Editor's Note:

The market's pullback accelerated on Wednesday with stocks down for a third day in a row. Disappointing economic data and worries over corporate earnings spooked investor sentiment. Semiconductor stocks, biotechs, and transportation names were all hammered pretty hard.

It was a very widespread decline. Commodities were one of the few things that rallied today.

AET, CAVM, CBRL, CRM, MNK, and UA all hit our stop loss.
ALKS hit our bearish entry trigger.


Current Portfolio:


CALL Play Updates

Jack in the Box, Inc. - JACK - close: 95.73 change: -3.41

Stop Loss: 95.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 616 thousand
Entry on March -- at $---.--
Listed on March 24, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Comments:
03/25/15: JACK reversed at resistance near $100.00. The market's sharp decline fueled a -3.4% drop in the stock. Shares are trading near the bottom of its trading range. If JACK does not rebound soon we'll likely remove it as a candidate. For the moment we are going to keep our entry trigger at $100.25.

Trade Description: March 24, 2015:
It's a burger-eat-burger world out there in the fast-food business. Jack in the Box is small fries compared to its larger rivals like McDonalds (36,258 locations) and Wendy's (6,515 locations). Let's not forget heavy weights like Taco Bell, Burger King, Subway, Dairy Queen, and a handful of pizza chains. JACK only has about 2,200 restaurants but it also has a secret weapon and that is the Qdoba Mexican Grill restaurant with about 600 locations. Chipotle Mexican Grill has almost 1,800 locations.

Some of that intense competition being felt by McDonalds and Chipotle Mexican Grill is coming from Jack in the Box and its Qdoba brand, which is growing sharply. A majority of their Qdoba franchisees own multiple stores with 10, 20 even 40 stores common. Enterprising business owners don't open additional stores if the original stores are not working. To have so many owners with high numbers of stores suggests the franchise is consistently profitable.

To be profitable they need solid customer traffic, good food and decent margins. Shares of JACK have been one of the best performers on the S&P over the last year because the company has been posting solid earnings and growth.

With analysts cutting earnings estimates for McDonalds and Chipotle because of competition in the sector it makes sense to look at what has happened at JACK. Over the last quarter and the last year not a single analyst has lowered their earnings estimates for JACK. According to Zacks there has been a noticeable trend of raising estimates. JACK is expected to grow +16% to +20% this year and in 2016. JACK has beaten earnings by an average of 6% over the last four quarters.

Because of the drop in gasoline prices consumers have more money in their pocket. Some of that money is going to end up in the cash registers at these fast food outlets. Customers are also trending towards healthier foods and away from the mass produced burgers and fries at McDonalds. Did you know there are 19 ingredients in McDonalds fries? Surely you didn't think they were just potatoes and grease? Restaurants like JACK and Chipotle are capitalizing on the healthy food craze. JACK store sales rose an average of 5.7% over the last three quarters but Qdoba sales rose +13% for the year and +7.7% in Q4. Zacks rates JACK as a strong buy.

The company plans to open 15 new Jack in the Box stores in 2015. They're also cashing in on Qdoba's success and planning to open 50 to 60 new Qdoba locations. That compares to just 12 new Jacks and 38 new Qdobas in 2014.

It's also worth noting that JACK has an active share buyback program and they reduced the share count by 10% over the last four quarters. Earnings growth rose +20% in Q3 after three years of consecutive earnings growth of more than 30%.

JACK's most recent earnings report was February 17th, when they reported their 2015 Q1 results. Analysts were expecting a profit of $0.87 a share on revenues of $461.2 million. JACK delivered earnings of $0.93 a share. That's a +24% improvement from a year ago. Revenues were up +4.1% to $468.6 million, above estimates. Their operating margins improved 1% to 19.3%.

Management expects same-store sales at Jack in the Box to surge from +0.9% a year ago to +5% to +7% in Q2. Qdoba same-store sales are forecasted to be in the +7% to +9% range. The company raised full-year 2015 guidance to $2.85-2.97 a share compared to Wall Street estimates of $2.84.

Shares of JACK surged on the earnings news and bullish guidance. Since the report that has been almost no profit taking. Now, after more than four weeks of consolidation, the stock looks poised to breakout past major, psychological resistance at the $100.00 mark. Tonight we're suggesting a trigger to buy calls at $100.25.

Trigger @ $100.25

- Suggested Positions -

Buy the JUN $105 CALL (JACK150619C105)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Lennox International - LII - close: 109.20 change: -0.76

Stop Loss: 106.75
Target(s): To Be Determined
Current Option Gain/Loss: -37.3%
Average Daily Volume = 417 thousand
Entry on March 23 at $110.96
Listed on March 19, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: LII held up reasonably well. The S&P 500 dropped -1.45% while LII only slipped -0.69%. If this market sell-off continues I would watch for LII to find technical support at the 20-dma (near 107.85). No new positions at this time.

Trade Description: March 19, 2015:
LII has been in business for over one hundred years. Lennox Intl. is part of the industrial goods sector. They offer residential cooling and heating products as well as commercial cooling and heating equipment. They are considered a global leader in the heating, air conditioning, and refrigeration markets. The residential business generates just over half of their annual sales.

The last couple of quarters have seen steady growth for LII. You can see the big gap higher in the stock price back in October 2014. That was a reaction to its Q3 earnings results. Their most recent report was February 2nd, 2015 where LII delivered its Q4 results.

Analysts were expecting a profit of $0.99 a share on revenues of $790 million. LII reported earnings per shares grew +32% to $1.02. Revenues were up +8.4% to $812.8 million, led by +13% sales growth in their residential segment.

Chairman and CEO Todd Bluedorn commented on his company's results,

"2014 was a year of strong growth and record profitability for Lennox International, led by 10% revenue growth at constant currency and 31% profit growth in our Residential business. In the fourth quarter, the company's momentum continued, with revenue up 10% at constant currency and total segment profit up 24%. Growth in the quarter continued to be led by Residential, with revenue up 14% at constant currency and profit up 57% from the prior-year quarter. In Commercial, revenue rose 8% at constant currency. Commercial profit was essentially flat with the prior-year quarter on headwinds from customer mix, foreign exchange, and investments related to our entrance in the VRF market. In Refrigeration, revenue was up 8% at constant currency. As expected, Refrigeration profit was down from the prior-year quarter by 45% due to the repeal of the carbon tax in Australia, North America product mix, and a negative impact from foreign exchange. We continue to expect Refrigeration revenue, margin and profit to be up in 2015 on continued growth in North America and improvement in Australia in the second half of the year. For the company overall in 2015, we expect another strong year of growth and record profitability, with strong cash generation for investments to drive growth as well as to return cash to shareholders."
Last year LII earnings rose more than +20% to $4.23 a share. They are forecasting $5.20-5.60 per shares in 2015 (+22.9% to +32.3%) versus Wall Street estimates of $5.42 per share.

Shares have been a steady performer the last few months with a bullish trend of higher lows and higher highs. The point & figure chart is bullish with a $140 target. Today shares of LII are hovering just below round-number resistance at $110. We are suggesting a trigger to buy calls at $110.25.

- Suggested Positions -

Long JUN $115 CALL (LII150619C115) entry $2.55

03/23/15 triggered on gap open at $110.96, suggested entry was $110.25
Option Format: symbol-year-month-day-call-strike


Northrop Grumman Corp. - NOC - close: 159.19 change: -2.90

Stop Loss: 158.45
Target(s): To Be Determined
Current Option Gain/Loss: -57.8%
Average Daily Volume = 1.4 million
Entry on March 19 at $163.50
Listed on March 18, 2015
Time Frame: Exit prior to May option expiration
New Positions: see below

Comments:
03/25/15: Defense stocks were also crushed today. NOC held up a little bit better than its peers. Unfortunately shares did breakdown under what should have been support near $160.00 and the bottom of its bullish channel.

More conservative traders may want to hit the sell button tomorrow morning. NOC does look poised to hit our stop loss at $158.45. I am not suggesting new positions.

Trade Description: March 18, 2015:
The United States spends more on its defense budget than any other country in the world. The Budget Control Act of 2011 led to the sequestration budget cuts of $1.2 trillion. Half of that spending reduction is taken out of the U.S. defense budget from 2013-2021 (nine years).

Now pretend you are a defense contractor. You might think that having your biggest customer cut their budget would send your revenues and your stock price lower. That has not been the case for the major defense players. While it is true that many defense companies did see slower sales to the U.S. their stocks have delivered significant gains since the sequester.

I should note that part of the defense cuts have been delayed or amended with various short-term deals in Washington but the sequester is poised to return to full power in 2016. Law makers are already trying to find a way around it. Meanwhile, both 2013 and 2014 saw stocks like NOC outperform the broader market averages. That relative strength has continued into 2015, even after the recent correction.

According to their company website, "Northrop Grumman is a leading global security company providing innovative systems, products and solutions in unmanned systems, cyber, C4ISR, and logistics and modernization to government and commercial customers worldwide." What does that mean? It means NOC makes bombers, unmanned drones, cyber security solutions, and logistics. If you're curious, C4ISR stands for command, control, communications, computers, intelligence, surveillance, and reconnaissance.

The fact that the world seems to be growing more dangerous, not less dangerous, should be a bullish undercurrent that lifts the defense sector. NOC should benefit because the American public does not have the stomach for another war. That means the U.S. will use more and more unmanned technology like NOC's drones.

NOC has consistently delivered on the earnings front. Not only has NOC beaten expectations but they have raised their guidance the last five quarters in a row. A key driver has been a push to diversify their customers base so they're not so reliant on the U.S.

The company's Q4 report was released on January 29th. Wall Street was expecting a profit of $2.25 a share on revenues of $5.99 billion. NOC delivered earnings of $2.48 per share, up +17% from a year ago. Revenues slipped -0.8% but came in better than expected at $6.11 billion. Their profit margin improved and their backlog at the end of 2014 was $38.2 billion compared to $37 billion the prior year.

Management raised their 2015 earnings guidance into the $9.20-9.50 range and their revenue guidance up to $23.4-23.8 billion. This is above Wall Street's estimate of $9.12 on revenues of $23.5 billion.

The stock peaked near $172 about four weeks ago. Since then NOC, like most of the defense stocks, have seen a correction. NOC was down -9% from its high as of last Friday's low. Yet the point & figure chart is still bullish and forecasting a long-term target of $210.

We like how NOC has kept the bullish trend of higher lows alive. Now, after consolidating sideways in the $158-162 zone the last few days, the current bounce looks like an potential entry point. Tonight we're suggesting a trigger to buy calls at $163.50.

Caveat: The U.S. Air Force is expected to make a big decision in spring or summer this year. That decision is who will make America's next-generation bomber. The program is called the Long Range Strike-Bomber (LRS-B) and will be worth tens of billions of dollars to the winning contractor. This is a major fight between defense contractors like NOC and rivals Boeing (BA) and Lockheed Martin (LMT). If NOC loses this opportunity it could hurt the stock price.

- Suggested Positions -

Long MAY $170 CALL (NOC150515C170) entry $2.25

03/19/15 triggered @ 163.50
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Alkermes plc - ALKS - close: 62.46 change: -3.82

Stop Loss: 69.05
Target(s): To Be Determined
Current Option Gain/Loss: +23.3%
Average Daily Volume = 1.26 million
Entry on March 25 at $64.90
Listed on March 23, 2015
Time Frame: exit PRIOR to May option expiration
New Positions: see below

Comments:
03/25/15: Our new trade on ALKS is open. The stock erased yesterday's bounce and accelerated lower. Our trigger to buy puts was hit at $64.90. ALKS underperformed the broader market with a -5.7% decline.

Trade Description: March 23, 2015:
Biotech stocks have been some of the market's best performers, especially off the October 2014 lows. The group may have gotten ahead of itself with significant gains in recent weeks. The last couple of days the biotech ETFs are flashing what might signal a potential top. Meanwhile one stock that has been underperforming its peers is ALKS.

You might not be familiar with ALKS. The company is part of the healthcare sector. According to their marketing materials, "Alkermes plc is a fully integrated, global biopharmaceutical company developing innovative medicines for the treatment of central nervous system (CNS) diseases. The company has a diversified commercial product portfolio and a substantial clinical pipeline of product candidates for chronic diseases that include schizophrenia, depression, addiction and multiple sclerosis. Headquartered in Dublin, Ireland, Alkermes plc has an R&D center in Waltham, Massachusetts; a research and manufacturing facility in Athlone, Ireland; and manufacturing facilities in Gainesville, Georgia and Wilmington, Ohio."

The company's most recent earnings report was February 24th. They beat expectations on both the top and bottom line. Unfortunate for shareholders management lowered their 2015 revenue guidance. Since its report shares have broken down. The stock has seen a couple of analyst downgrades (or lowered price targets). The point & figure chart has turned bearish and is currently forecasting at $54.00 target.

You can see the gap down on the earnings news. ALKS struggled to rebound and when it did traders immediately sold the stock at resistance. Now it's on the verge of breaking down bellow support near $65.00. The $60.00 level is potential support but there is a chance shares drop toward their 200-dma closer to $55. Tonight we are suggesting a trigger to buy puts at $64.90.

I want to remind readers that biotech stocks can be volatile. We should consider this a more aggressive, higher-risk trade.

- Suggested Positions -

Long MAY $60 PUT (ALKS150515P60) entry $2.15

03/25/15 triggered @ 64.90
Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

Aetna Inc. - AET - close: 107.29 change: -1.45

Stop Loss: 107.45
Target(s): To Be Determined
Current Option Gain/Loss: +155.9%
Average Daily Volume = 2.2 million
Entry on March 04 at $101.15
Listed on March 02, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: AET was not immune to the market's widespread sell-off on Wednesday. Shares fell -1.3% and broke down under short-term support at $108.00. Our stop loss was hit at $107.45.

I'd keep AET on your watch list. A dip near the $100-102 zone might be a new entry point.

- Suggested Positions -

Apr $105 CALL (AET150417C105) entry $1.36 exit $3.48 (+155.9%)

03/25/15 stopped out
03/21/15 new stop @ 107.45
03/16/15 new stop @ 102.85
Our option has more than doubled. Traders might want to take some money off the table here.
03/04/15 triggered @ 101.15
Option Format: symbol-year-month-day-call-strike

chart:


Cavium, Inc. - CAVM - close: 67.75 change: -4.48

Stop Loss: 71.65
Target(s): To Be Determined
Current Option Gain/Loss: +2.6%
Average Daily Volume = 737 thousand
Entry on February 27 at $68.75
Listed on February 26, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: Semiconductor stocks got whacked today with the SOX index down -4.6%. Shares of CAVM, which were trading at new highs just a few sessions ago, was crushed with a -6.2% decline today. Our stop loss was hit at $71.65.

- Suggested Positions -

JUN $75 CALL (CAVM150619C75) entry $3.80 exit $3.90 (+2.6%)

03/25/15 stopped out
03/21/15 new stop @ 71.65
03/17/15 new stop @ 68.45
03/07/15 new stop @ 67.65
02/27/15 triggered @ $68.75
Option Format: symbol-year-month-day-call-strike

chart:


Cracker Barrel - CBRL - close: 150.08 change: -5.56

Stop Loss: 149.85
Target(s): To Be Determined
Current Option Gain/Loss: -63.7%
Average Daily Volume = 320 thousand
Entry on March 20 at $156.57
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: CBRL was hit hard with a -3.5% decline. The stock broke through multiple-short-term support levels and pierced the $150.00 mark. Our stop was hit at $149.85.

- Suggested Positions -

JUN $160 CALL (CBRL150619C160) entry $7.05 exit $2.56 (-63.7%)

03/25/15 stopped @ 149.85
03/20/15 triggered on gap open at $156.57, suggested entry was $155.55
Option Format: symbol-year-month-day-call-strike

chart:


Salesforce.com, Inc. - CRM - close: 65.78 change: -1.59

Stop Loss: 66.45
Target(s): To Be Determined
Current Option Gain/Loss: -33.3%
Average Daily Volume = 4.5 million
Entry on March 17 at $66.75
Listed on March 16, 2015
Time Frame: Exit prior to May option expiration
New Positions: see below

Comments:
03/25/15: The NASDAQ underperformed the other big cap indices today with a -2.3% decline. CRM kept pace with a -2.3% drop and hit our stop at $66.45.

- Suggested Positions -

MAY $70 CALL (CRM150515C70) entry $1.95 exit $1.30 (-33.3%)

03/25/15 stopped out
03/23/15 new stop @ 66.45
03/21/15 new stop @ 65.45
03/20/15 CRM reversed at $70.00 resistance and generated a bearish engulfing candlestick reversal pattern.
03/17/15 triggered @ 66.75
Option Format: symbol-year-month-day-call-strike

chart:


Mallinckrodt - MNK - close: 126.66 change: -3.02

Stop Loss: 128.65
Target(s): To Be Determined
Current Option Gain/Loss: +29.3%
Average Daily Volume = 1.3 million
Entry on March 16 at $125.29
Listed on March 14, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: Biotech-related stocks were getting crushed today. MNK fared better than most but still lost -2.3%. Shares hit our stop at $128.65 before lunchtime.

- Suggested Positions -

JUL $130 CALL (MNK150717C130) entry $7.50 exit $9.23 (+23.1%)

03/25/15 stopped out
03/21/15 new stop @ 128.65
03/17/15 new stop @ 125.25
03/16/15 new stop @ 121.85
03/16/15 triggered on gap open at $125.29, suggested trigger was $125.15
Option Format: symbol-year-month-day-call-strike

chart:


Under Armour, Inc. - UA - close: 79.45 change: -2.05

Stop Loss: 79.65
Target(s): To Be Determined
Current Option Gain/Loss: +17.6%
Average Daily Volume = 2.1 million
Entry on March 17 at $77.60
Listed on March 12, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

Comments:
03/25/15: UA is another example of traders selling their winners. The stock was trading at all-time highs just a couple of days ago. Today the market's sell-off drug UA below $80.00 and hit our stop at $79.65.

I would keep UA on your watch list. A dip in the $75.00-77.50 zone might be a new entry point.

- Suggested Positions -

JUL $80 CALL (UA150717C80) entry $4.09 exit $4.81 (+17.6%)

03/25/15 stopped out
03/21/15 new stop @ 79.65
03/18/15 be prepare for possible volatility on Friday morning as UA reacts to Nike's earnings out Thursday night.
03/17/15 new stop @ 75.95
03/17/15 triggered @ 77.60
Option Format: symbol-year-month-day-call-strike

chart: