Editor's Note:

The U.S. market ended a volatile week on a down note. The selling intensified heading into the weekend.

MBLY and MNK hit our stop loss. We've adjusted the entry point on AMBA.

Prepare to exit LAD on Monday.

We have updated several stop losses tonight.


Current Portfolio:


CALL Play Updates

Ambarella, Inc. - AMBA - close: 36.42 change: -5.46

Stop Loss: $31.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.4 million
Entry on October -- at $---.--
Listed on October 08, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
10/11/14: AMBA held up reasonably last week during the market's choppy action. At least that was the case until Friday. Shares of AMBA were crushed on Friday with a -13% drop on no news. There's no reason for this relative weakness and we think the sell-off is overdone.

AMBA is nearing what should be support at $35.00 and its simple 50-dma near $35.65. We suspect AMBA will test $35.00 before bouncing. Tonight we're adjusting our entry point strategy. Move the trigger to buy calls down to $35.25 and we'll move the stop loss to $31.90. Adjust the option strike down to the November $40 call.

Earlier Comments: October 8, 2014:
AMBA is in the technology sector. They're considered part of the semiconductor and semiconductor equipment makers. The company was founded in 2004 and went public in October 2012 at $6.00 a share. That price was significantly below where AMBA was expected to price in the $9-11 range.

The company has grown from making broadcast-class encoders to making consumer and sports cameras, security cameras, and now automotive cameras. Their high-definition chips are being integrated into security IP cameras and wearable cameras. AMBA is also capturing part of a new market - cameras on consumer-level remote control drones.

The last two plus years have seen a strong performance in AMBA with the stock up +633% from its IPO price. AMBA has GoPro, Inc. (GPRO) to thank for part of that rally. GPRO came to market in June this year and the stock has been in rally mode since mid August with a rally in GPRO from less than $40 to $90 a share. AMBA happens to make the HD camera sensors in many of GPRO's products. As GPRO rallies it could be giving AMBA a boost and GPRO expects record sales this holiday season.

It's also worth noting that AMBA's rally has been helped by consistent earnings growth. The company has beat Wall Street's estimates on both the top and bottom line for the last four quarters in a row. Their most recent earnings report in September saw AMBA's management raise their revenue guidance.

Shorts are getting killed. As the rally continues AMBA could see more short covering. The most recent data listed short interest at 21.7% of the small 28.0 million share float.

We think the bullish momentum continues. Tonight we're suggesting a trigger to buy calls at $44.65.

Trigger @ $35.25

- Suggested Positions -

Buy the NOV $40 call (AMBA141122C40) current ask $1.85

10/11/14 new entry strategy: move the entry trigger from $44.65 to $35.25 and move the stop loss from $40.45 to $31.90.
We will adjust the option strike from the NOV $46 call to the NOV $40 call
Option Format: symbol-year-month-day-call-strike

chart:




PUT Play Updates

Flowserve Corp. - FLS - close: 64.09 change: -0.89

Stop Loss: 66.55
Target(s): To Be Determined
Current Option Gain/Loss: +75.0%
Average Daily Volume = 813 thousand
Entry on October 06 at $68.45
Listed on October 04, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: FLS just marked its fifth weekly loss in a row. Shares look oversold with a drop from $77 to $64 during that time frame. Traders may want to start taking some money off the table.

We are moving the stop loss down to $66.55. I am not suggesting new positions at this time.

Earlier Comments: October 4, 2014:
FLS is part of the industrial goods sector. The company is headquartered in Texas and has grown to 16,000 employees in over 50 countries. The company makes pumps, valves, seals, and provides services to the power generation, oil & gas, chemicals, and general industries.

FLS' rally from its 2011 low peaked back in early 2014. A slowdown in the global economy is impacting sales. The last couple of quarters have seen FLS miss revenue estimates and report declining sales. Now after six months of lower highs shares of FLS has broken down from a huge consolidation pattern. Goldman Sachs may have seen this coming when they put a "sell" rating on the stock back in June.

FLS is currently down four weeks in a row and the last few days have seen the stock break down under support near $70.00. More importantly it has broken support at its long-term trend line of support dating back to its 2011 low.

FLS was also showing relative weakness on Friday. Instead of bouncing with the market shares underperformed with a -1.5% decline on almost double its average volume. The point & figure chart has turned bearish and is forecasting at $60 target.

Tonight we are suggesting a trigger to buy puts at $68.45.

- Suggested Positions -

Long NOV $70 PUT (FLS141122P70) entry $3.20

10/11/14 new stop @ 66.55, traders may want to take profits early
10/07/14 new stop @ 70.10
10/06/14 triggered @ 68.45
Option Format: symbol-year-month-day-call-strike

chart:


Lithia Motors Inc. - LAD - close: 80.86 change: +1.12

Stop Loss: 85.25
Target(s): To Be Determined
Current Option Gain/Loss: -18.1%
Average Daily Volume = 384 thousand
Entry on October 07 at $81.40
Listed on October 06, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: As a bear on LAD it was disappointing to see the stock showing relative strength on Friday. Shares managed to add +1.4% in spite of the market's weakness. After Friday's bounce we're choosing to exit this trade immediately on Monday morning.

- Suggested Positions -

Long NOV $80 PUT (LAD141122P80) entry $4.40*

10/11/14 prepare to exit on Monday morning
10/07/14 trade begins. LAD gaps down at $81.40
*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

chart:


Lennox Intl. - LII - close: 74.64 change: -0.74

Stop Loss: 77.15
Target(s): To Be Determined
Current Option Gain/Loss: +38.4%
Average Daily Volume = 391 thousand
Entry on September 22 at $79.25
Listed on September 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: LII's midday bounce on Friday failed near the $76.00 level, which is good news if you're bearish. The next support level looks like $70.00 but LII is oversold and could bounce at any time. We are moving our stop loss down to $77.15.

Please note that LII has earnings coming up on October 20th. We will likely exit prior to the announcement.

Earlier Comments: September 20, 2014:
LII is in the industrial goods sector. Unfortunately for shareholders the stock is significantly underperforming with a -6.1% decline in 2014. That compares to a +4.1% gain in the XLI industrials ETF and a +4.2% gain in the Dow Industrials.

This is a simple momentum trade. After a three-year rally from its 2011 lows near $25 the stock traded near $95.00 in early 2014. Shares have since been struggling. Traders started selling the rallies. Now LII has broken down below its simple 200-dma and its long-term up trend (see weekly chart below). The last few days have seen LII create a "death cross" with the 50-dma crossing under the 200-dma.

This past week saw the oversold bounce in LII fail near prior support near $82.00 and its 300-dma. Friday's low was $79.33. I'm suggesting a trigger for bearish positions at $79.25. Potential support looks like $75.00 and $70.00. Currently the Point & Figure chart is suggesting at $68.00 target.

- Suggested Positions -

Long DEC $80 PUT (LII141220P80) entry $3.90

10/11/14 new stop @ 77.15
10/01/14 new stop @ 78.25
09/30/14 new stop @ 79.55
09/23/14 new stop @ 80.25
09/22/14 triggered @ 79.25
Option Format: symbol-year-month-day-call-strike

chart:


Oceaneering Intl. Inc. - OII - close: 60.81 change: -0.32

Stop Loss: 62.75
Target(s): To Be Determined
Current Option Gain/Loss: +38.5%
Average Daily Volume = 1.6 million
Entry on October 06 at $62.35
Listed on October 04, 2014
Time Frame: We will likely exit prior to earnings on Oct. 29th
New Positions: see below

Comments:
10/11/14: Hmm... traders bought the decline in OII near round-number support at $60.00 on Friday. Shares ended the session down -0.5% versus the -1.1% drop in the S&P 500. We're turning more defensive here and lowering the stop loss down to $62.75, just above Thursday's intraday high. I'm not suggesting new positions at this time.

Earlier Comments: October 4, 2014:
The price of crude oil hits its 2014 peak in late June. The steady decline in crude oil has pressure nearly all of the energy-related stocks lower including oil services names. As a matter of fact the oil service names have fared even worse with the OSX oil service index down -9.4% for the year.

OII is underperforming its peers with a -20% decline this year. The company provides an array of oil services with hundreds of remotely operated vehicles (ROVs). A company press release describes OII as "a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries."

The weakness in oil is expected to get worse, which should keep the pressure on oil and oil service stocks like OII. Shares of OII recently broke support near $65.00. The oversold bounce has already rolled over and shares are hitting 18-month lows. The point & figure chart is bearish and forecasting at $47.00 target.

Friday's intraday low was $62.47. We're suggesting a trigger to buy puts at $62.35.

- Suggested Positions -

Long NOV $60 PUT (OII141122P60) entry $1.48

10/11/14 new stop @ 62.75
10/06/14 triggered @ 62.35
Option Format: symbol-year-month-day-call-strike

chart:


Pentair Plc - PNR - close: 62.15 change: -0.57

Stop Loss: 64.75
Target(s): To Be Determined
Current Option Gain/Loss: +108.3%
Average Daily Volume = 2.0 million
Entry on August 26 at $68.90
Listed on August 23, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: PNR ended the week at a new 2014 low. The breakdown under its early August low is bearish but the $60.00 level could be round-number support. We will adjust the stop loss down to $64.75, just above the simple 10-dma. More conservative investors may want to start taking money off the table now.

I'm not suggesting new positions at this time. Earnings are coming up on October 21st.

Earlier Comments: August 23, 2014:
Pentair is considered part of the industrial goods sector. They manufacture industrial equipment across the globe. According to the company website, "Pentair is a global water, fluid, thermal management, and equipment protection partner with industry leading products, services, and solutions. Pentair reports the performance of its business within four reporting segments that focus on five primary verticals."

Long-term the stock has had a strong 2012 and 2013 performance. The rally appears to have peaked in 2014 when the market started pulling back in March this year. If you recall many of the momentum names and higher-growth stocks were hammered lower starting in March. PNR doesn't really qualify as a big momentum name or a high-growth name but shares have been unable to recover anyway. Shares have trended lower from the March peak, currently down -16% from its 2014 highs and down -10.6% year to date.

PNR's earnings results have not helped the stock's performance. Back in April they beat estimates but missed the revenue number and then guided lower for the second quarter. Their most recent earnings report was July 31st. Depending whose estimate you use PNR either reported in-line profits or managed to just beat by a penny. Revenues disappointed again. PNR missed the revenue estimate with a -2.7% decline from a year ago to $1.91 billion. Management lowered guidance again but they also announced they were exiting their struggling water transport business.

PNR collapsed on this late July earnings news and lowered guidance with a drop toward $64. Shares have spent three weeks with an oversold bounce that is just now starting to roll over under resistance. PNR appears to have resistance near $70-71 and its 50-dma and 300-dma (see daily chart below). The point & figure chart is bearish and currently forecasting at $61 target.

Tonight we are suggesting a trigger to buy puts at $68.90.

- Suggested Positions -

Long Nov $70 PUT (PNR141122P70) entry $3.60*

10/11/14 new stop @ 64.75, traders may want to take profits now
10/09/14 new stop @ 66.15
10/01/14 new stop @ 67.05
09/06/14 new stop @ 68.65
08/26/14 triggered @ 68.90
Option Format: symbol-year-month-day-call-strike

chart:


Starbucks Corp. - SBUX - close: 74.46 change: -0.02

Stop Loss: 76.51
Target(s): To Be Determined
Current Option Gain/Loss: + 0.0%
Average Daily Volume = 3.6 million
Entry on September 23 at $74.25
Listed on September 22, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: The midday rally attempt in SBUX on Friday failed near its 30-dma. Shares look poised to test support at the bottom of its $73.75-76.25 trading range. The fact that SBUX did not see bigger losses on Friday is a bit worrisome.

I am not suggesting new positions at this time.

Earlier Comments: September 22, 2014:
Summer is over and fall is officially here. That has many consumers thinking of hot coffee and seasonal fare like SBUX's pumpkin spice lattes. Unfortunately Wall Street doesn't appear too keen on SBUX, if you're looking at the share price action.

This company is in the services sector. They are a global power house as a specialty retailer of what some might consider overpriced coffee and sugary drinks with too many calories. After 30 years in business they have grown to more than 20,000 stores and over 180,000 full time employees.

The stock peaked in late 2013. It looked like the correction was over back in April this year and SBUX did rally from $68 to $79 by July. Yet the stock has been dead money the last several weeks and now it's starting to underperform the market.

That spike you see on the daily chart was a reaction to its Q2 earnings results. The recent breakdown under $76 is bearish and the oversold bounce just failed near this level. Today's intraday low was $74.33. We're suggesting a trigger to buy puts at $74.25.

- Suggested Positions -

Long NOV $72.50 PUT (SBUX141122P72.5) entry $1.60*

09/23/14 triggered @ 74.25
*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

chart:


Tupperware Brands Corp. - TUP - close: 68.26 change: -0.22

Stop Loss: 71.05
Target(s): To Be Determined
Current Option Gain/Loss: +54.4%
Average Daily Volume = 399 thousand
Entry on September 22 at $71.75
Listed on September 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: TUP tried to bounce on Friday morning but rolled over near $69.00 and closed near its lows for the session. The stock is ready to breakdown to new 52-week lows.

Tonight we are adjusting the stop loss to $71.05.

Earlier Comments: September 20, 2014:
TUP was founded back in 1946 and over the last 60 years the company has grown from their plastic food prep and storage line into multiple brands.

According to the company website, "Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method through an independent sales force of 2.9 million. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands."

Unfortunately this year has not been the best for TUP's stock price. The company missed earnings expectations and lowered guidance back in January. You can see the market's reaction with the big drop in late January on the chart.

It took three months but TUP slowly clawed its way back toward resistance near $85 and its simple 200-dma. That area proved to be a lid on the stock price. Then in July the company disappointed again. It's Q2 earnings report disclosed that profits fell -38% to $47.6 million, down from $76.3 million a year ago. Management then lowered its full year guidance when they reported earnings and shares plunged again.

The weekly chart has produced a bearish head-and-shoulders pattern. The daily chart doesn't look healthy either. The Point & Figure chart is bearish and suggesting at $58.00 price target.

There is short-term support near $72.00. I'm suggesting a trigger to buy puts at $71.75.

- Suggested Positions -

Long 2015 Jan $70 PUT (TUP150117P70) entry $2.59

10/11/14 new stop @ 71.05
09/23/14 new stop @ 72.25
09/22/14 new stop @ 72.80
09/22/14 triggered @ 71.75
Option Format: symbol-year-month-day-call-strike

chart:


Vulcan Materials Co. - VMC - close: 56.52 change: -0.81

Stop Loss: 60.15
Target(s): To Be Determined
Current Option Gain/Loss: -10.1%
Average Daily Volume = 976 thousand
Entry on October 08 at $56.90
Listed on October 07, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: VMC's reversal at the 10-dma on Thursday continued on Friday with another -1.4% decline. I don't see any changes from my prior comments and would still consider new positions at current levels.

Earlier Comments: October 7, 2014:
VMC is in the industrial goods sector. The are the largest producer of construction aggregates in the United States. They are also a major producer of aggregate-based construction materials. Put it altogether and VMC produces crushed stone, sand, gravel, asphalt and ready-mix concrete.

The stock has languished for years after peaking near $125 a share back in 2007. It looked like the stock has turned a corner back in 2011 but that rally now appears to be in trouble. More recently VMC peaked under $70 back in March this year. It's been slowly chopping sideways since then in the $60-70 zone. The recent weakness might suggest a trend change for the worse.

The selling pressure has pushed VMC stock under multiple layers of support. It could get a lot worse. The market's recent weakness has been stoked by fears of a global growth slowdown. Bulls could argue that nearly all of VMC's sales are inside the U.S. and the U.S. economy is still growing. That's true. Evidently investors don't care.

Today's display of relative weakness (-2.1%) left shares of VMC testing its long-term trend line of higher lows dating back to 2011. A breakdown here could mean a much longer and larger correction lower. Tonight we're suggesting a trigger to buy puts at $56.90.

- Suggested Positions -

Long NOV $55 PUT (VMC141122P55) entry $1.67*

10/08/14 triggered @ 56.90
*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

chart:


WESCO Intl. - WCC - close: 72.92 change: -2.07

Stop Loss: 76.25
Target(s): To Be Determined
Current Option Gain/Loss: +89.7%
Average Daily Volume = 306 thousand
Entry on October 01 at $77.75
Listed on September 30, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: It was a really ugly week for shares of WCC with a drop from $79.50 near Monday's highs down to $72.41 at Friday's lows. The stock is probably due for an oversold bounce. We are going to try and reduce our risk by moving the stop loss to $76.25.

WCC is testing a potential trend line of support. Investors may want to take some money off the table here.

Please note that WCC is scheduled to report earnings on October 23rd and we will most likely exit prior to the announcement.

Earlier Comments: September 30, 2014:
WCC is part of the services sector. They distribute industrial equipment. Their website describes WCC as "WESCO Distribution is a leader in industrial supply with an extensive offering of electrical, data communications, general maintenance, repair, and operating (MRO) and electrical OEM products. We are more than just an electrical distributor; we are a company of procurement specialists, helping customers lower supply chain costs, increase efficiency through WESCO Value Creation and save energy with green and sustainability initiatives. Our network of branches delivers industrial supply products fast, and our vast catalog of supplier partners enables WESCO to be your one-stop shop for electrical and MRO products."

Unfortunately for shareholders the stock peaked back in January this year. WCC produced a lower high in June. After a two-month drop WCC bounced but the bounce failed early September under resistance near $86.00, resistance at its simple 200-dma and resistance at the 50% retracement of the decline.

This trade isn't just about the technical picture. WCC has missed Wall Street's earnings estimates every quarter this year starting with its quarterly report announced in January, then April, and most recently in July. When WCC reported its July results management also lowered their 2014 guidance.

We are not the only ones who think WCC is bearish. The most recent data listed short interest at 13% of the 44.1 million share float. The point & figure chart is bearish too and forecasting at $64.00 target.

Today's drop was fueled by strong volume and shares are poised to break down under its late July low. Tonight we are suggesting a trigger to buy puts at $77.75.

- Suggested Positions -

Long NOV $75 PUT (WCC141122P75) entry $1.95*

10/11/14 new stop @ 76.25, traders may want to take some money off the table here.
10/01/14 triggered @ 77.75
*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

chart:



CLOSED BULLISH PLAYS

Mobileye N.V - MBLY - close: 48.20 change: -5.99

Stop Loss: 51.25
Target(s): To Be Determined
Current Option Gain/Loss: -44.4%
Average Daily Volume = 9.0 million
Entry on October 08 at $57.15
Listed on October 07, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: The stock market's widespread sell-off on Friday sent shares of MBLY crashing. The stock gapped down under its trend line of higher lows (support) and then plunged to a -11% decline. Our stop was hit pretty early at $51.25.

I labeled this an aggressive trade due to the volatility and sadly the volatility stung us.

- Suggested Positions -

Long NOV $60 call (MBLY141122c60) entry $4.50* exit $2.50** (-44.4%)

10/10/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
10/08/14 triggered on gap higher at $57.15, suggested entry was $56.55
*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

chart:


Mallinckrodt Public Limited Co. - MNK - close: 87.97 change: -2.53

Stop Loss: 89.45
Target(s): To Be Determined
Current Option Gain/Loss: -40.0%
Average Daily Volume = 4.85 million
Entry on September 17 at $87.25
Listed on September 11, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/11/14: MNK had been hold up above support near $90.00 but shares finally caved in with the market dropping to new relative lows on Friday. MNK hit our stop at $89.45.

*consider smaller positions* - Suggested Positions -

OCT $90 call (MNK141018C90) entry $3.00* exit $1.80** (-40.0%)

10/10/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
10/07/14 new stop @ 89.45, potential bearish reversal pattern
10/04/14 new stop @ 87.70
09/25/14 new stop @ 86.45
09/22/14 new stop @ 85.65
09/20/14 new stop @ 84.65
09/17/14 triggered @ 87.25
Option Format: symbol-year-month-day-call-strike

chart: