Option Investor

Daily Newsletter, Thursday, 6/18/2015

Table of Contents

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

Market Wrap

FOMC Sends Market Higher

by Thomas Hughes

Click here to email Thomas Hughes
The FOMC signaled they need just a little more time, and more data, and the market moved higher.


Today, global markets marched to the beat of their own drums. Now that the June Fed meeting has come and passed traders are focused on local issues which led to mixed markets around the world.

In Asia indices fell hard as the reality of margin controls comes face to face with boiling IPO scene. Shang Hai led the fall, shedding more than 3%, as mainland investors rotate out of current holdings in order to prepare for a new round of IPO's scheduled for Friday. European indices fell, but only marginally, as the Greece debt negotiations and possible default continue to weigh on sentiment. Our markets were indicated to open with a gain despite all the global woe and that trade only strengthened going into the opening bell.

Market Statistics

The Fed statement and Janet Yellen's comments left rate-hike outlook in basically the same shape it was before... the economy is getting better, a rate hike is coming most likely this year and the decision is going to be data dependent. What is different is now there is no longer fear of an immediate rate hike, based on consensus we have at least until September although July is on the table.

The early morning economic data and earnings reports were in the Goldilocks zone. Data shows the recovery is still ongoing and not too hot, not too cold and just right for the FOMC to wait a little longer before raising interest rates. The earnings are mixed with a positive spin but in some cases you have to read beyond the headlines to see it.

The bulls were out in force today, driving the market higher from the start of early electronic trading. Futures trading indicated a higher opening throughout the morning and that held true into the opening bell. The indices gained a half percent as soon as the bell rang and then slowly ratcheted higher throughout the morning. By 11AM the SPX was up by 1%, led by the Dow, the NASDAQ and the Transports. The indices hovered at these levels the rest of the day with the NASDAQ setting a new all-time high in mid-afternoon.

Economic Calendar

The Economy

Consumer prices rose by 0.4% on a seasonally adjusted basis, 0.5% not adjusted. This is slightly below the consensus 0.5% expected and flat on a year-over-year basis. Ex-food&energy CPI rose by only 0.1%, reflecting the 10.4% gain seen in the gasoline index. Other energy indices remained flat. The food index also remained flat as prices paid for food-out offset those for food-in. This data is near perfect in terms of yes, inflation is here and no, the FOMC doesn't need to act immediately.

Initial claims fell by -12,000 to 267,000, the four week moving average also fell, to 267,750. The leading number of initial claims is now back below the moving average and falling, in line with the overall trend. Claims remain near long term lows and at levels consistent with a healthy/improving labor market. On a not adjusted basis claims fell by -6.3%, ahead of the -2.1% expected by seasonal factors. Not adjusted claims are -14.3% below last year at this time. California, Pennsylvania and Texas led with gains of +10917, +4130 and +3489. I was at first concerned I might see a large number of losses due to energy but the primary sectors listed for jobless claims are services, transportation, manufacturing and F&B. Of course it is possible these losses are associated to cut backs in the oil fields but overall not alarming.

Continuing claims fell by -50,000 to 2.22 million. This brings the number of 2nd week claims back below the moving average, which rose slightly, and to levels just above the long term low. Continuing claims may have been trending sideways for over a month but remain in long term downtrend and at levels consistent with ongoing labor market improvements.

Total claims bucked it trend and rose by +79,821. This is not too surprising, I've been expecting total claims to rise based on the early May uptick in initial and continuing claims. This gain may sustain for a week or two but remains near the long term low and at levels consistent with labor market trends. Initial and continuing claims have both fallen since hitting near term highs in mid-March so total claims should also fall back to recent lows in the next month (total claims lags initial by 2 weeks). On a year-over-year basis total claims are -13% from last year at this time.

Philly Fed and Leading Indicators were both released at 10AM, were both better than expected and both helped send the indices to new intra-day highs. The Philly Fed diffusion index more than doubled, gaining 8.5 to hit 15.2, the highest level since December of last year. New orders jumped 11 points and shipments jumped 13 points, the highest readings since November. Employment remained positive but shows slowing while hours worked saw a small rise. Hours worked rose from -5.6 to 4.7. Prices paid increased by 31 points to its highest level in 8 years. Future outlook remains positive with increases to expectations in hiring, production and shipments.

The Leading Indicators rose by 0.7%. This is flat from last month's 0.7% gain and above consensus estimates of 0.4%. This is the second of the largest increase in LDI since July last year when it was 1%. The Coincident Indicators rose by 0.1%, the Lagging Indicators by 0.2%. Together this month's reading point to continued expansion into the second half and possible upward revisions to 2nd quarter estimates.

The Oil Index

Oil prices got a slight boost from weaker dollar but only slightly. WTI jumped about a half percent in early trading but pared that back by the end of the day. Dollar value may help support oil in the near term but supply/demand is still heavy on the supply side and the so called dovish Fed statement isn't helping to increase demand outlook. Oil is still stuck in its tug-of-war near the $60 level without clear direction.

The Oil Index held steady near yesterday's closing prices and traded in a very tight range. The index gained about 0.25% in today's action and is looking more and more like a bounce from the long term trend line is in the works. The recent pullback has halted, just above the trend line, with double bottom and is now moving higher off of that bottom. This move is confirmed by a strong stochastic signal and a bullish MACD crossover that could result in a move up to 1,350 in the least and as high as 1,400 and 1,430 on a break above the short term moving average. Current resistance is the short term moving average, near 1,350, with support near 1,325. The caveat is oil prices, if they fall it may have an adverse impact and result in a test of support at the trend line. The silver lining is that many analysts projections are based on $50 oil so the impact may be muted.

The Gold Index

Gold got a nice boost from the FOMC. Their lack of commitment to nailing down a date for the first rate hike was seen as dovish and weakened the dollar which helped to send gold shooting up by over 2%. Gold is now back above $1200 and moving higher with $1225 as a target. Gold is still inside the Fed/dollar driven range and may stay there until the actual first rate hike. Until then data and dollar fluctuation will be key movers.

The gold miners got a boost today as well. The +$25 spike in gold helped lift stocks across the sector resulting in a 1.25% rise in the miners ETF GDX. Today's move follows the formation of a large white candle rising from the support line I drew just Monday and confirms a shallower trend line than the one I have been following until now. The signal is bullish but I won't call it trend following just yet. I still see a long term bottom forming in the chart but at this time the miners are range bound with bullish bias at best.

In The News, Story Stocks and Earnings

Rite Aid reported before the bell and painted a mixed picture. Earnings were in line with expectations on increased revenue but comp store sales were down and full year guidance is weak. The reason is the recent purchase of EnvisionRX which is having a near negative impact on earnings. The long term expectations is for a positive impact to earnings which may explain today's price action. Shares of the stock fell nearly -5% in the pre-opening session, gapped lower at the opening bell and opened at the short term moving average. Price action from that point forward created a large doji with high volume, centered on the moving average in indication of the conflict between near term and long term outlook. Current support is the moving average consistent with a previous long term high.

Kroger also reported before the bell but it's report was more obviously positive. The grocery operator reported a beat on revenue, earnings, comp store sales and increased full year guidance. Current quarter earnings are $1.25, $0.03 ahead of expectations and more than 25% better than last year at this time. The stock jumped more than 2% in the pre-opening session and gapped up at the open only to fall from resistance during the day. The early gain was nearly wiped out but bulls stepped in and drove them back up for a close near 1.25% above yesterday.

RedHat reported after the bell. RedHat is Oracles open-source competitor and reported earnings and revenues above estimates. Guidance for the current quarter was a little weak and helped to put pressure on after hours trading. Shares of the stock lost over -2% on the news after trading higher throughout the day.

Smith&Wesson also reported after the bell and also saw share prices sink. Revenues and earnings were both better than expected, with growth expected in 2016, but current quarter guidance was weak. Shares fell more than 4% in after hours trading after setting new high during the day.

The Indices

The indices made a strong move higher in today's action, all finishing with gains near 1% or greater. Today's star was the NASDAQ Composite which set a new high although it did not make the largest move. The tech heavy index broke the 5132 level with a strong white candle and mixed indicators closing with a gain of 1.34%. MACD has only just reached the zero line and not yet crossed over while stochastic has made a bullish crossover with %D still pointing down, both suggesting bullish activity but not yet confirming it. The break out makes the index look like it wants to move higher but indicators say a retest of support is very possible. Support is near 5,040 and the short term moving average, upside target is near 5,200.

The Dow Jones Transportation also made a notable gain but remains low in its range. Today's action created a long white candle rising 1.5% from recent support levels with indicators consistent with a trend following entry. The index is now back out of correction territory and could be moving higher although technical resistance remains. Momentum is to the upside with stochastic in process of making a second and much stronger bullish crossover in confirmation of recent support. Resistance is just above today's closing prices, near the short term moving average and the bottom of the Nov/May trading range. A break above this level would be another confirmation of the trend following signal with targets between 8750 and 9250.

The Dow Jones Industrial Average was third in today's march higher, closing with a gain of 1%. The blue chips also created a long white candle after breaking above resistance and the short term moving average. Today's action is accompanied by a trend following signal that has only the all time high as resistance. MACD completed its bullish crossover today adding strength to the strong stochastic signal which began earlier this week. Current target is the all-time high with 18,750 as target should a break above resistance occur.

The S&P 500 made the smallest gain today, just under 1%. The broad market was able to form a strong white candle, like the other indices, and also move above the short term moving average. The indicators are bullish with MACD confirming the stochastic signal so a continuation of this move and test of resistance looking likely. Today's action was halted at the bottom of the previously broken up trend line, near all-time high levels, with only the all-time high above that as resistance. A break above this level would be bullish with a target between 2150 and 2200 in the near to short term.

It looks like the rally is still on but I am as cautious about getting back on board with it as I was about getting too bearish a week ago. The Fed has given the all clear, at least for the summer, and data remains in line with trends so as long as long as earnings and expectations for the end of the year remain positive I will remain bullish. In the meantime there are headwinds to be wary of including quadruple witching options expiration tomorrow and the upcoming earnings season which starts in 3 weeks. Between those two events are plenty of economic data releases.

Until then, remember the trend!

Thomas Hughes

New Option Plays

Significant Earnings Growth In Healthcare

by James Brown

Click here to email James Brown


Universal Health Services - UHS - close: 132.11 change: +0.82

Stop Loss: 128.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 697 thousand
Entry on June -- at $---.--
Listed on June 18, 2015
Time Frame: 6 to 8 weeks, exit prior to Q2 earnings
New Positions: Yes, see below

Company Description

Trade Description:
The Affordable Care Act, a.k.a. Obamacare, has been a boon for the health insurance companies. Another industry that has profited from the ACA is hospitals. Stocks like UHS and HCA are outperforming the broader market. The S&P 500 is up +3.0% year to date. UHS is up +18.7%.

According to the company's website, "Universal Health Services, Inc. (UHS) is one of the nation's largest and most respected healthcare management companies, operating through its subsidiaries, behavioral health facilities, acute care hospitals and ambulatory centers throughout the United States, the United Kingdom, Puerto Rico and the U.S. Virgin Islands. UHS was founded in 1978 by Alan B. Miller, Chairman and CEO, and today has more than 68,000 employees. UHS maintains one of the strongest balance sheets and is rated amongst the highest in the hospital services industry by Moody's and Standard & Poor's. This strong capital position has enabled the company to develop and acquire many new facilities over the past few years.

The UHS strategy is to build or purchase healthcare properties in rapidly-growing markets and create a strong franchise based on exceptional service and effective cost control. UHS owes its success to a responsive management style and to a service philosophy that is based on integrity, competence and compassion."

UHS owns and operates more than 235 acute care and behavioral health locations and surgery centers. Together they generated annual revenues of $8.0 billion in 2014.

Looking at the last couple of quarters the company's revenues have been improving. Their Q4 results were out on February 26th. Earnings were in-line with expectations at $1.51 per share. That's a +46% improvement from a year ago. Revenues were up +7.0% and above estimates at $2.26 billion.

The trend continued in the first quarter. UHS reported its Q1 results on April 27th. Earnings were up +30% to $1.78 per share. That was 21 cents better than expected. Revenues rose +10.9% to $2.38 billion, also above estimates.

In their earnings press release the company said, "The increased operating performance experienced at our acute care facilities during the first quarter of 2015, as compared to the comparable quarter in 2014, was due in part to continued improvement in general economic conditions as well as a decrease in the number of uninsured patients treated at our hospitals. The decrease in the number of uninsured patients treated at our acute care hospitals was due primarily to the favorable impact of the Affordable Care Act which includes the expansion of Medicaid in certain states in which we operate and the enrollment of patients in newly created commercial exchanges."

This trend should continue but there is a risk. The U.S. Supreme Court is currently mulling a decision on Obamacare subsidies. If they decide that the current structure of the law makes these subsidies illegal it could bring down the entire piece of legislation and that would hurt the healthcare industry. The major healthcare and hospital stocks could all drop if this were to occur.

Technically shares of UHS look very bullish with trend of higher lows and higher highs. The point & figure chart is bullish and forecasting at $147.00 target. On a short-term basis UHS is hovering just below resistance in the $132.50 area. Today's intraday high was $132.70. We are suggesting a trigger to buy calls at $132.75. Plan on exiting prior to UHS' next earnings report in very late July or early August.

Trigger @ $132.75

- Suggested Positions -

Buy the OCT $140 CALL (UHS151016C140) current ask $5.10
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:

Weekly Chart:

In Play Updates and Reviews

Bullish Breakouts For The NASDAQ & Russell 2K

by James Brown

Click here to email James Brown

Editor's Note:

U.S. stocks delivered widespread gains as investors expect the Fed to take a slow approach to raising rates. Both the NASDAQ composite and the small cap Russell 2000 indices rallied past resistance to close at new all-time highs.

DIS and MAN both hit our bullish entry triggers today.

Our CERN trade was closed at the opening bell.

Current Portfolio:

CALL Play Updates

Aetna Inc. - AET - close: 124.50 change: +0.64

Stop Loss: 119.85
Target(s): To Be Determined
Current Option Gain/Loss: +50.9%
Average Daily Volume = 2.0 million
Entry on June 15 at $118.75
Listed on June 10, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/18/15: The stock market was in rally mode today. Unfortunately AET sat this one out. Shares have already rallied big this week and AET simply drifted sideways on Thursday.

Readers may want to raise their stop loss again. No new positions at this time.

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.

- Suggested Positions -

Long OCT $125 CALL (AET151016C125) entry $4.34

06/16/15 new stop @ 119.85
06/15/15 triggered @ $118.75 thanks to M&A speculation
Option Format: symbol-year-month-day-call-strike

Tableau Software, Inc. - DATA - close: 122.54 change: +1.79

Stop Loss: 116.75
Target(s): To Be Determined
Current Option Gain/Loss: +54.5%
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

06/18/15: It was a good day for DATA bulls. Shares bounced off the $120 level this morning and rebounded to a +1.48% gain. This is a new closing high.

Tonight we'll raise the stop loss to $116.75. 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

06/18/15 new stop @ 116.75
06/10/15 new stop @ 111.75
05/28/15 triggered @ $115.25
Option Format: symbol-year-month-day-call-strike

The Walt Disney Co. - DIS - close: 113.22 change: +1.73

Stop Loss: 108.75
Target(s): To Be Determined
Current Option Gain/Loss: +12.6%
Average Daily Volume = 5.7 million
Entry on June 18 at $112.25
Listed on June 17, 2015
Time Frame: Exit PRIOR to earnings in August
New Positions: see below

06/18/15: Our brand new trade on DIS is off to a good start. Shares broke through resistance at $112.00 and raced to a new closing high. Today's +1.5% gain outperformed the major indices. Our trigger was hit at $112.25.

Trade Description: June 17, 2015:
Disney is an American icon. The company is over 90 years old. They have grown into a massive content generating giant. Today DIS runs five business segments. Their media networks include broadcast, cable, radio, publishing, and digital businesses headlined by their Disney/ABC television group and ESPN Inc. DIS' parks and resort business includes Disneyland, Disneyworld, plus theme parks in Tokyo, Paris, Hong Kong, Shanghai, and a cruise line.

The company's products division licenses the company's horde of names, characters, and intellectual property to a wide range of products. They've also jumped into the online world with their Disney Interactive division. Last but not least is the Walt Disney Studios segment. Disney started making movies 90 years ago. Today their studio business includes Disney animation, Pixar Animation, Disneynature, Disney Studios Motion Pictures, Disney music group, Touchstone Pictures, and Marvel Studios.

Their movie business has been a money maker over the years with huge hits like the Pirates of the Caribbean franchise, Tangled, Wreck-it Ralph. In 2013 they released the animated film "Frozen", which has turned into the largest grossing animated movie of all time. Pixar has a stable of successful movies that have grossed almost $9 billion. DIS is also mining gold in Marvel Entertainment's library of over 8,000 characters of comic book history. Marvel had two big hits in 2014 Captain America: Winter Soldier and Guardians of the Galaxy. Their 2015 Avengers: Age of Ultron was also a big winner at the box office grossing more than $1.3 billion worldwide. Of course not every Disney movie crushes it. Their recent Tomorrowland was a big disappointment and they could lose more than $100 million on the film.

Back in 2012 Disney purchased Lucasfilm and all the Star Wars properties from George Lucas for $4 billion. The company is busy filming the next three episodes of the Star Wars franchise. The next Star Wars film it titled "The Force Awakens." It will be episode seven in the franchise. The movie doesn't hit theaters until December 2015 but analysts are already predicting that "The Force Awakens" will generate $1.2 billion at the global box office.

DIS management loves movie franchises because they can fuel years of sequels, park rides, and merchandise. The approach seems to be working. Revenues and net income have hit all-time highs for five consecutive quarters. Their 2015 Q1 results saw earnings per share up +23% to $1.27. Their Q2 results saw earnings grow +14% to $1.23 per share. Their domestic theme parks showed a strong surge in both attendance and in customer spending. Analysts are forecasting DIS earnings to grow +17% this year.

The stock surged to new all-time highs back in early May after its Q2 earnings report. Shares have since spent the last six weeks digesting gains in a sideways consolidation that has ignored much of the broader market's volatility. More recently DIS has started to rebound and is now at the top of its trading range. A breakout here could signal the next leg higher.

The point & figure chart is bullish and forecasting at long-term target of $154.00. I personally suspect that DIS could rally toward $120-125 before its next earnings report in August. Credit Suisse recently upped their price target to $130. Tonight we are suggesting a trigger at $112.25 to buy calls.

- Suggested Positions -

Long AUG $115 CALL (DIS150821C115) entry $2.30

06/18/15 triggered @ $112.25
Option Format: symbol-year-month-day-call-strike

ManpowerGroup Inc. - MAN - close: 90.32 change: +1.56

Stop Loss: 85.70
Target(s): To Be Determined
Current Option Gain/Loss: -9.1%
Average Daily Volume = 697 thousand
Entry on June 18 at $90.25
Listed on June 16, 2015
Time Frame: Exit PRIOR to earnings in very late July
New Positions: see below

06/18/15: Today's widespread market rally pushed MAN through resistance at $90.00. The stock rallied to new multi-year highs and hit our suggested entry point at $90.25. I would consider new positions at current levels.

Trade Description: June 16, 2015:
The U.S. Q1 GDP growth estimate was a dismal -0.7%. Yet Q2 estimates have been rising the last few weeks. It looks like the U.S. will avoid a recession. The average estimate is above +2.0%. Most believe that if the Federal Reserve is going to raise rates they will only do so because they believe the economy is healthy enough and growing fast enough to endure higher rates. At the same time we are hearing improving economic data out of Europe thanks to the ECB's massive QE program. While growth in Europe is expected to be slow it is still growth and the ECB's QE program is set to last through September 2016.

One way to play improving economies in U.S. and Europe is the staffing industry. MAN is part of the services sector. According to the company, "ManpowerGroup (MAN) is the world's workforce expert, creating innovative workforce solutions for more than 65 years. As workforce experts, we connect more than 600,000 people to meaningful work across a wide range of skills and industries every day. Through our ManpowerGroup family of brands – Manpower®, Experis, Right Management and ManpowerGroup Solutions – we help more than 400,000 clients in 80 countries and territories address their critical talent needs, providing comprehensive solutions to resource, manage and develop talent."

Their most recent earnings report was April 21st. MAN announced their 2015 Q1 results were $0.83 per share. That was down -3.4% from a year ago but it was four cents better than analysts were expecting. Revenues were down -7.4% to $4.5 billion but this too was above expectations. The EPS and revenues declines were "significantly impacted" by the strong U.S. dollar. On a constant currency basis MAN's earnings were up +16% and revenues were up +7%.

Jonas Prising, ManpowerGroup CEO, said, "2015 is off to a strong start as we built on the progress we made last year delivering good results in the first quarter. It is encouraging to see the early signs of more broad based improvement in Europe, setting the stage for what we believe could be a slow but sustained labor market recovery in that region. The strong start to the year gives us confidence that we are on the right track and that our focus on permanent recruitment and our market leading solutions offerings continues to pay off. We are well placed to seize further opportunities as economic trends improve."

MAN has recently upped their semiannual dividend +63% from $0.49 to $0.80 per share. They're also making acquisitions. The company recently purchased the Australian and Singapore divisions of Greythorn, a professional services and recruiting firm. They just announced they were buying the 7S Group in Germany for 136.5 million euros.

Most of Wall Street is bullish on MAN. The last few months have seen a parade of upgraded price targets. Some of the new analyst price targets are: $89, $94, $95, $98, $99, and $103. Currently the point & figure chart is only forecasting a $94.00 target I suspect that if shares of MAN can breakout past $90.00 the stock is headed for $100.00.

Technically shares have been consolidating sideways beneath resistance near $87.00-88.00 for more than two months. The rally last week and this week looks like a bullish breakout past this level. The $87.00 region has been resistance going back to late 2013 so a breakout here could be significant. Tonight we're suggesting a trigger to buy calls at $90.25.

- Suggested Positions -

Long SEP $95 CALL (MAN150918C95) entry $2.20

06/18/15 triggered @ $90.25
Option Format: symbol-year-month-day-call-strike

Sirona Dental Systems - SIRO - close: 102.01 change: +1.31

Stop Loss: 97.85
Target(s): To Be Determined
Current Option Gain/Loss: -22.4%
Average Daily Volume = 316 thousand
Entry on June 15 at $101.05
Listed on June 11, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

06/18/15: SIRO rallied past short-term resistance near $101.40 and closed at a new high today. More conservative traders may want to move their stop loss closer to the 20-dma near $99.25.

Trade Description: June 11, 2015:
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, its 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.

*small positions to limit risk* - Suggested Positions -

Long SEP $105 CALL (SIRO150918C105) entry $2.90

06/15/15 triggered @ $101.05
Option Format: symbol-year-month-day-call-strike

Skyworks Solutions Inc. - SWKS - close: 109.98 change: +3.41

Stop Loss: 97.95
Target(s): To Be Determined
Current Option Gain/Loss: +36.7%
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

06/18/15: This morning, before the opening bell, SWKS announced they were raising their quarterly cash dividend by +100% to $0.26 per share. SWKS does not have a very big dividend yield (about 0.5%) so the news may not have done much for the stock price but it certainly doesn't hurt. Shares did outperform the market with a +3.19% gain. The $110.00 area has been resistance in the past but this is a new closing high for the stock.

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: 115.23 change: +2.27

Stop Loss: 111.85
Target(s): To Be Determined
Current Option Gain/Loss: -20.0%
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

06/18/15: ZBRA is looking a lot healthier today. Thursday's +2.0% gain has erased the prior two days worth of declines. I would be tempted to buy calls on a rally past $116.00.

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

06/16/15 new stop @ 111.85
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

Kohl's Corp. - KSS - close: 63.20 change: +0.44

Stop Loss: 64.15
Target(s): To Be Determined
Current Option Gain/Loss: -14.6%
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

06/18/15: Our KSS trade could be in trouble. Shares actually lagged behind the market today with a +0.7% gain versus the +0.99% rally in the S&P 500. However, KSS did close above its simple 10-dma and is on the verge of breaking out from its recent $62.00-63.20 trading range.

We are going to try and reduce our risk by moving the stop loss down to $64.15. 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

06/18/15 new stop @ 64.15
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

Southwest Airlines Co. - LUV - close: 33.86 change: +0.02

Stop Loss: 36.05
Target(s): To Be Determined
Current Option Gain/Loss: -9.1%
Average Daily Volume = 7.9 million
Entry on June 16 at $33.85
Listed on June 15, 2015
Time Frame: Exit prior to earnings in late July
New Positions: see below

06/18/15: This morning, before the opening bell, Barclays downgraded shares of LUV from "overweight" to "underweight". They still have a $39 price target on LUV. The analyst believes LUV could face challenges meeting its growth forecast.

Shares of LUV gapped open lower at new 2015 lows near $33.00. The weakness didn't last long. The market was in rally mode and LUV bounced back to close virtually unchanged on the session.

Considering today's big bounce I am not suggesting new positions at this time.

Trade Description: June 15, 2015:
Last year LUV was one of the best performing stocks in the S&P 500 with a +124% gain. Shares are not seeing a repeat this year. In fact the stock is down -19% year to date. Most of the major airline stocks have been suffering as investors fear overcapacity will kill profits.

LUV is in the services sector. They're part of the regional airline industry. According to the company, "In its 44th year of service, Dallas-based Southwest Airlines (LUV) continues to differentiate itself from other air carriers with exemplary Customer Service delivered by more than 46,000 Employees to more than 100 million Customers annually. Southwest operates more than 3,400 flights a day, serving 93 destinations across the United States and five additional countries."

There are plenty of bullish investors rooting for LUV. After years of belt tightening with high oil prices the airline industry finally found some discipline and profits boomed. LUV has been a great example and many consider it the "best-in-breed" among the major airliners. LUV's earnings have surged from $0.43 a share in 2011 to $1.64 per share in 2014.

The big drop in crude oil last year was a major boon for most of the airline companies. Fuel is a huge expense and while oil has bounced off its 2015 lows it is still a lot cheaper than last year's prices. So why are airline stocks getting crushed? The biggest worry is the industry will build into much capacity (over supply) and this will lead to price wars, which could slash profitability.

On May 20th airline stocks were crushed, shares of LUV included, after the American Airlines CEO said they would aggressively compete on price. This is after AAL had already warned that their margins would shrink in 2016 versus 2015. News that LUV was planning to boost capacity by +8% in 2015 also helped spark the plunge lower.

The sell-off in airline stocks has continued as more companies downgrade their outlook. United Airlines (UAL) recently reported that their capacity had outpaced traffic growth. Delta (DAL) warned that their Q2 revenues would decline. Even LUV warned that their May passenger revenue per available seat mile (PRASM) was down -6% from a year ago. They adjusted their 2015 Q2 PRASM estimate to be down -4% to -5% from a year ago.

In spite of all the negativity there are a ton of analysts who are still bullish on the group. If you do any research you'll see a lot of voices shouting that the airline stocks are a buy. You'll hear how the airlines will avoid the mistakes of the past. There are plenty of analysts suggesting the airlines are a buy because their valuations are so cheap. Even the International Air Transport Association (IATA) recently raised their 2015 global estimate on airline profits from $25 billion to 29.3 billion thanks to lower oil prices and record high load factors (near 80%).

On one hand the bullish view point on airline stocks is true. Traffic is still growing. Oil prices remain depressed compared to the last few years. Valuations do look cheap. Eventually this group will get so cheap that they will find a bottom. Unfortunately that could be another -10% to -20% from current levels.

Technically LUV is a sell. The stock produced a bearish double top with its peaks in January and March. It has sliced through multiple layers of support and broken the longer-term up trend. The $34.00 level looks like short-term support. We are suggesting a trigger to launch short-term bearish positions at $33.85. Earnings are coming up in late July and we'll likely exit before LUV reports.

- Suggested Positions -

Long SEP $33 PUT (LUV150918P33) entry $1.87

06/16/15 triggered @ $33.85
Option Format: symbol-year-month-day-call-strike

SM Energy Company - SM - close: 45.14 change: -1.12

Stop Loss: 50.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.6 million
Entry on June -- at $---.--
Listed on June 13, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

06/18/15: Many of the energy stocks underperformed today. Not only did SM fail to participate in the market's widespread rally but shares sank -2.4% to settle on support near $45.00. The intraday low was $45.10. Our suggested entry point is $44.90, which could be hit tomorrow.

Trade Description: June 13, 2015:
SM has been around a long time. They were founded back in 1908. The company was formerly known as St. Mary Land & Exploration Company but they changed their name to SM Energy Company about five years ago.

SM is in the basic materials sector. According to the company, "SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in onshore North America."

SM operates in the Rocky Mountain region including the Bakken and Three Forks formations. Further south, they drill in the Haynesville and Woodford shales of Texas and Oklahoma. SM also operates in the Permian region of Texas and New Mexico. Even further south SM drills in the South Texas area with the Eagle Ford shale formation.

Crude oil's plunge in late 2014 crushed the oil sector and shares of SM followed it lower. Yet SM appeared to be having trouble before the big drop in oil prices. The company has missed Wall Street's earnings estimates the last four quarters in a row.

The huge drop in oil sparked significant cutbacks across the oil and gas industry with most major exploration companies reducing their capital spending plans. When SM reported their Q4 earnings in February 2015 they missed the EPS number by five cents and revenues were down -6.4% from a year ago. Management also slashed their 2015 investment plans by -44% from $1.9 billion to $1.0 billion.

SM reported its 2015 Q1 numbers on May 5th. Analysts were expecting a profit of $0.29 per share on revenues of $543.1 million. SM delivered a profit of $0.21 as revenues plunged -42% to $365.9 million.

Citigroup issued a research report last month that suggested U.S. oil producers will still be able to profit with oil at depressed prices. Here's a quote from a Bloomberg article, "belt-tightening across the industry and more strategic drilling in prolific areas would deliver ample profits even at $50 crude. The improvement is driven by costs that are expected to fall by 20 to 30 percent and techniques that allow rigs to wring 30 percent more oil or natural gas from each well compared with a year ago." That definitely seems like ammunition for the bulls to be buying some of the oil producers. Yet the group continues to lag. They are facing some stiff headwinds.

Crude oil has produced a +25% bounce off its March 2015 lows. Yet the rally in oil has stalled the last few weeks with the commodity churning sideways. The recent OPEC meeting showed that the Middle East shows no signs of slowing down their production. The world is temporarily facing a small oil glut.

Meanwhile currencies could play an issue here. It is widely accepted that the long-term trend for the U.S. dollar is now higher. The Federal Reserve will eventually raise rates, either later this year or early next year. When they start raising rates it should boost the dollar. At the same time central banks around the world (like Japan and Europe) are in the middle of huge QE programs that will drive their currencies lower. Naturally this will lift the dollar even higher. A rising dollar pushes commodities lower.

Technically shares of SM have been very weak. The broke down from a bullish channel a couple of weeks ago. The stock has also sliced through some psychological support levels. The point & figure chart is currently forecasting at $40.00 target. You could argue that SM is already oversold. However, the path of least resistance is lower. Tonight we are suggesting a trigger to buy puts at $44.90 with a wide stop loss at $50.25 just in case SM does see a little oversold bounce.

Trigger @ $44.90

- Suggested Positions -

Buy the AUG $40 PUT (SM150821P40)

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

Zillow Group - Z - close: 86.98 change: -0.01

Stop Loss: 88.25
Target(s): To Be Determined
Current Option Gain/Loss: -7.7%
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

06/18/15: It was a relatively quiet day for Z. The stock traded inside a $1.50 range and failing near yesterday's high just under the $88.00 level. Shares settled virtually unchanged on the session, which is a victory for the bears considering the big market rally. Shares of Z didn't move much but our option definitely reacted to the market's rally and sadly our put option value retreated.

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

06/16/15 new stop @ 88.25
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


Cerner Corp. - CERN - close: 69.39 change: +1.58

Stop Loss: 68.15
Target(s): To Be Determined
Current Option Gain/Loss: -36.7%
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

06/18/15: We have been worried about our CERN trade the last few days. The stock has not been cooperating since the June 10th bounce near technical support at its 200-dma.

CERN shot higher today thanks to the combination of a broad-based market rally and a bullish analyst rating. The new analyst call has CERN listed as an "outperform" and given an $89 price target. The stock reacted by gapping open higher at $68.28 and racing toward overhead resistance near $70 and its 50-dma. Our stop loss was $68.15 so the gap open immediately closed our play.

- Suggested Positions -

SEP $65 PUT (CERN150918P65) entry $2.45 exit $1.55 (-36.7%)

06/18/15 stopped out on gap open at $68.28 this morning
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