Editor's Note:
The first trading day of November saw a surge across the U.S. markets with all the major indices posting gains. Small caps displayed relative strength today.


Current Portfolio:


BULLISH Play Updates

Carnival Corp. - CCL - close: 53.55 change: -0.53

Stop Loss: 50.75
Target(s): To Be Determined
Current Gain/Loss: -1.3%
Entry on October 30 at $54.25
Listed on October 29, 2015
Time Frame: Exit prior to earnings in mid December
Average Daily Volume = 4.0 million
New Positions: see below

Comments:
11/02/15: Warning! CCL underperformed the broader market today with a -0.98% decline. Not only is it disappointing to see CCL sinking when the rest of the market is in rally mode but today's move is also a potential reversal. Monday's session has generated a bearish engulfing candlestick reversal pattern. More conservative traders will want to seriously consider raising their stop loss.

No new positions at this time. The $52.25 area should offer some short-term support.

Trade Description: October 29, 2015:
Cruise lines appear to be doing a great business this year. CCL, RCL, and NCLH are all trading near their 52-week highs. CCL looks interesting as shares push through resistance this week.

CCL is in the services sector. According to the company, "Carnival Corporation & plc is a global cruise company and one of the largest vacation companies in the world. Our portfolio of leading cruise brands includes Carnival Cruise Line, Holland America Line, Princess Cruises, Seabourn, and Fathom in North America; P&O Cruises and Cunard in the United Kingdom; AIDA Cruises in Germany; Costa Cruises in Southern Europe; and P&O Cruises in Australia.

These brands, which comprise the most recognized cruise brands in North America, the United Kingdom, Germany and Italy, offer a wide range of holiday and vacation products to a customer base that is broadly varied in terms of cultures, languages and leisure-time preferences. We also own a tour company that complements our cruise operations: Holland America Princess Alaska Tours in Alaska and the Canadian Yukon. Combined, our vacation companies attract 10 million guests annually.

Headquartered in Miami, Florida, U.S.A., and Southampton, England, Carnival Corporation & plc operates a fleet of more than 100 ships, with another seven ships scheduled for delivery between January 2015 and March 2017. With approximately 200,000 guests and 77,000 shipboard employees, there are more than 277,000 people sailing aboard the Carnival fleet at any given time."

CCL has been a consistent winner on the earnings front. The company has beaten Wall Street's bottom line earnings estimates the last four quarters in a row. Their most recent report was September 22nd. Analysts were looking for a profit of $1.63 a share on revenues of $4.81 billion. CCL delivered a profit of $1.75 a share. Revenues fell -1.3% to $4.88 billion, above estimates. The company enjoyed a -33% drop in fuel expenses last quarter.

CCL's President and CEO is Arnold Donald. He commented on their quarter, "We have just enjoyed a record quarter and are on track to achieve a nearly 35% annual non-GAAP earnings improvement. That's over $0.5 billion of year-over-year profit improvement on top of the 25% annual earnings improvement we achieved in 2014... This year is clearly trending ahead of pace with constant currency yield now forecasted to be up 4%. We overcame numerous headwinds including ongoing macroeconomic malaise in Europe, global geopolitical disruptions, public health scares like MERS, and even ship construction delays."

CCL is also seeing growth in China. According to Mr. Donald, "China has clearly made world news in recent weeks but continues to be an aggressive growth region for us. In fact, we will grow to a six ship fleet next year from a base of four, strengthening our position as industry leader, yet still representing only 5% of our global capacity next year. Given the low penetration levels for cruise and the pent-up demand for travel, we remain very confident in the long-term potential for this expansive market." CCL isn't stopping there. They are adding two more ships dedicated to the Chinese market with one coming online in 2017 and another in 2018.

Technically shares of CCL have rallied off support in early October. Now it's starting to break through resistance in the $54.00 area and ended today's session at a new multi-year high. The point & figure chart is very bullish and forecasting a long-term $72.00 target. Tonight we are suggesting a trigger to launch bullish positions at $54.25. We will plan on exiting prior to CCL's earnings report in mid December.

- Suggested Positions -

Long CCL stock @ $54.25

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

Long 2016 JAN $55 CALL (CCL160115C55) entry $1.95

11/02/15 Caution - CCL has produced a bearish engulfing candlestick reversal pattern (it needs to see confirmation).
10/30/15 triggered @ $54.25
Option Format: symbol-year-month-day-call-strike


Delta Air Lines - DAL - close: 50.70 change: -0.14

Stop Loss: 47.75
Target(s): To Be Determined
Current Gain/Loss: -1.0%
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:
11/02/15: DAL is another disappointment. The XAL airline index rallied +1.1% today. The S&P 500 index also added +1.1%. Yet shares of DAL underperformed with a -0.2% drop. I do not see any specific news to account for today's relative weakness.

No new positions at this time. More conservative investors may want to start raising their stop loss.

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


Wayfair Inc. - W - close: 43.60 change: +1.33

Stop Loss: 39.85
Target(s): To Be Determined
Current Gain/Loss: +6.0%
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:
11/02/15: Monday delivered a volatile session for shares of W but it ended on a high note. Shares plunged back toward round-number support at $40.00 this morning (a -5% drop). Then W reversed higher and surged to +44.30 this afternoon (a +10.5% gain from $40). W ended the session with a +3.1% gain.

I am not suggesting new positions at this time.

Do not forget that W has earnings coming up on November 10th. We plan to exit prior to the announcement.

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




BEARISH Play Updates

DSW Inc. - DSW - close: 24.44 change: -0.50

Stop Loss: 25.75
Target(s): To Be Determined
Current Gain/Loss: -2.3%
Entry on October 27 at $23.90
Listed on October 26, 2015
Time Frame: Exit prior to earnings in late November
Average Daily Volume = 1.5 million
New Positions: see below

Comments:
11/02/15: DSW saw an early spike higher that just as quickly reversed. The stock was weak the rest of the morning with a -5% drop toward last week's low. DSW eventually bounced and pared its loss to -2.0% on the day. The relative weakness is encouraging with the rest of the market in rally mode today.

Trade Description: October 26, 2015:
Investor sentiment regarding footwear retailers has soured dramatically. Recent earnings reports have not helped. Skechers (SKX) reported earnings last Wednesday (night). They missed estimates on both the top and bottom line. This report from SKX sent shockwaves through the footwear industry. Nike (NKE) seems to be the only one that was unaffected. The rest of the group has turned bearish.

DSW falls in that category. Officially DSW is in the services sector. According to the company, "DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and kids. DSW operates 469 stores in 42 states, the District of Columbia and Puerto Rico, as well as 370 leased departments for other retailers in the United States under the Affiliated Business Group. We also operate an e-commerce site, http://www.dsw.com, and a mobile site, http://m.dsw.com. Through its partnership with Town Shoes of Canada, the company operates two stores in Canada as well as the e-commerce site http://www.dswcanada.ca."

DSW's most recent earnings report was August 25th. Their earnings of $0.42 a share was in-line with estimates. Unfortunately revenues missed expectations. DSW's management provided soft guidance that was below Wall Street estimates. Traders sold the stock and DSW fell to new 2015 lows at the time. Since then shares have continued to melt.

Today DSW underperformed the market with a -1.9% drop. Shares got some help with a downgrade by Canaccord Genuity. Canaccord reduced DSW from a "buy" to a "hold" and slashed their price target. The analyst is concerned that DSW will not be able to maintain their comparable store sales. Traditional retailers do face a challenge this year. Foot traffic during the holiday season is expected to decline as more consumers shop online.

Technically DSW has broken down to new 18-month lows with today's drop. The point & figure chart is bearish and forecasting a very bearish $11.00 price target. There is a chance that DSW bounces near the 2014 low near $23.50 but we think its momentum will carry it past this level. I am suggesting investors start with small positions to limit risk. Yesterday's intraday low was $24.11. We'll use a trigger at $23.90.

*small positions to limit risk* - Suggested Positions -

Short DSW stock at $23.90

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

Long DEC $22.50 PUT (DSW151218P22.5) entry $0.90

10/27/15 triggered @ $23.90
10/27/15 DSW downgraded a 2nd time in as many days
Option Format: symbol-year-month-day-call-strike


Keurig Green Mountain, Inc. - GMCR - close: 50.75 change: -0.97

Stop Loss: 54.25
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on November -- at $---.--
Listed on October 31, 2015
Time Frame: Exit PRIOR to earnings on November 18th
Average Daily Volume = 2.5 million
New Positions: Yes, see below

Comments:
11/02/15: GMCR dipped to $50.25 and bounced. I do not see any changes from the weekend newsletter's new play description. We are still bearish and suggesting a trigger to launch positions at $49.40.

Trade Description: October 31, 2015:
Oh how the mighty have fallen. Shares of GMCR rallied from $17.00 in summer of 2012 to almost $160 in November 2014. A couple of days later, on November 19, 2014, GMCR reported earnings and guided lower. That warning has kicked off a year-long decline in the stock.

GMCR is in the consumer goods sector. According to the company, "Keurig Green Mountain, Inc. (Keurig) (GMCR) is reimagining how beverages can be created, personalized, and enjoyed, fresh-made in homes and workplaces. We are a personal beverage system company revolutionizing the beverage experience through the power of innovative technology and strategic brand partnerships. With an expanding family of more than 80 beloved brands and more than 575 beverage varieties, our Keurig® hot and Keurig KOLD® beverage systems deliver great taste, convenience, and choice at the push of a button. As a company founded on social responsibility, we are committed to using the power of business to brew a better world through our work to build resilient supply chains, sustainable products, thriving communities, and a water-secure world."

GMCR really has revolutionized how the world drinks coffee with their single-serving machines and coffee pods. Unfortunately they got a little greedy. When they released their Keurig 2.0 brewer (summer of 2014). The new design had an optical scanner that read the top of each pod placed in the brewer. If you placed an unauthorized (third-party) pod in the machine it would not brew. Consumers rebelled and sales plunged.

Since then sales of brewing machines and pods have suffered. GMCR is facing growing competition for both the brewers and the coffee pods. It does seem like everyone is selling the individually packaged coffee pods these days including Starbucks, Dunkin' Brands, McDonalds, and many more.

GMCR's most recent earnings report was in early August. Wall Street was expecting a profit of $0.79 a share on revenues of $1.04 billion. GMCR delivered $0.80 a share but revenues fell -5.2% to $969 million, below estimates. Furthermore GMCR drastically reduced their Q4 guidance to $0.70-0.75 a share. Analysts' estimates were $0.97. GMCR said revenues would like fall -11% to -13%. GMCR management tried to soften this bad news by announcing an additional $1 billion to their stock buyback program. It didn't work. The stock collapsed. You can see the gap down on the daily chart.

The market has also been disappointing with GMCR's newest product the Keurig Kold, which brews cold beverages (sodas). It's easy to see why GMCR would want to get into this market. Estimates put the hot beverage market (in the U.S.) at $10 billion. Yet the nonalcoholic cold beverage market in the U.S. is over $50 billion. The funny thing is soda/cola/pop consumption has been falling for 10 years in a row. Consumers are slowing turning away from soda drinks over healthy concerns.

Another challenge with GMCR's new Keurig Kold machine is the price. It's very expensive at $370 a pop. You can buy a Sodastream machine for less than $100. GMCR does have an advantage over Sodastream thanks to GMCR's partnerships with companies like Coca-cola (KO) and Dr. Pepper (DPS). Consumers might be tempted to make their own Coca-cola flavored drinks at home than some no-name, generic cola. However, if you want to make your own coke or Dr. Pepper at home it's going to cost $1.00 a drink. That's expensive when you can buy cans of coke or Dr. Pepper for $0.50-0.75 each. Plus, consumer reviews note that the machine is slow nor does the product taste the same as the store-bought variety.

The oversold bounce from its August plunge peaked in September. Shares of GMCR have been falling under a bearish trend of lower highs. The bears have been right on this stock. The most recent data listed short interest at 14% of the 115 million share float. While the trend is down there is a risk that any good news could spark a short-term squeeze higher.

After a plunge from $160 to $50 some analyst might decide it's "cheap" and upgrade GMCR. That could produce a brief spike higher. GMCR has long been rumored to be an acquisition target by a larger beverage company. Coca-cola (KO) is the most often rumored buyer. KO does have a stake in the company. KO purchased a 10% stake back in February 2014 and upped it to 16% in early 2015. These are likely the two biggest risks if you're short.

The trend is down and falling sales would suggest this trend continues. If GMCR trades under $49.00 it will generate a new sell signal on the point & figure chart. The October low was $49.51. We are suggesting a trigger to launch bearish positions at $49.40. We will plan on exiting prior to GMCR's earnings report in mid November. There is no official earnings date yet but they will likely report in the next two or three weeks.

Trigger @ $49.40

- Suggested Positions -

Short GMCR stock @ $49.40

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

Buy the DEC $45 PUT (GMCR151218P45)

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


iPath S&P500 VIX Futures ETN - VXX - close: 17.88 change: -0.95

Stop Loss: None, no stop at this time.
Target(s): $16.50
Current Gain/Loss: +18.1%
2nd position Gain/Loss: +38.4%
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:
11/02/15: The stock market's big rally today fueled another decline in the volatility indices. The VIX lost -6% while the VXX fell -5%.

Tonight we are adjusting our exit target from $16.25 to $16.50.

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

11/02/15 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