Editor's Note:

Traders applauded strong earnings results from Apple (AAPL), Texas Instruments (TXN), and United Technologies (UTX).

The S&P 500 and the NASDAQ composite delivered their best day of the year!

All of our bullish plays with the exception of NTES have new stop losses tonight.

Prepare to exit our short-term AAPL and QQQ puts, see play update for details.


Current Portfolio:


CALL Play Updates

Ambarella, Inc. - AMBA - close: 41.46 change: +2.28

Stop Loss: $37.85
Target(s): To Be Determined
Current Option Gain/Loss: +77.7%
Average Daily Volume = 2.4 million
Entry on October 13 at $35.25
Listed on October 08, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: The stock market's widespread gains on Tuesday helped fuel a +5.8% surge in shares of AMBA. The stock is nearing potential resistance in the $42.00 area. More conservative traders may want to take some money off the table now.

We are raising the stop loss to $37.85.

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.

- Suggested Positions -

Long NOV $40 call (AMBA141122C40) entry $1.80*

10/21/14 new stop @ 37.85. Traders may want to take profits now!
10/18/14 new stop @ 34.90
10/15/14 new stop @ 34.25
10/13/14 triggered at $35.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
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


FedEx Corp. - FDX - close: 159.88 change: +4.01

Stop Loss: 153.45
Target(s): To Be Determined
Current Option Gain/Loss: +21.6%
Average Daily Volume = 1.5 million
Entry on October 17 at $155.50
Listed on October 15, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: Transport stocks continue to be some of the best performing stocks in the market. FDX soared +2.5% and is testing potential resistance in the $160.00 area.

Tonight we're moving the stop loss to $153.45.

Earlier Comments: October 15, 2014:
Last year a last minute surge of online shoppers overwhelmed the system and thousands of Christmas presents were delivered late. Part of the problem was terrible weather. The other challenge was the growth in online shopping. Amazon.com (AMZN) blamed UPS for the mass of delayed deliveries last year. You can bet that UPS' rival FDX has taken notice and plans to be ready this year.

Market research firm EMarketer is estimating that retail online shopping will surge +17% in 2014 to $72.4 billion. That might be under estimating the growth, especially this year as many consumers might opt to shop online instead of face the crowds and risk being a target for terrorism or catching Ebola. Granted neither a terrorist event inside the U.S. and a widespread outbreak of Ebola in the states has happened yet but people are already afraid with the daily headlines about the virus.

UPS and FDX hope to be ready. UPS is hiring up to 95,000 seasonal workers and FDX is hiring 50,000 holiday workers this year. That's 10K more than last year for FDX.

In addition to the surge in online shopping FDX should also benefit from the multi-year lows in oil prices. Low oil prices means lower fuel costs, one of FDX's biggest expenses.

It would appear that FDX has fine tuned its earnings machine as well. Their latest earnings report was September 17th. Wall Street was expecting a profit of $1.95 a share on revenues of $11.46 billion. FDX delivered a profit of $2.10 a share with revenues up to $11.7 billion. That's a +24% increase in earnings from a year ago and the second quarter in a row that FDX beat EPS estimates.

FDX chairman, president, and CEO Frederick Smith said, "FedEx Corp. is off to an outstanding start in fiscal 2015, thanks to very strong performance at FedEx Ground, solid volume and revenue increases at FedEx Freight and healthy growth in U.S. domestic volume at FedEx Express." Business has been strong enough that a few weeks ago FDX started raising prices on some services.

Since that September earnings report Wall Street analysts have been raising price targets. Some of the new price targets for FDX stock are $175, $180 and $183 a share.

The recent sell-off in the market and FDX could be an opportunity. FDX has already seen a -10% correction from its intraday high near $165 to today's low near $149. Right now FDX sits just below resistance near $155.

We're suggesting a trigger to buy calls at $155.50.

- Suggested Positions -

Long 2015 Jan $160 call (FDX150117c160) entry $5.30*

10/21/14 new stop @ 153.45
10/17/14 triggered @ 155.50
*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


The Hain Celestial Group, Inc. - HAIN - close: 103.52 change: +1.46

Stop Loss: 100.65
Target(s): To Be Determined
Current Option Gain/Loss: +36.5%
Average Daily Volume = 632 thousand
Entry on October 17 at $100.25
Listed on October 14, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: The rally in HAIN continues with shares up six days in a row. The stock is nearing what could be serious resistance in the $104.00 area. More conservative traders might want to take profits now.

We are raising the stop loss to $100.65.

Earlier Comments: October 14, 2014:
Looking at the world economies the U.S. is the cleanest shirt in the dirty clothes hamper. Every economy needs to see improvement but the U.S. is looking the healthiest. If U.S. growth continues to improve it should bode well for consumer spending. That should lead to strength in organic food sales.

There has been a strong trend of consumers moving more and more toward natural and organic foods. That's where HAIN is a major player. The company website describes HAIN as, "The Hain Celestial Group, headquartered in Lake Success, NY, is a leading natural and organic food and personal care products company in North America and Europe. Hain Celestial participates in almost all natural food categories with well-known brands that include Celestial Seasonings, Terra, Garden of Eatin', Health Valley, WestSoy, Earth's Best, Arrowhead Mills, DeBoles, Hain Pure Foods, FreeBird, Hollywood, Spectrum Naturals, Spectrum Essentials, Walnut Acres Organic, Imagine Foods, Rice Dream, Soy Dream, Rosetto, Ethnic Gourmet, Yves Veggie Cuisine, Linda McCartney, Realeat, Lima, Grains Noirs, Natumi, JASON, Zia Natural Skincare, Avalon Organics, Alba Botanica and Queen Helene."

HAIN's results have definitely confirmed the trend in consumer spending. They have beaten Wall Street's estimates and guided higher in three out of the last four earnings reports. Their most recent report was August 20th. You can see the big move in the stock after HAIN reported a profit of 90 cents a share on revenues that rose +26% to $583.8 million. Analysts were only expecting $0.89 cents a share on revenues of $577 million.

HAIN's management then raised their guidance again. They expect 2015 earnings to be in the $3.72-3.90 range compared to analysts' estimates around $3.73. HAIN is anticipating sales growth of +27% to +30% in 2015.

The bullish outlook for 2015 did not completely HAIN from the market's recent sell-off. Shares broke support near $100 and dipped to their 50-dma before bouncing. Altogether the stock has weathered the market's correction pretty well. The point & figure chart is still bullish and forecasting a long-term target at $131.00.

We want to be ready to buy calls if HAIN can rally back above the $100 level. Tonight we're suggesting a trigger to buy calls at $100.25. Earnings are expected in November so this might only be a 2-to-4 week trade.

- Suggested Positions -

Long NOV $105 call (HAIN141122c105) entry $2.05*

10/21/14 new stop @ 100.65
10/17/14 triggered @ 100.25
*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


iShares Transportation ETF - IYT - close: 151.91 change: +4.62

Stop Loss: 144.65
Target(s): To Be Determined
Current Option Gain/Loss: +123.5%
Average Daily Volume = 320 thousand
Entry on October 13 at $138.75
Listed on October 11, 2014
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
10/21/14: The transportation stocks are helping lead the market higher. The IYT is up six days in a row with a +10% bounce in that time. The rally past resistance at $150 and its 50-dma is bullish but now the IYT is starting to look overbought.

Investors may want to take some money off the table now, especially since our option has more than doubled in value. We are raising our stop loss to $144.65.

Earlier Comments: October 11, 2014:
The IYT is an exchange traded fund (ETF) that tries to mimic the performance of the Dow Jones Transportation Average index.

Stocks have been sinking as investors worry about a global slowdown, especially in Europe. Yet the U.S. economy is still growing. Plunging oil prices should be great news for both business and consumers. Lower fuel costs means more money to spend elsewhere. Lower fuel prices also mean better margins for transportation companies.

The IYT has hit correction territory with a -10% pullback from its September highs about four weeks ago. When the market finally bounces the transports should lead the market higher thanks to the U.S. economy and low oil prices.

It looks like IYT's current drop could be near a bottom. Volume was almost three times the norm on Friday and shares settled near technical support at its simple 200-dma. We suspect the market will see another push lower before bouncing. That could see the IYT pierce the $140 level.

Tonight we're suggesting a trigger to buy calls at $138.75 with a stop loss at $134.45. This should be considered a higher-risk, more aggressive trade. You've heard the term "catching a falling knife" and that's what we're trying to do. You may want to wait for the IYT to pierce $140.00 and then buy the rebound back above this level as an alternative strategy.

*Higher-risk, more aggressive trade* - Suggested Positions -

Long NOV $143 call (IYT141122c143) entry $3.40*

10/21/14 new stop @ 144.65
10/18/14 new stop @ 141.75
10/13/14 triggered @ 138.75
*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


NetEase, Inc. - NTES - close: 92.22 change: +2.02

Stop Loss: 87.45
Target(s): To Be Determined
Current Option Gain/Loss: +2.0%
Average Daily Volume = 430 thousand
Entry on October 21 at $91.59
Listed on October 20, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: We were expecting NTES to breakout past resistance and hit new highs. Our plan was to buy calls at $91.15. Shares surprised us with a gap open higher at $91.59 this morning, immediately triggering our play. NTES rallied up toward $95.00 before trimming its gains.

If the market sees a dip there is a good chance NTES could fill the gap. That could mean a dip back toward $90.50. Nimble traders could use such a dip as a new entry point.

Earlier Comments: October 20, 2014:
NTES is in the technology sector. They are part of the Chinese Internet space. The company operates online video games, an Internet portal and email services in China. Technically the stock has been outperforming most of its peers in the Chinese Internet industry (compare to the performance of the KWEB ETF of which NTES is a component).

Their most recent earnings report was healthy. NTES' quarterly profit was in-line but revenues were up +21% to $475.8 million, beating Wall Street's estimates. NTES' Chief Executive Officer Mr. Ding said, "This quarter we have achieved in three business areas MoM and YoY increase revenue total revenue growth of 17.2%, an increase of 22.3 percent compared with the same period last year, gaming revenues grew 13.1%, advertising services revenue grew 42.9%, mailboxes, electricity suppliers and other business income increased 201.5 percent."

After an initial rally on these results NTES share price stalled out at resistance near $90-91. Here we are more than two months later and NTES is testing resistance near $90-91 again. This time the point & figure chart is suggesting at $102 price target.

We are suggesting a trigger to buy calls at $91.15.

- Suggested Positions -

Long NOV $95 call (NTES141122C95) entry $2.45

10/21/14 triggered on gap higher at $91.59, trigger was $91.15
Option Format: symbol-year-month-day-call-strike


Semiconductor ETF - SMH - close: 48.82 change: +1.46

Stop Loss: 46.35
Target(s): To Be Determined
Current Option Gain/Loss: - 4.5%
Average Daily Volume = 2.4 million
Entry on October 17 at $47.15
Listed on October 16, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: Semiconductor stocks were some of the market's best performers today with the SOX index up +3.6%. The SMH followed with a +3.0% gain. The breakout past resistance near $48.00 is bullish but shares are now testing the top of the gap down near $49.00, which could also be resistance.

Tonight we are moving the stop loss to $46.35.

Earlier Comments: October 16, 2014:
It looks like the correction in the semiconductor stocks might be done.

The SMH is the Market Vectors Semiconductor Exchange Traded Fund (ETF) that tries to mimic the performance of the Market Vectors Semiconductor 25 index. Semiconductors as a group had been strong performers with the SMH up +73% from its late 2012 lows.

A few weeks ago the industry started to see some profit taking. MCHP issued an earnings warning last week that that sparked the massive plunge in the SMH. The SMH has witnessed a -15% correction from its 2014 closing high to the closing low on Monday this week. Now it has started to bounce. It's possible all the panic selling is over.

Intel (INTC), a much bigger company than MCHP, just reported earnings on October 14th and the results were better than Wall Street expected. More importantly INTC offered slightly bullish guidance.

Bloomberg noted that INTC said its PC-processor business rose +8.9% last quarter. Sales for INTC's chips for notebook computers soared +21%. Even chips for desktop PCs rose +6% in the third quarter.

The strong results from INTC have helped buoy the SMH, which is starting to rebound after testing (and piercing) long-term support on its weekly chart (shown below).

We suspect the worst might be over. However, this could be a volatile trade. There are a lot of semiconductor companies who have yet to report their results.

The SMH saw its rally stall under $47 and near its 200-dma. Tonight we are suggesting a trigger to buy calls at $47.15.

- Suggested Positions -

Long 2015 Jan $50 call (SMH150117c50) entry $1.10

10/21/14 new stop @ 46.35
10/17/14 triggered @ 47.15
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Apple Inc. - AAPL - close: 102.47 change: +2.71

Stop Loss: n/a
Target(s): To Be Determined
Current Option Gain/Loss: -92.8%
Average Daily Volume = 54 million
Entry on October 20 at $98.32
Listed on October 18, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: Market reaction to AAPL's earnings has been bullish. Shares closed today up +2.7%. This has broken the six-week trend of lower highs but shares have yet to breakout past the early September peak.

This trade was based on a post-earnings sell-the-news move which has not appeared. More aggressive traders may want to put a stop just above the September all-time high ($103.74). We are suggesting an immediate exit tomorrow morning. However you may want to consider just leaving this play open with no stop since the damage has already been done and the current bid on the put is 10 cents.

WEEKLY AAPL puts (that expire after Oct. 31st)

- Suggested Positions -

Long AAPL Oct 31st $96 PUT (AAPL141031P96) entry $1.40

10/21/14 prepare to exit tomorrow morning,
Option Format: symbol-year-month-day-call-strike


PowerShares QQQ (NASDQ-100 ETF) - QQQ - close: 96.87 chg: +2.48

Stop Loss: n/a
Target(s): To Be Determined
Current Option Gain/Loss: -89.3%
Average Daily Volume = 36.6 million
Entry on October 20 at $92.96
Listed on October 18, 2014
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/21/14: The market's rebound is accelerating and the NASDAQ composite delivered its best day of the year with a +2.39% gain. The QQQ's outperformed the broader index with a +2.6% gain.

We were expecting the Qs to sell-off on earnings from AAPL and AMZN. With the market in rally mode it's not working out for us. Tonight we are suggesting an early exit tomorrow morning. However, traders may want to just leave this trade open. The damage is done with the bid on our put at 14 cents. There is a still a chance that stocks retreat before the end of October. Several big name NASDAQ-100 stocks are due to report in the next two weeks. Any disappointing results could spark some profit taking.

- Suggested Positions -

Long QQQ Oct.31st $92 PUT (QQQ141031P92) entry $1.32

10/20/14 play begins. QQQ opens at $92.96
Option Format: symbol-year-month-day-call-strike


Sohu.com Inc. - SOHU - close: 43.72 change: +0.18

Stop Loss: 45.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 393 thousand
Entry on October -- at $---.--
Listed on October 18, 2014
Time Frame: 2 to 3 weeks
New Positions: Yes, see below

Comments:
10/21/14: SOHU is still not participating in the market's rally, which is a good sign for the bears.

Earlier Comments: October 18, 2014:
This is a simple momentum trade on a struggling Chinese Internet name.

Sohu.com is an online media, Internet search, and video gaming company. Unfortunately gaming revenues are becoming a smaller chunk of the overall pie for SOHU. At the same time, while they have seen significant growth in ad revenues from streaming TV shows and movies, the company is facing pressures on this front. The cost of content is rising while the Chinese government is becoming more strict about what shows, especially which American shows, they will allow to be aired (or streamed over the Internet). This is pressuring SOHU's margins.

Bulls can argue that SOHU has already corrected and is now oversold. That's possible. SOHU is down eight weeks in a row. It seems to be slicing through support. The 2014 low didn't hold it. Support near $50.00 didn't hold it. The $45 level has failed. The next stop could be $40.00. SOHU's recent bounce just failed at short-term resistance at the 10-dma.

I do consider this a more aggressive, higher-risk trade because SOHU is so oversold. We'll try and limit our risk with a stop above Friday's high.

Trigger @ $43.25 *Smaller positions to limit risk*

- Suggested Positions -

Buy the NOV $40 PUT (SOHU141122P40) current ask $1.00

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