Editor's Note:

The combination of rising geopolitical fears in the Middle East and very disappointing economic data out of China was a powerful one-two punch that knocked the market lower.

The U.S. stock market was poised for its worst start to the year since 1932 but managed to trim its losses by the closing bell.

It was a very, very widespread decline and ABC, BDX, CRL, FB, NOC, RYAAY, and SPB were all stopped out.

Tonight we have adjusted our entry point strategy on AVGO.


Current Portfolio:


CALL Play Updates

Avago Technologies - AVGO - close: 142.28 change: -2.87

Stop Loss: 139.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.6 million
Entry on December -- at $---.--
Listed on December 29, 2015
Time Frame: Exit PRIOR to February option expiration
New Positions: Yes, see below

Comments:
01/04/16: AVGO was definitely not immune to the market's flush lower today. On the plus side investors did buy the dip at round-number support near $140.00. We want to take advantage of this pullback.

The intraday high in AVGO was $142.35. Tonight we are adjusting our entry point strategy and moving our entry trigger down to $142.65. We'll adjust the stop loss to $139.75. We will also adjust the option down to the February $150 call.

Trade Description: December 29, 2015:
AVGO is probably best known for being a chip supplier to Apple Inc. (AAPL). Shares of AAPL have struggled the last half of 2015 on worries about slowing iPhone sales. This worry has not impacted shares of AVGO.

AVGO is in the technology sector. They're part of the semiconductor industry. According to the company, "Avago Technologies Limited is a leading designer, developer and global supplier of a broad range of analog, digital, mixed signal and optoelectronics components and subsystems with a focus in III-V compound and CMOS based semiconductor design and processing. Avago's extensive product portfolio serves four primary target markets: wireless communications, enterprise storage, wired infrastructure, and industrial & other."

We can't mention AVGO without mentioning their $37 billion acquisition of Broadcom (BRCM). Here's a description of BRCM, "Broadcom Corporation, a FORTUNE 500® company, is a global leader and innovator in semiconductor solutions for wired and wireless communications. Broadcom products seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environments. With one of the industry's broadest portfolio of state-of-the-art system-on-a-chip solutions, Broadcom is changing the world by Connecting everything®."

This acquisition of BRCM was announced in May 2015. The combined company was initially valued at $77 billion. Together they will have annual sales of $15 billion with $6-7 billion in free cash flow. The merger is expected to close on February 1, 2016.

Without BRCM, AVGO has been delivering impressive earnings and revenue growth. Last year AVGO saw earnings surge from $1.16 a share to $4.90. This year Wall Street expects AVGO's earnings to hit $9.68 a share. Revenue growth over the last five years has averaged more than +23% a year.

AVGO's most recent earnings report was December 2nd. The company announced their Q4 results with earnings rising +26% from a year ago to $2.51 a share. That beat estimates by 13 cents. Revenues were up +15% to $1.85 billion. Gross margins improved from 51% in Q3 to 54% in Q4. The stock surged toward resistance near $150 following this better than expected earnings report.

Several days ago RBC Capital Markets upgraded AVGO to one of their top picks. RBC analyst Amit Daryanani shared his opinion on the company, saying, "Our bullish bias is predicated on our belief that AVGO will expand EPS from $9.24 in CY15E to [more than] $16.00 by CY18E driven by multiple levers - BRCM integration, asset divestures, RF ramp-up, cost containment and potential deleveraging ... we estimate [less than 30%] of future EPS growth is predicated on organic revenue dynamics and 70%+ is driven by AVGO's ability to curtail costs, optimize the portfolio, and further deleveraging."

Daryanani raised their AVGO price target from $165 to $170. Currently the point & figure chart is very bullish and forecasting a long-term target of $213. Technically shares of AVGO appear to be consolidating sideways beneath major resistance at the $150.00 level. If the stock breaks out we want to be ready. Tonight we are suggesting a trigger to buy calls at $150.25.

Trigger @ $142.65 *New Entry Trigger*

- Suggested Positions -

Buy the FEB $150 CALL (AVGO160219C150) current ask $4.40

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.

01/04/16 Entry Point Update - Move the entry trigger from $150.25 down to $142.65. Adjust the stop loss down to $139.75. Adjust the suggested option from February $155 call to the $150 call.
Option Format: symbol-year-month-day-call-strike


Clovis Oncology - CLVS - close: 33.37 change: -1.63

Stop Loss: 32.45
Target(s): To Be Determined
Current Option Gain/Loss: -53.4%
Average Daily Volume = 1.4 million
Entry on December 01 at $32.55
Listed on November 28, 2015
Time Frame: Exit PRIOR to January option expiration
New Positions: see below

Comments:
01/04/16: Biotech stocks underperformed the broader market with the IBB biotech ETF losing -3.38%. CLVS fared even worse with a -4.6% plunge. I want to caution investors that today's drop has broken CLVS' bullish trend of higher lows. Readers will want to turn more defensive and either raise their stop or take some money off the table.

No new positions at this time.

Trade Description: November 28, 2015:
After a -70% plunge all the bad news might be priced in for this biotech stock.

CLVS is in the healthcare sector. According to the company, "Clovis Oncology is a biopharmaceutical company focused on acquiring, developing and commercializing cancer treatments in the United States, Europe and other international markets. Our product development programs target specific subsets of cancer, and we seek to simultaneously develop, with partners, companion diagnostics that direct our product candidates to the patients most likely to benefit from their use. We believe this approach to personalized medicine - to deliver the right drug to the right patient at the right time - represents the future of cancer therapy."

The company has three product candidates in their pipeline. They are rociletinib, rucaparib, and lucitanib. Right now the market is reacting to news on its rociletinib clinical trials, where the drug is being tested on non-small-cell lung cancer.

Several days ago the company issued an update on their Rociletinib NDA filing. CLVS held their regularly scheduled mid-cycle communication meeting with the U.S. Food and Drug Administration (FDA). The current data on the Rociletinib clinical trials was not good enough. The FDA is asking for more data to prove the treatment's efficacy. This will likely push back the time frame on any approval. Investors were expecting a potential approval in the March-April 2016 time frame.

The delay in Rociletinib approval is a serious setback. Rival biotech firm AstraZeneca just got FDA approval for a competing drug, Tagrisso. By the time Rociletinib is approved (if it's approved), it will face serious competition from an already established treatment.

CLVS is a perfect example of why biotech stocks can be high-risk trades. On November 13, 2015 the stock closed at $99.43. The next trading day, Nov. 16th, shares gapped down at $29.27 and closed near $30. The stock traded down to $24.50 on November 23rd and started to reverse higher. CLVS' stock is now up three days in a row.

The current rally could be a combination of short covering and investors bargain hunting. It has been a full two weeks since the sell-off. If investors were going to sell they probably did so already. We think this rebound has a lot further to go but make no mistake CLVS is still a higher-risk trade. Tonight we are suggesting a trigger to buy calls at $32.55.

- Suggested Positions -

Long JAN $35 CALL (CLVS160115C35) entry $2.90

12/29/15 new stop @ 32.45
12/26/15 new stop @ 31.95
12/14/15 new stop @ 30.75
12/05/15 new stop @ 29.65
12/01/15 triggered @ $32.55
Option Format: symbol-year-month-day-call-strike


Ionis Pharmaceuticals - IONS - close: 61.68 change: -0.25

Stop Loss: 59.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.6 million
Entry on January -- at $---.--
Listed on January 02, 2016
Time Frame: Exit PRIOR to February option expiration
New Positions: Yes, see below

Comments:
01/04/16: IONS' performance was encouraging. Traders bought the dip near round-number support at $60.00 and shares trimmed their loss to just -0.4% versus the NASDAQ's -2.0% decline.

Our suggested entry point remains $63.20.

Trade Description: January 2, 2016:
Biotech stocks had a volatile year, especially after the group peaked in July 2015. The IBB managed to deliver a +11% gain for the year thanks to strength among some of its bigger cap names. IONS closed virtually flat for the year (down -19 cents for all of 2015). The stock has been showing relative strength recently and looks poised to sprint past its peers.

IONS is in the healthcare sector. They are part of the drug and biotech industry. The company was previously known as ISIS pharmaceuticals. Unfortunately the rise of the radical Islamic terrorist group known as ISIS has tarnished the name. A couple of weeks ago ISIS changed its name to Ionis. Here's a bit from the company press release:

"Isis Pharmaceuticals, Inc. today (December 18th) announced that the company has changed its name to Ionis Pharmaceuticals, Inc. Ionis (pronounced "eye-OH-nis") Pharmaceuticals is an original name that the Company has chosen to represent its innovative culture and heritage as both the pioneer and leader in the RNA-targeted therapeutic space for the past 26 years."

Now here is the company's description: "Ionis is the leading company in RNA-targeted drug discovery and development focused on developing drugs for patients who have the highest unmet medical needs, such as those patients with severe and rare diseases. Using its proprietary antisense technology, Ionis has created a large pipeline of first-in-class or best-in-class drugs, with over a dozen drugs in mid- to late-stage development. Drugs currently in Phase 3 development include volanesorsen, a drug Ionis is developing and plans to commercialize through its wholly owned subsidiary, Akcea Therapeutics, to treat patients with familial chylomicronemia syndrome and familial partial lipodystrophy; IONIS-TTRRx, a drug Ionis is developing with GSK to treat patients with all forms of TTR amyloidosis; and nusinersen, a drug Ionis is developing with Biogen to treat infants and children with spinal muscular atrophy. Ionis' patents provide strong and extensive protection for its drugs and technology."

Regular readers know that we feel biotech stocks are aggressive, higher-risk trades. A lot of biotech companies are relatively small and only have one or two treatments in development, which make them binary trades. You can win big or lose big depending on the approval process of their treatment. There is a lot of headline risk. There is still headline risk with IONS but the company's relatively deep pipeline of drugs makes IONS a stronger play. You can view IONS' pipeline here.

Shares of IONS surged through several layers of resistance in early November on a better than expected Q3 earnings report. Since that big rally the stock has been consolidating lower. That changed in mid December when traders bought the dip near its 100-dma. Investors have been buying the dips every since. IONS displayed relative strength on Thursday with a +0.99% gain. The point & figure chart is bullish and forecasting at $74.00 target.

We would like to see some follow through higher. Tonight we are suggesting a trigger to buy calls at $63.20. Plan on exiting prior to February option expiration.

Trigger @ 63.20

- Suggested Positions -

Buy the FEB $65 CALL (IONS160219C65)

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


Royal Caribbean Cruises - RCL - close: 98.14 change: -3.07

Stop Loss: 96.45
Target(s): To Be Determined
Current Option Gain/Loss: -29.5%
Average Daily Volume = 2.0 million
Entry on December 29 at $100.85
Listed on December 26, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: Investors were definitely selling their winners this morning. Shares of RCL gapped down from $101.21 to $99.60 and fell to $96.69 intraday. The stock bounced near its 20-dma and 50-dma after a -4.4% plunge. Shares ended the session with a -3.0% decline. Tonight we are adjusting the stop loss up to $96.45.

No new positions at this time.

Trade Description: December 26, 2015:
2015 has been a tough year for fund managers. The market's recent bounce has lifted the S&P 500 to a +0.1% gain for the year. One group that is outperforming the big cap index is the consumer discretionary stocks. The XLY consumer discretionary ETF is up +8.7% year to date. Helping lead the charge is RCL, which is up more than +20% thus far in 2015.

RCL is in the services sector. According to the company, "Royal Caribbean Cruises Ltd. is a global cruise vacation company that owns Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Pullmantur and CDF Croisieres de France, as well as TUI Cruises through a 50 percent joint venture. Together, these six brands operate a combined total of 44 ships with an additional eight under construction contracts, and two under conditional agreements. They operate diverse itineraries around the world that call on approximately 480 destinations on all seven continents."

A few weeks ago Barclays just upped their outlook on the cruise liners and believes the group is seeing improved strength in pricing. Meanwhile RCL has been cashing in on the growing trend of Chinese tourism. The recent change in ties between the U.S. and Cuba also represents a new opportunity for the cruise lines.

Crude oil's drop to multi-year lows is another tail wind for RCL. Fuel is a big expense for these massive cruise ships with many burning through 140-150 tons of fuel per day. Fortunately, oil (and fuel) is expected to remain relatively low throughout 2016.

Technically RCL has been able to build on its longer-term trend of higher lows and higher highs. The point & figure chart is bullish and forecasting at $118 target. Last week's widespread market rally lifted shares of RCL toward major resistance at $100. A breakout here could spark the next big leg higher. Tonight we are suggesting a trigger to buy calls at $100.85.

- Suggested Positions -

Long MAR $105 CALL (RCL160318C105) entry $4.10

01/04/16 new stop @ 96.45
12/29/15 triggered @ $100.85
Option Format: symbol-year-month-day-call-strike




PUT Play Updates

Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

AmerisourceBergen Corp. - ABC - close: 101.87 change: -1.84

Stop Loss: 102.40
Target(s): To Be Determined
Current Option Gain/Loss: -38.7%
Average Daily Volume = 2.2 million
Entry on December 15 at $103.02
Listed on December 12, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: The stock market's collapse this morning produced a gap down in shares of ABC. Our stop loss was at $102.40 but ABC opened lower at $102.31 immediately closing our play. The stock closed under technical support at its 20-dma.

- Suggested Positions -

FEB $105 CALL (ABC160219C105) entry $3.10 exit $1.90 (-38.7%)

01/04/16 stopped out
12/29/15 new stop @ 102.40
12/26/15 new stop @ 101.20
12/16/15 new stop @ 99.85
12/15/15 Caution - ABC has produced a bearish engulfing candlestick reversal pattern
12/15/15 triggered on gap higher at $103.02, trigger was $102.85
Option Format: symbol-year-month-day-call-strike

chart:


Becton, Dickinson and Company - BDX - close: 147.95 change: -6.14

Stop Loss: 152.25
Target(s): To Be Determined
Current Option Gain/Loss: -47.9%
Average Daily Volume = 1.0 million
Entry on December 17 at $156.35
Listed on December 16, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: Shares of BDX were hammered lower today. Shares underperformed with a -4% plunge. The combination of the market's sell-off and a downgrade by Morgan Stanley was a tough pill to swallow.

Our stop loss was at $152.25. Unfortunately BDX gapped open lower at $150.62, closing our trade. Shares fell to $146.02 intraday.

- Suggested Positions -

MAR $160 CALL (BDX160318C160) entry $3.84 exit $2.00 (-47.9%)

01/04/16 stopped out on gap down at $150.62
12/26/15 new stop @ 152.25
12/17/15 triggered @ $156.35
Option Format: symbol-year-month-day-call-strike

chart:


Charles River Labs. Intl. - CRL - close: 78.25 change: -2.14

Stop Loss: 77.75
Target(s): To Be Determined
Current Option Gain/Loss: -32.4%
Average Daily Volume = 426 thousand
Entry on December 24 at $80.40
Listed on December 17, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: The stock market's sharp drop today hit CRL pretty hard and shares fell -2.6%. They were down closer to -4% intraday before paring its loss. Our stop loss was hit at $77.75.

- Suggested Positions -

FEB $85 CALL (CRL160219C85) entry $1.85 exit $1.25 (-32.4%)

01/04/16 stopped out @ 77.75
12/24/15 triggered @ $80.40
Option Format: symbol-year-month-day-call-strike

chart:


Facebook, Inc. - FB - close: 102.22 change: -2.44

Stop Loss: 103.40
Target(s): To Be Determined
Current Option Gain/Loss: -43.4%
Average Daily Volume = 28 million
Entry on December 29 at $106.42
Listed on December 28, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: The "FANG" stocks were hammered lower today. Shares of FB gapped open lower at $101.95 and traded toward round-number support near $100 before paring its decline. The stock was down -4.69% at its intraday lows ($99.75). Our suggested stop loss was $103.40 but unfortunately we were stopped out on the gap down at $101.95.

- Suggested Positions -

FEB $110 CALL (FB160219C110) entry $3.20 exit $1.81 (-43.4%)

01/04/16 stopped out on gap down at $101.95
01/02/16 Caution - on 12/31/2014 FB broke some support levels
12/29/15 triggered on gap open at $106.42, suggested entry was $106.25
Option Format: symbol-year-month-day-call-strike

chart:


Northrop Grumman - NOC - close: 187.51 change: -1.30

Stop Loss: 186.85
Target(s): To Be Determined
Current Option Gain/Loss: -43.0%
Average Daily Volume = 1.2 million
Entry on December 29 at $191.25
Listed on December 22, 2015
Time Frame: Exit PRIOR to earnings in late January
New Positions: see below

Comments:
01/04/16: NOC was no safe haven for investors this morning. Our stop loss was $186.85 but we were stopped out on the gap down at $185.98. NOC was down -1.8% at its worst levels of the session. The stock did find support near $185 and managed to pare its loss to just -0.68%.

I would keep NOC on your watch list. Another close above $192.00 could be a bullish entry point.

- Suggested Positions -

FEB $195 CALL (NOC160219C195) entry $4.30 exit $2.45 (-43.0%)

01/04/16 stopped out on gap down at $185.98, stop was $186.85
12/29/15: triggered @ $191.25
Option Format: symbol-year-month-day-call-strike

chart:


Ryanair Holdings - RYAAY - close: 84.64 change: -1.82

Stop Loss: 84.45
Target(s): To Be Determined
Current Option Gain/Loss: -64.5%
Average Daily Volume = 406 thousand
Entry on December 21 at $85.77
Listed on December 19, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: Airline stocks did not fare very well today. The XAL airline index plunged -3.8%. RYAAY managed to outperform its peers but still lost -2.1%. Our stop loss was hit early this morning at $84.45.

- Suggested Positions -

MAR $90 CALL (RYAAY160318C90) entry $3.10 exit $1.10 (-64.5%)

01/04/16 stopped out
12/26/15 new stop @ 84.45
12/21/15 triggered on gap open at $85.77, trigger was $85.65
Option Format: symbol-year-month-day-call-strike

chart:


Spectrum Brands Holdings - SPB - close: 102.86 change: +1.06

Stop Loss: 99.85
Target(s): To Be Determined
Current Option Gain/Loss: -9.1%
Average Daily Volume = 257 thousand
Entry on December 22 at $100.57
Listed on December 21, 2015
Time Frame: Exit PRIOR to earnings in February
New Positions: see below

Comments:
01/04/16: The market's widespread weakness this morning pushed SPB through round-number support at $100. Shares hit our stop at $99.85. Surprisingly SPB generated a big intraday bounce and managed to outperform the market by the closing bell with a +1.0% gain on the session.

- Suggested Positions -

APR $105 CALL (SPB160415C105) entry $3.40 exit $3.09 (-9.1%)

01/04/16 stopped out
12/26/15 new stop @ 99.85
Option Format: symbol-year-month-day-call-strike

chart: