open. The stock continued to rally on Friday. Our suggested entry point was $51.15 but our trade was opened on the Friday morning gap higher at $51.23.

I am a little bit concerned with how DAL lagged behind the major indices. Shares only gained +0.37% for the session. That underperformed the S&P 500's +1.1% gain and the XAL airline index's +0.77% gain.

I would consider new positions at current levels in DAL but readers may want to wait for rally above $51.20 instead.

Trade Description: October 22, 2015:
Depressed crude oil prices have kept jet fuel prices low. This has provided a big cushion for the major airlines. The recent strength in DAL has boosted shares to an all-time closing high.

DAL is in the services sector. According to the company, "Delta Air Lines serves more than 170 million customers each year. Delta was named to FORTUNE magazine's top 50 World's Most Admired Companies in addition to being named the most admired airline for the fourth time in five years. Additionally, Delta has ranked No.1 in the Business Travel News Annual Airline survey for four consecutive years, a first for any airline. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 318 destinations in 58 countries on six continents.

Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry's leading trans-Atlantic joint venture with Air France-KLM and Alitalia as well as a joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with key hubs and markets including Amsterdam, Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St. Paul, New York-JFK, New York-LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products and services, and technology to enhance the customer experience in the air and on the ground."

DAL's most recent earnings report was October 14th. Wall Street was expecting a profit of $1.72 per share on revenues of $11.1 billion. DAL beat estimates with a profit of $1.74 a share. Revenues fell -0.6% to $11.11 billion, essentially in-line with estimates. At $1.74 a share DAL's earnings were up +45% from a year ago. That's thanks to the low cost of jet fuel.

Oil prices have been depressed long enough that airlines have started lowering air fares. This drop in air fares is hurting PRASM (passenger revenue per available seat mile). Fortunately DAL's fuel expense, plunged -40% from a year ago.

DAL management is forecasting Q4 PRASM to fall -2.5% to -4.5% but they are still guiding for strong operating margins (16-18%). Plus they see Q4 earnings growth of +40% or more. Think about that. How many other companies are forecasting +40% profit growth for Q4?

DAL's CEO made headlines following their Q3 earnings when he said there is a bubble in wide-body jets. What does he mean? There are a lot of wide-body jets that are being leased by other airlines. Once their lease expires there could be a flood of used jets for sale. DAL believes the price of wide-body jets (and possibly narrow-body jets) will decline and allow the company to purchase additional planes at a discount.

Oil prices are expected to remain low for the foreseeable future. Meanwhile we are approaching the busy holiday season, which means more travel by consumers. Technically shares of DAL appear to be breaking out from a multi-month consolidation pattern. The point & figure chart is bullish and forecasting at $62.00 target.

The January 2015 highs are in the $50.80-51.06 area. Tonight we are suggesting a trigger to launch bullish positions at $51.15. This is a multi-week trade.

- Suggested Positions -

Long DAL stock @ $51.23

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

Long 2016 JAN $55 CALL (DAL160115C55) entry $1.25

10/23/15 triggered on gap open at $51.23, suggested entry was $51.15
Option Format: symbol-year-month-day-call-strike

chart:


Ingram Micro Inc. - IM - close: 29.45 change: +0.20

Stop Loss: 28.75
Target(s): To Be Determined
Current Gain/Loss: +5.7%
Entry on September 09 at $27.85
Listed on September 8, 2015
Time Frame: Exit prior to earnings on October 29th
Average Daily Volume = 1.0 million
New Positions: see below

Comments:
10/24/15: IM gapped higher on Friday morning but then spent the rest of the session drifting sideways. Shares look like they want to breakout from its current $28.50-29.50 trading range. Yet IM might be stuck consolidating sideways until its earnings report on Thursday, October 29th.

We do not want to hold over the earnings announcement. We will plan on exiting this trade on Tuesday at the closing bell. However, in an attempt to reduce our risk, we will raise the stop loss to $28.75, just under Thursday's intraday low. More conservative investors might want to exit now.

No new positions at this time.

Trade Description: September 8, 2015:
IM looks like it is about to break out from a huge consolidation pattern.

The company operates in the services sector. According to the company, "Ingram Micro helps businesses fully realize the promise of technology® - helping them maximize the value of the technology that they make, sell or use. With its vast global infrastructure and focus on cloud, mobility, supply chain and technology solutions, Ingram Micro enables business partners to operate more efficiently and successfully in the markets they serve.

No other company delivers as broad and deep a spectrum of technology and supply chain services to businesses around the world. Founded in 1979, Ingram Micro's role as a leader and innovator in technology and supply chain services has fueled its rise to the 69th ranked corporation in the FORTUNE 500.

Ingram Micro amplifies the value of its position at the intersection of thousands of vendor, reseller and retailer partners by customizing and delivering highly targeted applications for industry verticals, business to business customers and commercial needs. From provisioning solutions for system integrators working at the heart of the network to offerings through the full lifecycle of mobile devices, SMB to global enterprise software and computing, point of sale to cloud services, professional AV to physical security-Ingram Micro is trusted by customers to have the expertise and resources to help them define and push the boundaries of what's possible.

The company supports global operations by way of an extensive sales and distribution network throughout North America, Europe, Middle East and Africa, Latin America and Asia Pacific."

The company's most recent earnings report was July 30th. Wall Street was expecting a profit of $0.54 per share on revenues of $10.9 billion. IM delivered $0.55 cents. Revenues were down -3.3% to $10.55 billion. However, if you back out the impact of currency headwinds then IM's results look a lot better. Negative currency translations shaved off -8% from their revenues.

IM management's guidance was a little soft but they announced the initiation of a $0.10 per share dividend and that they were boosting their stock buyback program by $300 million. The stock soared on this news. Shares rallied from $24.50 to $27.25 the next day.

IM was not immune to the market's late-August crash but investors bought the dip at support near its July lows. Shares have since erased the sell-off. Now IM is poised to breakout past resistance and what looks like a consolidation that started in early 2014.

A rally past $28.00 would generate a new buy signal on the point & figure chart. We want to jump in a little earlier. Tonight we are suggesting a trigger to open bullish positions at $27.85.

NOTE: I want to caution readers about the options. The spreads on most of IM's options are a little bit wide. Actually some of them are probably too wide. Be careful with the options.

- Suggested Positions -

Long IM stock @ $27.85

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

Long DEC $30 CALL (IM151218C30) entry $1.15

10/24/15 new stop @ 28.75
10/15/15 new stop @ 27.85
10/07/15 new stop @ 27.45
09/15/15 Caution - IM did not participate in the market's rally today
09/09/15 triggered @ $27.85
Option Format: symbol-year-month-day-call-strike

chart:


Lennar Corp. - LEN - close: 52.12 change: +0.28

Stop Loss: 47.90
Target(s): To Be Determined
Current Gain/Loss: -0.3%
Entry on October 21 at $52.25
Listed on October 20, 2015
Time Frame: Exit prior to earnings in January
Average Daily Volume = 2.8 million
New Positions: see below

Comments:
10/24/15: Investors are still buying the dips in LEN. Shares dipped to short-term support near the 50-dma again on Friday and LEN rebounded back toward its recent highs. I am suggesting a rally past $52.50 before initiating new bullish positions.

Trade Description: October 20, 2015:
Rents are soaring. Mortgage rates are low. The labor market is relatively healthy. This has been fueling a stable environment for the homebuilders. The latest National Association of Homebuilders sentiment index hit ten-year highs. The September reading for the NAHB index was 64. That was above the 62 estimate and a level not seen since October 2005.

David Crowe is the NAHB Chief Economist. According to Crowe, "This upward momentum shows that our industry is strengthening at a gradual but consistent pace. With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015."

LEN is in the industrial goods sector. According to the company, "Lennar Corporation, founded in 1954, is one of the nation's largest builders of quality homes for all generations. The Company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title insurance and closing services for both buyers of the Company's homes and others. Lennar's Rialto segment is a vertically integrated asset management platform focused on investing throughout the commercial real estate capital structure. Lennar's Multifamily segment is a nationwide developer of high-quality multifamily rental properties."

Earnings have been improving. LEN reported their Q2 results on June 24th. Results were $0.79 a share, which was 15 above estimates. Revenues soared +31.6% to $2.39 billion, above estimates. Home deliveries were up +21%. New orders were up +18%. Their backlog of homes rose +18%.

These bullish trends continued in LEN's fiscal third quarter. The company reported on September 21st. Earnings were $0.96 per share, which was 17 cents above estimates. Revenues were up +23.7% to $2.49 billion, also better than expected. Deliveries rose +16%. New orders were up +10%. The number of homes in the backlog rose +13% (to 8,250) while the value of their backlog surged +22%.

The stock has been consolidating sideways the last few months but LEN appears to be bouncing off its long-term up trend. The current bounce is testing short-term resistance at $52.00. Tonight we are suggesting a trigger to open bullish positions at $52.25. This is a multi-week trade that could last the rest of the year.

- Suggested Positions -

Long LEN stock @ $52.25

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

Long 2016 JAN $55 CALL (LEN160115C55) entry $1.88

10/21/15 triggered @ $52.25
Option Format: symbol-year-month-day-call-strike

chart:


Starbucks Corp. - SBUX - close: 62.61 change: +1.12

Stop Loss: 54.75
Target(s): To Be Determined
Current Gain/Loss: +5.1%
Entry on October 08 at $59.55
Listed on October 05, 2015
Time Frame: Exit prior to earnings on October 29th
Average Daily Volume = 8.5 million
New Positions: see below

Comments:
10/24/15: Big cap, high-profile stocks continued to lead the market higher on Friday and SBUX added +1.8% to close at a new all-time high.

SBUX has earnings coming up on October 29th. We do not want to hold over the announcement. Tonight we are choosing a more conservative strategy to exit now and lock in a potential gain. SBUX could keep rising or it could churn sideways into its earnings report.

Exit on Monday morning.

Trade Description: October 5, 2015:
SBUX has delivered a strong rebound off last week's lows. Once again the stock looks like a bullish candidate.

We recently traded SBUX as a bullish candidate. What follows is an updated play description:

The world seems to have an insatiable appetite for coffee. Starbucks is more than happy to help fill that need. The first Starbucks opened in Seattle back in 1971. Today they are a global brand with locations in 66 countries. SBUX operates more than 21,000 retail stores with more than 300,000 workers.

A few years ago Business Insider published some facts on SBUX. The average SBUX customer stops by six times a month. The really loyal, top 20% of customers, come in 16 times a month. There are nearly 90,000 potential drink combinations at your local Starbucks. The company spends more money on healthcare for its employees than it does on coffee beans.

The company's earnings results were only mediocre most of 2014 year. You can see the results in SBUX's long-term chart below. After incredible gains in 2013 SBUX has essentially consolidated sideways in 2014. SBUX broke out of that sideways funk after it reported earnings in January 2015.

Five-Year Plan

In late 2014 SBUX announced their five-year plan to increase profitability. Here's an excerpt from a company press release:

"The seismic shift in consumer behavior underway presents tremendous opportunity for businesses the world over that are prepared and positioned to seize it," Schultz said (Howard Schultz is the Founder, Chairman, President, and CEO of Starbucks). "Over the next five years, Starbucks will continue to lean into this new era by innovating in transformational ways across coffee, tea and retail, elevating our customer and partner experiences, continuing to extend our leadership position in digital and mobile technologies, and unlocking new markets, channels and formats around the world. Investing in our coffee, our people and the communities we serve will remain at our core as we continue to redefine the role and responsibility of a public company in today's disruptive global consumer, economic and retail environments."

"Starbucks business, operations and growth trajectory around the world have never been stronger, and we are more confident than ever in our ability to continue to drive significant growth and meet our long term financial targets," said Troy Alstead, Starbucks chief operating officer. "We have more customers visiting more stores more frequently, both in the U.S. and around the world, than at any time in our history. And we expect both the number of customers visiting our stores and the amount they spend with us to accelerate in the years ahead. With a robust pipeline of mobile commerce innovations that will drive transactions and unprecedented speed of service, Starbucks is ushering in a new era of customer convenience. We believe the runway of opportunity for Starbucks inside and outside of our stores is both vast and unmatched by any other retailer on the planet."

The company believes they can grow revenues from $16 billion in FY2014 to almost $30 billion by FY2019. To do that they will expand deeper into regions like China, Japan, India, and Brazil. SBUX expects to nearly double its stores in China to over 3,000 locations in the next five years

They're also working hard on their mobile ordering technology to speed up the experience so customers don't have to wait in line so long at their busiest locations. This will also include a delivery service.

Part of the five-year plan is a new marketing campaign called Starbucks Evening experience. The company wants to be the "third place" between home and work. After 4:00 p.m. they will start offering alcohol, mainly wine and beer, in addition to new tapas-like smaller plates.

The company recently launched its first ever Starbucks Reserve Roastery and Tasting Room in Seattle, near their iconic first retail store. The new roastery is supposed to be the ultimate coffee lovers experience. CEO Schultz said they will eventually open up about 100 of these Starbucks Reserve locations.

Earnings results:

It was a very strong holiday period for SBUX thanks in part to astonishing gift card sales. The amount of money loaded onto SBUX gift cards during the holidays surged +17% to a record $1.6 billion. One out of every seven Americans received a SBUX gift card. The company also saw significant growth overseas with its China and Asia-Pacific business soaring +85% to sales of $495 million. Their mobile transactions have reached seven million transactions a week.

SBUX reported its Q2 (2015) on April 23rd. Earnings of $0.33 a share were in-line with estimates. Revenues were up +17.8% to $4.56 billion, slightly above expectations. It was their strongest growth in four years. Customers are responding well to new drink options and an updated food menu. They're also developing new delivery options, mobile pay options, and alcoholic drinks available at select locations.

Worldwide same-store sales grew +7%. This was significantly above estimates. It also marked the 21st consecutive quarter where SBUX's comparable store sales were +5% or more.

The company issued mixed guidance. The stronger dollar is having an impact. They see fiscal 2015 results in the $1.55-1.57 range. That compares to Wall Street estimates for $1.57 per share. However, the company's revenue estimates are more optimistic. They're forecasting +16-18% sales growth into the $19.1-19.4 billion zone compares to analysts' estimates of $19.1 billion.

The trend of earnings pops continued in July with shares gapping up to new all-time highs following its Q2 report on July 23rd. Earnings were $0.42 per share, a penny above estimates. Revenues were up +17.5% to $4.88 billion, just a hair above expectations. Global same-store sales were up +7% and their non-GAAP operating margin improved 100 basis points to 19.5%. Management is still guiding 2015 revenues to rise +17% in the $19.1-19.4 billion range.

Technical Set Up

Traders bought the dip in SBUX at its rising 100-dma last week. The rebound has lifted SBUX to major resistance in the $59.00-59.30 area. A breakout here would mark new all-time highs. Tonight we are suggesting a trigger to launch bullish positions at $59.55. It is possible that the $60.00 level is round-number resistance so more conservative traders may want to wait for SBUX to close above $60.00 before initiating bullish positions.

We plan to exit prior to SBUX's earnings report in very late October. More aggressive investors might want to consider holding over the announcement.

- Suggested Positions -

Long SBUX stock @ $59.55

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

Long NOV $60 CALL (SBUX151120C60) entry $1.96

10/24/15 Prepare to exit on Monday morning
10/08/15 triggered @ $59.55
Option Format: symbol-year-month-day-call-strike

chart:


Wayfair Inc. - W - close: 41.27 change: -2.79

Stop Loss: 39.85
Target(s): To Be Determined
Current Gain/Loss: +0.3%
Entry on October 16 at $41.15
Listed on October 15, 2015
Time Frame: Exit PRIOR to earnings on November 10th
Average Daily Volume = 1.1 million
New Positions: see below

Comments:
10/24/15: It has been a frustrating week if you're bullish on W. The Monday and Tuesday rally has been erased. W is now down three days in a row and it underperformed the market in a big way with a -6.3% plunge on Friday.

No new positions at this time.

Trade Description: October 15, 2015
W displayed relative strength today and just closed above resistance. Shares could be poised for some serious short covering.

According to the company, "Wayfair Inc. offers an extensive selection of home furnishings and decor across all styles and price points. The Wayfair family of brands includes:

Wayfair.com, an online destination for all things home
Joss & Main, an online flash sales site offering inspiring home design daily
AllModern, a go-to online source for modern design
DwellStudio, a design house for fashion-forward modern furnishings
Birch Lane, a collection of classic furnishings and timeless home decor
Wayfair is headquartered in Boston, Massachusetts, with additional locations in New York, Ogden, Utah, Hebron, Kentucky, Galway, Ireland, London, Berlin and Sydney."

Shares of W came to market with an IPO in October 2014 and priced at $29.00. They opened at $36.00 and spiked up to $39.43 on the first day of trading. The IPO excitement faded and shares didn't find a bottom until about $17.00 in December 2014.

Revenue Growth

The company seems to be growing at a tremendous pace. Their first earnings report as a public company was November 10th, 2014. Revenues soared +41.7% to $336.2 million. Their direct retail business surged +57%. W said their gross profit was $79.0 million versus $58.6 million a year ago.

Additional 2014 Q3 highlights included the number of active customers for their direct retail business rose +61% to $2.9 million year over year. Their LTM Net revenue per active customer increase $342 or +8.6% year over year and +3.0% from the second quarter of 2014.

W reported their Q4 results on March 4, 2015. The company delivered a loss of ($0.18) per share, which was 10 cents better than expected. Revenues were up +38.4% to $408.6 million, above expectations. Management raised their Q1 guidance significantly above Wall Street estimates.

The company beat expectations again with their Q1 report on May 11th. Results were a loss of ($0.23) per share. Revenues accelerated with a +52% gain to $424.4 million.

The earnings beats kept coming when W reported its Q2 results on August 12th. Analysts were forecasting a loss of ($0.29) per share on revenues of $438.4 million. Wayfair delivered a loss of ($0.15) per share. Revenues roared +66.5% to $491.8 million. Management said their number of active customers was up +53.5% from a year ago to four million. Repeat customer orders hit 56%. Orders delivered shot up +80%.

Big Potential

Following their Q1 results back in May the company's CEO talked about their future. On their Q1 conference call the CEO noted that their potential markets are huge. Estimates suggest that spending in their industry will hit $264 billion in the U.S. and $308 billion in Europe by 2018 (a combined total of $572 billion market).

Bears will argue that W's valuations are outrageous. They're probably right. The recent rally in the stock has bumped the company's market cap to $3.6 billion. At the same time analysts are expecting W to operate at a loss for the next two fiscal years. On a short-term basis the market doesn't seem to care about W's valuation. If this rally continues W could see a short squeeze.

A few months ago in an interview one of the co-founders said that together the two co-founders own between 40% and 50% of the stock. The current float is only 30.2 million shares, which is relatively small. The most recent data listed short interest at 79% of the float.

Shares of W have been consolidating sideways beneath resistance at the $40.00 level for about two weeks. Today shares displayed relative strength with a +3.0% gain and a close above resistance. Tonight we are suggesting a trigger to launch bullish positions at $41.15 (hopefully W does not gap too far past our trigger tomorrow). We will plan on exiting prior to W's earnings report on November 10th.

- Suggested Positions -

Long W stock @ $41.15

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

Long NOV $45 CALL (W151120C45) entry $2.80

10/20/15 new stop @ 39.85
10/16/15 triggered @ $41.15
Option Format: symbol-year-month-day-call-strike

chart:




BEARISH Play Updates

Hanesbrand Inc. - HBI - close: 27.06 change: -1.15

Stop Loss: 27.65
Target(s): To Be Determined
Current Gain/Loss: +1.1%
Entry on October 20 at $27.35
Listed on October 19, 2015
Time Frame: Exit PRIOR to earnings on October 28th
Average Daily Volume = 3.4 million
New Positions: see below

Comments:
10/24/15: It was great to see shares of HBI underperforming on Friday. The market was in rally mode but HBI's bounce reversed. Shares fell -4.0%.

Please note we are almost out of time. HBI is scheduled to report earnings on Wednesday, October 28th (after the closing bell). We do not want to hold over their announcement. I am suggesting we exit this trade on Monday at the closing bell. We will lower the stop loss to $27.65 just in case HBI bounces before we exit.

Trade Description: October 19, 2015:
The long-term rally in HBI may have peaked. The stock surged more than +500% from the beginning of 2012 to its 2015 highs near $34.50. Now momentum has reversed.

HBI is in the consumer goods sector. According to the company, "HanesBrands, based in Winston-Salem, N.C., is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Europe and Asia under some of the world's strongest apparel brands, including Hanes, Champion, Playtex, DIM, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra, Nur Die/Nur Der, Lovable and Gear for Sports. The company sells T-shirts, bras, panties, shapewear, men's underwear, children's underwear, socks, hosiery, and activewear produced in the company's low-cost global supply chain."

The upward momentum in shares of HBI had stalled in March this year. Shares tried and failed to breakout past the $34.50-35.00 zone several times between March and July. Then on July 30th HBI reported its Q2 earnings. Profits came in at $0.50 a share, which was in-line with estimates. Revenues were up +13.4% to $1.52 billion yet that missed estimates of $1.57 billion. Management provided soft guidance for the rest of 2015. The stock plunged the next two days.

Since their disappointing guidance in July investors have been selling the rallies in HBI. That has not stopped Wall Street from defending it. 12 of the 13 analyst firms that cover HBI are bullish on the stock. On September 17th shares of HBI popped after Goldman Sachs upgraded shares and gave it at $40 price target. Unfortunately for bullish investors the Goldman pop failed at resistance. Shares have continued to sink and now they're accelerating lower.

The weakness in HBI is a little bit surprising. The new TransPacific Partnership deal should be positive for apparel makers like HBI. Plus there was recent news that cotton prices are expected to decline through the rest of this year and into 2016. Traders don't seem to care about these potentially bullish tailwinds for HBI. The stock displayed significant relative weakness today with a -4.4% decline.

The market might be worried about HBI's relationship with Wal-Mart (WMT). Last week WMT surprised Wall Street by significantly lowering their earnings guidance. Now WMT is pressuring its suppliers, which could squeeze margins for companies like HBI. That's significant since WMT accounts for over 20% of HBI's sales.

Technically HBI is bearish. Shares have created a big bearish double top on the weekly chart (see below). More recently the rally attempts have failed at resistance near the 200-dma. The point & figure chart is bearish and forecasting at $20.00 target.

Today's low was $27.45. Tonight we are suggesting a trigger to launch bearish positions at $27.35. Please note that this is a short-term trade, which will probably last two or three weeks. HBI is due to report earnings in very late October or early November. There is no confirmed date yet but we plan to exit prior to HBI's announcement.

- Suggested Positions -

Short HBI @ $27.35

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

Long NOV $26 PUT (HBI151120P26) entry $0.65

10/24/15 prepare to exit on Monday, at the closing bell
10/24/15 new stop @ 27.65
10/20/15 triggered @ $27.35
Option Format: symbol-year-month-day-call-strike

chart:


iPath S&P500 VIX Futures ETN - VXX - close: 18.63 change: +0.19

Stop Loss: None, no stop at this time.
Target(s): $16.25
Current Gain/Loss: +14.6%
2nd position Gain/Loss: +35.8%
Entry on August 25 at $21.82
2nd position: September 2nd at $29.01
Listed on August 24, 2015
Time Frame: Exit prior to October option expiration
Average Daily Volume = 50 million
New Positions: see below

Comments:
10/24/15: The VXX eked out a gain on Friday after bouncing from its Friday morning lows.

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

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

chart:



CLOSED BULLISH PLAYS

Bitauto Holdings - BITA - close: 36.09 change: +3.02

Stop Loss: 29.90
Target(s): To Be Determined
Current Gain/Loss: +6.9%
Entry on October 13 at $33.75
Listed on October 07, 2015
Time Frame: Exit prior to earnings in mid November
Average Daily Volume = 946 thousand
New Positions: see below

Comments:
10/24/15: The market's big rally on Friday appears to have sparked some short covering in BITA. The stock surged +9.1% and rallied to new two-month highs. That was perfect timing for us. Our plan was to exit on Friday at the closing bell.

*small positions to limit risk*- Suggested Positions -

Long BITA stock @ $33.75 exit $36.09 (+6.9%)

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

NOV $35 CALL (BITA151120C35) entry $2.50 exit $3.10 (+24.0%)

10/23/15 planned exit at the closing bell
10/22/15 prepare to exit this trade tomorrow at the closing bell
10/13/15 triggered @ $33.75
Option Format: symbol-year-month-day-call-strike

chart:


Intra-Cellular Therapies, Inc. - ITCI - close: 46.82 change: +3.48

Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Gain/Loss: +3.8%
Entry on October 12 at $45.10
Listed on October 10, 2015
Time Frame: Exit prior to earnings in November
Average Daily Volume = 850 thousand
New Positions: see below

Comments:
10/24/15: We were lucky with our ITCI exit. The plan was to exit this trade on Friday at the closing bell. The market's widespread rally fueled a lot of short covering. The IBB biotech ETF surged +3.3% yet shares of ITCI soared +8.0%. Unfortunately the option failed to keep up.

(small positions to limit risk) - Suggested Positions -

ITCI stock @ $45.10 exit $46.82 (+3.8%)

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

NOV $50 CALL (ITCI151120C50) entry $3.80 exit $2.85 (-25.0%)

10/23/15 planned exit
10/22/15 prepare to exit tomorrow at the closing bell
10/12/15 triggered @ $45.10
Option Format: symbol-year-month-day-call-strike

chart:



CLOSED BEARISH PLAYS

AMAG Pharmaceuticals - AMAG - close: 33.61 change: -2.76

Stop Loss: 37.75
Target(s): To Be Determined
Current Gain/Loss: -0.9%
Entry on October 08 at $37.40
Listed on October 06, 2015
Time Frame: Exit PRIOR to earnings in late October
Average Daily Volume = 946 thousand
New Positions: see below

Comments:
10/24/15: Whoa! AMAG reversed higher on Friday. After big declines earlier in the week shares surged +12.6% on Friday. The stock hit technical resistance at its 20-dma before paring its gains. Our stop was hit at $37.75.

*small positions to limit risk* - Suggested Positions -

Short AMAG stock @ $37.40 exit $37.75 (-0.9%)

10/23/15 stopped out
10/22/15 new stop @ 37.75
10/20/15 AMAG breaks down below support with a drop to new 2015 lows
10/17/15 new stop @ 41.05
10/10/15 new stop @ 42.05
10/08/15 triggered @ $37.40

chart:


GNC Holdings - GNC - close: 36.55 change: +2.05

Stop Loss: 36.25
Target(s): To Be Determined
Current Gain/Loss: + 9.1%
Entry on October 14 at $39.90
Listed on October 13, 2015
Time Frame: Exit prior to earnings at the very end of October
Average Daily Volume = 1.2 million
New Positions: see below

Comments:
10/24/15: The market's big rally on Friday may have played a part in GNC's oversold bounce. After a -14.2% plunge on Thursday shares rebounded +5.9% on Friday. Our new stop loss was hit at $36.25.

- Suggested Positions -

Short GNC stock @ $39.90 exit $36.25 (+9.1%)

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

NOV $40 PUT (GNC151120P40) entry $2.10 exit $4.90 (+133.3%)

10/23/15 stopped out
10/22/15 Decision time - do you take profits now or just lower your stop loss?
We are moving the stop loss to $36.25
10/14/15 triggered @ $39.90
Option Format: symbol-year-month-day-call-strike

chart:


XPO Logistics, Inc. - XPO - close: 28.36 change: +0.78

Stop Loss: 30.30
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 21, 2015
Time Frame: Exit PRIOR to earnings on November 4th
Average Daily Volume = 2.0 million
New Positions: see below

Comments:
10/24/15: We are removing XPO as a trade. The longer-term trend still looks bearish. Yet on a short-term basis XPO has bounced and outperformed the market on Friday with a +2.8% gain.

Trade did not open.

10/24/15 removed from the newsletter, suggested entry was $26.65

chart: