Editor's Note:

Stocks did not see any follow through on yesterday's reversal lower. Big caps continue to lead the way higher.

ESRX hit our entry trigger. VTR and DISCA hit our stop loss.


Current Portfolio:


CALL Play Updates

Express Scripts Holding - ESRX - close: 69.84

Stop Loss: 66.90
Target(s): to be determined
Current Option Gain/Loss: +2.0%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/21/14: ESRX managed to outpace the rally in the major indices today with a +1.0% gain. Our suggested entry point to buy calls at $69.50 was hit early this morning. It is worth noting that the rally stalled at the $70.00 mark.

I have been suggesting that more conservative traders will want to wait and use an entry point at $70.50.

Earlier Comments:
ESRX is in the healthcare sector. The company provides pharmacy benefit management (PBM) services in the U.S. and Canada. Both the NASDAQ and shares of ESRX peaked in early March. It would appear that investors considered ESRX one of the higher-growth, momentum names since it has been sinking with that group over the last couple of months.

That big drop you see on ESRX's daily chart was market reaction to its latest earnings news. The results were disappointing. You could call it a trifecta of bad news. ESRX missed Wall Street's estimates on both the top and bottom line. Management guided lower for 2014. Plus they disclosed three separate subpoenas from different state authorities as the company is investigated for its relationship with drug makers.

Investors already had lowered expectations for ESRX's earnings because the company lost UnitedHealth Group (UNH) as a client last quarter. The loss of UNH accounted for about half of ESRX's lost revenues. ESRX complained that a lot of expected new enrollments had been postponed. They didn't see quite the impact from the new Obamacare exchanges previously expected.

It sounds like plenty of bad news for ESRX. Yet here's the interesting part. The stock lost -6% following its earnings report but there was no follow through lower. Investors have been buying the dip. Shares are up two weeks in a row and slowing chewing through resistance. With a drop from $79 to $65 (-17.7%) it is possible that all the bad news is already priced into ESRX stock price. The long-term trend for ESRX is still higher. As the new affordable healthcare policy changes gain momentum it should mean more enrollments for ESRX.

- Suggested Positions -

Long Aug $70 call (ESRX140816C70) entry $2.45*
option format: symbol-year-month-day-call-strike
05/21/14 triggered @ 69.50
*option entry price is an estimate since the option did not trade at the time our play was opened.
05/19/14 adjust entry trigger from $70.50 to $69.50
adjust the strike price to the August $70s.

Entry on May -- at $---.--
Average Daily Volume = 6.5 million
Listed on May 17, 2014


Gilead Sciences - GILD - close: 81.81 change: +0.67

Stop Loss: 77.90
Target(s): to be determined (potentially $85.00)
Current Option Gain/Loss: +53.3%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21/14: There were new headlines regarding criticism of GILD's price for its Solvaldi hepatitis C cure. They failed to stop the rally in GILD's stock. Traders bought the dip midday and GILD recouped a good chunk of yesterday's pullback. GILD is currently on course for its sixth weekly gain in a row.

I am not suggesting new positions at this time. More conservative traders may want to use a higher stop loss.

- Suggested Positions -

Long Jun $80 call (GILD1421F80) entry $2.12

05/15/14 new stop @ 77.90, readers may want to exit now to lock in potential gains.
05/10/14 new stop @ 75.75
05/01/14 new stop @ 74.45
04/30/14 triggered @ 77.00

Entry on April 30 at $77.00
Average Daily Volume = 23 million
Listed on April 29, 2014


LyondellBasell Industries - LYB - close: 97.00 change: +0.20

Stop Loss: 93.75
Target(s): to be determined
Current Option Gain/Loss: +17.6%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/21/14: LYB displayed some relative strength on Wednesday with a +1.1% gain and a new all-time closing high. Shares are approaching what could be round-number, psychological resistance at the $100.00 level. I am not suggesting new positions at this time.

Earlier Comments:
The Point & Figure chart for LYB is bullish with a $110 target.

- Suggested Positions -

Long Sep $100 call (LYB140920C100)* entry $2.55**

05/15/14 new stop @ 93.75
05/12/14 LYB gapped open higher at $96.20 (+75 cents)
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 12 at $96.20
Average Daily Volume = 3.1 million
Listed on May 10, 2014


3M Company - MMM - close: 140.66 change: +1.29

Stop Loss: 138.75
Target(s): to be determined
Current Option Gain/Loss: -32.4%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21/14: Good news! MMM technically opened higher considering the stock began trading ex-dividend this morning. MMM opened at $139.77 and kept pace with the Dow Industrials with a +0.92% gain.

I am not suggesting new positions at this time.

- Suggested Positions -

Long Jun $140 call (MMM1421F140) entry $3.45*

05/20/14 adjust stop loss to $138.75 due to the dividend
05/15/14 new stop @ 139.49
05/08/14 triggered @ $142.00

Entry on May 08 at $142.00
Average Daily Volume = 2.65 million
Listed on May 07, 2014


Pacira Pharmaceuticals - PCRX - close: 74.79 change: -1.89

Stop Loss: 69.95
Target(s): to be determined
Current Option Gain/Loss: - 32.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21/14: PCRX tagged a new two-month high this morning and then reversed. I do not see any news that might account for the relative weakness today (-2.4%). With last week's high, today's move is arguably a short-term double top. More conservative traders may want to exit early or raise their stop loss.

Earlier Comments:
If PCRX does breakout it could see a short squeeze. The most recent data listed short interest at 17% of the 33.6 million share float. This is a somewhat aggressive trade because the option spreads on PCRX are a bit wider than we like. The Point & Figure chart for PCRX is bullish with a $93 target.

- Suggested Positions -

Long Aug $80 call (PCRX1416H80) entry $7.00

05/21/14 caution! today's move looks like a potential reversal lower.
05/06/14 triggered on gap higher at $75.32, suggested entry was $74.25

Entry on May 06 at $75.32
Average Daily Volume = 602 thousand
Listed on May 05, 2014


Potasch Corp. of Saskatchewan - POT - close: 37.05 change: -0.17

Stop Loss: 34.90
Target(s): to be determined
Current Option Gain/Loss: + 1.1%
Time Frame: 3 to 4 months
New Positions: see below

Comments:
05/21/14: POT shot lower this morning thanks to a downgrade before the opening bell. Traders bought the dip near its rising 10-dma. POT has been stuck in the $36.50-37.50 zone for almost two weeks now.

- Suggested Positions -

Long Sept $35 call (POT1420i35) entry $2.65

05/15/14 new stop @ 34.90
05/02/14 triggered @ 36.50

Entry on May 02 at $36.50
Average Daily Volume = 5.0 million
Listed on April 26, 2014


Thermo Fisher Scientific, Inc. - TMO - close: 115.32

Stop Loss: 116.75
Target(s): to be determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/21/14: TMO did not see any follow through on yesterday's sharp decline. Instead the stock gapped open higher this morning. Before the bell TMO announced a quarterly dividend of 15 cents per share payable on July 15th, 2014 to shareholders of record on June 16th.

We are not changing our strategy yet. The plan is to buy calls at $120.25.

Earlier Comments:
TMO is in the healthcare sector. The company recently acquired Life Technologies making the combined company the world's largest producer of scientific and laboratory equipment.

This is a pretty simple story. TMO has been firing on all cylinders with strong earnings growth. When TMO reported earnings in January the beat Wall Street estimates on both the top and bottom line and raised their 2014 guidance. They did it again on April 23d with its Q1 earnings report beating analyst estimates on the top and bottom line. TMO raised their 2014 EPS guidance again.

Earnings will likely continue to accelerate as the Life acquisition should generate noticeable cost and revenue synergies, potentially worth $85 million in just the first year.

Multiple firms have upgraded the stock. Goldman Sachs recently upgraded TMO due to expectations for strong organic growth. Goldman bumped their price target on TMO from $114 to $153.

Wall Street is bullish on TMO because the company is growing in Asia, specifically China. TMO currently has a goal of achieving 25% of its total revenues from the Asia-Pacific region by 2016.

Technically the stock looks strong too. TMO has a long-term up trend and appears to be breaking out from a three-month bull-flag consolidation pattern. Today's display of relative strength (+1.2%) is also a breakout above its 50-dma.

We do see potential resistance at $120. Therefore we're suggesting a trigger to buy calls at $120.25. If triggered we will start with a stop loss at $116.75.

Trigger @ $120.25

- Suggested Positions -

Buy the Sep $125 call (TMO140920C125)

symbol-year-month-day-call-strike

Entry on May -- at $---.--
Average Daily Volume = 2.0 million
Listed on May 19, 2014


United Parcel Service - UPS - close: 100.53 change: -0.86

Stop Loss: 97.75
Target(s): to be determined
Current Option Gain/Loss: + 51.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/21/14: UPS is looking a lot stronger with today's +1.2% bounce. The stock has found support twice at $100.20 in the last few days. We will probably raise our stop loss soon.

I would be tempted to use this bounce as a new bullish entry point.

More conservative traders may want to raise their stop loss but I would keep it below $100.

We're not setting an exit target yet but the Point & Figure chart for UPS is bullish with a $114 target.

- Suggested Positions -

Long Jul $100 call (UPS140719C100)* entry $1.98

05/12/14 triggered @ 100.25
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 12 at $100.25
Average Daily Volume = 2.9 million
Listed on May 10, 2014




PUT Play Updates

Athenahealth, Inc. - ATHN - close: 113.23 change: -1.13

Stop Loss: 124.05
Target(s): to be determined
Current Option Gain/Loss: Jun$100put -29.2% & Sep100put: - 7.2%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
05/21/14: Shares of ATHN popped higher this morning but reversed near $117. The stock eventually underperformed the market with a -0.98% decline. If ATHN continues to sink tomorrow it might be time to reconsider new bearish positions.

Earlier Comments:
The plan was to keep our position size small to limit our risk.

*small positions* - Suggested Positions -

Long Jun $100 PUT (ATHN140621P100) entry $2.05**

- or -

Long Sep $100 PUT (ATHN140920P100) entry $6.90**

05/15/14 trade opened on gap down at $115.66
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Entry on May 15 at $115.66
Average Daily Volume = 1.5 million
Listed on May 14, 2014


Chart Industries - GTLS - close: 71.70 change: +0.46

Stop Loss: 75.55
Target(s): to be determined
Current Option Gain/Loss: - 22.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/21/14: GTLS did not see any follow through on yesterday's decline. Today's market wide bounce may have stalled the sell-off.

Earlier Comments:
More conservative traders could wait for a drop under $71.00 as an alternative entry point.

FYI: The Point & Figure chart for GTLS is currently bullish but a drop below $71.00 would produce a new triple-bottom breakdown sell signal.

- Suggested Positions -

Long Jun $70 PUT (GTLS140621P70) entry $2.25

05/16/14 trade begins. GTLS opened at $72.34
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

Entry on May 16 at $72.34
Average Daily Volume = 652 thousand
Listed on May 15, 2014


Lumber Liquidators - LL - close: 79.53 change: -1.53

Stop Loss: 84.05
Target(s): to be determined
Current Option Gain/Loss: -17.7%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/21/14: LL continues to underperform and lost another -1.8% today.

The late April low was $78.92. I would wait for LL to trade below this level before initiating new bearish positions.

Earlier Comments:
I do consider a more aggressive trade because of LL's short interest. The most recent data listed short interest at 25% of the small 24.3 million share float, which raises the risk of a short squeeze. I am not setting a target yet. The P&F chart is bearish and forecasting at $72 target.

*small positions* - Suggested Positions -

Long Aug $75 PUT (LL140816P75) entry $4.50**

05/15/14 triggered @ 79.75
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-call-strike

Entry on May 15 at $79.75
Average Daily Volume = 888 thousand
Listed on May 14, 2014


Whole Foods Market, Inc. - WFM - close: 37.55

Stop Loss: 40.25
Target(s): to be determined
Current Option Gain/Loss: + 1.9%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/21/14: After hitting new lows yesterday WFM managed a bounce today (+0.99%). I do not see any changes from my prior comments.

Earlier Comments:
WFM is in the services sector. The company runs a grocery chain focused on natural and organic foods. As of May 2014 they had 379 stores. Unfortunately their success in the higher-margin organic foods has fueled significant competition.

The stock has been sinking for months as investors worried about growing competition. WFM's recent earnings report confirmed their fears. The stock crashed -19% after WFM missed estimates on both the top and bottom line and confessed they were facing tougher rivals. Management then lowered their 2014 guidance.

WFM said revenues still grew +10% and their same-store comparable sales were up +4.5%. Unfortunately profits were relatively flat and margins are getting squeezed with higher cost of goods sold and rising capex.

WFM is facing competition on all sides. Sprouts Farmers Market (SFM), The Fresh Market (TFM), Kroger (KR), Wal-mart (WMT), and regional competitors like HEB and Trader Joe's are all jumping on the organic and natural food bandwagon.

- Suggested Positions -

Long Aug $35 PUT (WFM140816P35) entry $1.01

05/19/14 trade begins. WFM opens at $37.89

Entry on May 19 at $37.89
Average Daily Volume = 9.2 million
Listed on May 17, 2014



CLOSED BULLISH PLAYS

Ventas, Inc. - VTR - close: 66.32 change: -0.95

Stop Loss: 66.75
Target(s): to be determined
Current Option Gain/Loss: - 1.8%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
05/21/14: VTR underperformed the broader market with a -1.4% decline on Wednesday. I do not see any company-specific news to account for today's relative weakness. Shares did breakdown below their 20-dma for the first time in several weeks. Our stop loss was hit at $66.75.

- Suggested Positions -

Aug $65 call (VTR1416H65) entry $2.75 exit $2.70* (-1.8%)

05/21/14 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
05/19/14 new stop @ 66.75
05/12/14 readers may want to exit early right now
05/10/14 new stop @ 65.75
05/01/14 triggered @ 66.35

chart:

Entry on May 01 at $66.35
Average Daily Volume = 1.6 million
Listed on April 28, 2014


CLOSED BEARISH PLAYS

Discovery Communications - DISCA - close: 74.30 change: +0.57

Stop Loss: 75.05
Target(s): to be determined
Current Option Gain/Loss: -58.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/21/14: DISCA has not been cooperating. The stock spiked higher this morning, likely on last night's announcement that Discovery was offering an extra share of stock as a special dividend. DISCA rallied toward $76 before reversing under its 30-dma. Our stop loss was hit at $75.05.

- Suggested Positions -

Jul $70 PUT (DISCA140719P70)* entry $1.60** exit $0.67*** (-58.1%)

05/21/14 stopped out
***option exit price is an estimate since the option did not trade at the time our play was closed.
05/14/14 triggered @ 72.25
**option entry price is an estimate since the option did not trade at the time our play was opened.
*I've provided the more standardized option symbol format.
symbol-year-month-day-put-strike

chart:

Entry on May 14 at $72.25
Average Daily Volume = 1.63 million
Listed on May 10, 2014