Editor's Note:

Broad-based gains in Europe helped fuel strong gains in U.S. stocks this morning. The S&P 500 ended the session at another new record high.

BBH and MA hit our entry triggers.
Bearish plays ATHN, GTLS, and LL hit our stop loss.


Current Portfolio:


CALL Play Updates

Biotech ETF - BBH - close: 90.80 change: +2.16

Stop Loss: 85.75
Target(s): to be determined
Current Option Gain/Loss: -22.5%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/27/14: Biotechs were in rally mode today. The group outperformed the major indices. The BBH added +2.4% and broke through the $90.00 level. Our suggested entry point was hit at $90.25.

Correction: the weekend newsletter had the $90 option symbol, not the $95 strike.

Earlier Comments:
Last year the biotech industry doubled the market's growth with +60% gains in the BBH. The rally continued into January and February with almost another +20%. Then sentiment reversed. Suddenly traders did not want to own the momentum names or the high-growth names. News articles and debates about the extremely high costs of some biotech treatments like Sovaldi helped feed the sell-off. Biotech experienced 20 percent correction (actually -22.6%) in less than two months.

Now it appears that investors are losing their fear over the growth names again. The BBH has been consolidating sideways the last several weeks. Many believe the correction in biotech is providing a great entry point. There are plenty of high-profile biotech firms with low multiples. A lot of the big names have high-quality pipelines. The group could see more M&A activity as older firms seek to buy up younger rivals.

We want to be ready to buy calls if the BBH can breakout from this consolidation phase. Currently shares of this ETF are testing resistance near $90.00 and its 50-dma and 150-dma. I am suggesting a trigger to buy calls at $90.25.

Bear in mind that biotech stocks can be volatile. The BBH does not see a lot of volume and the option spreads are wide. Add it all up and I would label this a more aggressive, high-risk/high-reward trade. Investors may want to start with small positions.

- Suggested Positions -

Long Sep $95 call (BBH140920C95) entry $3.55*

05/27/14 triggered @ 90.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

Entry on May 27 at $90.25
Average Daily Volume = 119 thousand
Listed on May 22, 2014


CVS Caremark Corp. - CVS - close: 77.17 change: +0.05

Stop Loss: 74.65
Target(s): to be determined
Current Option Gain/Loss: - 8.6%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/14: CVS delivered a quiet session on Tuesday. Shares bounced along short-term support at the $77.00 level. I do not see any changes from my prior comments.

I would still consider new bullish positions at current levels. If you're concerned about a market pullback then consider waiting for CVS to dip into the $75-76 zone as an alternative entry point.

Earlier Comments:
CVS is in the services sector. The company provides integrated pharmacy healthcare services in addition to running a drug store chain with over 7,600 locations. CVS' largest rival is Walgreen's with 8,650 locations.

The company's most recent earnings report was mixed. CVS delivered a profit of $1.02 per share. That missed estimates by a penny. Revenues came in above expectations at $32.69 billion in the first quarter. Wall Street appears to have accepted CVS's "blame it on the weather" excuse. Last month CVS also disclosed they had finalized a settlement with the SEC over events dating back to 2009 that stemmed from its acquisition of Longs Drug Stores in 2008. In the settlement CVS did not have to admit any wrongdoing and does not have to restate any earnings reports. They're happy to put the ordeal behind them and for investors it's old news.

More importantly the company is seeing strong growth in its PBM business. Its pharmacy services segment saw revenues climb +10.3% to $20.2 billion in the second quarter. Management said CVS is "beginning to develop integrated products for both hospitals and health plans."

They're also growing into a broader healthcare provider with the retail-based clinic subsidiary MinuteClinic. According to CVS' website, "MinuteClinic launched the first retail medical clinics in the United States in 2000 and now has more than 800 locations in 28 states. MinuteClinics are staffed by nurse practitioners and physician assistants who utilize nationally recognized protocols to provide treatment for common family illnesses, skin conditions and injuries, administer vaccinations, conduct physicals and wellness screenings, and offer monitoring for chronic conditions seven days a week without an appointment, including evenings and holidays."

American's growing acceptance of the MinuteClinic for quick healthcare services will grow. Long-term CVS will benefit from an aging population more dependent on their prescriptions. Plus, CVS will benefit from the growing number of new Americans being covered under Obamacare. Payments for these services will be covered by health care plans, Medicaid, and now the Affordable Care Act mandate.

Wall Street is happy with its steady growth. The most recent earnings report showed profits rising 18% year over year for the fifth consecutive quarter of double-digit earnings growth.

We're not setting a bullish exit target yet but the Point & Figure chart for CVS is bullish with a $102 target.

- Suggested Positions -

Long Aug $80 call (CVS140816C80) entry $1.04

05/22/14 triggered @ 77.25
option format: symbol-year-month-day-call-strike

Entry on May 22 at $77.25
Average Daily Volume = 5.1 million
Listed on May 21, 2014


Express Scripts Holding - ESRX - close: 70.65 change: +0.51

Stop Loss: 66.90
Target(s): to be determined
Current Option Gain/Loss: +20.4%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/14: ESRX extended its rally another session with a +0.7% gain. The stock is testing potential resistance at its simple 150-dma. The top of the April 29th gap (it closed at $71.01) could also be short-term resistance. I would not be surprised to see ESRX stall here for a bit.

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


Facebook, Inc. - FB - close: 63.48 change: +2.13

Stop Loss: 59.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
05/27/14: The rally in FB accelerated on Tuesday with a +3.4% gain. The stock is nearing potential resistance at the $64.00 level. We are looking for a bullish breakout higher. There is no change from the weekend newsletter's new play description.

Earlier Comments:
FB is in the technology sector. The company operates the largest social network on the planet with monthly active users up +15% year over year to 1.28 billion as of March 31st, 2014. Mobile monthly users were up +34% to 1.01 billion.

When investors started selling the momentum stocks and high-growth names in March shares of FB were not immune. The stock corrected from $72 to $55, a -23.6 percent correction. We suspect when investors return to the high-growth names they will flock to FB.

The company is firing on all cylinders with a strong Q1 report. Analysts were expecting a profit of 24 cents a share on revenues of $2.35 billion. FB delivered a Q1 profit of 34 cents with revenues soaring +71.6% year over year to $2.5 billion. Advertising revenues were up +82% from the same quarter a year ago. Mobile advertising has increased from 30% of ad revenues to 59% of ad revenues.

Wall Street is pretty bullish on shares of FB. Many analysts have price targets in the $75-85 zone. David Tepper's Appaloosa Management initiated a new position in FB last quarter. ITG Research recently offered positive comments on FB suggesting the current quarter could also come in ahead of estimates.

Technically the stock has been consolidating sideways in the $55-64 zone for almost two months. Friday's gain was a bullish close above the 50-dma for the first time in weeks. More aggressive traders may want to launch positions above $62.50. We are suggesting investors wait for FB to trade at $64.25 as our trigger to buy calls. The point & figure chart is bearish but a move above $64.00 would produce a new P&F chart buy signal.

Trigger @ $64.25

- Suggested Positions -

Buy the Sept $70 call (FB140920C70) current ask $3.15

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

Entry on May -- at $---.--
Average Daily Volume = 62 million
Listed on May 24, 2014


Gilead Sciences - GILD - close: 82.16 change: +1.22

Stop Loss: 77.90
Target(s): to be determined
Current Option Gain/Loss: +62.7%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/27/14: Thanks to a widespread rally in biotech stocks today there was no follow through on GILD's bearish move last Friday. Shares bounced near their 10-dma with a +1.5% gain.

I am not suggesting new positions at this time.

NOTE: since we only have June calls, readers may want to take some money off the table now.

- 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: 98.47 change: -0.31

Stop Loss: 93.75
Target(s): to be determined
Current Option Gain/Loss: +21.5%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/27/14: LYB spiked to new all-time highs before reversing. I have been warning readers that the $100 level could be overhead resistance. 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


MasterCard Inc. - MA - close: 77.03 change: +0.58

Stop Loss: 72.35
Target(s): To Be Determined
Current Option Gain/Loss: -3.5%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/14: Our brand new play on MA is open. The stock received a lot of positive analysts' comments this morning. Shares gapped open higher at $76.88 before spiking up towards $78. Our suggested entry point was hit at $77.25. I do not see any changes from the weekend newsletter's new play description.

Earlier Comments:
MA is in the financial sector. The company provides transaction processing and payment-related services. Globally cash is still the most dominant method of payment. That may not be true in the most developed countries but worldwide there is a long-term trend with consumers moving away from cash more toward cards and electronic payments, which will benefit MasterCard.

MA's latest earnings on May 1st was positive. The company beat Wall Street's estimates on both the top and bottom line. The company said a 14% increase in transactions, on a local currency basis, hit $1.0 trillion. They also saw a +14% jump in processed transactions. Cross border volumes were up +17%.

MA's CEO and President Ajay Banga said the company signed new deals with Wal-Mart (WMT), Sam's Club, and Target (TGT). WMT and Sam's will move their co-brand portfolios to MasterCard. TGT will also shift its co-brand cards to MasterCard and use MA's chip and PIN technology to upgrade their security. Banga said MA will, "continue to invest in technology and acquisitions that will speed our development of mobile and online solutions."

Both Visa and MA were caught up in the sanction backlash between Russia and Europe and the U.S. The two companies were not singled out but new legislation in Russia was going to force the two American companies out of the country. Working with Russian officials MA and Visa have found a way to sidestep the issue by creating a domestic (Russian) payment system within six months and create a Russian company to handle domestic transactions.

Technically shares of MA saw a -20% correction on an intraday basis from its January 2014 highs to the April intraday lows. The stock bounced near its long-term up trend. Now MA appears to be breaking out past resistance near $76, resistance at its 100-dma and 150-dma, and resistance at its five-month trend of lower highs. We're not setting an exit target yet but the point & figure chart is bullish with an $87 target.

- Suggested Positions -

Long Oct $80 call (MA141018C80) entry $2.85*

05/27/14 triggered @ 77.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike

Entry on May 27 at $77.25
Average Daily Volume = 5 million
Listed on May 24, 2014


3M Company - MMM - close: 141.44 change: +0.30

Stop Loss: 138.75
Target(s): to be determined
Current Option Gain/Loss: -25.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/27/14: MMM posted another gain today but shares lagged behind the major indices with its +0.2% gain.

Readers may want to wait for a rally past $142.00 before considering new positions.

If you do choose to open new positions I the July or October calls.

- Suggested Positions -

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

05/24/14 if you open new positions, use the July or October calls
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


Potasch Corp. of Saskatchewan - POT - close: 36.18 change: -0.14

Stop Loss: 35.75
Target(s): to be determined
Current Option Gain/Loss: -21.8%
Time Frame: 3 to 4 months
New Positions: see below

Comments:
05/27/14: POT is not cooperating. The stock's attempt to follow through on Friday's rebound failed at its simple 20-dma. POT underperformed the market with a -0.38% decline.

We are turning more defensive and raising our stop loss to $35.75.

- Suggested Positions -

Long Sept $35 call (POT1420i35) entry $2.65

05/27/14 new stop @ 35.75
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


United Parcel Service - UPS - close: 103.17 change: +0.44

Stop Loss: 97.75
Target(s): to be determined
Current Option Gain/Loss: + 96.9%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/27/14: The transportation average continues to hit new highs and UPS posted another gain hitting new relative highs.

The next area of resistance appears to be the $105 level.

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

Whole Foods Market, Inc. - WFM - close: 38.65

Stop Loss: 40.25
Target(s): to be determined
Current Option Gain/Loss: -29.7%
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
05/27/14: Today's bounce in WFM was all market related. Shares spiked higher at the open as shorts covered positions. WFM settled with a +2.3% gain. Look for resistance near $40.00.

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 BEARISH PLAYS

Athenahealth, Inc. - ATHN - close: 125.96 change: +5.04

Stop Loss: 124.05
Target(s): to be determined
Current Option Gain/Loss: Jun$100put -80.4% & Sep100put: -40.5%
Time Frame: 4 to 12 weeks
New Positions: see below

Comments:
05/27/14: The biotech stocks produced big gains on Tuesday. This sparked more short covering in ATHN, which surged +4% and rallied through resistance. Our stop loss was hit at $124.05.

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

*small positions* - Suggested Positions -

Jun $100 PUT (ATHN140621P100) entry $2.05** exit $0.40*** (-80.4%)

- or -

Sep $100 PUT (ATHN140920P100) entry $6.90** exit $4.10*** (-40.5%)

05/27/14 stopped out
***option exit price is an estimate since the option did not trade at the time our play was closed.
05/22/14 more conservative traders may want to exit immediately!
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

chart:

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


Chart Industries - GTLS - close: 75.20 change: +0.48

Stop Loss: 75.55
Target(s): to be determined
Current Option Gain/Loss: - 71.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/27/14: I cautioned readers in the weekend newsletter that we might see GTLS test resistance at its 50-dma. That's were the rally stalled today, at the 50-dma. The intraday high was $75.75, which was enough to stop us out.

Our play is closed but readers may want to keep GTLS on their watch list as a bearish candidate

- Suggested Positions -

Jun $70 PUT (GTLS140621P70) entry $2.25 exit $0.65* (-71.1%)

05/27/14 stopped out
*option exit price is an estimate since the option did not trade at the time our play was closed.
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

chart:

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


Lumber Liquidators - LL - close: 84.37 change: +3.32

Stop Loss: 84.05
Target(s): to be determined
Current Option Gain/Loss: -44.4%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/27/14: The stock market's widespread rally sparked some new short covering in LL and the stock surged +4.1%. Today's rebound broke through some technical resistance and hit our stop loss at $84.05.

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.

*small positions* - Suggested Positions -

Aug $75 PUT (LL140816P75) entry $4.50* exit $2.50** (-44.4%)

05/27/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
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

chart:

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