Option Investor

Daily Newsletter, Thursday, 9/24/2015

Table of Contents

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

Market Wrap

Back In Correction Territory

by Thomas Hughes

Click here to email Thomas Hughes
US markets reentered correction territory ahead of Fed speak, data and earnings.


The US indices reentered correction territory today. The sell-off which began last Thursday has entered its 6th day and looks set to retest lows reached last month. Today's selling may have been sparked by the widening VW scandal, poor guidance from Caterpillar, or anticipation of Janet Yellen's speech scheduled for 5PM, but in the end part of a greater corrective cycle.

Today's action started in Asia as it always does. Markets in the region were mixed, the Nikkei fell -2.76% while the Chinese Shang Hai rose by 0.9% as traders struggle with slow/slowing growth and uncertainty over the FOMC rate hike. In Europe trading was a little more one sided. Indices started the day in positive territory, led by a rise in German Business Sentiment, but quickly fell as fear of VW contagion spread through the market. Indices in that region closed the day in the red with an average loss greater than -1.5%.

Market Statistics

Futures trading indicated a lower opening for the US market all morning. The trade indicated a loss close to -1% and firmed to -1% after the release of Durable Goods orders. Durables was weaker than expected and helped to depress trading although other data was positive. At the bell indices moved lower as expected. The SPX shed more than -0.5% in the first few minutes and extended that to greater than -1.5% at the days low. The low was hit late morning and resulted in choppy sideways trading until late afternoon. Late afternoon saw a mild rally. The indices moved up from their lows and just about reached break even levels. The last hour of trading was more choppy sideways action but left the indices near the high of the day at the close of trading.

Economic Calendar

The Economy

Janet Yellen's speech, scheduled for after the bell, is not economic data per se but yet had a huge impact on today's trading. It was by far the most heavily cited reason for today's sell-off although there were other reasons. This is the first we've heard from her since the last FOMC meeting, only a week ago, and was largely expected to be dovish, as was the FOMC statement. . . but more on that later.

Initial claims for jobless benefits came in a little higher than expected with a gain of 3,000. It hit 267,000 last week, the previous week was not revised. The four week moving average of claims fell however, shedding -750 to hit 271,750. Despite the gain claims remain near the long term low and consistent with healthy labor markets. On a not revised basis claims rose by 10.4%, slightly more than the 9.2% predicted by the seasonal factors. Not revised claims are now -8.3% below last years level and have been trending at levels below last for most of the year.

Continuing claims fell by -1,000 from an upward revision of 6,000 to come in at 2.242 million. The four week moving average is also fell, from an upward revision, shedding -6,000. This is the third month that continuing claims have been trending at this level, near the long term low and consistent with healthy labor markets. Based on this trend it looks like labor markets may be stabilizing.

The total claims number was a real surprise and one I am surprised did not get more attention today. Total claims fell by -118,826 to hit 1.988 million. This is a new low in claims going back until well before the housing bubble and 2008 crisis. On a year over year basis total claims are now -10.5% lower. This figure suggests some strength in jobs creation and hiring going into September and may indicate more good labor data is due out in next week's NFP/Unemployment report.

Durable Goods was the only negative report of the day. Durables declined on the headline by -2%, slightly better than consensus estimates. Ex-transportation orders were flat, ex-defense orders rose by 1%. This follows 2 months of gains in orders although last month was revised marginally lower. Within the report shipments remained unchanged, unfilled orders fell -0.2% and inventories remained unchanged.

Sales of New Homes surged by 5.7% in August to an annualized rate of 552,000. This is a larger than expected gain and sign of the ongoing recovery in housing. The July figures were also revised higher, leaving the August figure 21.6% above this same time last year. Inventories for new homes are down to about 4.7 months at the current rate of sales and, along with low inventories of existing homes, could lead to increase activity in the sector... as well as increased profits among the home builders. The Home Builders Sentiment Index echoes this possibility. It rose to 62 in September, the third month of gains ad the highest level in over 12 months.

Tomorrow be on the lookout for the 3rd estimate for 2nd quarter GDP. It is largely expected to hold flat or decline slightly from the last reading. So long as it is not wildly different it should be a non-event. Also on tap is Michigan Sentiment, expected to rise from the previous month. Next week is the first of October so will include the monthly labor data as well as other key pieces of macro-data.

The Oil Index

Oil prices tried to catch a bid today but remain near the bottom of the 30 day range. Price for WTI settled up more than 1.25% in today's session, followed by a 1.17% gain in Brent, due to unexpectedly large draw downs of US stockpiles. This is the 2nd week of draw down and, along with declining rig counts, another sign the supply/demand balance may be shifting. However, it is still too soon to tell and global supply/production remains high so I expect oil prices to remain under pressure until demand expectations begin to perk up.

The Oil Index was mixed in today's session. It set a new one month low, near the recent multi-year low, in early trading and then got a boost from oil prices that took it into positive territory later in the day. The index appears to be making a retest of support but has not quite reached it. Today's action is bullish, but tied to oil prices, and could easily reverse tomorrow. The indicators are mixed, stochastic is pointing lower in the near term but MACD remains bullish although it is declining and could cross the zero line at any time. The August low, near 1,025, is best target for strong support and could be tested in the near term.

The Gold Index

Gold got a big boost today, largely due to expectations of what Yellen might say later in the day. The dovish stance taken by the FOMC last week has led speculators to think she may firm that position today. This led to a weakening in the dollar and surge in gold prices that took them up more than 2%. Gold hit and surpassed the $1150 level but I suspect it knee-jerk at best; there were no changes to fundamentals this morning, and data continue to supports economic recovery.

The gold miners got a big boost from the surge in Gold Prices. The miners ETF GDX gained more than 6.5% in today's session and crossed back above the short term moving average. The indicators are bullish and pointing higher so this move could continue but they are also weak and consistent with a bull swing within the greater down trend. At best the miners are range bound with support along the all time low near $13 and resistance near $15.

OK, Yellen's speech, a speech on economic policy and inflation drivers with no Q&A, turned out to be more hawkish than last week's FOMC statement. She says that she and her colleagues are in general agreement a rate hike is still due this later this year. She says a delay in hiking rates could force the Fed to raise rates more abruptly than they have been forecasting and, believe it or not, they are still data dependent. It's starting to sound to me like there is some worry they may be waiting to long. Regardless the news helped to lift the dollar in after hours electronic trading.

In The News, Story Stocks and Earnings

Caterpillar was another reason the market was down in today's session. The international industrial behemoth lowered guidance and announced job cuts up to 5,000 workers. The company lowered revenue guidance by $1 billion as global sales come in lower than expected and growth concerns continue to weight. Shares of the stock lost more than -6% in the pre-market session, gapped lower at the open and closed at a 5 year low.

Several noteworthy earnings reports came after the close of today's session. Most notably Nike which beat on the top and bottom lines, produced 5% growth and revealed a 17% rise in future orders. This comes in the face of global slowing and despite stronger dollar impacts and sent shares of the stock up more than 5% in after hours trading.

Cintas, provider of rental uniform and safety products for businesses and employees, reported better than expected. Earnings were 3 cents ahead of expectations on an 8.8% growth in revenue that sparked execs to raise guidance for the full year. They now have full year 2016 EPS in the range of $3.79 to $3.88, a nickel ahead of the previous range but still only in line with consensus estimates. Shares of the stock held flat in after hours trading.

Bed Bath & Beyond reported in line with estimates and reaffirmed guidance. Guidance is in line with consensus estimates but a miss on comp store sales left investors in doubt. On a more positive note the board authorized a $2.5 billion share repurchase program that could help to support prices. Shares of the stock closed at a new 12 month low in today's session and drifted lower in after hours trading.

The Indices

The indices sold off today, again, driven by several factors including fear of Janet Yellen's speech and news from Caterpillar. Action was led by the Dow Jones Transportation Average which lost a little more than -1.0%. The transports have now retreat to support near 7,750 and look like this move could turn into a full blown test of support. The indicators are bearish and pointing to lower prices so a test of this level looks likely. A break below this level could take the index down to 7,500.

The Dow Jones Industrial Average made the next largest decline, just shy of -0.50%. The blue chips made a triple digit move to test 16,000 where support was found. This level produced a decent bounce but looks more like a round-number bounce more than true support. The indicators are mixed but are consistent with a retreat to support if not an outright test of it. MACD is bullish but retreating from its peak and fast approaching the zero line, stochastic has peaked and is moving lower following a bearish crossover. 16,000 could prove to be support but 15,000 or 15,750 look more likely.

The NASDAQ Composite made the third largest decline in today's session, -0.38%. The tech heavy index was able to create a white bodied candle despite the decline in prices in a sign of potential support but indicators are pointing to lower prices. MACD is about to cross the zero line in confirmation of the recent bearish crossover in stochastic consistent with the current market correction and expected retest of support. Support target is near the recent lows, near 4,350, but could be as high as 4,500. A break below this level is unlikely in my view at this time but would be bearish for the market in general and could take this index down as low as 4,100.

The S&P 500 made the smallest loss in today's session, only -0.33%, but is in much the same position as the others. Today's candle hints at support but is not confirmed by support targets or the indicators. The indicators are both consistent with a retest of the recent lows as foreshadowed by convergences with said lows. Current target is 1,900 with a possible move to the 1,880 level.

The market is selling off but not in a crazy out of control way. It looks like the indices are making a steady move down toward support targets in what could be a retest of recent lows and strong support levels. It could also be the beginnings of another leg lower but in light of economic trends and earnings expectations into next year I am leaning toward the former rather than the latter. In either event I think we may find out over the next week. Tomorrow is important in terms of data, but not as important as next week.

Something else to watch out for is the upcoming government shut down. Yes, were are facing another budget battle and potential government shut-down in just 6 days. This may be causing some fear in the market but if I remember correctly the last one, two years ago, barely fazed the market and provided a good buying opportunity.

Until then, remember the trend!

Thomas Hughes

New Option Plays

In Correction Territory

by James Brown

Click here to email James Brown


Laboratory Corp. Of America - LH - close: 115.31 change: -1.49

Stop Loss: 119.05
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.0 million
Entry on September -- at $---.--
Listed on September 24, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: Yes, see below

Company Description

Trade Description:
Investor sentiment on LH seems to have soured. The stock is up +6.8% for the year but it's down more than -10% from its early August peak. LH's 2015 gains could vanish if shares break support.

LH is in the healthcare sector. According to the company, "Laboratory Corporation of America® Holdings, an S&P 500 company, is the world's leading healthcare diagnostics company, providing comprehensive clinical laboratory services through LabCorp Diagnostics, and end-to-end drug development support through Covance-Drug Development. LabCorp is a pioneer in commercializing new diagnostic technologies and is improving people's health by delivering the combination of world-class diagnostics, drug development and knowledge services. With combined revenue pro forma for the acquisition of Covance in excess of $8.5 billion in 2014 and more than 48,000 employees in over 60 countries, LabCorp offers innovative solutions to healthcare stakeholders. LabCorp clients include physicians, patients and consumers, biopharmaceutical companies, government agencies, managed care organizations, hospitals, and clinical labs."

LH has delivered decent results over the last four quarters. The company has beaten Wall Street estimates on the bottom line four quarters in a row. They have beaten analysts' revenue estimates three out of the last four quarters. Their most recent report was July 28th. LH announced their Q2 results with revenues up +49% thanks to its Covance acquisition. Management raised their 2015 guidance above Wall Street expectations.

Unfortunately the post-earnings rally did not last very long. Shares reversed under resistance near $130 and its 2015 highs. Since then traders have been selling the rallies and LH has a bearish trend of lower highs. Today LH underperformed the broader market with a -1.27% decline. The stock is poised to breakdown under support in the $114-115 region.

The August 25th low was $114.44. Tonight I am suggesting a trigger to buy puts at $114.25. The point & figure chart is bearish and forecasting a $102.00 price target but I see potential support in the $108-110 region. Don't be surprised to see a temporary bounce in that area.

Trigger @ $114.25

- Suggested Positions -

Buy the NOV $110 PUT (LH151120P110) current ask $2.95
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

Stocks Post Third Loss In A Row

by James Brown

Click here to email James Brown

Editor's Note:

The S&P 500 posted its third loss in a row and its fifth loss in six sessions. The U.S. market plunged this morning but equities managed a rebound this afternoon, significantly trimming their losses.

AVGO, NBL, and SWKS were stopped out on the market's morning plunge.

CMP and DECK both hit our bearish entry points.

Current Portfolio:

CALL Play Updates

The Walt Disney Co. - DIS - close: 100.62 change: -0.95

Stop Loss: $98.85
Target(s): To Be Determined
Current Option Gain/Loss: -73.0%
Average Daily Volume = 8.5 million
Entry on August 27 at $101.35
Listed on August 24, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

09/24/15: DIS posted its third loss in a row. The market's widespread decline today pushed DIS below round-number support at $100.00. The stock bounced at $99.24 and pared its loss to -0.9%.

No new positions at this time.

Trade Description: August 24, 2015:
We are bringing DIS back. The sell-off from its August high has been extreme. At its low today near $90.00 DIS was down -26% from its high. The retreat offers a lot of opportunity. Jump to the bottom of this play update for our entry point strategy.

Disney reported earnings on August 4th and beat the street with earnings of $1.45 compared to estimates for $1.42. The very next day shares fell -$11.00 to $110. The sell-off in DIS stock has continued thanks to a global market meltdown.

We think this pullback in the stock is way overdone. Disney posted $13.1 billion in revenue compared to estimates for $13.2 billion. That minor miss was not the reason for the huge decline in the stock. Disney said revenues in its cable products rose +5% BUT they had seen some pressure from online streaming. Subscription growth to the ESPN cable bundle had slowed, not declined, just slowed.

There are multiple reasons. There are no major sporting events this summer like the World Cup, Olympics, etc. Some consumers are cutting the cord to cable because they are now getting their TV programming from Netflix, Hulu, etc. Cable is expensive compared to the streaming options. The drop off in ESPN growth is not related specifically to Disney. CEO Bob Iger said subscriptions would pick back up in 2016 and expand sharply in 2017 thanks to a flood of sporting events due to come online next year.

Disney has already purchased the rights to nearly every sporting event available in the next five years but the old contracts with the prior rights holders have yet to expire. As those contracts expire and the new Disney contracts begin the content on ESPN will surge.

This slowdown in ESPN growth should be ignored. This is just a small part of the Disney empire and everything else is growing like crazy. Parks and resorts revenue rose +4%. Consumer products revenue rose +6% thanks to Frozen, Avengers and Star Wars merchandise. The only weak spot was interactive gaming, which declined -$58 million to $208 million. Disney expects that to rebound in Q4 as new games are released and holiday shopping begins.

The real key here is the theme parks, cruises and most of all the movie franchises. They have five Star Wars movies in the pipeline and the one opening this December is expected to gross $2.2 billion and provide Disney with more than $1 billion in profits. This is just one of the blockbusters they have scheduled.

Analysts are claiming Disney shares could add 25% before the end of December because of their strong movie schedule and coming attractions. The Avengers movie in April was a hit and added greatly to their Q2 earnings. However, that will just be a drop in the bucket compared to the money they are going to make on the Star Wars reboot in December. That is the first of five Star Wars movies on the calendar. Remember, Disney now has Marvel, Pixar and Star Wars (Lucasfilm) all under the same roof.

Disney Movie Schedule (partial)

Dec. 18, 2015 - "Star Wars: Episode VII - The Force Awakens"
2016 - "The Incredibles 2"
2016 - "Frozen" sequel
April 29, 2016 - "Captain America: Civil War"
June 17, 2016 - "Finding Dory"
Dec. 16, 2016 - "Star Wars Anthology: Rogue One"
May 26, 2017 - "Star Wars: Episode VIII"
June 16, 2017 - "Toy Story 4"
Late 2017 - "Thor: Ragnarok"
May 4, 2018 - "Avengers: Infinity War - Part I"
2018 - "Untitled Star Wars Anthology Project"
May 3, 2019 - "Avengers: Infinity War - Part II"
2019 - "Star Wars: Episode IX"

The four-week drop in DIS' stock has sent shares back to their 2015 lows. During the panic this morning investors bought the dip at round-number support near $90.00 (FYI: the February 2015 low was $90.06). When the market bounced DIS rallied more than +10% only to stall at round-number resistance at $100.00. DIS closed right in the middle of this $90-100 trading range today.

We want to be ready no matter what direction DIS moves. That's why we are listing two different entry point strategies.

Our first plan is to buy calls on a dip at $91.00 should DIS dip toward today's low. The second entry trigger is to buy calls on a breakout at $101.00 since the $100 level was resistance.

We are not listing a stop loss tonight. The market volatility has been extreme. The intraday moves in the market are a little ridiculous and nearly impossible to trade around if you're not glued to your screen and day trading. You can manage your risk by limiting your position size. We'll add a stop loss once the dust settles, likely in a couple of days.

- Suggested Positions -

Long OCT $105 CALL (DIS151016C105) entry $2.52

09/19/15 new stop loss @ 98.85
09/12/15 a breakout past resistance near $105 could be a new bullish entry point.
09/09/15 caution - DIS produced a bearish engulfing candlestick reversal pattern
08/27/15 triggered on gap open at $101.35, suggested entry was $101.00
Option Format: symbol-year-month-day-call-strike

Electronic Arts - EA - close: 68.81 change: -0.65

Stop Loss: $67.35
Target(s): To Be Determined
Current Option Gain/Loss: -30.8%
Average Daily Volume = 3.1 million
Entry on September 17 at $70.75
Listed on September 16, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

09/24/15: We had a close call with EA today. The stock traded below short-term support at $68.00 and its 20-dma before bouncing. The low was $67.67. Our stop is at $67.35. Shares settled with a -0.9% decline, which underperformed the S&P 500's -0.3% decline.

No new positions at this time.

Trade Description: September 16, 2015:
Believe it or not but consumers spent more money on video games than movies. One of the biggest video game makers out there is EA.

They are considered part of the technology sector. According to the company, "Electronic Arts (EA) is a global leader in digital interactive entertainment. The Company delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. EA has more than 300 million registered players around the world. In fiscal year 2015, EA posted GAAP net revenue of $4.5 billion. Headquartered in Redwood City, California, EA is recognized for a portfolio of critically acclaimed, high-quality blockbuster brands such as The Sims®, Madden NFL, EA SPORTS® FIFA, Battlefield®, Dragon Age® and Plants vs. Zombies®."

Earnings have managed to beat Wall Street estimates even as revenues declined in the last couple of quarters. EA reported its 2015 Q4 results on May 5th. Results of $0.39 a share beat estimates by 13 cents. Revenues were down -2% to $896 million but that beat expectations by a wide margin. Management announced a new $1 billion stock buy back program that will last between now and May 2017.

With the May Q4 report the company lowered its Q1 guidance. Three months later EA beat this lowered forecast. Earnings were $0.15 a share. That was 13 cents better than expected. Revenues fell -10% to $693 million but still ahead of analysts' expectations. The company lowered its Q2 guidance but raised its full year 2016 estimates.

Bigger picture EA has a lot of new products coming out in the next few months that should drive sales. One of them is a Star Wars game timed to hit the shelves ahead of the movie debut in December.

Technically the long-term trend is higher. Shares did suffer a painful $16 drop from its August high to August low but has already recovered half of it. Wall Street is bullish with new price target upgrades in the $82-85 region. The point & figure chart is bullish and forecasting at $82 target.

Today EA sits just below resistance at its simple 50-dma (near $70.50). We are suggesting a trigger to buy calls at $70.75.

- Suggested Positions -

Long DEC $75 CALL (EA151218C75) entry $3.15

09/19/15 new stop @ 67.35
09/17/15 triggered @ $70.75
Option Format: symbol-year-month-day-call-strike

Facebook, Inc. - FB - close: 94.41 change: +0.44

Stop Loss: $90.65
Target(s): To Be Determined
Current Option Gain/Loss: +433.3%
Average Daily Volume = 27.3 million
Entry on August 24 at $77.03
Listed on August 20, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

09/24/15: FB traded below its 50-dma again but traders bought the dip near $92.00. The stock rebounded back to a +0.46% gain on the session.

More conservative investors might want to raise their stop loss. No new positions at this time.

Trade Description:
Facebook needs no introduction. It is the largest social media platform on the planet. As of June 30th, 2015 the company reported 1.49 billion monthly active users and 968 million daily active users. If FB were a country that makes them the most populous country on the planet. China has 1.35 billion while India has 1.25 billion people.

Earlier this year (March) the company announced a new mobile payment service through FB's messenger app. The new service will compete with similar programs through PayPal, Apple Pay, and Google Wallet.

Meanwhile business at FB is great. According to IBD, FB's Q4 earnings, announced in January, were up +69% from a year ago. Revenues were up +49%. The company released their Q1 results on April 22nd. Earnings were up +20% to $0.42 per share, which beat estimates. Revenues were up +41.6% to $3.54 billion in the first quarter.

FB's Q2 results, announced July 29th, were also better than expected. Earnings were $0.50 per share, which was three cents above estimates. Revenues surged +39% to $4.04 billion, above expectations. Daily active users were up +17%. Mobile daily active users were up +29%. Monthly actives were up +13%. Wall Street expects income to surge next year with +12% profit growth in 2015 but +32% profit growth in 2016.

FB continues to see growth among its niche properties. The company bought Instagram for $1 billion in 2012. Last late year Instagram surpassed Twitter with more than 300 million active users. FB is also a dominant player in the messenger industry with more than 600 million users on WhatsApp and 145 million users on Facebook Messenger.

FB has not yet started to truly monetize its WhatsApp and Messenger properties. It's just now starting to include ads in Instagram. Eventually, with audiences this big, FB will be able to generate a lot of cash through additional advertising. On the subject of Instagram advertising, FB just released the advertising API for the photo-sharing service in August 2015. The API or application programming interface will allow third-party marketers to plug into the system to buy advertising. Instagram could soon rival Google and Twitter for the online ad market. According to EMarketer, Instagram will surpass Google and Twitter for U.S. mobile display ad revenue by 2017.

Since we are talking about advertising, this year has seen FB jump into the video ad market with both feet and it's off to a strong start. FB claims that it's already up to four billion video views a day. They had 315 billion video views in Q1 2015. That's pretty significant. YouTube had 756 billion video views in Q1 but YouTube has been around for ten years (FYI: YouTube is owned by Google). FB has only recently focused on video.

Wall Street is growing more optimistic as FB develops its blooming video ad business, its Instagram business, and messaging properties. In the last several weeks the stock has seen a number of price target upgrades. Bank of America upped their FB price target from $95 to $105. Cantor Fitzergerald upped theirs to $100. Brean Capital raised theirs to $108. Piper Jaffray upgraded their FB target to $120.

After surging to new highs in mid July shares of FB had been consolidating sideways in the $92-99 zone. The stock broke down through the bottom of that trading range today with a -4.98% plunge toward technical support at the simple 50-dma. The broader market looks very vulnerable right now with the S&P 500, the NASDAQ composite, and the small cap Russell 2000 all piercing key support levels with today's sell-off. If this market weakness continues we want to take advantage of it.

Stocks tend to overreact to big market moves, especially to the downside. FB is no exception. When traders panic they sell everything. We want to be ready to buy FB when it nears support. Prior resistance near $85-86 should be new support. Tonight we are suggesting a buy-the-dip trigger to buy FB calls at $85.50. If triggered we'll start with a stop at $81.40, just below the simple 200-dma.

- Suggested Positions -

Long OCT $90 CALL (FB151016C90) entry $1.05

09/22/15 Instagram announces they hit 400 million users
09/19/15 new stop @ 90.65
09/16/15 More conservative traders will want to consider taking some money off the table before the Fed decision tomorrow afternoon
09/05/15 FB recently announced their WhatsApp service has hit 900 million people
08/27/15 Zuckerberg announced that FB hit a new milestone - one billion people used FB in a single day.
08/24/15 Strategy Update = remove the stop loss. Expect more volatility
08/24/15 Trade opens. FB gapped down at $77.03.
08/22/15 Adjusted entry point. FB missed our buy-the-dip trigger at $85.50 by a few cents on Friday. We want to buy calls at the opening bell on Monday morning, August 24th.
Option Format: symbol-year-month-day-call-strike

Post Holdings, Inc. - POST - close: 68.25 change: +0.36

Stop Loss: 64.65
Target(s): To Be Determined
Current Option Gain/Loss: -28.0%
Average Daily Volume = 1.0 million
Entry on September 03 at $66.55
Listed on August 29, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

09/24/15: Traders bought the dip in POST at $67.13 and shares bounced to a +0.5% gain on the session, outperforming the major indices. The trend of higher lows is bullish but I would not launch new positions at this time.

Trade Description: August 29, 2015:
Shares of ready-to-eat cereal maker POST have shown surprising strength this month and the last few days during the market turmoil. POST is also poised to be one of the better performing stocks this year with a +57% gain year to date.

POST is in the consumer goods sector. According to the company, "Post Holdings, Inc., headquartered in St. Louis, Missouri, is a consumer packaged goods holding company operating in the center-of-the-store, private label, refrigerated and active nutrition food categories. Through its Post Consumer Brands business, Post is a leader in the ready-to-eat cereal category and offers a broad portfolio that includes recognized brands such as Honey Bunches of Oats(R), Pebbles(TM), Great Grains(R), Grape-Nuts(R), Honeycomb(R), Frosted Mini Spooners(R), Golden Puffs(R), Cinnamon Toasters(R), Fruity Dyno-Bites(R), Cocoa Dyno-Bites(R), Berry Colossal Crunch(R) and Malt-O-Meal(R) hot wheat cereal.

Post's Michael Foods Group supplies value-added egg products, refrigerated potato products, cheese and other dairy case products and dry pasta products to the foodservice, food ingredient and private label retail channels and markets retail brands including All Whites(R), Better'n Eggs(R), Simply Potatoes(R) and Crystal Farms(R). Post's active nutrition platform aids consumers in adopting healthier lifestyles through brands such as PowerBar(R), Premier Protein(R) and Dymatize(R). Post's Private Brands Group manufactures private label peanut butter and other nut butters, dried fruits, baking and snacking nuts, cereal and granola."

The earnings picture has improved significantly. Back in February 2015 POST reported its Q1 results that missed estimates by a wide margin. Yet the last couple of quarters the company has seen earnings and revenues soar. Their Q2 report said revenues were up +140%. Their Q3 results, announced on August 6th, reported revenue growth of +91%. Earnings were $0.27 per share, which was $0.20 better than expected. Management raised their full year guidance from $585-610 million up to $635-650 million. A lot of POST's revenue growth has been due to its aggressive acquisition strategy but Wall Street doesn't seem to care.

As a matter of fact, Wall Street has ignored POST's warnings about its egg supply. The company uses a lot of eggs and the U.S. egg-production industry has been hammered by an outbreak of Avian Influenza (AI). The last significant outbreak of AI was back in the early 1980s. According to CNN the current outbreak has been causing havoc since December 2014 and 35 million egg-laying hens have been killed. The price of eggs surged this summer but looks like it may have peaked.

Back in May this year POST warned that the outbreak had infected a significant portion of their company-owned flocks and 35% of their egg commitments could be impacted. Fortunately, a few weeks later they said the damage may be down to just 25% of their egg supply but they still expected a $20 million hit to earnings. The market doesn't seem to care.

Instead POST seems to be getting a boost from the crop outlook for the rest of 2015. The USDA raised their estimates for crop productions. The harvest this year could see record soybean numbers. Corn could produce the third largest crop on record. This is pushing commodity prices lower, which is a bullish tailwind for cereal makers like POST.

Shares of POST have been very strong this month. The market's reaction to their Q3 results produced a bullish breakout in POST with a rally past resistance near $55.00 and a surge to all-time highs. When the market crashed late last week and this past Monday, shares of POST did see a decline but it was minor compared to the rest of the market. POST didn't even dip to support at $60.00.

Today POST is surging. Shares are poised to breakout past their mid-August high. If that happens POST could see more short covering. The most recent data listed short interest at 19% of the 54.2 million share float. The point & figure chart is bullish and forecasting at $78.00 target. Tonight we are suggesting a trigger to open bullish positions at $66.55.

- Suggested Positions -

Long OCT $70 CALL (POST151016C70) entry $2.43

09/10/15 new stop at $62.40
More conservative traders may want to exit early tomorrow morning
09/03/15 triggered @ $66.55
Option Format: symbol-year-month-day-call-strike

Constellation Brands Inc. - STZ - close: 127.12 change: -0.93

Stop Loss: $124.95
Target(s): To Be Determined
Current Option Gain/Loss: -73.2%
Average Daily Volume = 1.1 million
Entry on September 16 at $130.55
Listed on September 3, 2015
Time Frame: Exit PRIOR to Earnings on October 7th
New Positions: see below

09/24/15: STZ declined toward Tuesday's lows before bouncing. Shares managed to trim their loss to -0.7%. More conservative traders might want to move their stop loss closer to $126.00. Currently our stop is at $124.95.

No new positions at this time.

Trade Description: September 3, 2015:
Major beer brands have suffered from the boom in craft beers. Yet STZ's Corona and Modelo have seen significant growth, especially in the U.S. The company's earnings and revenue growth has fueled a rally in the stock that has outpaced the major marker indices.

STZ is in the consumer goods sector. According to the company, "Constellation Brands (NYSE:STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. In 2014, Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Constellation is the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world`s leader in premium wine, selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company`s premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.

Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand-building, our trade partners, the environment, our investors and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Founded in 1945, Constellation has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio, sales in approximately 100 countries, about 40 facilities and approximately 7,200 talented employees."

This past January STZ reported their fiscal year 2015 Q3 results that beat analysts' estimates on both the top and bottom line. Management raised their 2015 guidance. Their Q4 results were announced on April 9th. Earnings were up +37% from a year ago to $1.03 per share. That was 9 cents above estimates. Revenues were up +5% to $1.35 billion. Gross margins improved to 44%.

STZ said they're seeing strong demand for their Mexican beer brands Corona and Modelo. They're gaining market share in both the spirits and wine categories as well.

The company said 2015 sales were up +24% from the prior year to $6.03 billion. STZ's management guided in-line for fiscal 2016 and forecast earnings of $4.70 to $4.90 per share. That compares to 2015's profit of $4.17 per share (essentially +12% to +17.5% earnings growth).

STZ's most recent earnings report was July 1st. Wall Street was expecting a profit of $1.24 per share on revenues of $1.62 billion. STZ narrowly beat expectations with a profit f $1.26 per share. Revenues were up +7% to $1.63 billion. Management then raised their full-year 2016 earnings guidance from $4.70-4.90 to $4.80-5.00 a share.

The stock did not get much of a reaction from its earnings news or improved guidance. There was a brief spike higher but it didn't last. STZ spent almost the entire month of July consolidating sideways.

The technical picture changed in August. STZ began to rally and displayed impressive strength with a climb from its July 27th low near $115 to $130 by August 18th. Then STZ gave it all back in about three days as the U.S. market tanked. The sharp correction lower saw STZ plunge back toward support in the $114-115 area. What is shocking is how fast STZ has recovered. Buyers just poured into this stock and now STZ is testing its all-time highs near $130 again.

While the three-day crash is a bit terrifying the relative strength in STZ's rebound is impressive. I would consider this an aggressive, higher-risk trade due to STZ's volatility. Tonight we are suggesting a trigger to buy calls at $130.55. We'll exit prior to the October option expiration.

- Suggested Positions -

Long OCT $135 CALL (STZ151016C135) entry $2.05

09/19/15 new stop @ 124.95
09/16/15 triggered @ $130.55
Option Format: symbol-year-month-day-call-strike

The TJX Companies - TJX - close: 71.23 change: +0.07

Stop Loss: $69.85
Target(s): To Be Determined
Current Option Gain/Loss: -32.8%
Average Daily Volume = 3.0 million
Entry on September 03 at $72.05
Listed on August 26, 2015
Time Frame: 8 to 12 weeks
New Positions: see below

09/24/15: TJX briefly traded below its simple 50-dma this morning. The stock quickly started to bounce and rallied back to virtually unchanged by the closing bell.

No new positions at this time.

Trade Description: August 26, 2015
Believe it or not but there are only 120 days until Christmas 2015. Most of us are just adjusting to school starting again but retailers are already planning for the 2015 holiday shopping season. Historically the time to buy retailers has been early fall (i.e. right now) and then sell on Black Friday (day after Thanksgiving). TJX could be a great way to play that seasonal trend.

TJX is in the services sector. According to the company, "The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. As of May 2, 2015, the end of the Company's first quarter, the Company operated a total of 3,441 stores in seven countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, and Austria, and three e-commerce sites. These include 1,126 T.J. Maxx, 987 Marshalls, 498 HomeGoods and 6 Sierra Trading Post stores, as well as tjmaxx.com and sierratradingpost.com in the United States; 239 Winners, 97 HomeSense, and 39 Marshalls stores in Canada; and 416 T.K. Maxx and 33 HomeSense stores, as well as tkmaxx.com, in Europe."

Just a couple of days before the market collapsed TJX reported its Q2 2016 earnings results (on August 18th). Wall Street was looking for a profit of $0.76 per share on revenues of $7.25 billion. TJX beat both estimates with a profit of $0.80 per share and revenues of $7.36 billion. Earnings were up +7% from a year ago and revenues were up +6.5%. Gross margins improved. Comparable-store sales improved from +3% a year ago to +6%. TJX said their customer traffic improved for the fifth quarter in a row.

Most retailers have not been doing so hot this year so TJX management was naturally optimistic given their strong results. Carol Meyrowitz, Chairman and Chief Executive Officer of The TJX Companies, Inc., commented on her company's quarter,

"We are extremely pleased that our momentum continued in the second quarter. Our 6% consolidated comparable store sales growth and 7% adjusted EPS growth significantly exceeded our expectations. It was great to see that comp sales were entirely driven by customer traffic - our fifth consecutive quarter of sequential traffic improvement - and that we had strong sales across all of our divisions. Our flexible model and ability to offer an eclectic, exciting merchandise mix at outstanding values continues to resonate with consumers in all of our geographies. We were also very pleased with our solid merchandise margins. We are proud of our strong comp sales, traffic increases and merchandise margins, all of which are core to a successful retail business. We enter the back half of the year in an excellent position to keep our momentum going and have many exciting initiatives planned. I am convinced that our gift-giving selections will be better than ever this year, and that our fall and holiday marketing campaigns will keep attracting more shoppers to our stores. Above all, we will be offering consumers amazing values every day! The third quarter is off to a solid start and we are raising our full year comp sales and earnings per share guidance. Today, we are a nearly $30 billion retailer with a clear vision for growth, a differentiated apparel and home fashions business, and world-class organization. Looking ahead, we are confident that we will achieve, and hope to surpass, our plans as we continue to bring value around the world and grow TJX to a $40 billion-plus company!"
TJX management did lower their Q3 guidance but they raised their full year 2016 EPS forecast. They also raised their 2016 comparable store sales estimate from +2-3% to +3-4%. It was the second quarter in a row that management raised their guidance.

The stock market's recent sell-off produced a correction in shares of TJX, which fell from its August high of $76.78 down to an intraday low of $67.25 on Monday morning. That is a -12.4% correction. Shares just happened to bounce near technical support at the simple 200-dma and its late July lows near $67.00. In spite of the sharp retreat the point & figure chart is still bullish and still forecasting at long-term $98.00 target.

Tonight we are suggesting a trigger to buy calls at $72.05. This is a relatively longer-term trade and hope to hold this position for several weeks.

- Suggested Positions -

Long 2016 Jan $75 CALL (TJX160115C75) entry $2.90

09/19/15 new stop @ 69.85
09/03/15 triggered @ $72.05
Option Format: symbol-year-month-day-call-strike

PUT Play Updates

Aon plc - AON - close: 88.95 change: -0.14

Stop Loss: 92.25
Target(s): To Be Determined
Current Option Gain/Loss: - 3.0%
Average Daily Volume = 1.2 million
Entry on September 23 at $88.65
Listed on September 22, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

09/24/15: AON traded down to new relative lows this morning. The market's big afternoon bounce brought it back to nearly unchanged on the session. The $89-90 area should be overhead resistance. Wait for this bounce to roll over and then launch new positions.

Trade Description: September 22, 2015:
A slowing global economy and negative currency winds have created a tougher environment for AON. Financial stocks in general have underperformed the broader market (-8%) and AON looks like it could play catch up with the group.

AON is in the insurance business. According to the company, "Aon plc is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise."

Management has managed to beat Wall Street's bottom line earnings estimate the last few quarters. However, they have been missing analysts' revenue estimates. Revenues have been falling faster than expected. Their Q4 results saw revenues drop to +3% growth. By Q1 revenues were down -3.4%. Their Q2 results, announced on July 31st, saw revenues decline -3.9%. As a global company the impact of negative currency headwinds does account for a lot of this revenue trouble. While some traders may want to write this off the situation could get worse as the U.S. dollar should rally when the Fed starts to raise rates.

Technically shares of AON look broken. The stock collapsed during the market's correction in late August. The oversold bounce failed pretty quickly. Now three weeks later the stock is starting to breakdown from this short-term consolidation pattern. The point & figure chart is already bearish and forecasting at $75.00 target. We are suggesting a trigger to buy puts at $88.65.

- Suggested Positions -

Long 2016 JAN $85 PUT (AON160115P85) entry $3.30

09/23/15 triggered @ $88.65
Option Format: symbol-year-month-day-call-strike

Caterpillar Inc. - CAT - close: 65.80 change: -4.40

Stop Loss: 76.10
Target(s): To Be Determined
Current Option Gain/Loss: +92.3%
Average Daily Volume = 5.8 million
Entry on September 22 at $71.12
Listed on September 21, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

09/24/15: CAT was a major story on Wall Street today. This morning before the bell CAT slashed its 2015 forecast. The company also said they could cut as many as 10,000 jobs by 2018.

The global economic slowdown has crushed the mining and energy sector, two areas that have a big impact on CAT. Major mining and energy companies have been slashing their capex budgets and that's impacting CAT's bottom line.

The company expects 2015 revenues to fall from $49 billion to $48 billion. This will be their third year in a row of falling sales, something that has never happened in their company's history. CAT is also forecasting 2016 revenues to be -5% less than 2015 (about $45-46 billion).

Their new 2015 forecast represents a 27% drop in revenues and a 50% drop in profits from 2012.

Shares of CAT gapped down at $66.20 and spiked to $64.65 (-8% at its low). The stock settled with a -6.26% decline.

No new positions at this time.

Trade Description: September 21, 2015:
The recent relative weakness in CAT has awarded the stock a spot in our bearish plays section.

The bear market in shares of CAT continues. Most of the big industrial names are down about -10% year to date. CAT is down -21% in 2015 and off about -35% from its 2014 highs. The company has seen business hurt by a multitude of factors.

If you're not familiar with CAT, a component of the Dow Jones Industrial Average, they are in the industrial goods sector. According to the company, "For 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2014 sales and revenues of $55.184 billion, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment."

The earnings outlook has been somewhat volatile for CAT. On January 27, 2015, the stock collapsed to new 52-week lows after the company missed earnings estimates and guided lower for 2015. Three months later on April 23rd the company beat estimates on both the top and bottom line and management raised their 2015 guidance. Jump ahead three more months and on July 23rd CAT reported earnings that were in-line with expectations but revenues fell -13% to $12.3 billion. This was below analysts' revenue estimates. CAT's management lowered their 2015 guidance below Wall Street expectations. Naturally the stock plunged on this bearish outlook.

The company has been hurt by the crash in commodity prices. Low prices for coal, iron ore, and oil discourage production and thus the need for more equipment manufacturers like CAT and rival Joy Global. A few weeks ago CAT reported that worldwide sales were down -11% in July. That was actually an improvement from the -14% drop in June. Asia was hardest hit thanks to weakness in China. Joy Global just lowered their 2015 outlook a few days ago as they look ahead through the rest of 2015. CAT also expect a tough second half.

This morning, September 21st, CAT updated their worldwide sales numbers for August. Global sales fell -11% again. This followed a -11% drop in July. The Asia-Pacific region worsened from -25% to -29%. Latin America improved from -37% to -33%. North America was still at -5%. CAT also noted that oil and gas-related equipment sales were down -20%, and transportation was down -38%. These are pretty ugly numbers.

CAT is a global business. Currency translations are taking a big bite out of sales. Weakness in the euro, the Japanese yen, and the Brazilian real are all adding pressure. When the U.S. Federal Reserve eventually raises rates that should boost the dollar and only make the currency issue worse.

CAT's management has been trying to support their stock price with an accelerated stock buyback program of $1.5 billion. It doesn't seem to be working. Investors are selling every rally and CAT is in a clear down trend of lower highs and lower lows.

The most recent oversold bounce from short-term support at $72.00 failed near resistance at $76.00. Now CAT is about to breakdown under $72.00. Friday's intraday low was $71.61. Tonight we are suggesting a trigger to buy puts at $71.40.

- Suggested Positions -

Long NOV $70 PUT (CAT151120P70) entry $3.25

09/24/15 CAT warned. The company lowered its 2015 and 2016 forecast and announced thousands in job cuts.
09/22/15 triggered on gap down at $71.12, trigger was $71.40
Option Format: symbol-year-month-day-call-strike

Compass Minerals Intl. - CMP - close: 78.93 change: -0.15

Stop Loss: 83.25
Target(s): To Be Determined
Current Option Gain/Loss: -23.4%
Average Daily Volume = 269 thousand
Entry on September 24 at $78.70
Listed on September 23, 2015
Time Frame: Exit PRIOR to earnings in late October
New Positions: see below

09/24/15: Our new bearish play on CMP is open. The market's big drop this morning pushed CMP to new two-year lows. The stock hit our suggested entry point at $78.70. Unfortunately the market delivered a very widespread bounce and CMP closed almost unchanged on the day. Wait for this bounce to fail. A decline below $78.50 could be used as a new entry point.

Trade Description: September 23, 2015:
Continued weakness in commodities is really started to weigh down the basic material stocks. CMP could be on the verge of a big breakdown.

CMP is in the basic materials sector. According to the company, "Compass Minerals is a leading provider of essential minerals that provide solutions to nature's challenges, including salt for winter roadway safety and other consumer, industrial and agricultural uses, and specialty plant nutrition minerals that improve the quality and yield of crops. The company produces its minerals at locations throughout the U.S. and Canada and in the U.K."

Looking at CMP's last few earnings reports their results have been mixed. They tend to beat Wall Street's estimate on the bottom line but revenues have been up and down. The most recent report (Q2) came out on July 27th. Revenues were down -1.6% from a year ago but that actually beat expectations. CMP's management has reaffirmed their full year guidance two quarters in a row but that hasn't stopped multiple analyst firms from downgrading their outlook for the stock.

Technically CMP has been churning sideways in the $79.00-86.00 trading range for about three months. A breakdown through the bottom of this range would also generate a new sell signal on the point & figure chart.

Tonight we are suggesting a trigger to buy puts at $78.70. Plan on exiting prior to CMP's earnings report in late October.

- Suggested Positions -

Long DEC $75 PUT (CMP151218P75) entry $3.20

09/24/15 triggered @ $78.70
Option Format: symbol-year-month-day-call-strike

Deckers Outdoor Corp. - DECK - close: 58.76 change: -0.19

Stop Loss: 62.65
Target(s): To Be Determined
Current Option Gain/Loss: -21.1%
Average Daily Volume = 775 thousand
Entry on September 24 at $58.28
Listed on September 23, 2015
Time Frame: Exit PRIOR to earnings
New Positions: see below

09/24/15: DECK, another new trade, is now open. The plan was to buy puts on a drop at $58.65 but shares gapped open lower this morning. Our play began at $58.28 on the open. Like most of the market DECK pared its losses by the closing bell. After looking at the intraday chart I am suggesting a new decline under $58.40 before initiating new positions.

Trade Description: September 23, 2015:
Slowing sales and rising expenses is a dangerous recipe. Investors seem to have lost confidence in DECK with the stock down -35% year to date.

DECK is in the consumer goods sector. According to the company, "Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Teva®, Sanuk®, Ahnu®, and HOKA ONE ONE®. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 143 Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally."

The stock was crushed in January 2015 with a plunge from $94 to $66. A big chunk of that decline was a reaction to their earnings (January 29th). DECK missed estimates on both the top and bottom line and lowered guidance.

Since then DECK has seen some improvement in earnings but their most recent report was still disappointing. DECK reported its 2016 Q1 results on July 30th. Wall Street was expecting a loss of ($1.50) per share on revenues of $213 million. DECK delivered a loss of ($1.43) a share. That beat estimates but it was still worse than the ($1.07) loss a year ago. Revenues were up +4.5% to $221 million. Unfortunately DECK said their expenses were up while margins contracted.

DECK management also offered soft Q2 guidance while bumping their full-year 2016 earnings estimates. Investors chose to sell. Their Q1 results saw Teva brand sales up +6.8% but Sanuk brand sales fell -7.0% while Ugg brand sales dropped -7.2%. The Ugg number is important since Ugg sales account for more than 50% of DECK's revenues.

It looks like the bears might be right about this one but I have to warn you this is starting to look like a crowded trade. The most recent data listed short interest at 20% of the 32.1 million share float. This raises the risk of a short squeeze. Consider small positions to limit risk.

Technically DECK is in a bear market. The trend of lower highs is pushing it lower. Today DECK just broke down below key support at the $60.00 level. The next support area could be the $50 region. Today's low was $58.77. I am suggesting a trigger to open bearish positions at $58.65.

- Suggested Positions -

Long NOV $55 PUT (DECK151120P55) entry $2.85

09/24/15 Trade begins on gap down at $58.28, trigger was $58.65
Option Format: symbol-year-month-day-call-strike

International Flavors & Fragrances Inc. - IFF - close: 104.80 chg: +0.09

Stop Loss: 108.25
Target(s): To Be Determined
Current Option Gain/Loss: -21.4%
Average Daily Volume = 470 thousand
Entry on September 23 at $104.45
Listed on September 19, 2015
Time Frame: Exit PRIOR to earnings in early November
New Positions: see below

09/24/15: IFF fell to new lows this morning but the market's big intraday rebound lifted shares back into positive territory. The stock closed virtually unchanged on the day.

This reversal into positive territory could be a warning signal for the bears. No new positions at this time.

Trade Description: September 19, 2015:
Currencies moves and a slowing global economy appear to be souring IFF's performance.

IFF is considered part of the basic materials sector. According to the company, "International Flavors & Fragrances Inc. (IFF) is a leading global creator of flavors and fragrances used in a wide variety of consumer products. Consumers experience these unique scents and tastes in fine fragrances and beauty care, detergents and household goods, as well as beverages, sweet goods and food products. The Company leverages its competitive advantages of consumer insight, research and development, creative expertise, and customer intimacy to provide customers with innovative and differentiated product offerings. A member of the S&P 500 Index, IFF has more than 6,200 employees working in 32 countries worldwide."

Bulls could argue that emerging markets offer a lot of opportunity as the growing population of consumers demand more variety and flavors. Bears can argue that IFF faces a lot of competition around the globe and they're very vulnerable to currency moves. We can already see the impact of currency fluctuations in IFF's results.

Their Q4 results, announced Feb. 12th, were better than expected but revenues were only +4.7%. Their Q1 results, out May 12th, beat estimates by a thinner margin. Revenues were only up +0.6%. Their Q2 report came out on August 10th. Wall Street was expecting a profit of $1.36 a share on revenues of $776 million. IFF only delivered $1.29 a share with revenues down -2.6% to $767 million. Currencies are a big part of the issue here but the stock is not acting very healthy either.

On August 6th, 2015, the company announced they were raising their quarterly dividend by +20% to $0.56 a share. IFF should begin trading ex-dividend on Sept. 23rd. Management also announced a $250 million stock buyback through 2017. This news has not helped the stock price.

Investors seem to be selling the rally. Shares peaked in early 2015 and have made a trend of lower highs and lower lows. It looks like the trend of lower lows will accelerated. A few days ago IFF broke down under a major trend line of support on its long-term chart (see below). Tonight we are suggesting a trigger to buy puts at $104.45.

- Suggested Positions -

Long NOV $100 PUT (IFF151120P100) entry $2.80

09/23/15 triggered @ $104.45
Option Format: symbol-year-month-day-call-strike

Tiffany & Co. - TIF - close: 77.91 change: -0.73

Stop Loss: $80.35
Target(s): To Be Determined
Current Option Gain/Loss: -16.5%
Average Daily Volume = 1.2 million
Entry on September 11 at $79.75-
Listed on September 9, 2015
Time Frame: Exit PRIOR to November option expiration
New Positions: see below

09/24/15: The action in TIF looks similar to the rest of the market. The early weakness pushed TIF to new relative lows. Shares bounced this afternoon. TIF still closed with a -0.9% decline, which underperformed the major indices.

No new positions at this time.

Trade Description: September 9, 2015:
2015 has not been a good year for shares of TIF. The stock is down about -24% for the year thanks to a big drop in January and August. The August drop was painful with a -14% slide.

TIF is in the services sector. According to the company, "Tiffany is the internationally-renowned jeweler founded in New York in 1837. Through its subsidiaries, Tiffany & Co. manufactures products and operates TIFFANY & CO. retail stores worldwide, and also engages in direct selling through Internet, catalog and business gift operations."

On January 12th, 2015, TIF issued an earnings warning for 2015 and lowered guidance. Shares fell from about $103.50 to $90. TIF spent months churning sideways and the popped higher in May thanks to better than expected earnings results. Their Q1 results, reported May 27th, beat estimates by a wide margin and revenues came in better than expected in spite of a -5% slide from a year ago.

Three months later the company missed analysts' expectations. TIF reported their Q2 results on August 27th. Wall Street was looking for earnings of $0.91 a share on revenues of $1 billion. TIF said earnings fell -10% to $0.86 a share (a 5-cent miss). Revenues dropped -0.2% to $991 million.

The strong dollar is hurting their sales. Tourists coming to America are spending less in TIF's flagship stores. Management lowered their 2016 guidance. TIF now expects earnings to be -2% to -5% less than last year's $4.20 per share.

Analysts have been lowering their price targets in response to TIF's new guidance but shares are sinking faster than expected.

TIF is currently hovering near round-number support at $80.00. The breakdown in August was significant because TIF has broken below its long-term up trend dating back to the 2009 bear-market lows (see weekly chart below). If TIF breaks down below $80 the next support level could be $70.

- Suggested Positions -

Long NOV $75 PUT (TIF151120P75) entry $2.42

09/23/15 new stop @ 80.35
09/19/15 new stop @ 82.35
09/11/15 triggered @ $79.75
Option Format: symbol-year-month-day-call-strike


Avago Technologies - AVGO - close: 124.10 change: -1.44

Stop Loss: $123.65
Target(s): To Be Determined
Current Option Gain/Loss: -83.8%
Average Daily Volume = 3.8 million
Entry on September 14 at $132.50
Listed on September 12, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

09/24/15: Another volatile day for the market was too much for AVGO. Shares pierced multiple layers of support and fell to $119.45 at its lows before bouncing back and trimming its loss to -1.1%. Our stop was hit at $123.65.

*small positions to limit risk* - Suggested Positions -

OCT $140 CALL (AVGO151016C140) entry $3.70 exit $0.60 (-83.8%)

09/24/15 stopped out
09/19/15 new stop @ 123.65
09/14/15 triggered on gap open at $132.50, suggested trigger was $131.55
Option Format: symbol-year-month-day-call-strike


Noble Energy, Inc. - NBL - close: 32.18 change: +0.31

Stop Loss: $31.45
Target(s): To Be Determined
Current Option Gain/Loss: -57.1%
Average Daily Volume = 5.7 million
Entry on September 08 at $31.32
Listed on September 5, 2015
Time Frame: Exit PRIOR to October option expiration
New Positions: see below

09/24/15: Our aggressive trade on NBL ha been stopped out. The stock hit a new low for the week and tagged our stop loss at $31.45 before bouncing back into positive territory.

- Suggested Positions -

OCT $32.50 CALL (NBL151016C32.5) entry $2.10 exit $0.90 (-57.1%)

09/24/15 stopped out
09/23/15 new stop @ 31.45
09/19/15 new stop @ 30.85
09/05/15 trade begins. NBL opens at $31.32
Option Format: symbol-year-month-day-call-strike


Skyworks Solutions, Inc. - SWKS - close: 86.35 change: -1.77

Stop Loss: $85.45
Target(s): To Be Determined
Current Option Gain/Loss: -58.8%
Average Daily Volume = 4.0 million
Entry on September 17 at $92.55
Listed on September 15, 2015
Time Frame: Exit PRIOR to earnings in early November
New Positions: see below

09/24/15: Technology and semiconductor stocks were underperformers this morning. SWKS was no exception and shares fell -4.1% this morning. The stock eventually pared its loss to -2.0%. Our stop loss was hit at $85.45.

- Suggested Positions -

NOV $100 CALL (SWKS151120C100) entry $4.03 exit $1.66 (-58.8%)

09/24/15 stopped out
09/19/15 new stop loss @ 85.45
09/17/15 triggered @ $92.55
Option Format: symbol-year-month-day-call-strike