NEW DIRECTIONAL CALL PLAYS

Deckers Outdoor - DECK - close: 99.38 change: +1.23

Stop Loss: 95.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 665 thousand
Entry on September -- at $---.--
Listed on September 27, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DECK is part of the consumer goods sector. The essence of the company is making shoes. Many look at DECK and think of just one brand - Ugg. It's true that Ugg accounts for 80% of sales but DECK is growing. They have a number of brands and its Teva brand saw sales jump more than 25% last quarter. Its Sanuk brand had sales improve +19.6% last quarter.

According to a company press release, "Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG, I HEART UGG, Teva, Sanuk, TSUBO, Ahnu, MOZO, and HOKA ONE ONE. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 126 Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally."

DECK is developing a healthy trend of beating Wall Street's earnings estimates. The last couple of quarters have seen beats by at least 15%. Many on wall street believe DECK should continue to see healthy margin improvements.

The company's latest earnings report was in July. It was their Q1 for fiscal year 2015. Wall Street expected a loss of $1.31 a share. DECK reported a loss of $1.07. Revenues soared +24.3% to a record $211.5 million, significantly above analysts estimates. Management then raised their EPS and revenue guidance for 2015.

This earnings improvement has powered the stock to new multi-year highs. The $90.00 level was significant resistance and now DECK is testing potential round-number resistance at $100. A breakout could spark some short covering. The most recent data listed short interest at 17.3% of the small 33.49 million share float. The point & figure chart is bullish and forecasting at $116 target and a move over $100 would produce a new triple-top breakout buy signal.

Tonight we're suggesting a trigger to buy calls at $100.25.

Trigger @ $100.25

- Suggested Positions -

Buy the NOV $105 call (DECK141122C105) current ask $3.50

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

Daily Chart:

Weekly Chart:




NEW DIRECTIONAL PUT PLAYS

Harley-Davidson, Inc. - HOG - close: 60.54 change: -0.44

Stop Loss: 62.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.6 million
Entry on September -- at $---.--
Listed on September 27, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
It looks like shares of HOG have run out of gas. The company is an American icon. Their website describes themselves as "Harley-Davidson Motor Company produces custom, cruiser and touring motorcycles and offers a complete line of Harley-Davidson motorcycle parts, accessories, riding gear and apparel, and general merchandise." The made in America label still resonates with many consumers, especially overseas. Unfortunately sales appear to have hit a pothole.

HOG's Q1 results were reported back in April and the numbers were better than expected. The stock gapped higher and hit new multi-year highs. Yet a week later HOG had peaked. Shares have been building a trend of lower highs ever since its late April high.

The latest earnings report was in July. While earnings were above expectations HOG's revenues were a hair below estimates. Management said that market share fell 260 basis points to 50.3%. More importantly management lowered their 2014 full year shipping guidance from a range of 279K-284K down to 270K-275K. This has resulted in some analysts lowering estimates and their ratings on the stock. Shares have also struggled.

HOG is now trading new 2014 lows. It's also testing significant support in the $60.00 level. A breakdown under $60 could send HOG toward $55 or even $50. The point & figure chart is bearish and currently suggesting at $49.00 target.

Technically shares of HOG have built a bearish head-and-shoulders pattern (easily seen on the weekly chart). The $60 level support is the neckline for this bearish sell signal. Tonight we're suggesting a trigger to buy puts at $59.75.

Trigger @ $59.75

- Suggested Positions -

Buy the NOV $60 PUT (HOG141122P60) current ask $1.98

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

Daily Chart:

Weekly Chart: