Editor's Note:

If you are feeling optimistic then today's session is somewhat encouraging since there was no serious follow through lower after yesterday's sell-off. On the other hand the bounce attempt was very anemic and might suggest the sell-off is not over yet.

AVGO, CLVS, and RCL all hit our stop losses today.


Current Portfolio:


CALL Play Updates

Harris Corp. - HRS - close: 88.17 change: +0.52

Stop Loss: 84.90
Target(s): To Be Determined
Current Option Gain/Loss: -15.1%
Average Daily Volume = 927 thousand
Entry on January 05 at $88.15
Listed on January 04, 2016
Time Frame: Exit PRIOR to earnings in early February
New Positions: see below

Comments:
01/05/16: Our new bullish play on HRS is off to a pretty good start. Shares displayed relative strength today with a +0.59% gain versus the S&P 500's +0.2% advance. HRS hit our suggested entry point at $88.15. I would consider new positions at current levels although more conservative investors might want to wait for a new rise above $88.40 or $88.50 as an alternative entry point.

Trade Description: January 4, 2016:
Out of the thousands of publically traded companies out there only a few have been around for over 100 years. A couple of weeks ago HRS celebrated its 120th anniversary.

HRS issued a press release to mark the achievement. Here's an excerpt: "Founded in the back room of an Ohio jewelry store in December 1895, Harris grew from a tiny printing press company into a top 10 defense contractor with $8 billion in annualized sales, 22,000 employees, customers in 125 countries, and a diverse portfolio of technologies that connect, inform and protect the world. Harris is the longest-thriving major defense contractor and one of 398 publicly held companies still in existence for 120 years or longer - including GE, CVS, Coca-Cola, Pfizer, P&G, and J.P. Morgan."

Today HRS is in the technology sector. They are considered part of the communication equipment industry. According to the company, "Harris Corporation is a leading technology innovator, solving our customers' toughest mission-critical challenges by providing solutions that connect, inform and protect. Harris supports customers in more than 125 countries, has approximately $8 billion in annual revenue and 22,000 employees worldwide. The company is organized into four business segments: Communication Systems, Space and Intelligence Systems, Electronic Systems, and Critical Networks."

Last year HRS ended 2015 on a strong note. The month of December saw HRS win several government contracts worth more than $1 billion. Meanwhile analysts are bullish on the stock. Goldman Sachs has a buy rating on HRS. Cowen recently upped their price target to $102 and said it was one of their best trading ideas for 2016.

Technically the stock has been showing relative strength. Last year HRS outperformed the broader market with a +20% gain. The positive news about the company's new contract wins produced a bullish breakout past major resistance at $85.00 in mid December. Today investors bought the dip near short-term support at its 10-dma. HRS displayed relative strength today too with a +0.8% gain. If this bounce continues we want to hop on board. Tonight we are suggesting a trigger to buy calls at $88.15.

- Suggested Positions -

Long FEB $90 CALL (HRS160219C90) entry $2.65

01/05/16 triggered @ $88.15
Option Format: symbol-year-month-day-call-strike


Ionis Pharmaceuticals - IONS - close: 60.94 change: -0.74

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:
01/05/16: IONS found support near $60.00 again for the second day in a row. Shares initially rallied to new three-week highs before reversing lower. There is no change from my recent comments.

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




PUT Play Updates

Currently we do not have any active put trades.




CLOSED BULLISH PLAYS

Avago Technologies - AVGO - close: 137.52 change: -4.76

Stop Loss: 139.75
Target(s): To Be Determined
Current Option Gain/Loss: -36.7%
Average Daily Volume = 3.6 million
Entry on January 05 at $143.14
Listed on December 29, 2015
Time Frame: Exit PRIOR to February option expiration
New Positions: see below

Comments:
01/05/16: It was a frustrating day if you were bullish on AVGO. The stock started Tuesday with strength. Shares gapped higher at $143.14. Our suggested trigger to buy calls was $142.65 so the gap open immediately triggered our play. Unfortunately AVGO quickly reversed lower. One story suggested that new concerns about falling iPhone sales for Apple may have pressure Apple part suppliers. The funny thing is slower iPhone sales have been a worry for months and hasn't really impacted AVGO before.

Whatever drove AVGO lower the stock broke down below support at $140.00 and its 30-dma. Shares underperformed the market with a -3.3% drop and hit our stop loss at $139.75.

- Suggested Positions -

FEB $150 CALL (AVGO160219C150) entry $4.90 exit $3.10 (-36.7%)

01/05/16 stopped out at $139.75
01/05/16 triggered on gap higher at $143.14, suggested entry was $142.65
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

chart:


Clovis Oncology - CLVS - close: 31.70 change: -1.67

Stop Loss: 32.45
Target(s): To Be Determined
Current Option Gain/Loss: -63.8%
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:
01/05/16: CLVS displayed relative weakness for the second day in a row. Yesterday CLVS was hammered with a -4.6% drop. Today it lost another -5% and hit our stop loss at $32.45 along the way.

- Suggested Positions -

JAN $35 CALL (CLVS160115C35) entry $2.90 exit $1.05 (-63.8%)

01/05/16 stopped out
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

chart:


Royal Caribbean Cruises - RCL - close: 96.54 change: -1.60

Stop Loss: 96.45
Target(s): To Be Determined
Current Option Gain/Loss: -39.8%
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:
01/05/16: The selling pressure in RCL continued on Tuesday. Bears got some help after Morgan Stanley downgraded RCL this morning. The stock gapped down to $96.39 on this downgrade, which immediately stopped us out.

- Suggested Positions -

MAR $105 CALL (RCL160318C105) entry $4.10 exit $2.47 (-39.8%)

01/05/16 stopped out on gap down at $96.39
01/04/16 new stop @ 96.45
12/29/15 triggered @ $100.85
Option Format: symbol-year-month-day-call-strike

chart: