Editor's Note:

The market did not move much on Monday. Equities digested gains from last week's big rally. Investors are looking ahead toward Wednesday's FOMC decision.

AMBA and PANW hit our stop loss today. HAIN was closed this morning.


Current Portfolio:


CALL Play Updates

FedEx Corp. - FDX - close: 165.22 change: +1.34

Stop Loss: 157.85
Target(s): To Be Determined
Current Option Gain/Loss: +75.4%
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:
10/27/14: The rally in FDX continues with a +0.8% gain and a close above potential resistance at $165.00. I'm still worried FDX is looking a little short-term overbought here. More conservative investors may want to take some profits now.

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*

10/25/14 new stop @ 157.85
10/23/14 new stop @ 155.90
FDX is nearing resistance at $164.00. Traders may want to take profits now.
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


Keurig Green Mountain, Inc. - GMCR - close: 143.28 change: -1.96

Stop Loss: 141.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.68 million
Entry on October -- at $---.--
Listed on October 25, 2014
Time Frame: Exit PRIOR to earnings on November 19th
New Positions: Yes, see below

Comments:
10/27/14: GMCR delivered a disappointing performance on Monday. The stock almost hit our suggested entry point this morning before rolling over. The stock settled with a -1.3% decline. Our suggested entry trigger is $145.75.

Earlier Comments: October 25, 2014:
GMCR is labeled as part of the consumer goods business. GMCR describes their company as "a leader in specialty coffee, coffee makers, teas and other beverages, Keurig Green Mountain (Keurig), is recognized for its award-winning beverages, innovative brewing technology, and socially responsible business practices. The Company has inspired consumer passion for its products by revolutionizing beverage preparation at home and in the workplace." GMCR makes almost 300 varieties of coffee, hot cocoa, teas, and other beverages in K-cup and Vue portion packs.

The company's latest earnings report back in August were better than expected but revenues were a disappointment and management guided lower. Yet the stock did see much follow through on the initial post-earnings drop. Then a couple of weeks later shares of GMCR soared to new highs on news it had finally signed a licensing deal with Kraft Foods, the second largest food and beverage company in the world. GMCR already had licensing deals with all the major coffee brands but Kraft was the lone holdout.

Several weeks later shares of GMCR soared again after Goldman Sachs slapped a buy rating on the stock and gave it a 12-month $166 price target. The Goldman analyst believes GMCR will see sales rise at a compounded annual growth rate of almost 30% and profits will soared at 23% per year through 2017.

On a short-term basis the middle of last week was starting to look like a top, especially with Thursday's bearish engulfing candlestick reversal pattern. Yet there was no confirmation on Friday.

Friday's intraday high was $145.54. We are suggesting a trigger to buy calls at $145.75. We'll try and limit our risk with a stop loss at $141.90. We are not setting an exit target yet but I will note the point & figure chart is suggesting a $182.00 target.

Earnings are coming up on November 19th. We will plan on exiting prior to the announcement. More aggressive traders may want to take a longer-term approach and hold over the announcement (and use longer-dated calls).

Trigger @ $145.75

- Suggested Positions -

Buy the NOV $150 call (GMCR141122C160)

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


iShares Transportation ETF - IYT - close: 154.49 change: +1.05

Stop Loss: 148.65
Target(s): To Be Determined
Current Option Gain/Loss: +191.1%
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:
10/27/14: More weakness in crude oil helped boost the transports. The IYT added another +0.6% and is getting closer to potential resistance near $155 and its September highs near $156.

More conservative investors may want to take profits now.

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*

10/25/14 new stop @ 148.65, traders may want to take some money off the table now
10/23/14 new stop @ 147.25
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: 91.97 change: -0.77

Stop Loss: 89.40
Target(s): To Be Determined
Current Option Gain/Loss: -14.2%
Average Daily Volume = 430 thousand
Entry on October 21 at $91.59
Listed on Exit PRIOR to earnings on November 12th
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
10/27/14: NTES is still consolidating sideways in the $91-92 area.

More aggressive traders might want to consider a rally past $93.50 as an alternative entry point for new positions.

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

10/23/14 new stop @ 89.40
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: 50.10 change: +0.83

Stop Loss: 47.85
Target(s): To Be Determined
Current Option Gain/Loss: +18.8%
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:
10/27/14: Semiconductor stocks continued to show relative strength today. The SMH soared +1.68% and is challenging resistance near $50.00 and its 50-dma. I'm not suggesting new positions at the moment.

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

10/25/14 new stop @ 47.85
10/21/14 new stop @ 46.35
10/17/14 triggered @ 47.15
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Monsanto Co. - MON - close: 112.82 change: -0.46

Stop Loss: 115.15
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 4.1 million
Entry on October -- at $---.--
Listed on October 22, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
10/27/14: MON briefly traded below technical support at its 40-dma and its 300-dma before bouncing. Shares did not break the $112.00 level so we are still on the sidelines. Our suggested entry point is $111.90.

Earlier Comments: October 23, 2014:
Monsanto describes itself as a company "committed to bringing a broad range of solutions to help nourish our growing world. We produce seeds for fruits, vegetables and key crops – such as corn, soybeans, and cotton – that help farmers have better harvests while using water and other important resources more efficiently. We work to find sustainable solutions for soil health, help farmers use data to improve farming practices and conserve natural resources, and provide crop protection products to minimize damage from pests and disease. Through programs and partnerships, we collaborate with farmers, researchers, nonprofit organizations, universities and others to help tackle some of the world’s biggest challenges."

What does that mean in plain English? The company operates two main segments. They have a seeds and genomics business and an agricultural productivity business. The seed and genomics business gets a lot of negative press over its bio-engineered seeds (GMO) to boost production and deter insects and weeds from hampering growth. The productivity business makes herbicides.

About 60% of MON's sales are in North America. They're trying to broaden their market and generate more customers in Europe, Latin America, and Africa. Unfortunately the plunge in grain prices in America has hurt with many grains at four or five year lows. If this doesn't change soon it could hurt future sales as farmers tend to buy less when prices are down.

It's easy to understand the long-term tailwinds for MON. The world needs to see significant growth in grain production to feed the booming population. Yet the company admits they are in a challenging commodity environment. Bears argue that the ethanol-driven boom in corn is over.

MON's most recent earnings report was October 8th and it was a disappointment. Wall Street was expecting a loss of 24 cents a share compared to a loss of 47 cents a year ago. MON reported their Q4 loss at 27 cents. They did see a strong surge in revenues of +19% to $2.63 billion in the quarter, which beat expectations. Here's an interesting factoid that should worry the bulls. What would MON's earnings have looked like if the company did not spend an astonishing $6.1 billion in stock buybacks last quarter?

Management did lower their guidance for fiscal year 2015. They expect their Q1 results to come in about half the same period a year ago. In the conference call MON claims that the weakness in corn will be made up by strength in soybeans. They pointed out that one of their biggest contributors in 2015 will be sales of their Intacta soybean seeds in Latin America. Yet the company is currently facing a legal battle with farmers in Brazil over getting paid royalties for these Intacta soybean seeds. Another challenge in 2015, which they just lowered guidance on, is they expect 4% to 5% of their EPS growth to come from their stock buyback program.

It looks like the next four quarters could be tough for MON. That's why today's bearish reversal at resistance near $115 and its 200-dma could be a bearish entry point. Tonight we are suggesting a trigger to buy puts at $111.90. The point & figure chart is bearish and suggesting a $90 target but the P&F chart also shows potential support in the $102-104 zone.

Trigger @ $111.90

- Suggested Positions -

Buy the 2015 Jan $110 PUT (MON150117P110)

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


Sanderson Farms, Inc. - SAFM - close: 79.31 change: +0.36

Stop Loss: 80.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 483 thousand
Entry on October -- at $---.--
Listed on October 25, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
10/27/14: SAFM spent Monday's session consolidating sideways in a narrow range. There is no change from the weekend newsletter's new play description below.

Earlier Comments: October 25, 2014:
SAFM is part of the consumer goods sector. They raise chickens - a lot of chickens. The company will process more than 3.0 billion pounds of chicken meat in 2014. At almost 9.4 million chickens a week that makes SAFM the third largest poultry farmer in the United States.

Earlier this year the stocks of chicken producers were soaring. The price of beef and pork were rising fast and consumers were buying more chicken. Now it would appear the price of chicken is catching up and consumers might be buying less.

SAFM's most recent earnings report was in August. Even though the retail price of chicken was near record highs the company still missed Wall Street's estimates by a mile. Management blamed the earnings miss on chickens that didn't reach their target weights fast enough, a lower hatch rate for new chicks, and a rise in employee bonus programs.

Nearly all the poultry producers have had a rough October thanks to a big drop on October 16th. It would appear that drop was sparked by SAFM's comments at an investor conference. SAFM said casual dining traffic was down and thus people were eating less chicken at restaurants. SAFM blamed the weak job market and weakness in the broader economy, which seems a little out of sync with the rest of the country since the U.S. economy is still growing and the labor market has been slowly improving.

The S&P 500 put in a short-term bottom in the October 15-16 time frame and is up sharply since then. SAFM has not participated in the market's bounce. Instead the oversold bounce is rolling over. The point & figure chart looks ugly and suggests a $63 price target.

More aggressive traders may want to buy puts now. We are suggesting a trigger to buy puts at $78.20. More conservative investors might want to see a breakdown under the October low (77.25) before initiating positions.

NOTE: I am listing the 2015 February puts. I would prefer to use Decembers or Januarys but I didn't see any decent option strikes to trade. Earnings are not due until December.

Trigger @ 78.20

- Suggested Positions -

Buy the 2015 FEB $75 PUT (SAFM150220P75)

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


Sohu.com Inc. - SOHU - close: 43.03 change: -0.99

Stop Loss: 44.75
Target(s): To Be Determined
Current Option Gain/Loss: -23.0%
Average Daily Volume = 393 thousand
Entry on October 22 at $43.25
Listed on October 18, 2014
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
10/27/14: Good news! SOHU did not see any follow through on Friday's mini breakout above its simple 10-dma. Instead shares displayed relative weakness today with a -2.2% decline.

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.

*Smaller positions to limit risk* - Suggested Positions -

Long NOV $40 PUT (SOHU141122P40) entry $1.04

10/25/14 new stop @ 44.75, caution! SOHU closed above its 10-dma
10/22/14 triggered @ 43.25
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

Ambarella, Inc. - AMBA - close: 41.20 change: -0.18

Stop Loss: $39.65
Target(s): To Be Determined
Current Option Gain/Loss: +16.6%
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:
10/27/14: AMBA garnered some bullish analyst comments today but that didn't stop shares from seeing some profit taking. AMBA gapped open lower at $40.38 and hit our stop loss at $39.65 before settling with a -4.0% decline.

- Suggested Positions -

NOV $40 call (AMBA141122C40) entry $1.80* exit $2.10** (+16.6%)

10/27/14 stopped out
**option exit price is an estimate since the option did not trade at the time our play was closed.
10/25/14 new stop @ 39.65
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

chart:


The Hain Celestial Group, Inc. - HAIN - close: 102.76 change: +0.26

Stop Loss: 101.75
Target(s): To Be Determined
Current Option Gain/Loss: +12.1%
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:
10/27/14: HAIN appeared to be failing at resistance near $104. In the prior newsletter we decided to just close this trade early on Monday morning. Shares opened at $102.50.

- Suggested Positions -

NOV $105 call (HAIN141122c105) entry $2.05* exit $2.30 (+12.1%)

10/27/14 planned exit
10/25/14 prepare to exit on Monday morning
10/23/14 new stop @ 101.75
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

chart:


Palo Alto Networks, Inc. - PANW - close: 103.67 change: -4.39

Stop Loss: 103.65
Target(s): To Be Determined
Current Option Gain/Loss: - 37.2%
Average Daily Volume = 2.1 million
Entry on October 22 at $105.25
Listed on October 21, 2014
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
10/27/14: Our aggressive trade on PANW has been stopped out thanks to some volatility on Monday. Shares collapsed this morning and opened at $101.00. The intraday low was $100.10, a nearly $8.00 drop or -7.37%, before PANW started to bounce. Our stop was at $103.65 but the gap down immediately closed this trade.

The strange thing is I couldn't find any specific news to account for the sharp sell-off this morning.

- Suggested Positions -

DEC $110 call (PANW141220C110) entry $5.90* exit $3.70 (-37.2%)

10/27/14 stopped out on gap down at $101.00
10/25/14 new stop @ 103.65
10/23/14 new stop @ 101.90
10/22/14 triggered @ 105.25
*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: