Option Investor

Daily Newsletter, Thursday, 6/11/2015

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Greece Does It Again

by Thomas Hughes

Click here to email Thomas Hughes
Another day of positive data and bullish price action crushed by Greece.


Today was shaping up to be a fairly nice global rally until Greece issues regained the spotlight. Greece bail-out negotiations have now stalled due to "major differences" over pensions, taxes and other reforms. The deadlocked meeting has been disbanded and IMF officials have left Brussels. The news is counter to yesterday's headlines which implied a deal was imminent and cut early gains in European and US markets.

Today's action started in Asia where as-expected Chinese data and a rate cut from the Bank of Korea lifted stocks. Chinese retail sales and industrial production both came in as expected and were seen as a sign economic activity in the country was stabilizing. Korea's central bank cut its benchmark rate by 0.25% to 1.5%, a record low and the fourth cut this year. Asian indices gained an average 1%, led by the Nikkei. European indices had been soaring on hopes a Greek deal was about to be announced. The DAX led with a gain better than 2% but that was cut to 0% within a half hour of the latest Greek announcement. This sentiment carried over into our markets which had also been in rally mode.

Market Statistics

Futures trading was indicating a flat opening in the early hours of the morning while traders waited on today's data. There was quite a bit for the market to digest, today's calendar was pretty full and as a whole was positive. This helped lift the indices going into the opening bell and carried over into the first hour of trading. The market rallied by move than 0.5%, hit an early high just after 10AM and then quickly pulled back from that level when the Greek news hit the airwaves. At that time the early gains were halved and those levels held until the end of the day.

Economic Calendar

The Economy

Lots of data today, all from the 2nd quarter and as a bundle has raised expectations for 2nd quarter GDP. The Kansas City Fed's GDP now was revised today to include the latest Retail Sales and Business Inventories. The previous estimate, released June 3rd, was 1.1%. That has been elevated to 1.9% with estimates for consumer spending moving higher as well, from 2.1% to 2.4%. The consensus estimate for 2nd quarter GDP also inched higher to 2.7%. Moody's tracking survey of GDP expectations is now at 3.1% for consensus with a range of 1.9%-4.0%.

Initial claims for unemployment inched higher, adding 2,000 with a +1,000 revision to last week, and is now 279,000. The four week moving average also edged higher gaining 3,750 to hit 278,750. On a not adjusted basis claims rose by 19.2% versus the expected +18.5% predicted by seasonal factors. On a year-over-year basis not adjusted claims are now -12.28% below last June. Tennessee leads with a gain in claims of 1,006, California and Texas lead with declines in claims of -7891 and -2580. First time claims have been rising off of their lows but remain near those long term lows and at levels consistent with trends and expectations.

Continuing Claims rose by 61,000 from an upward revision of 8,000 to hit 2.265 million. The four week moving average also rose, adding 10,000 to reach 2.226. This is the second week of increase in this figure but leaves it near the long term low. It is also at levels consistent with labor market health.

Total Claims fell, counter to the recent uptick in initial and continuing claims, but lags initial claims figures by two weeks. Total claims shed -64,979 to 2.062 million, the lowest level since early October 2015 and the second lowest level in 15 years. Total claims remains in down trend but may bottom in the near term if initial and continuing claims numbers carry through. However, based on JOLTs and NFP data it appears as if there are plenty of jobs/job openings so maybe not.

Retail Sales for May rose more than expected. Consensus was near 1.10%, actual was 1.20%. This is not a strong number but definitely a positive. Ex-auto sales rose by 1%. On a year-over-year basis sales are up 2.7%, on a year-to-date basis up 2.1%. Again, not strong but great in terms of the long term economic recovery, labor and earnings trends. All are slowly and steadily improving together.

Import prices rose by 1.3% led by fuels&lubricants 11.8% gain. Export prices also rose but only by 0.6%. Ex-agriculture prices fell by -1.0%.

Business Inventories rose more than expected, double expectations actually, 0.4%. This is the reading for April so the first for the 2nd quarter and the largest increase in nearly a year. The inventory to sales ratio held flat and is just below the 6 year high. On a year-over-year basis inventories are up 2.6%.

The World Bank agrees with the IMF, the FOMC should definitely hold off on rate hikes until next year because it could upset the global recovery.

The Oil Index

Oil prices fell more than -1.5% today as strong dollar and continuing levels of high supply capped yesterday's gains at recent resistance. New data from the EIA shows that US production continues to rise, along with a marginal increase in demand. This was offset by a reduction in global growth forecast by the World Bank and so the tug of war continues. Oil prices have been relatively flat, if volatile within the range, over the past month and may remain so into the near future.

The Oil Index gained a half percent today despite the fall in oil prices. The index created a small doji/spinning top just beneath the short term moving average and the 38.2% Fibonacci Retracement of the '09-'14 rally. The index has been moving higher over the last few days, in line with the underlying up trend, but may not be ready to break resistance yet. The indicators are rolling over into a trend following entry signal but that signal is not yet confirmed. This signal is consistent with the long term outlook of earnings stabilization and growth but again, not yet confirmed. Resistance may be at the retracement level/moving average and could remain until earnings season gets underway. The near term trend is down with support target just below 1,300 near the long term up trend line.

The Gold Index

Strong economic data helped to strengthen the dollar and put pressure on gold prices today. Gold fell about a half percent but remains above $1180. The near term churn driven by economic data, the dollar and Fed speculation wears on. Prices have been hovering in a range near $1200 for months, 3 months, while we wait on the June FOMC meeting. Tomorrows PPI data is very likely to be a mover of the dollar and gold. Last month weak data helped gold to reverse at the top of the 3 month range, perhaps tomorrows expected strong data will help it to bottom. I think gold could stay in this range, between $1170-$1215, until the first interest rate hike. The FOMC meeting is next week, there is an outside chance of a hike because the data is firming, but consensus is still next fall sometime. Long term fundamental factors supporting gold, aside from my inflation/hedge outlook, include year-on-year net purchases of gold by global central banks and above average demand for jewelry.

The gold miners are testing support. Today's move in gold has the miners ETF GDX pushing a new two month low. The indicators remain bearish but incredibly weak/divergent so I still think this is just a test of support and not a break. Gold prices will of course lead this sector but I remain bullish in the long term and viewing this dip as a potential buying opportunity. The PPI is going to make or break my theory, a move lower could take the ETF down to the long term low near $17.50. Resistance is now the underside of my rising trend line and the short term moving average.

In The News, Story Stocks and Earnings

Citrix Systems got a boost from news activist investor Elliot Management wanted to talk to the board. Elliot hold greater than 7% of the shares and sees significant upside potential in the stock. Their target is nearly 40% above yesterday's closing price. Today the stock shot up more than 8% in the pre-market session, opened with a large gap and sold off through the day. The stock is now trading near the top of the 1 year range.

Lululemon made the news when founder and 14% shareholder Dennis Wilson filed to sell all of his shares. The news was unexpected and without official reason but does not he will be selling them tomorrow. The statement released by his people simply states that he is filing in order to be able to sell some or all of his shares at some time in the future. The stock responded by dropping more than -1% on the news and providing a possible buying opportunity.

The retail sector did not get quite the boost I might have expected from this morning's retail sales data. The XRT Retail Spyder only gained 0.29% in a move that may have been capped by the Greece news. Today's action would have broken the short term moving average but resulted in a black candle and failed break above $100. This candle confirms resistance exists at $100 but other indications are contradictory. The over all trend is up with indicators firing a trend following entry. MACD is bullish and ticking upward with today's price action, stochastic is forming a bullish crossover with both %K and %D pointing up. The sector appears to be range bound in the near term, with a bullish bias. A break above $100 would confirm the trend following signal with a target near $102.50.

Dick Costolo, CEO of Twitter, announced in after hours news that he will step down from his position. This is not unexpected, he has been getting a lot of flak from just about every corner and has been looking frazzled on TV. Jack Dorsey, co-founder, will act as interim CEO. The news was taken well and helped to send shares up 7% in after hours trading.

The Indices

The market wanted to rally today. The global markets were positive, the data was positive, outlook is improving and then wham! The IMF pulls out of its negotiations with Greece because of “major differences”. The good news is that the bad news was not enough to completely erase today's gains. The funny thing is that Greece credit got downgraded to default imminent just yesterday, looks like S&P was right.

Today's move was led by the Dow Jones Transportation Index. The heavily beaten down index gained more than 1% in today's session in an extension of the move up from support. The index appears to be bouncing off of support, in line with the underlying long term up trend, but there is still resistance to overcome in the near term. First is the short term moving average and the bottom of the recently broken trading range near 8,500, and then just above that is the bottom of my up trend line. Data may help lift the index tomorrow and next week, along with the FOMC, but I remain cautious here until a there is a break above resistance.

The next largest move was only 0.22% and came from the Dow Jones Industrial Average. The blue chips started out strong but the move was reduced to near nothing and created a very small bodied candle. Today's move, regardless of size, is an extension of yesterday's rally, in line with the trend and moved above the short term moving average. The indicators are mixed but rolling into a trend following entry; stochastic is forming a strong bullish crossover, MACD is receding from a bear peak but not quite back to zero yet. Current target is near the all-time high, about 18,325.

The S&P 500 made the third largest gain, 0.17%. The broad market also started out strong, Greece news was just too much. Despite the weak day, today's action was able to move above the short term moving average and extends the rally we saw yesterday. The indicators are rolling over, in line with the move and the long term trend, but are not yet showing a strong signal. This move has a target near the all-time high and the bottom of my long term up-trend line.

The NASDAQ Composite made the smallest gain, only 0.11%. Today's move, while moving higher, created a small black candle just below the current all-time high. The indicators are rolling into a trend following signal with only a few tick between the current level and resistance. This index, more than any other, looks like it is on the verge of breaking out to new highs. A break above resistance could carry it up as high as 5,250. Support is between 5,000-5,050.

The market tried to move higher today and not just a little. The morning was off to a good start with early indications of a 0.50% move or greater. Nothing emerged today that would have halted that except for Greece and even that was not enough to derail the long term trend. Greece has been in trouble for years and has yet to hurt US business or economy. That being said, the situation will either get fixed in the next few weeks, or a whole lot worse. Greece is due to pay the IMF at the end of the month.

Today's data, and the move sparked by it, are good signs. The correction that appeared to be shaping up may have been put off for a little while. The data was good, has caused positive revision to the 2nd quarter and helped to boost outlook. So long as the summer economic rebound doesn't stall, and the FOMC doesn't scare the market, the secular bull is intact. Earnings outlook for the 2nd quarter may still keep stocks range bound but I think once we get start looking to the third quarter the rally will continue.

Until then, remember the trend!

Thomas Hughes

New Option Plays

Bulls Are Smiling

by James Brown

Click here to email James Brown


Sirona Dental Systems - SIRO - close: 100.79 change: +1.21

Stop Loss: 97.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 316 thousand
Entry on June -- at $---.--
Listed on June 11, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Trade Description:
Revenue growth in SIRO's business has been disappointing due to foreign currency headwinds thanks to the strong dollar. Yet investors seem to be ignoring this issue. Shares of SIRO have outperformed the broader market with a +15.3% gain this year.

SIRO is in the healthcare sector. They sell dental equipment. According to the company, "Sirona, the dental technology leader, has served dealers and dentists worldwide for more than 130 years. Sirona develops, manufactures, and markets a complete line of dental products, including CAD/CAM restoration systems (CEREC), digital intra-oral, panoramic and 3D imaging systems, dental treatment centers and handpieces."

The last couple of earnings reports for SIRO have only been mediocre. The company has been meeting analysts estimates on the bottom line (earnings). Unfortunately revenues have been seeing declines in U.S. dollar terms. On a local currency basis their sales have grown. One positive that helps the bullish picture for SIRO is margin growth. The company has seen margin growth improve the last two quarters in a row.

Shares of SIRO spiked down on May 8th, it's most recent earnings report, but traders immediately bought the dip at technical support on its 50-dma. The stock seems to be stair stepping higher with a rally, then a week or two of consolidation that breaks out into another rally. Shares just broke through major round-number resistance at the $100.00 mark today. Tonight we are suggesting a trigger to buy calls at $101.05. Volume on SIRO's stock and its options is a little light. I would start this trade with small positions to limit risk.

Trigger @ 101.05 *small positions to limit risk*

- Suggested Positions -

Buy the SEP $105 CALL (SIRO150918C105) current ask $2.25
option price is a current quote and not a suggested entry price.

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

Daily Chart:

In Play Updates and Reviews

Positive Economic Data Offset By Greek Disappointment

by James Brown

Click here to email James Brown

Editor's Note:

Yesterday stocks rallied on hopes for a Greek deal. Today those hopes have already started to sour. The IMF says Greece and its creditors are still too far apart to reach a deal.

Surprisingly both the U.S. and the major European markets still managed to eke out a gain today. Hope springs eternal.

CRTO and NSC hit our stop losses. MMM has been removed.

Current Portfolio:

CALL Play Updates

Aetna Inc. - AET - close: 117.95 change: +0.01

Stop Loss: 114.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.0 million
Entry on June -- at $---.--
Listed on June 10, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

06/11/15: The U.S. market delivered a pretty flat session. The early morning gains faded. AET followed suit with its rally attempt this morning stalling near $118.60. The stock closed virtually unchanged on the day. There is no change from last night's new play description.

Trade Description: June 10, 2015:
Healthcare was big business before Obamacare. Now it's even bigger. AET is the third largest health insurer in the U.S. They added over 950,000 clients thanks to the Affordable Care Act. Naturally it doesn't hurt the healthcare business when the ACA forces you to buy health insurance or pay a tax penalty. Big insurers like AET are also benefitting from an expanding Medicaid program.

If you are not familiar with AET the company describes itself this way: "Aetna is one of the nation's leading diversified health care benefits companies, serving an estimated 46 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities, Medicaid health care management services, workers' compensation administrative services and health information technology products and services. Aetna's customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups and expatriates."

Earnings have been steadily improving for AET. They have a habit of beating estimates. Management has raised their guidance the last three quarters in a row. AET's most recent report was April 28th. The company reported its 2015 Q1 earnings were up +17% from a year ago. Analysts were expecting a profit of $1.94 per share on revenues of $15.5 billion. AET delivered $2.39 per share. Revenues were up +8% to $15.09 billion. The number of medical enrollment members rose +4% to 23.7 million.

AET's management raised their 2015 guidance for the second time in a row. They now expect fiscal 2015 earnings in the $7.20-7.40 range compared to analysts' estimates at $7.17. The stock has been steadily rising thanks to its bullish outlook.

The big insurance stocks surged in late May on M&A rumors. Then on May 29th Humana (HUM) announced they were putting the company up for sale. HUM surged +20% on that one session. AET, Cigna (CI), and Anthem (ANTM) have all been rumored as potential suitors for HUM. Lately Wall Street has been rewarding the acquirer's stock with a rally on any merger news. AET could rally if they turn out to be the buyer.

Shares of AET just recently saw a $5.00 correction from $120 to $115 and bounced. This rebound looks like a potential entry point. Today's intraday high was $118.53. We are suggesting a trigger to buy calls at $118.75.

Trigger @ $118.75

- Suggested Positions -

Buy the OCT $125 CALL (AET151016C125) current ask $3.80

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

Tableau Software, Inc. - DATA - close: 119.00 change: +1.27

Stop Loss: 111.75
Target(s): To Be Determined
Current Option Gain/Loss: +15.2%
Average Daily Volume = 1.0 million
Entry on May 28 at $115.25
Listed on May 27, 2015
Time Frame: Exit prior to July option expiration
New Positions: see below

06/11/15: DATA spiked higher at the open and then spent the rest of the day trading sideways, like the major market indices. Except DATA managed to close up +1.0%. The $120.00 level is potential round-number resistance. No new positions at this time.

Trade Description: May 27, 2015:
The market for analyzing big business data is growing fast. DATA is leading the charge. According to the company, "Tableau Software (NYSE: DATA) helps people see and understand data. Tableau helps anyone quickly analyze, visualize and share information. More than 26,000 customer accounts get rapid results with Tableau in the office and on-the-go. And tens of thousands of people use Tableau Public to share data in their blogs and websites."

The last few earnings reports have been very impressive. DATA released their Q3 results on November 5, 2014. Results were 12 cents above estimates with revenues up +71% to $104.5 million, also above estimates.

Their Q4 results came out in early February. Analysts were expecting a profit of $0.11 a share on revenues of $122.58 million. DATA delivered $0.42 a share with revenues up +75% to $142.9 million. In the fourth quarter they added 2,600 new customers. They closed 304 transactions worth more than $100,000, a +70% improvement from a year ago.

Christian Chabot, Chief Executive Officer of Tableau. "In 2014, we experienced the strongest demand we've seen in our history, as the move to agile analytics grows faster than ever."

DATA reported their 2015 Q1 results on May 7th. Analysts were looking for a loss of $0.03 per share on revenues of $115.29 million. The company blew away these numbers with a profit of $0.08 per share (11 cents above estimates). The pattern of big revenue growth continued with Q1 revenues up +74.4% to $130.1 million. They added 2,600 new customers putting their total above 29,000. The number of deals above $100,000 hit 249 in the first quarter.

Management provided bullish guidance with estimates for Q2 revenues in the $135-140 million range. That's above Wall Street's estimate of $130.9 million. They also upped their fiscal year 2015 earnings picture and see $600-615 million, which is better than analysts' estimates of $587 million.

Shares of DATA surged on its results and optimistic guidance. Since then traders have been buying the dips pretty quickly. Today's display of relative strength (+1.99%) is also a new all-time closing high for DATA. It's also worth noting that DATA has been talked about as a potential takeover target.

The $115.00 level looks like short-term resistance. We will use a trigger at $115.25 as our entry point to buy calls.

- Suggested Positions -

Long JUL $120 CALL (DATA150717C120) entry $3.82

06/10/15 new stop @ 111.75
05/28/15 triggered @ $115.25
Option Format: symbol-year-month-day-call-strike

Skyworks Solutions Inc. - SWKS - close: 105.63 change: +0.09

Stop Loss: 97.95
Target(s): To Be Determined
Current Option Gain/Loss: +2.0%
Average Daily Volume = 4.0 million
Entry on June 10 at $103.44
Listed on June 09, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: After big gains yesterday SWKS could have been a target for profit taking today. Instead the stock consolidated sideways and closed virtually unchanged on the session. Shares did receive some bullish analyst comments and had their price target raised from $105 to $115.

No new positions at this time.

Trade Description: June 9, 2015:
SWKS seems to be everywhere. They make semiconductor chips for just about every industry including aerospace, automotive, consumer electronics, wearables, and the Internet of Things. They have been called the leading wireless semiconductor company. They're probably best known for being a component supplier to Apple (AAPL) for the company's iPhones.

The stock has soared from its October 2014 lows near $45 a share to over $100 today (a +126% move). SWKS is up +39.7% year to date versus a +5.5% gain in the NASDAQ composite and a +3.6% gain in the SOX semiconductor index.

If you're not familiar with SWKS they're in the technology sector. According to the company website, "Skyworks Solutions, Inc. is an innovator of high performance analog semiconductors. Leveraging core technologies, Skyworks supports automotive, broadband, wireless infrastructure, energy management, GPS, industrial, medical, military, wireless networking, smartphone and tablet applications. The Company's portfolio includes amplifiers, attenuators, circulators, demodulators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, isolators, lighting and display solutions, mixers, modulators, optocouplers, optoisolators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, power management devices, receivers, switches and technical ceramics. Headquartered in Woburn, Mass., Skyworks is worldwide with engineering, manufacturing, sales and service facilities throughout Asia, Europe and North America."

The company is really cashing in on some major global trends including smart phones and smart(er) cars. Data suggests that over 90% of mobile phone users are still using 2G and 3G phones. That means SWKS should benefit as they upgrade to 4G phones. Meanwhile SWKS is also poised to benefit from the surging trend of interconnectivity in automobiles. One forecast estimates that 75% of automobiles in 2020 (about 70 million vehicles) will have Internet-connectivity. Today that number is only around 10 million cars.

The company's earnings growth has been phenomenal. They have beaten Wall Street's earnings and revenues estimates the last four quarters in a row. They have also raised their guidance the last four quarters in a row. Their 2014 Q4 report saw revenues up +50%. Their 2015 Q1 reported revenues were up +59% while earnings were up +88%. SWKS' Q2 report on April 30th delivered earnings growth of +85% on revenue growth of +58%.

Several analysts upgraded their price target on SWKS following the April results. Analysts are expecting strong year-over-year growth for the next several quarters. One reason is the Apple iPhone upgrade cycle. There are about 450 million iPhones in circulation. Thus far only about 20% have upgraded to the iPhone 6 or 6+. That leaves a lot more iPhone sales to come.

A fast-growing company like SWKS can be a buyout target. There have been rumors that QCOM is a potential suitor.

Shares of SWKS have seen an intraday correction from $111.60 on June 1st to $98.07 today. That's a -11% pullback and traders pounced on SWKS when it started to bounce. The $100 region and the 50-dma coincide with the bullish trend of higher lows. We want to hop on board the SWKS train if shares continue to rebound. Tonight we are suggesting a trigger to buy calls at $103.25. I should warn you that SWKS can be a volatile stock. You may want to consider this a higher-risk trade. We'll start this trade with a stop loss under today's low (just below $98.07).

- Suggested Positions -

Long AUG $110 CALL (SWKS150821C110) entry $4.90

06/10/15 triggered on gap open at $103.44, suggested entry was $103.25.
Option Format: symbol-year-month-day-call-strike

Zebra Tech. - ZBRA - close: 115.57 change: -0.11

Stop Loss: 109.85
Target(s): To Be Determined
Current Option Gain/Loss: -17.5%
Average Daily Volume = 475 thousand
Entry on June 10 at $113.54
Listed on June 06, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: We see a similar situation with ZBRA. After a strong rally yesterday the stock could have seen some profit taking today. It did not. ZBRA spiked to a new high this morning. Like the major market indices the early morning gains faded and ZBRA spent the rest of the day drifting sideways.

No new positions at this time.

Trade Description: June 6, 2015:
Traditionally known for bar code scanning and RFID technology, ZBRA has changed. They have grown into a company that management says puts them right in the middle of three major tech trends: the Internet of Things, mobility, and cloud computing. Today the company has thousands of customers in more than 100 countries, including more than 95 percent of all Fortune 500 companies.

ZBRA is in the industrial goods sector. In April 2014 they announced a $3.45 billion deal to buy the Motorola Solutions enterprise unit. According to the company, "Zebra Technologies is a global leader in enterprise asset intelligence, designing and marketing specialty printers, mobile computing, data capture, radio frequency identification products and real-time locating systems. Incorporated in 1969, the company has over 7,000 employees worldwide and provides visibility into valued assets, transactions and people The company's extensive portfolio of marking and printing technologies, including RFID and real-time location solutions, illuminates mission-critical information to help customers take smarter business actions."

The company has been consistently delivering on the earnings front. ZBRA has reported seven quarters in a row of double-digit earnings growth. The numbers have boomed since the addition of the enterprise unit in October last year.

Looking at the last few quarterly reports ZBRA has been beating Wall Street estimates on both the top and bottom line . Their most recent report was May 13th where ZBRA announced its 2015 Q1 results of $1.39 per share. That was a +53% improvement from the prior year and 28 cents above estimates. Revenues surged +210% to $893 million, which was above estimates. That was thanks to $561 million in sales from the Motorola solutions business. Even ZBRA's legacy business saw a +15% improvement in sales.

Anders Gustafsson, ZBRA's CEO, commented on his company's report, saying, "We started the year with strong, positive momentum, as business activity remained high specifically in North America and Europe. Our partners and customers are responding enthusiastically to our greatly expanded portfolio of solutions and capabilities, and our enhanced focus on giving them improved visibility into their assets, transactions and people for better enterprise asset intelligence. During the quarter we also made material progress on achieving our cost-synergy targets, pursuing growth initiatives and integrating Zebra with the Enterprise business acquired from Motorola Solutions in October. The favorable business trends are continuing into the second quarter, as Zebra is well positioned to benefit over the long term from the convergence of technology trends in the Internet of Things, mobility and cloud computing."

ZBRA guided in-line with analysts' estimates. Wall Street expects full year 2015 earnings growth of +50% and +24% growth in 2016. This bullish earnings picture has fueled big gains for ZBRA's stock price. The S&P 500 is up +1.6% year to date versus the NASDAQ composite's +6.6% gain. Currently ZBRA is up +47% this year. The stock has almost doubled from its October 2014 lows near $60.

ZBRA produced huge gains after its earnings report in May. After consolidating several days near $110 the stock broke out again on June 2nd. We like how traders bought the dip on Friday morning and expect ZBRA to hit new highs soon. Tonight we are suggesting a trigger to buy calls at $115.15.

- Suggested Positions -

Long AUG $120 CALL (ZBRA150821C120) entry $4.00

06/10/15 triggered @ $113.54 (intraday gap higher)
06/09/15 Entry strategy adjustment: Move the entry trigger from $115.15 to $113.25. Adjust the stop loss from $110.85 to $109.85
Option Format: symbol-year-month-day-call-strike

PUT Play Updates

Cerner Corp. - CERN - close: 67.87 change: +0.70

Stop Loss: 68.15
Target(s): To Be Determined
Current Option Gain/Loss: -22.4%
Average Daily Volume = 1.7 million
Entry on June 04 at $66.75
Listed on June 02, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: Our CERN trade is in trouble. Shares managed to build on yesterday's bounce with a +1.0% gain. That outperformed the broader market today and pushed CERN above both its 10 and 20-dma.

If CERN closed the week right here it would be a bullish engulfing candlestick reversal pattern on its weekly chart. Readers will want to seriously consider an immediate exit. Today's high was $68.09. Our stop loss is at $68.15. I am not suggesting new positions.

Trade Description: June 2, 2015:
CERN was having a pretty good year. Then the stock started to top out in March and April. Suddenly shares crashed lower in May due to disappointing guidance.

CERN is in the technology sector. According to the company, "Cerner's health information technologies connect people, information and systems at more than 18,000 facilities worldwide. Recognized for innovation, Cerner solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help health care organizations manage revenue, as well as a wide range of services to support clients' clinical, financial and operational needs. Cerner's mission is to contribute to the systemic improvement of health care delivery and the health of communities."

CERN reported its Q1 earnings on May 7th. Just looking at the numbers it appeared to be a pretty good quarter. Earnings were up +22% from a year ago to $0.45 per share. That was only in-line with analysts' expectations. Revenues rose what look like a healthy +27% from a year ago to $996 million. Unfortunately that missed analysts' estimates for $1,084 million.

CERN's management said, "Revenue was below guidance provided by the Company due to a combination of lower than expected revenue from the recently closed acquisition of Siemens Health Services (Health Services) and lower revenue in our existing business." Earlier this year, in February, Cerner Corporation acquired substantially all of the assets, and assumed certain liabilities, of the Siemens Health Services business from Siemens AG.

CERN said their gross margins fell -40 basis points in the first quarter. They expect margins to slide another 100 to 150 basis points by yearend. Management provided Q2 and 2015 guidance that was below Wall Street estimates. This sparked the sell-off. The company is in a highly competitive industry and could definitely see more pricing pressures.

Technically the stock's oversold bounce didn't make it very far. Shares have been consolidating sideways in the $67-69 range for the last three weeks. The point & figure chart is bearish and forecasting at $59.00 target. Currently the stock looks poised to breakdown from this trading range. There is a chance it bounces at its simple 200-dma but we suspect it would be a temporary bounce. Tonight we are suggesting a trigger to buy puts at $66.75.

- Suggested Positions -

Long SEP $65 PUT (CERN150918P65) entry $2.45

06/11/15 CERN is not cooperating and traders may want to exit early now
06/10/15 new stop @ 68.15
06/04/15 triggered @ $66.75
Option Format: symbol-year-month-day-call-strike

Kohl's Corp. - KSS - close: 62.41 change: -0.05

Stop Loss: 66.55
Target(s): To Be Determined
Current Option Gain/Loss: +2.1%
Average Daily Volume = 3.3 million
Entry on June 05 at $63.90
Listed on June 01, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: The U.S. Commerce Department said retail sales in May were up +1.2%. April's reading was revised higher to +0.2%. Analysts were expecting a +1.1% gain in May. The U.S. has now seen positive retail sales growth the last three months in a row. This positive news did not do much for shares of KSS. The stock gapped open higher only to see the rally fail near $63.00.

No new positions at this time.

Trade Description: June 1, 2015:
Most of the big retail names have been disappointing on the sales front. Macy's (M) most recent earnings report saw the company miss analysts' expectations on both the top and bottom line and Macy's lowered their guidance.

J.C. Panney Co (JCP) beat estimates but their same-store sales disappointed and traders sold the stock. Retail titan Wal-Mart (WMT) missed estimates on both the top and bottom line and issued soft guidance. Kohl's (KSS) is suffering from similar results.

Wall Street is somewhat surprised by the retailer's lackluster results. The U.S. consumer is benefitting from significantly lower gas prices from a year ago. We have one of the healthiest job markets in years. Yet consumers are not spending. The U.S. Commerce department said April retail sales were flat (+0%) after a +1.1% rise in March. Today (June 1st), the Commerce Department reported that consumer spending was flat in April. According to Marketwatch.com, the pace of consumer spending has fallen to the lowest level in several years. After another harsh winter many were expecting pent up demand by consumers to produce a surge in spending when the weather warmed up. Thus far consumers are keeping their wallets closed.

KSS is in the services sector. According to the company, "Kohl's (KSS) is a leading specialty department store with 1,164 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store, online at Kohls.com and via mobile devices."

The first quarter of 2015 was pretty good for KSS' stock. Shares rallied big on its Q4 results announced in early February. Earnings were better than expected. Revenues were just a little bit above expectations. Management raised their fiscal year 2016 guidance and raised their dividend.

Then KSS' upward momentum stalled in April. The stock started to reverse lower. Shares got crushed on May 14th with its biggest ever one-day drop that shaved off $2 billion in market cap. The drop was a reaction to KSS' Q1 results. Earnings were up +5% from a year ago and beat estimates. Yet revenues missed with $4.12 billion in sales versus analysts' estimates of $4.19 billion. Another warning signal was KSS' Q1 comparable store sales were up +1.4% versus expectations for +2.5%.

The disappointing news sparked some analyst downgrades and lower price targets. The point & figure chart is bearish and forecasting at $55.00 target. Technically shares of KSS look weak. The oversold bounce lasted about three days and KSS rolled over again with a steady pattern of lower highs.

Today KSS is poised to breakdown below its trend of higher lows and technical support at its simple 200-dma. We are suggesting a trigger to buy puts at $63.90. I will point out that prior resistance near $62.00 could be support but momentum clearly favors the bears here. We suspect shares could fall into the $56-60 zone.

- Suggested Positions -

Long OCT $60 PUT (KSS151016P60) entry $2.40

06/09/15 Down 5 days in a row, testing support at $62.00
06/05/15 triggered @ $63.90
Option Format: symbol-year-month-day-call-strike

Zillow Group - Z - close: 89.47 change: +3.04

Stop Loss: 91.05
Target(s): To Be Determined
Current Option Gain/Loss: -23.1%
Average Daily Volume = 2.0 million
Entry on June 01 at $89.85
Listed on May 30, 2015
Time Frame: exit prior to July expiration
New Positions: see below

06/11/15: We knew that Z is an aggressive trade. I warned readers that high short interest can generate big spikes higher. Today Z shot higher this morning on no discernible news. The stock was up about $2.50 in the first 90 minutes of trading. It managed another 50 cents by the end of the day for a +3.5% gain. Z closed just below what should be resistance at $90.00 and its 10-dma.

More conservative investors may want to lower their stop loss closer to $90.00. Currently our stop is $91.05. No new trades at this time.

Trade Description: May 30, 2015:
The National Association of Realtors just announced on May 28th that pending home sales surged to nine-year highs in April. The U.S. real estate market is booming and yet shares of Z are down -31% from their 2015 closing highs. What's wrong with this picture?

Zillow is considered part of the financial sector. They are a free online service for consumers that provides home values, listings, and mortgages. According to the company, "Zillow Group (Nasdaq:Z) houses a portfolio of the largest real estate and home-related brands on mobile and Web. The company's brands focus on all stages of the home lifecycle: renting, buying, selling, financing and home improvement. Zillow Group is committed to empowering consumers with unparalleled data, inspiration and knowledge around homes, and connecting them with the right local professionals to help. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow(R), Trulia(R), StreetEasy(R) and HotPads(R). In addition, Zillow Group works with tens of thousands of real estate agents, lenders and rental professionals, helping maximize business opportunities and connect to millions of consumers. The company operates a number of business brands for real estate, rental and mortgage professionals, including Postlets(R), Mortech(R), Diverse Solutions(R), Market Leader(R) and Retsly(TM). The company is headquartered in Seattle."

The last year has been a rocky one for Zillow investors. The stock rallied from $130 to $160 in about three days back in July 2014 when the company announced a $2.5 billion stock for stock deal to buy its rival Trulia. By January 2015 the stock was bouncing along the $93.00 area.

Shares of Z did spike in February 2015 when they finally announced the completion of the merger. Shares surged more than 15% in one day on the news it had closed the acquisition. Zillow changed their name to Zillow Group. The combined company accounts for about 60% of the online real estate advertising market. It's the biggest U.S. real estate and home-related branding company on the Internet and mobile.

After the February spike higher shares of Zillow did nothing but fall. This culminated into a huge spike down on April 14th. The company issued an earnings warning. Z's management said that 2015 would be a "transition year", which on Wall Street means our quarterly results will stink. The company cut their 2015 revenue estimate down to $690 million. At the time Wall Street analysts were estimating $722-753 million in revenues. Z slashed their EBITDA estimate to $80 million when analysts were expecting $141 million. Zillow blamed the length review process by the FTC over potential anti-trust issues. Z's management was expecting a three-month review. It took nine months. No worries though, Z's management says that 2016 and 2017 will be awesome.

Z's most recent earnings report was May 12th. It was the first report with the combined company's results. Z posted a loss of $1.19 per share versus a 16-cent loss a year ago. Backing out their restructuring costs and stock option expenses their adjusted earnings was a profit of $0.05 per shares. That was 17 cents better than analysts were expecting. Revenues soared +92% to $127.3 million. Yet that wasn't good enough. Wall Street had been forecasting revenues in the $135-141 million range.

Shares of Z popped on its earnings news but they have done nothing but sink since then. Now the stock is poised to breakdown below round-number support at $90.00. The point & figure chart is bearish and forecasting an $86.00 target (which could get worse as Z continues to sink).

Bears point out that Zillow's valuation is very rich at more than 60 times forward earnings. The company also faces competition from the likes of Move.com and Realtor.com, both run by News Corp. My only concern is that there are a lot of bears shooting against this stock. The most recent data listed short interest at 37% of the 46.3 million share float. That's why Z can see huge one-day spikes as shorts panic. Yet overall they have been correct with Z underperforming the market.

Tonight I am suggesting a trigger to launch small bearish positions at $89.85. Odds are pretty good we could see Z retest its lows in the $80-81 area.

- Suggested Positions -

Long JUL $85 PUT (Z150717P85) entry $2.60

06/10/15 new stop @ 91.05
06/04/15 new stop @ 93.55
06/01/15 triggered @ $89.85
Option Format: symbol-year-month-day-call-strike


Criteo SA - CRTO - close: 47.00 change: +0.95

Stop Loss: 47.45
Target(s): To Be Determined
Current Option Gain/Loss: -60.7%
Average Daily Volume = 628 thousand
Entry on June 05 at $50.25
Listed on June 04, 2015
Time Frame: Exit PRIOR to July option expiration
New Positions: , see below

06/11/15: It was an exceptionally ugly day for CRTO investors. The stock was crushed with shares gapping open lower at $49.36 and then plunging to support near $44.00. CRTO was down -13% at its worst levels of the session and managed to trim that loss to -7.26% by the closing bell.

So why the big decline? CRTO specializes in online ad delivery. One of the biggest markets is advertising on mobile devices. This morning there were reports from the Wall Street Journal and Financial Times that Apple (AAPL) was working on a way to allow iPhone users to block ads on their Safari web browser. According to the Financial Times, Apple will launch their iOS 9 before the end of the year. This new iOS will will include a browser extension that blocks ads, images, cookies, and pop-ups.

CRTO hit our stop loss at $47.45.

- Suggested Positions -

JUL $50 CALL (CRTO150717C50) entry $2.80 exit $1.10 (-60.7%)

06/11/15 stopped out @ 47.45
06/05/15 triggered @ $50.25
Option Format: symbol-year-month-day-call-strike



3M Company - MMM - close: 159.86 change: +0.82

Stop Loss: 160.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.2 million
Entry on June -- at $---.--
Listed on June 08, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: The bounce from support in shares of MMM continued on Thursday. The stock outperformed the market with a +0.5% gain. MMM still has a bearish trend of lower highs but its recent relative strength is enough of a reason to drop it as a candidate. If shares closed right here for the week it will create a bullish engulfing candlestick reversal pattern on its weekly chart.

Trade did not open.

06/11/15 removed from the newsletter, suggested entry was $155.75


Norfolk Southern Corp. - NSC - close: 92.53 change: +1.99

Stop Loss: 92.55
Target(s): To Be Determined
Current Option Gain/Loss: +13.2%
Average Daily Volume = 2.2 million
Entry on May 26 at $94.85
Listed on May 23, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/11/15: I cautioned readers on June 9th (Tuesday) that $90.00 could be support and traders may want to take profits. Yesterday NSC tested support at $90 and bounced although it didn't bounce very high. Suddenly today railroad stocks are surging. The broader transportation average also outperformed the rest of the market.

Shares of NSC broke through short-term resistance near $92.00 and its 10-dma and hit our new stop loss at $92.55.

- Suggested Positions -

SEP $90 PUT (NSC150918P90) entry $2.65 exit $3.00 (+13.2%)

06/11/15 stopped out
06/09/15 new stop @ 92.55
05/30/15 new stop @ 95.65
05/26/15 triggered @ $94.85
Option Format: symbol-year-month-day-call-strike