NEW DIRECTIONAL CALL PLAYS

AmerisourceBergen Corp. - ABC - close: 102.08 change: +0.13

Stop Loss: 99.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.2 million
Entry on December -- at $---.--
Listed on December 12, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: Yes, see below

Company Description

Trade Description:
Stocks had a rough week but ABC has been showing relative strength. Shares of ABC are now up three out of the last four weeks and up six sessions in a row. Considering how ugly the stock market was last week, ABC looks pretty attractive.

ABC is in the services sector. According to the company, "AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel in human and animal health. With over $135 billion in annual revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs approximately 18,000 people. AmerisourceBergen is ranked #16 on the Fortune 500 list."

The company reported their 2015 Q3 results on July 23rd. They beat Wall Street estimates on both the top and bottom line. Revenues were up +12.8%. Management forecasted full-year 2015 income growth in the 20-to-22% range.

Fast-forward to late October and ABC reported another strong quarter. The company announced their 2015 Q4 results on Oct. 29th. Wall Street was expecting a profit of $1.18 a share on revenues of $34.5 billion. ABC beat estimates again with a profit of $1.21 a share. Revenues were up +12.3% to $35.47 billion. Management raised their 2016 earnings and revenue guidance above analysts' estimates. They're now forecasting 2016 revenue growth of +8% to +10%.

Last month ABC raised their dividend by 17% to $0.34 a share. Normally raising the dividend is a sign of confidence by management. Meanwhile Citigroup analyst Robert Buckland recently listed ABC as one of his top 28 value stocks in the U.S. market (for 2016).

Technically shares bottomed in October after a three-month plunge from resistance in the $115 area. Now ABC has a bullish trend of higher lows. The last few days have seen ABC produce a technical breakout past round-number resistance at $100 and technical resistance at its 100-dma. The point & figure chart is bullish and forecasting at $122 target. Tonight we are suggesting at trigger to launch bullish positions at $102.85.

Trigger @ $102.85

- Suggested Positions -

Buy the FEB $105 CALL (ABC160219C105) current ask $3.00
option price is a current quote and not a suggested entry price.

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

Daily Chart:

Weekly Chart:


SPDR S&P 500 ETF - SPY - close: 201.88 change: -3.99

Stop Loss: 201.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 137 million
Entry on December -- at $---.--
Listed on December 12, 2015
Time Frame: Exit PRIOR to January option expiration
New Positions: Yes, see below

Company Description

Trade Description:
There is a good chance stocks could bounce this week.

Mid-December tends to see a pullback due to tax-loss selling ahead of yearend. This past week was probably the height of tax-loss selling. The only problem was the normal weakness was exacerbated by the sell-off in crude oil, which crushed the energy sector. The rest of the market followed it lower. Wild fluctuations among the major currencies didn't help. Plus, we have the FOMC meeting this week and there seems to be a lot of confusion and uneasiness about the Fed likely raising rates for the first time in almost a decade.

Now crude oil is extremely oversold and due for a bounce. Stocks look short-term oversold as well. The S&P 500 just suffered its worst week since the August 2015 market correction lower. The S&P 500 should have support in the 2,000 area and a bounce could spark a yearend rally. The next three weeks is normally very bullish for stocks, according to historical trends.

We want to be ready if stocks do bounce. Tonight we are suggesting a bullish trade on the S&P 500 index. The easiest way to play that is the SPY. Wait for a bounce. We will use a trigger at $203.25 as our entry point. We'll try and limit our risk with a tight stop loss at $201.25. More aggressive traders might want to consider a stop loss below the $200 mark.

Trigger @ $203.25

- Suggested Positions -

Buy the JAN $205 CALL (SPY160115C205) current ask $2.71
option price is a current quote and not a suggested entry price.

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

Daily Chart: