Editor's Note:
The S&P 500 plunged to new 52-week lows while the small cap Russell 2000 tagged new two-year lows before trying to pare their declines before the close. The market looks very oversold.

We have adjusted our entry on the CHUY trade. We have also tightened stops on CF and HOG.


Current Portfolio:


BULLISH Play Updates

Chuy's Holdings, Inc. - CHUY - close: 35.14 change: -0.62

Stop Loss: 33.40
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on January -- at $---.--
Listed on January 14, 2016
Time Frame: Exit PRIOR to earnings in late February
Average Daily Volume = 286 thousand
New Positions: Yes, see below

Comments:
01/16/16: The market's crash on Friday briefly pushed CHUY below support near $34.00. The stock bounced at $33.52 and pared its loss to -1.7% by the closing bell.

We see the dip on Friday as an opportunity. Adjust the entry trigger from $36.65 to $36.15. We will move our stop loss down from $33.90 to $33.40, just under Friday's intraday low.

Trade Description: January 14, 2016:
Small cap stocks underperformed last year with the small cap Russell 2000 index falling -5.9% in 2015. CHUY is one small cap that bucked the trend with shares surging +59% in 2015. That relative strength continues in 2016. The Russell 2000 index is already down -9.7% this year. Meanwhile CHUY is up +14% year to date and looks poised to hit new highs.

CHUY is in the services sector. According to the company, "Founded in Austin, Texas in 1982, Chuy's owns and operates 69 full-service restaurants across fourteen states serving a distinct menu of authentic, made from scratch Tex Mex inspired dishes. Chuy's highly flavorful and freshly prepared fare is served in a fun, eclectic and irreverent atmosphere, while each location offers a unique, 'unchained' look and feel, as expressed by the concept's motto 'If you've seen one Chuy's, you've seen one Chuy's!'."

CHUY's earnings and revenues have been hotter than a jalapeno. The company has beaten Wall Street's earnings estimates the last four quarters in a row. They have beaten analysts' revenue estimates in three of the last four quarters. Management has raised guidance three quarters in a row. Check out their revenue growth: Q4 2014 revenues +21.7%, Q1 2015 +19%, Q2 2015 +19%, and Q3 2015 saw revenues +15%. That's on top of a tough comparison to Q3 2014 where revenues rose +20%.

Technically shares appear to be in breakout mode. The surge on January 12th lifted CHUY out of a five-month consolidation and on big volume. Traders bought the dip today exactly where they should have near $34.00, which as prior resistance is now new support. If this rally continues CHUY could see a short squeeze. The most recent data listed short interest at 21% of its small 16.0 million share float. The point & figure chart is bullish and forecasting at $44.00 target.

Today's intraday rebound lifted CHUY back to the $36.00 level. Tonight we are suggesting a trigger to launch bullish positions at $36.65.

Trigger @ $36.15

- Suggested Positions -

Buy CHUY stock @ $36.15

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

Buy the APR $37.50 CALL (CHUY160415C37.5)

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.

01/16/16 Adjust entry strategy: move the trigger from $36.65 down to $36.15. Also adjust the stop loss from $33.90 to $33.40
Option Format: symbol-year-month-day-call-strike

chart:


SPDR S&P Regional Banking ETF - KRE - close: 36.66 change: -0.70

Stop Loss: 34.40
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on January -- at $---.--
Listed on January 13, 2016
Time Frame: 3 or 4 weeks
Average Daily Volume = 4.9 million
New Positions: Yes, see below

Comments:
01/16/16: The KRE fell -1.8% on Friday and set a new 11-month closing low. There is no change from my previous comments. The $35.00 area is major support. Our suggested entry point is to buy a dip at $35.50.

Trade Description: January 13, 2016:
Many people thought banks would be winners after the Federal Reserve hiked rates in December. While the Fed did raise rates (barely) the financial stocks didn't see much progress.

The Fed is still talking about raising rates multiple times in 2016. There is a growing camp of market watchers who believe the Fed will be forced to back track. Deteriorating economic conditions both in the U.S. and abroad may force the Fed to pause their rate hike plans or even cut rates again.

Even if the Fed does try to raise rates the yield curve, where many banks make their money, could struggle. If the stock market remains sour throughout 2016 it will drive money into the perceived safety of U.S. bonds and that will keep yields on the 10-year low. So now that I have painted a rather unappetizing picture for the banks I'm adding a new bullish play.

All of the issues above are long-term troubles that could plague financials throughout 2016. On a short-term basis the banks are oversold and due for a bounce. Tonight's trade is a short-term technical one. The KRE is nearing major support and should rebound.

If you are not familiar with the KRE it is an ETF that tracks the S&P regional banks select industry index. The top ten holdings in this ETF are: PNC, BBT, KEY, STI, HBAN, CIWV, RF, FITB, MTB, ZION,

You can see on the daily chart below the KRE is plunging. On the weekly chart I have highlighted long-term support at the $35.00 level. Odds are good that if the KRE is going to bounce that is the spot to watch. Tonight I am listing a buy-the-dip trigger at $35.50. We will start this trade, if triggered, with a stop loss at $34.40. Remember, this is a short-term trade. We want to get in, catch a bounce, and get out.

Buy-the-dip Trigger @ $35.50

- Suggested Positions -

Buy the KRE (etf) @ $35.50

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

Buy the MAR $39 CALL (KRE160318C39)

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.

01/14/16 adjusted the option strike from March $35 calls to the March $39 calls
Option Format: symbol-year-month-day-call-strike

chart:




BEARISH Play Updates

CF Industries - CF - close: 31.57 change: -1.05

Stop Loss: 33.25
Target(s): To Be Determined
Current Gain/Loss: +18.3%
Entry on January 06 at $38.65
Listed on January 05, 2016
Time Frame: Exit PRIOR to earnings in mid February
Average Daily Volume = 2.7 million
New Positions: see below

Comments:
01/16/16: The downward momentum in shares of CF seems to be slowing but the stock is still sinking. CF ended the week at new multi-year lows. Tonight we are adjusting our stop loss down to $33.25. More conservative investors may want to take some money off the table early, especially if you're trading the option.

No new positions at this time.

Trade Description: January 5, 2016:
CF underperformed the broader market and its sector in 2015. The S&P 500 lost -0.7% for the year while the IYM basic materials ETF lost -14.4%. Shares of CF returned a -25% loss last year. Momentum remains to the downside.

According to the company, "CF Industries Holdings, Inc., headquartered in Deerfield, Illinois, through its subsidiaries is a global leader in the manufacturing and distribution of nitrogen products, serving both agricultural and industrial customers. CF Industries operates world-class nitrogen manufacturing complexes in Canada, the United Kingdom and the United States, and distributes plant nutrients through a system of terminals, warehouses, and associated transportation equipment located primarily in the Midwestern United States. The company also owns a 50 percent interest in an ammonia facility in The Republic of Trinidad and Tobago."

It is important to note that CF is currently in the process of merging with OCI. Here's a brief description, "OCI N.V. is a global producer and distributor of natural gas-based fertilizers and industrial chemicals based in the Netherlands. The company produces nitrogen fertilizers, methanol and other natural gas based products, serving agricultural and industrial customers from the Americas to Asia. The company ranks among the world's largest nitrogen fertilizer producers, and can produce more than 8.4 million metric tons of nitrogen fertilizers and industrial chemicals at production facilities in the Netherlands, the United States, Egypt and Algeria."

Once the merger is completed they plan to move the new company's headquarters to the Netherlands to reduce their tax burden. Last year some U.S. government officials voiced their displeasure at these tax-inversion mergers to avoid paying U.S. taxes. There is a chance (albeit a small one) that the U.S. tries to stop this merger before it's completed.

Meanwhile the company continues to struggle with weak prices for nitrogen fertilizer. Looking at CF's last four quarterly earnings reports they have missed Wall Street's earnings estimates three of the last four quarters (and two quarters in a row). Revenues were down -8.3%, -15.8%, -10.9%, and -0.7% in the most recently reported quarter.

CF faces tough competition from fertilizer producers in China and in Russia and the Ukraine. It is worth noting that Bank of America just recently came out with a bullish call on CF. The BoA analyst suggested that fertilizer prices are too low and will bounce and CF's stock price should bounce with it. CF claims demand remains strong but that doesn't help if prices keep falling (obviously demand isn't strong enough or prices would rise).

Technically the path of least resistance is down and CF just broke support near $40.00. These are new two-year lows. Tonight we are suggesting a trigger to launch bearish positions at $38.85. Plan on exiting prior to CF's earnings report in mid February.

- Suggested Positions -

Short CF stock @ $38.65

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

Long FEB $35 PUT (CF160219P35) entry $1.20

01/16/16 new stop @ 33.25
01/13/16 new stop @ 33.60
01/11/16 new stop @ 34.15
01/09/16 new stop @ 35.75
01/07/16 new stop @ 37.05
01/06/16 new stop loss @ 38.75
01/06/16 triggered on gap down at $38.65, suggested entry was $38.85
Option Format: symbol-year-month-day-call-strike

chart:


Eaton Corp. - ETN - close: 47.86 change: -0.46

Stop Loss: 50.75
Target(s): To Be Determined
Current Gain/Loss: +2.0%
Entry on January 11 at $48.85
Listed on January 09, 2016
Time Frame: Exit PRIOR to earnings in early February
Average Daily Volume = 3.9 million
New Positions: see below

Comments:
01/16/16: ETN gapped down on Friday morning but the sell-off did not see much follow through. Shares barely dipped past Thursday's intraday low before bouncing. ETN managed to pare its loss to -0.9% by the close on Friday, which was better than the S&P 500's -2.1% loss.

I would be cautious here. Readers may want to lower their stop loss again. The $49.50-50.00 zone should be overhead resistance. No new positions at this time.

Trade Description: January 9, 2016:
Industrial stocks did not have a good 2015. The XLI industrials ETF and the Dow Jones Industrial Average both fell more than -6% last year. ETN significantly underperformed its peers with a -23% decline for 2015. Part of the problem is weak demand overseas compounded by a stronger dollar. Plus, the manufacturing sector in the U.S. is in recession.

ETN is in the industrial goods sector. According to the company, "Eaton is a power management company with 2014 sales of $22.6 billion. Eaton provides energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton has approximately 99,000 employees and sells products to customers in more than 175 countries."

Earnings and revenue growth for ETN was challenging last year. The company lowered guidance four times in 2015. Their most recent earnings report (Q3 results) from October 30th showed revenues were down -9.2% from a year ago. Earnings were down -25%.

ETN management is trying to be proactive. They plan to expand their restructuring efforts into 2016. Hopefully they will be able to cut costs by another $190 million if all goes as planned. The one positive side of ETN's slide has been the surge in its dividend. The stock just closed at three-year lows, which as boosted the dividend yield to 4.2%. Although I don't know why you'd buy ETN for the dividend if you are in jeopardy of losing more than 4% in the stock. The point & figure chart is forecasting a $42.00 target.

The ISM index measures manufacturing activity in the United States. December's ISM reading was negative for the second month in a row and marked the sixth monthly decline in a row. Numbers under 50.0 on the ISM index represent contraction. November's was 48.6. December's slipped to 48.2. Odds are it will be under the 50.0 again this month.

With the industrial sector in recession, revenues and earnings falling, the bearish momentum in ETN should continue. Last week's market decline has pushed ETN below round-number, psychological support at the $50.00 level. Now shares are poised to accelerate lower. Tonight we are suggesting a trigger to launch bearish positions at $48.85. My only caution is our time frame. ETN has earnings coming up in early February (no confirmed date yet). This could be a short-term three-four week play.

- Suggested Positions -

Short ETN stock @ $48.85

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

Long FEB $47.50 PUT (ETN160219P47.5) entry $1.55

01/13/16 new stop @ 50.75
01/11/16 triggered @ $48.85
Option Format: symbol-year-month-day-call-strike

chart:


Harley-Davidson, Inc. - HOG - close: 40.44 change: -1.53

Stop Loss: 41.25
Target(s): To Be Determined
Current Gain/Loss: +11.6%
Entry on December 11 at $45.75
Listed on December 09, 2015
Time Frame: Exit prior to earnings in late January
Average Daily Volume = 3.15 million
New Positions: see below

Comments:
01/16/16: I am suggesting caution our HOG trade. Shares are down three weeks in a row and the sell-off accelerated on Friday. HOG hit $39.38 before bouncing back to close above $40.00. The $40.00 level has been support in the past so this might be a short-term bottom in the stock. Tonight we are adjusting our stop loss down to $41.25 in an effort to protect a potential profit.

No new positions at this time.

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

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

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

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

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

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

- Suggested Positions -

Short HOG stock @ $45.75

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

Long FEB $45 PUT (HOG160219P45) entry $2.59

01/16/16 new stop @ 41.25
01/11/16 new stop @ 44.15
01/06/16 new stop @ 44.55
12/16/15 new stop @ 47.35
12/11/15 triggered @ $45.75
Option Format: symbol-year-month-day-call-strike

chart:


iPath S&P500 VIX Futures ETN - VXX - close: 26.70 change: +2.41

Stop Loss: None, no stop at this time.
Target(s): $16.65
Current Gain/Loss: -22.4%
2nd position Gain/Loss: + 8.0%
Entry on August 25 at $21.82
2nd position: September 2nd at $29.01
Listed on August 24, 2015
Time Frame: to be determined
Average Daily Volume = 50 million
New Positions: see below

Comments:
01/16/16: The brutal two-week sell-off in stocks has driven the VXX from 20 to almost 27. We suspect that the market decline might be near a short-term bottom and stocks could bounce, which would deflate this rally in the VXX.

No new positions at this time.

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

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

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

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

Here is an explanation from the product website:

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

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

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

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

- Suggested Positions -

Short the VXX @ $21.82

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

Short the VXX @ $29.01

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

chart: