Editor's Note:

We are adding a put play tonight.

If you are looking for bullish candidates consider FRGI and JACK. Both are restaurant stocks. Falling fuel prices mean consumers have more money to spend on dining out.



NEW DIRECTIONAL PUT PLAYS

Arrow Electronics - ARW - close: 56.06 change: -1.35

Stop Loss: 57.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 585 thousand
Entry on December -- at $---.--
Listed on December 13, 2014
Time Frame: Exit PRIOR to January option expiration
New Positions: Yes, see below

Company Description

Why We Like It:
ARW is in the services sector. The company sells electronic components at the wholesale level. The company describes itself as "a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 460 locations in 58 countries."

Most of this year ARW has been reporting results that beat Wall Street's bottom line estimates but they kept missing the revenue number. That changed with their Q3 results when ARW reported on October 29th. ARW managed to beat estimates on both the top and bottom line with revenues up +11% from a year ago. Management offered relatively bullish guidance. Yet the stock did not react. That appears to be the mystery.

ARW's share price performance immediately slowed down following its Q3 report. You can see on the daily chart below that ARW plunged with the market's correction in September and October. Yet while the S&P 500 lost about -10% during that pullback shares of ARW lost more than -25%. When the market started to bounce ARW followed but its rally stalled after its Q3 report. The S&P 500 and the NASDAQ continued to rally and broke out to new highs for the year. ARW was unable to follow suit. Now the stock appears to be reversing after a failed rally at round-number resistance near the $60 mark.

With the new lower high there is a good chance the weakness in ARW continues. The stock never reversed its massive sell signal on its P&F chart. Tonight we are suggesting a trigger to open bearish positions at $54.75. More aggressive traders may want to jump in earlier (like a drop under $56.00) but we would like to see ARW trade below its simple 50-dma (currently $55.22).

Trigger @ $54.75

- Suggested Positions -

Buy the Jan $55 PUT (ARW150117P55) current ask $1.35

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

Daily Chart: