Option Investor

Daily Newsletter, Sunday, 6/28/2015

Table of Contents

  1. Leaps Trader Commentary
  2. Portfolio
  3. New Plays
  4. Play Updates
  5. Watch

Leaps Trader Commentary

Greek PM Throws A Hail Mary Pass

by James Brown

Click here to email James Brown

The second quarter of 2015 is quickly coming to a close. All eyes were on the Greek drama as the final days rushed by with both sides refusing to budge from their positions. This weekend there was a flurry of headlines as Europe tried to sweeten the pot to get Greece to make a deal. Yet Greek leaders refused and Prime Minister Tsipras threw a Hail Mary pass and announced a referendum to let the public vote on it. The week ahead could be tumultuous as markets face a move into uncharted territory.

Just in case you are not familiar with American football, a Hail Mary pass is a very long forward pass, usually made in desperation, with only a very small chance of success. It's usually thrown in the final seconds of the game.
Looking at the last five days the U.S. stock market rallied on Monday (June 22nd) on hopes of a Greek deal. Then stocks slowly faded lower throughout the rest of the week as the impasse between Greece and its European creditors continued. The major U.S. indices all posted losses for the week. The normally strong biotechs were not immune and suffered some profit taking with the biotech index down -0.2%. Transports underperformed with a -2.0% drop to new 2015 lows. The semiconductor stocks were big losers thanks to a sharp drop in Micron (MU), which pushed the SOX index to a -3.4% weekly decline.

Money was coming out of the bond market and yields on the U.S. 10-year note surged to 2.48%. This yield is testing its highs for the year and looks poised to break past the 2.5% level. Crude oil churned sideways to close at $59.65 a barrel. Gold snapped a two-week bounce with a drop to $1,173.70 an ounce. Meanwhile yields on the German 10-year bond settled at 0.925%.

The U.S. Supreme Court decision on Thursday to uphold the federal subsidies for the Affordable Care Act (a.k.a. Obamacare) was bullish for many of the healthcare stocks. Hospitals saw the stocks soar on the news. Meanwhile the last hour of trading on Friday was busy thanks to the annual Russell rebalancing. Thursday's market volume was about 5.8 billion shares. The rebalancing on Friday boosted trading volume to more than 8.6 billion shares.


It was a super busy week for Eurozone finance ministers, EU leaders, the IMF, the ECB, and Greek representatives. Multiple meetings failed to produce any headway. Greece tried to get the International Monetary Fund (IMF) to restructure their debt on Wednesday but the IMF refused. On Thursday European leaders tried to sweeten the deal and boosted their bailout offer to provide 15.5 billion euros in funds, up from 7.2 billion. This would be enough to fund Greece's debt needs through the end of November. Greek Prime Minister Alexis Tsipras balked at his opponents demands and decried the offer as "blackmail".

This Greek drama that began five years ago could be nearing its final chapter. Although even as I type those words they ring hollow. We would like to think this debt crisis with Greece is nearing an end but it will probably last months and years to come. The only real change is whether or not Greece officially defaults on its debt July 1st. An actual exit from the Eurozone is not immediately guaranteed.

Just in case you've been living under a rock the last few weeks here's a quick reminder. Greece's current bailout program is due to expire on June 30th. This bailout program was frozen when the leftwing, anti-establishment party Syriza rose to power in Greece earlier this year. Greece was supposed to receive another 7.2 billion euros in bailout funds but this was halted as Europe demanded more stringent reforms before handing over more cash to Greece.

June 30th is also an important date because Greece owes about $1.7 billion to the IMF. The country was supposed to pay this amount spread out across the month of June but they delayed it into a lump sum payment at the end of the month. The problem is Greece is broke and they can't afford to make this payment and pay their other bills like pensions and salaries. Plus the country owes another $7 billion to the ECB and IMF in July and August this year.

Referendum Announcement

Eurozone leaders were hoping to get the new Greek government to cave in and sign a deal before June 30th. Unfortunately the Syriza party rose to power on a no new austerity platform. On Saturday (June 27) Greek PM Tsipras shocked everyone with a TV appearance to his people claiming that his government should not make this decision. Tsipras claims that the future of Greece should be decided by the people so he announced a referendum to vote on this new deal with the country's creditors to be held on July 5th.

Let's see... the deadline is June 30th and Tsipras announces a vote for July 5th. Tsipras is making a calculated bet that Greece's creditors will still be willing to do a deal in July. He's also betting on recent polls that show the majority of Greeks want to stay in the Eurozone. By putting this decision to a vote he can reduce the criticism from the very vocal minority and let the silent majority take responsibility for this decision. Publically his government has rejected the new offer and he is urging his citizens to reject it as well. This way he can claim that he remained true to his word and campaign promises while letting the consequences of this decision fall on the Greek people.

Reaction and Capital Controls

In reaction to the referendum announcement the ECB has frozen its ELA to Greek banks. On Sunday European Central Bank President Mario Draghi called an extraordinary meeting with the ECB's Governing Council. They decided to cut off Greek banks from the Emergency Liquidity Assistance program that has kept the Greek banking system afloat the last several weeks.

Greek citizens have been worried about what happens after June 30th if there isn't a deal and they've been pulling money out of Greek banks for months. This accelerated in the last couple of weeks with billions of euros being withdrawn. On Saturday Skai television reported that another one billion euros was withdrawn in a single day. Greek banking leaders noted that hundreds of the country's 7,000 ATMs had already run out of money.

The last several days there have been hints that Greek banks would not open on Monday, June 29th but Greek leaders promised they would. Well surprise! Now that the ELA has been frozen all of the Greek banks will be closed on Monday. Reuters is reporting there are new rumors that Greek banks may remain closed until the July 5th referendum. If and when they do reopen there are rumors that people will only be able to withdraw a maximum of 60 euros.

The reaction to these headlines is pressuring the euro currency lower. As of Sunday the euro had fallen about two cents against the dollar to $1.09, a new one-month low.

Economic Data

Economic data in the U.S. was mixed. The durable goods orders fell again. April was revised lower from -1.0% to -1.5% while May's durable orders came in at -1.8%, which was worse than expected. The decline was mostly due to a bid drop in airplane orders. The Markit U.S. manufacturing PMI posted its third monthly decline in a row with a drop to 53.4. This is the lowest reading in over a year.

The news was much more optimistic in the residential real estate industry. Existing home sales hit their highest levels since 2009 with May sales up +5.1% to an annual pace of 5.35 million. New home sales hit their best levels since early 2008 with a +2.2% jump in May to an annual pace of 546,000 units. Homebuilders Lennar (LEN) and KB Home (KBH) had bullish things to say about the market. They see strength across all markets. They're also seeing a nice improvement in the number of first time homebuyers.

Consumer spending saw its biggest one-month gains in six years with a +0.9% jump in May. At the same time consumer sentiment hit a five-month high in June with a rise from 94.6 to 96.1. Sentiment numbers are nearing the 11-year high we saw in January at 98.1.

Last week also saw the final Q1 GDP estimate. This was revised higher from -0.7% to -0.2% growth.

Another noteworthy event was a bounce in the number of active oil and gas rigs. Every week Baker Hughes publishes their active rig count. Last week the number of active rigs rose for the first time in 28 weeks. Oil rigs continue to decline and fell -3 to 628 but gas rigs rose by 5 to 228. The combination of the two rose by 2 rigs to 859. The last time we saw a big decline in active rigs was 2008-2009 when the rig count fell for 18 weeks in a row. Today the number of active rigs is near 10-year lows after a plunge from 1,931 rigs in September 2014. Believe it or not but U.S. oil production is still near 40-year highs at 9.6 million barrels a day in spite of the big drop in active rigs.

Overseas Economic Data

There was not much in the way of economic news in Europe last week. Any headlines would have been overshadowed by the Greece drama anyway. Looking East there was some improvement in Japan. The country said their household spending improved +2.4% in May. This was a +4.8% jump year over year. Japan's CPI rose +0.5% in May, which is good news since they have been worried about deflation. Japan's manufacturing PMI for June was a disappointment with a drop from 50.9 down to 49.9. Numbers under 50.0 suggest economic contraction.

China's HSBC manufacturing PMI is also under 50. The June PMI reading was 49.6, which was actually better than expected. Most of the headlines from China were focused on the country's stock market. It appears that the stock market bubble in China may have popped. Their main market indices are plunging. The Shanghai composite dropped -10% intraday on Friday and closed with a -7.4% decline. The Shanghai index is down -19% from its seven-year highs just two weeks ago.

Major Indices:

The S&P 500 is down three days in a row and posted a -0.4% loss for the week. Year to date the large cap index is only up +2.0%. Volatility in the market has faded. The S&P 500 has gone 174 days without a -5% pullback. We have not seen a streak that long since 2003-2004 when the index managed a 219-day streak. The index has gone 1,370 days without a -10% correction (although it got close with a -9.8% drop in October 2014).

Last weekend I suggested the 2,100 area would be support. The S&P 500 tagged its 100-dma near 2,095 on Friday before bouncing. The next support level is the recent double bottom near 2,072. If that level fails then we could see the S&P 500 drop to its 200-dma near 2,050. Below that the next support level is probably the 1,980-2,000 region.

Five-Day chart of the S&P 500 index:

chart of the S&P 500 index:

The NASDAQ composite was hitting new all-time highs earlier in the week. Unfortunately, like the S&P 500, the NASDAQ also fell the last three days in a row. Now that it's back below the 5,100 mark the nearest support is probably 5,000 and its 100-dma. Should the 5,000 level break then 4,900 and 4,800 are potential support levels with the simple 200-dma underpinning the 4,800 area. Year to date the NASDAQ composite is up +6.8%.

chart of the NASDAQ Composite index:

The move in the small cap Russell 2000 looks a lot like the NASDAQ's The $RUT was hitting record highs on Monday and Tuesday. The three-day market drop pushed the $RUT to a -0.38% loss for the week. This index should have some support at its multi-week trend of higher lows. If that trend line breaks then the 1,200-1,210 area is probably the area to watch for support. Year to date the $RUT is up +5.9%.

chart of the Russell 2000 index

Economic Data & Event Calendar

We have a holiday shortened week ahead of us. The U.S. markets will be closed on Friday, July 3rd for Independence Day.

It's the end of the second quarter (June 30th) and the beginning of a new month. That means lots of economic reports. Anybody not watching the Greek crisis this week will be looking at the U.S. labor market. Wednesday will bring the ADP report and Thursday we'll see the monthly BLS jobs data. Analysts are estimating +225,000 new jobs for June.

Q2 earnings season is fast approaching. Alcoa (AA) kicks it off on July 8th.

- Monday, June 29 -
Pending Home Sales
Greek banks closed (possibly all week)

- Tuesday, June 30 -
Case-Shiller 20-city home price index
Consumer Confidence survey
China's manufacturing PMI data
Greek deadline to make IMF payment ($1.7 billion)

- Wednesday, July 01 -
ADP Employment Change report
ISM Index
Auto and truck sales data
Eurozone PMI data

- Thursday, July 02 -
Nonfarm payrolls (jobs) report
Unemployment rate
Factory Orders

- Friday, July 03 -
U.S. market closed for Independence Day

Additional dates to be aware of:

July 5th - Greek referendum
July 29th - FOMC meeting (end of two-day meeting)

Looking Ahead:

Investors turned bullish last week, just in time for the Greek crisis to roil the markets. The American Association of Individual Investor (AAII) sentiment survey saw bullish sentiment jump from 25.4% to 35.6%. Bearish sentiment dipped to 21.7% while most traders are neutral at 42.8% of those surveyed. Even with last week's big jump in bullish sentiment we're still under the long-term bull market average of 38.3%.

Speaking of sentiment the majority of Wall Street analysts are still expecting gains for the S&P 500 between now and yearend. June 30th is the end of the 1st half. Currently the S&P 500 is at 2,101. Looking at the yearend targets for 27 firms, the average S&P 500 target is 2,231. That represents another +6.18% gain from current levels (or a +8.3% gain for the year). The lowest 2015 targets are in the 2,100-2,150 range. The highest estimates are for the S&P 500 to rally into the 2,350-2,375 region.

The Greek drama is sucking up most of the oxygen in the room so you may not have heard that ISIS is responsible for an outbreak of terrorist attacks on Friday. Reuters is reporting that ISIS fighters massacred about 150 civilians in Syria as part of a fight to retake the border town of Kobane. At least 37 people died in Tunisia when gunmen opened fire on tourists at a beach resort. In Kuwait 15 people are dead and another 50 were injured when a bomb went off near a Shiite mosque. In France two men have been arrested for ramming their car into the security gate of a U.S. gas company. The terrorists pinned a severed human head with Arabic writing on it to the factory gates. ISIS claims responsibility for all of these and they're urging their followers to launch more attacks on their enemies (Shiite Muslims and Westerners) during the Muslim holiday of Ramadan, which is June 17th through July 17th.

Meanwhile the Sunni Muslim country of Saudi Arabia continues to bomb rebel targets in their neighboring country of Yemen. Diplomatic talks between Saudi and the Iran-backed Houthi rebels broke down in Geneva so Saudi started air raids against targets again. Iran and the Houthis are Shiites.

Iran Deadline

Since I mentioned Iran we should note that June 30th is another "hard" deadline for the nuclear talks between Iran and the P5+1 countries (the U.S., Britain, China, France, Germany, and Russia). The West has threatened a number of concrete, unbreakable deadlines in the past and they were always postponed. Why does anyone believe Iran will respect this June 30th deadline?

Iran has been outmaneuvering a weak-willed U.S.-led negotiation over Iran's nuclear arms program for several years. Every deadline gets pushed back, which only gives Iran more time to build up its technology so it can make a nuclear warhead, a claim the country has denied. The current negotiations have been taking place over the last two years. President Obama wants to get a deal nailed down as another feather in his legacy cap. Israel has warned us multiple times that the current terms of the deal are a disaster. Now we're starting to hear from people on Obama's side of the table that are worried the current shape of the deal is a bad one.

I don't know why anyone is worried about a deal with Iran. It sounds like there is no deal. Everything the P5+1 want done are exactly the things that Iran's leadership have promised will never happen. The West wants Iran to reduce its ability to enrich uranium. They want Iran to allow unannounced spot checks on nuclear facilities and access to military sites to check on potential nuclear testing. I'd like to know what the negotiators have been doing for two years since Iran has never agreed to any of these. The West has promised to remove sanctions once Iran has accomplished these tasks while Iran wants the sanctions removed first.

Thankfully France seems to be the adult in the room and they won't agree to a deal unless Iran meets these qualifications. I can imagine it is hard to negotiate when Iran's Ayatollah Ali Khamenei condemned the west and said, "death to America" back in March this year. This past week, many of Iran's parliament members also took up the chant "death to America" after a vote on nuclear inspections. Yup, they definitely sound like they want to make a deal.

The Week Ahead

The week ahead could be a wild one. Greek PM Tsipras' surprise announcement for a referendum on July 5th would suggest there is absolutely zero chance of a deal getting done before the June 30th deadline. The ECB has cut off its ELA to Greek banks. These banks will be closed on Monday and potentially the rest of the week. Everything is suggesting that Greece will officially default on its IMF debt on July 1st. This is uncharted territory for the market. Ireland, Portugal, Spain and Cyprus all came close to defaults but were saved by massive bailouts. I am reasonably confident that Greece would be the first Eurozone member to actually default. The euro currency is falling against the dollar. The S&P futures are down sharply on Sunday suggesting we could see stocks gap down at the open on Monday morning.

~ James


Portfolio Update

by James Brown

Click here to email James Brown

Current Portfolio

Portfolio Comments:

All of the major U.S. indices posted losses for the week. Worries about the Greek debt crisis intensified. Investors started selling stocks as we got closer to the June 30th deadline for Greece.

DNKN has graduated from our watch list to our play list

We want to exit our LVLT trade on Monday, June 29th.
Plan on selling half of our DATA trade and SBUX trade on Monday to lock in a potential gain.

I have updated stop losses on ADBE, ANTM, COF, FB, HBI, NKE, and UA.

Disclaimer: At any given time the author may have positions in any or all of any companies mentioned in the Leaps Newsletter.

--Position Summary Table--
Table lists Directional CALL or PUT/LEAPS only.
Insurance puts, if applicable, are not shown.

Red symbol/name represents a play or option position exited or closed this week.

New Plays

The Clock Is Ticking

by James Brown

Click here to email James Brown

- New Trades -

Editor's Note:

(June 28, 2015)

This is it! We are about 48 hours away from Greece defaulting on its debt to the International Monetary Fund (IMF). They owe the IMF about $1.7 billion and no one expects them to make that payment on June 30th.

This is uncharged territory for the market. The global financial system has been preparing for this event for five years. The impact should be limited to just the IMF and ECB. However, it could still generate a lot of volatility in the European and American equity and bond markets. Surging expectations for a Greek default are already causing big moves in the currency market with the euro plunging against the dollar overnight.

Considering all the uncertainty about how the markets might react to this event I am not adding any new trades tonight. Investors should double check their stop losses on their current trades.

I am adding DIS as a new watch list candidate. If stocks do fall on this Greek story we want to use any weakness in DIS as a potential entry point for bullish positions.

Radar Screen:
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself. In no particular order:


Play Updates

Market Flounders Ahead of Greek Default Deadline

by James Brown

Click here to email James Brown

Editor's Note:

Investors should turn defensive. The story with Greece is deteriorating and it looks like the country could default on July 1st. S&P futures are falling at the moment and stocks are poised to gap down on Monday morning.

The week ahead could be volatile. Double check your stop loss placement.

We want to exit our LVLT trade at the opening bell on Monday, June 29th. We also want to sell half of our DATA trade and half of our SBUX trade to lock in potential gains on Monday morning.

Closed Plays

Our plan was to exit the AKAM trade on Monday, June 22nd.

Play Updates

Apple Inc. - AAPL - close: 126.75

06/28/15: AAPL eked out a very small gain for the week. Unfortunately the action last week looks bearish with a failed rally near resistance at $130.00. I'm concerned that market volatility in the week ahead could push AAPL into the $120 area. Currently our stop loss is at $118.00.

I am not suggesting new positions in AAPL at this time.

Trade Description: November 2, 2014:
Love it or hate it AAPL always has Wall Street's attention. It has a cult-like following. The company's success has turned AAPL's stock into the biggest big cap in the U.S. markets with a current valuation of more than $633 billion.

The company is involved in multiple industries from hardware, software, and media but it's best known for its consumer electronics. The iPod helped perpetuate the digital music revolution. The iPhone, according to AAPL, is the best smartphone in the world. The iPad helped bring the tablet PC to the mass market. The company makes waves in every industry they touch with a very distinctive brand (iOS, iWork, iLife, iMessage, iCloud, iTunes, etc.) and they've done an amazing job at building an Apple-branded ecosystem. Now they're getting into the electronic payments business with Apple Pay.

The company's latest earnings report was super strong. AAPL reported its Q4 (calendar Q3) results on October 20th. Wall Street was expecting a profit of $1.31 a share on revenues of $39.84 billion. The company delivered a profit f $1.42 a share with revenues up +12.4% to $42.12 billion. The EPS number was a +20% improvement from a year ago. Gross margins were up +1% from a year ago to 38%. International sales were 60% of the company's revenues.

AAPL's iPhone sales exceeded estimates at 39.27 million in the quarter and up nearly 16% from a year ago. The only soft spot in their ecosystem seems to be iPad sales, which have declined several quarters in a row. The company hopes to rejuvenate its tablet sales with a refresh of the iPad models. More importantly AAPL management raised their Q1 (calendar Q4) guidance as they expect revenues in the $63.5-66.5 billion in the quarter. Recent news would suggest that AAPL might deliver an incredible 50 million iPhone 6s in 2014. That's not counting their new iPhone 6+.

The better than expected results and bullish guidance sent the stock to new highs. The rally has created a quadruple top breakout buy signal on its point & figure chart that is currently forecasting at $133 target. Yet we do not want to chase AAPL here. The stock is up $12 from its October low. We do want to be ready if shares see a pullback.

Tonight I am suggesting a buy-the-dip trigger to buy calls at $103.50 with a stop loss at $98.90. (We amended the buy-the-dip trigger to $111.00 on Nov. 30th).

- Suggested Positions -
DEC 09, 2014 - entry price on AAPL @ 110.19, option @ 9.55
symbol: AAPL160115C120 2016 JAN $120 call - current bid/ask $12.40/12.50

06/20/15 AAPL underperformed the broader market this past week. Shares look like they could break support in the $125 area
04/27/15 AAPL crushes earnings estimates (again)
04/12/15 new stop @ 118.00
03/01/15 Caution: AAPL could be poised for a pullback. Consider taking profits now and then re-enter this trade later.
02/22/15 new stop @ 114.00
02/15/15 new stop @ 109.50
12/09/14 triggered on gap down at $110.19, trigger was $111.00
11/30/14 raise the buy-the-dip entry trigger to $111.00
11/16/14 raise the buy-the-dip entry trigger to $108.00
Adjust the strike price to the 2016 Jan $120 call.
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 118.00
Play Entered on: 12/09/14
Originally listed on the Watch List: 11/02/14

Adobe Systems - ADBE - close: 82.74

06/28/15: Last week was bullish for ADBE. Argus raised their price target on the stock to $95.00. This helped shares breakout past resistance in the $80.00 region on Monday. ADBE hit new record highs above $84.00 before succumbing to profit taking on Friday.

Broken resistance near $80.00 should be new support. Tonight we will raise our stop loss to $74.75. More conservative investors may want to use a higher stop loss.

If the market declines in the week ahead I expect ADBE will dip back toward $80.00.

Trade Description: May 3, 2015:
ADBE is in the technology sector. According to the company's website, "Adobe is changing the world through digital experiences. Content built and optimized with Adobe products is everywhere you look — from websites, video games, and smartphones to televisions, tablets, and beyond. Adobe® Creative Cloud® software offers the most innovative tools for creating digital media, while Adobe Marketing Cloud delivers groundbreaking solutions for data-driven marketing. Our leadership in these two emerging categories, Digital Media and Digital Marketing, provides our customers with a real competitive advantage, positioning Adobe for continued growth well into the future. As one of the largest software companies in the world, Adobe achieved revenue of more than US$4 billion in 2013."

The company's most recent earnings report was March 17th. Results were $0.44 a share, which was five cents better than expected. Revenues were up +10.9% to $1.11 billion, also above expectations. The company continues to see success with their subscription model and added 517,000 new creative cloud subscriptions, a +28% improvement from a year ago.

Technically the stock is in a long-term up trend. Shares just spent the last few weeks consolidating sideways and looks ready for the next move higher. A rise past $78.00 would generate a new buy signal on the point & figure chart.

I am suggesting we wait for ADBE to close above $77.75 and then buy calls the next morning with a stop loss at $71.85. More conservative investors may want to wait for ADBE to close over short-term resistance at $80.00 as an alternative entry point for bullish positions.

- Suggested Positions -
MAY 15, 2015 - entry price on ADBE @ 80.00, option @ 4.60
symbol: ADBE160115C85 2016 JAN $85 call - current bid/ask $4.85/5.10

06/28/15 new stop @ 74.75
06/20/15 new stop @ 73.90
05/15/15 trade begins. ADBE opens at $80.00
05/14/15 triggered. ADBE closed @ $79.43, above our trigger of $77.75
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 74.75
Play Entered on: 05/15/15
Originally listed on the Watch List: 05/03/15

Anthem Inc. - ANTM - close: 165.06

06/28/15: Healthcare stocks rallied on the U.S. Supreme Court ruling to uphold federal subsidies for the Affordable Care Act. Prior to Thursday's court decision the major health insurers, like ANTM, have been in rally mode on M&A headlines. The action in ANTM has been volatile. The company launched a bid for rival Cigna (CI) but CI rejected ANTM's initial offer.

On Friday shares of ANTM were hit with profit taking and underperformed the market with a -3.3% plunge. All the volatility in ANTM lately does not make me enthusiastic about this trade. More conservative investors may want to exit early. Tonight I am raising our stop loss to $159.00.

Trade Description: May 10, 2015:
The Affordable Care Act (a.k.a. Obamacare) was first feared by healthcare companies. Now they have embraced it. Obamacare has definitely been good for ANTM with waves of new enrollees.

ANTM, previously known as Wellpoint, is in the healthcare sector. According to the company, "Anthem is working to transform health care with trusted and caring solutions. Our health plan companies deliver quality products and services that give their members access to the care they need. With nearly 71 million people served by its affiliated companies, including more than 38 million enrolled in its family of health plans, Anthem is one of the nation’s leading health benefits companies."

ANTM has raised its guidance the last four quarters in a row! Their most recent earnings report was April 29th. ANTM delivered their 2015 Q1 results of $3.14 per share. That was 45 cents above estimates. Revenues came in below expectations but traders didn't care because ANTM raised their guidance above Wall Street's estimate.

Now analysts are starting to raise their price targets on the stock. Shares have broken out of a multi-week consolidation pattern. ANTM is poised to rally through resistance near $160.00 and hit new all-time highs.

Tonight I am suggesting we wait for ANTM to close above $161.00 and then buy calls the next morning with a stop loss at $152.00.

- Suggested Positions -
MAY 18, 2015 - entry price on ANTM @ 162.00, option @ 7.95
symbol: ANTM160115C170 2016 JAN $170 call - current bid/ask $8.75/11.40

06/28/15 new stop @ 159.00
06/20/15 ANTM announces a $184 per share bid to buy CI
06/07/15 Caution: ANTM has generated a potential bearish reversal pattern on its weekly chart
05/24/15 new stop loss @ 154.75
05/18/15 trade begins. ANTM opens at $162.00
05/15/15 Trade is triggered. ANTM closes above our $161.00 trigger
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 159.00
Play Entered on: 05/18/15
Originally listed on the Watch List: 05/10/15

Capital One Financial - COF - close: 89.06

06/28/15: Most of the big financial stocks posted losses for the week. COF managed a small gain. However, shares have been struggling with round-number resistance at $90.00 lately. I suspect that COF could be setting up for a pullback toward the $86.00 area.

Tonight we will try and reduce our risk by raising the stop loss to $83.75. More conservative traders may want to use a higher stop.

Trade Description: June 7, 2015:
Interest rates will rise. The Federal Reserve has kept its main interest near zero (0.0%) since December 2008. There has been mountains of speculation on when the fed will finally raise rates. It looks like they could start in September this year. If not this year then definitely next year. Rising rates are going to be bullish for big banks.

COF describes itself as, "Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N. A., had $205.5 billion in deposits and $308.9 billion in total assets as of December 31, 2014. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia."

COF's most recent earnings report was April 23rd. Earnings were $2.00 per share, which was 13 cents above estimates. Management said they saw strong loan growth. The company has recently raised their dividend and they have a big stock buy back program.

The stock has been stuck under resistance near $85.00 for almost a year. The stock's posture changed when it recovered from its January 2015 lows near $73. Since then COF has been rising in a bullish trend of higher lows and higher highs. Now it's poised to breakout past key resistance at $85.00. The point & figure chart is already bullish and forecasting at $97.00 target.

I am suggesting we look for COF to close in the $86.00-87.00 zone as our entry point. Then buy calls the next morning with a stop loss at $81.75. This is a long-term trade. We're using the 2017 calls.

Just a reminder - use 2017 calls.

- Suggested Positions -
JUN 11, 2015 - entry price on COF @ 86.99, option @ 3.95
symbol: COF170120C100 2017 JAN $100 call - current bid/ask $3.05/4.35

06/28/15 new stop @ 83.75
06/11/15 trade begins. COF opens at $86.99
06/10/15 Triggered with COF closing at $86.93
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 83.75
Play Entered on: 06/11/15
Originally listed on the Watch List: 06/07/15

Tableau Software - DATA - close: 116.86

06/28/15: Ouch! It was not a good week for DATA. Shares reversed on Monday and trended lower the rest of the week. The pullback accelerated on Friday with a -3.0% decline and a drop toward short-term support near $115.00.

Technically last week's decline has created a bearish engulfing candlestick reversal pattern on DATA's weekly chart. That doesn't bode well but it needs to see confirmation first as a sell signal. Currently our stop is at $109.00. More conservative traders may want to use a higher stop.

Please note I am suggesting we sell half our position now. A week ago our call option had almost doubled in value. It's not significantly less. Plan on selling half our position on Monday.

Trade Description: April 26, 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 couple of 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."

Management offered earnings guidance that was in-line with Wall Street estimates but they see revenues coming in above expectations.

Wall Street is bullish and the last couple of weeks have seen new price targets at $115 and $127. The point & figure chart is forecasting at $117.00 target.

DATA has been talked about as a potential take over target and that might be why their options are so expensive. DATA's next earnings report is coming up on May 7th. More conservative traders may want to sit this one out until we see how the market reacts to DATA's Q1 results.

I am labeling this a more aggressive play because shares can be volatile with multi-point single-day moves. Tonight we want to buy calls on a dip at $100.00.

- Suggested Positions -
APR 27, 2015 - entry price on DATA @ 100.00, option @ 12.10
symbol: DATA160115C110 2016 JAN $110 call - current bid/ask $16.40/18.70

06/28/15 Plan on selling 1/2 of option position on Monday, June 29
06/14/15 new stop @ 109.00
06/07/15 new stop @ 104.85
05/24/15 new stop @ 102.75
05/17/15 new stop @ 97.40
05/10/15 new stop loss @ 94.75
05/08/15 the stock soars to new highs in reaction to earnings and a couple of upgrades.
05/07/15 DATA delivered better than expected earnings and raises guidance above Wall Street expectations
04/27/15 triggered @ $100.00
Remember, this is a higher-risk trade. Consider small positions to limit risk.
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 109.00
Play Entered on: 04/27/15
Originally listed on the Watch List: 04/26/15

Dunkin' Brands Group - DNKN - close: 55.48

06/28/15: DNKN was on our watch list. The plan was to wait for shares to close above $54.35 and then buy calls the next morning. DNKN broke through resistance near $54.00 on Tuesday with a rally to new all-time highs. Shares closed at $54.96. That morning shares garnered bullish analyst comments and a new $62 price target. This news helped give DNKN a boost.

Our trade opened on Wednesday with DNKN at $54.83. Shares continued to push higher and ended the week at another new high. I suspect, given the after hours reaction to Greek news, that stocks will trend lower on Monday. You may get a chance to buy a dip near $54.00 soon.

Trade Description: May 31, 2015:
Investors appear to be in the mood for donuts this year. Shares of DNKN are significantly outperforming the broader market with its stock up about +26% year to date versus the S&P 500's +2.3% gain.

The company is in the services sector. According to the company, "Founded in 1950, Dunkin' Donuts is America's favorite all-day, everyday stop for coffee and baked goods. Dunkin' Donuts is a market leader in the hot regular/decaf/flavored coffee, iced coffee, donut, bagel and muffin categories. Dunkin' Donuts has earned the No. 1 ranking for customer loyalty in the coffee category by Brand Keys for nine years running. The company has more than 11,300 restaurants in 37 countries worldwide. Based in Canton, Mass., Dunkin' Donuts is part of the Dunkin' Brands Group, Inc. (DNKN) family of companies."

DNKN also owns the Baskin Robbins franchise, which has more than 7,500 retail locations in almost 50 countries.

The company seems to be undergoing a turnaround in its earnings results. Back in December shares plunged on an earnings warning when management lowered their 2015 guidance. When they reported their Q4 results in February they missed by a penny with revenues in-line (+5.5%). Their donut store comps were +1.4% but their ice cream store comps were +9.3%. Management raised their dividend +15% and announced a $700 million stock buy back program.

Results improved significantly in the first quarter of 2015. Analysts were expecting a profit of $0.35 a share on revenues of $180.7 million. DNKN reported earnings of $0.40 a share, which is a +21% improvement from a year ago. Margins improved 310 basis points to 47.1%. Their revenues rose +8.1% to $185.9 million, above estimates. Their donut store comps improved to +2.7% while their ice cream store comps hit +8.0%. Management raised their 2015 earnings estimates above Wall Street's consensus.

The stock soared to new all-time highs following this earnings report in late April. Since then shares have seen a correction but investors have bought the dip. Analysts have begun to raise their price targets. The point & figure chart is very bullish with a long-term target of $78.00. Currently shares of DNKN are hovering below resistance in the $54.00 area. Tonight I am suggesting we wait for DNKN to close above $54.25 and buy calls the next morning.

- Suggested Positions -
JUN 24, 2015 - entry price on DNKN @ 54.83, option @ 1.60
symbol: DNKN160115C60 2016 JAN $60 call - current bid/ask $1.25/1.70

06/24/15 Trade begins. DNKN opens at $54.83
06/23/15 DNKN closed at $54.96, above our trigger of $54.35
06/21/15 adjust entry trigger to a close above $54.35
Option Format: symbol-year-month-day-call-strike


Current Target: To Be Determined
Current Stop loss: 49.65
Play Entered on: 06/24/15
Originally listed on the Watch List: 05/31/15

iShares MSCI Italy Capped ETF - EWI - close: 15.78

06/28/15: I suggest you take your motion sickness medicine now. European stocks could see a lot of volatility as Greece looks poised to default on July 1st. I expect the initial reaction to be bearish and the EWI could plunge. I would not be surprised to see this ETF hit our stop loss at $14.70.

More conservative investors may want to just hit the sell button now.

No new positions at this time.

Trade Description: April 5, 2015:
Italy could be on the brink of an economic turnaround. The Wall Street Journal recently reported that Italy could escape from its chronic economic fatigue. The country's economic growth has been slowing down for years with growth falling from +2% in the 1980s to +1.4% in the 1990s to just +0.6% in the 2000s. The country has averaged -0.5% growth since 2010.

The situation appears to be changing. Markit's manufacturing PMI data for March hit 53.3, an 11-month high. Numbers above 50.0 suggest growth. UniCredit is forecasting Italian GDP growth of +0.2% in Q1 2015, which would snap the country out of its three-year recession.

The Organization for Economic Cooperation and Development (OECD) has upgraded their forecast on Italy for 2015 and 2016. They now see growth of +0.6% in 2015 and +1.3% in 2016.

The combination of lower oil prices and a weaker euro to boost exports should boost European economic growth. Plus, the European Central Bank (ECB) just launched a 60 billion euro QE program in March 2015 that will last at least through September 2016 or longer if they don't hit their 2% inflation target.

Investors know that QE helped fuel a multi-year rally in the U.S. stock market and they are expecting a similar reaction in the European stock markets.

The EWI could be a way to play it. This is an ETF that mimics the MSCI Italy 25/50 index. Underlying stocks are traded on the Milan stock exchange. It's one of the most liquid ETFs focused on Italy.

Technically the EWI appears to have formed an inverse (bullish version) of a head-and-shoulders pattern. It's also on the verge of breaking out past its simple 200-dma. Tonight I am suggesting investors wait for the EWI to close above $15.25 and then buy calls the next morning.

Warning: The biggest risk is probably a Greek exit from the Eurozone. Negative headlines that suggest the Greek might exit could generate a lot of volatility in the EWI.

- Suggested Positions -
APR 07, 2015 - entry price on EWI @ 15.31, option @ 2.35
symbol: EWI170120C15 2017 JAN $15 call - current bid/ask $2.00/2.30

06/28/15 Warning! EWI could be volatile this week thanks to Greece
06/20/15 Volatility is picking up as Greece gets closer to a default.
06/07/15 Caution: The EWI appears to have formed a bearish double top. Conservative investors may want to exit early now!
05/17/15 new stop @ 14.70
05/03/15 new stop @ 14.40
04/07/15 trade begins. EWI opens at $15.31
04/06/15 EWI closed @ 15.29, above our trigger of $15.25
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 14.70
Play Entered on: 04/07/15
Originally listed on the Watch List: 04/05/15

Facebook, Inc. - FB - close: 82.51

06/28/15: Shares of FB were in rocket mode the first few days of last week. The stock rallied from $82.51 a week ago to an intraday high of $89.40 on Thursday morning. The stock eventually encountered some profit taking after this +8% gain in less than four days.

Wall Street is bullish on FB with the company showing huge numbers for the number of Instagram and Messenger accounts. Between the two FB could have two billion people on its social networks soon. There has also been a lot of positive press on the amount of video ads that FB has been able to deliver.

Traders bought the dip on Friday. However, if the broader market sinks on the Greece story I would expect FB to follow the market lower. Fortunately prior resistance in the $83-84 zone should be new support. Tonight we will raise the stop loss up to $78.45.

Earlier Comments: March 22, 2015:
Facebook probably needs no introduction. It's the largest social media platform on the planet. As of December 31st, 2014 the company reported 1.19 billion monthly active users and 890 million daily active users. If FB were a country that probably puts them as the third most populous country on the planet (behind India and China).

This past week 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.

The announcement combined with a broad market rally helped fuel a +7% gain in FB's stock last week. FB's market cap has risen past $230 billion making it the tenth largest company in the S&P 500.

Growth has been phenomenal. According to IBD, FB's Q4 earnings were up +69% form a year ago. Revenues were up +49%. Wall Street is expecting FB's profit to rise +12% in 2015 and +32% in 2016.

Technically shares of FB have broken out from a very significant consolidation pattern. The point & figure chart is bullish and forecasting at $96.00 target. I think it will go higher. After a five-day run we do not want to chase it here. I'm suggesting a buy-the-dip entry trigger at $82.00 with a stop loss at $74.75.

- Suggested Positions -
APR 01, 2015 - entry price on FB @ 81.00, option @ 4.92
symbol: FB160115C90 2016 JAN $90 call - current bid/ask $5.70/5.85

06/28/15 new stop @ 78.45
04/23/15 Q1 earnings report
04/01/15 triggered @ 81.00
03/29/15 move the buy-the-dip trigger from $82.00 down to $81.00
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 78.45
Play Entered on: 04/01/15
Originally listed on the Watch List: 03/22/15

FireEye Inc. - FEYE - close: 48.86

06/28/15: I warned readers last weekend that after a five-week rally shares of FEYE were likely due for some profit taking. Right on cue shares reversed lower and plunged nearly $5.00 for the week. The pullback accelerated on Friday with a -5.3% drop and a breakdown under the $50.00 mark. The nearest support is $45-46. Currently our stop loss is at $45.85.

No new positions at this time.

Trade Description: May 31, 2015:
The cyber attack on media giant Sony last year was headline news for weeks. It was a major warning bell for corporations around the world to spend more on cyber security. Today it still seems like every week we hear about some high-profile cyber attack. Online criminals and saboteurs are growing more sophisticated and that's fueling corporate demand for high-tech defenses.

The company describes itself as, "FireEye has invented a purpose-built, virtual machine-based security platform that provides real-time threat protection to enterprises and governments worldwide against the next generation of cyber attacks. These highly sophisticated cyber attacks easily circumvent traditional signature-based defenses, such as next-generation firewalls, IPS, anti-virus, and gateways. The FireEye Threat Prevention Platform provides real-time, dynamic threat protection without the use of signatures to protect an organization across the primary threat vectors and across the different stages of an attack life cycle. The core of the FireEye platform is a virtual execution engine, complemented by dynamic threat intelligence, to identify and block cyber attacks in real time. FireEye has over 3,100 customers across 67 countries, including over 200 of the Fortune 500."

The stock was a real high flyer in late 2013 and into 2014. Shares began to fade in early 2014 and then really got crushed when FEYE issued an earnings warning in May 2014. FEYE spent the rest of 2014 consolidating sideways in a very wide $25-40 trading range.

This year FEYE's stock has seen a reversal of fortunes. Suddenly shares are soaring and up more than +45% thanks to better than expected earnings results. FEYE's reported its 2014 Q4 results on February 11th. Earnings improved from a loss of 50 cents a year ago to a loss of 38 cents in the fourth quarter, which was eleven cents better than expected. Revenues soared a whopping +149% to $143 million, which was above expectations.

Management guided 2015 earnings and revenues essentially in-line with consensus. The company is forecasting revenues in the $605-625 million range. FEYE expects a 2015 loss of $1.80 to $1.90 per share. Gross margins are expected to be in the 71-75 percent range.

Analysts have expressed concern with the surge in FEYE's spending but management said they are spending in-line with the company's growth. FEYE CEO Dave DeWalt said FEYE saw its growth double in 2014 and is up tenfold in the last three years.

The trend of improving results continued in the first quarter of 2015. FEYE reported earnings on April 30th. Wall Street was expecting a loss of ($0.51) a share on revenues of $120.5 million. FEYE delivered a loss of ($0.48) per share. Revenues surged +69.5% to $125.4 million. Guidance was in-line with their prior forecast.

The results were good enough that multiple analysts firms have raised their price target on FEYE in the last month. Jim Cramer talks about cyber security stocks on his CNBC show last week. I don't watch Cramer's show but he essentially said that cyber security stocks like FEYE could be great long-term investments. He's probably right. Hacking attacks on corporations have been getting worse every year. They are not going away. It's a constant arms race between hackers versus security specialists. Cyber security is going to be a long-term need for every corporation big or small.

Meanwhile FEYE has seen great success with its cyber security subscription services. This is great for the company since they get recurring revenues and not a one-time sale. Management also believes they have a ton of opportunity overseas. Most of their sales are in the U.S. but cyber security is a global need.

Technically the stock has been showing relative strength the last couple of weeks. FEYE appears to have broken out from its recent pennant-shaped consolidation pattern over the last three months. The point & figure chart is bullish and forecasting at $61 target.

Tonight I am suggesting we wait for FEYE to close above $47.25 and buy calls the next day. Please note I am setting an entry range to prevent buying a big spike. Wait for FEYE to close inside the $47.25-48.50 range. Then buy calls the next morning. Keep in mind that FEYE can be a volatile stock. Traders may want to consider this a slightly more aggressive trade. Consider smaller positions to limit risk.

- Suggested Positions -
JUN 02, 2015 - entry price on FEYE @ 47.40, option @ 3.90
symbol: FEYE160115C55 2016 JAN $55 call - current bid/ask $3.90/4.20

06/21/15 new stop @ 45.85
06/21/15 FEYE looks overbought after a 5-week surge higher. We should expect some profit taking. Don't be surprised to see a dip back toward $50.00
06/07/15 new stop @ 43.85
06/02/15 Trade begins. FEYE opens at $47.40
06/01/15 Triggered. FEYE closed @ $47.26, inside our $47.25-48.50 entry zone.
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 45.85
Play Entered on: 06/02/15
Originally listed on the Watch List: 05/31/15

Gilead Sciences - GILD - close: 119.50

06/28/15: GILD is virtually unchanged for the week with a minor 30-cent decline. I cautioned readers last weekend to expect some profit taking. Shares retreated from a new high on Wednesday above $123.00 back to $119.00 but I don't think the pullback is over. GILD still looks overbought following the prior six-week rally.

I am warning readers now to expect a dip toward $115.00. More conservative investors may want to exit now to lock in potential gains. You can wait for a decline and jump back in later.

No new positions at this time.

Trade Description: May 3, 2015:
GILD seems to be everyone's favorite biotech stock. I only hear bullish opinions about the future of the company, and for good reason. They have some pretty amazing treatments with products for HIV/AIDS, liver diseases, oncology, cardiovascular, respiratory, and more. GILD has essentially revolutionized how we treat major diseases like HIV and Hepatitis C.

According to the company website, "Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. We strive to transform and simplify care for people with life-threatening illnesses around the world. Gilead's portfolio of products and pipeline of investigational drugs includes treatments for HIV/AIDS, liver diseases, cancer and inflammation, and serious respiratory and cardiovascular conditions."

Last year (2014) everyone has been raving over GILD's hepatitis C treatment called Sovaldi. Hepatitis C is a form of viral hepatitis that causes chronic inflammation of the liver. About 185 million people currently suffer with hepatitis C. Previously the most common treatment for hepatitis C had serious side effects and was less than 50% successful. GILD changed that with their Sovaldi drug that not only treats the symptoms but actually cures the patient. The company has drawn some negative publicity over the cost since GILD charges $84,000 for a 12-week course of Sovaldi in the United States. The fact that 80% to 90% of patients who take Sovaldi are cured is a major milestone.

The Financial Times noted that before Sovaldi the impact of hepatitis C in the U.S. took a heavy toll on the healthcare system. The disease can lead to liver failure and cancer, both of which cost significantly more than Sovaldi's $84,000 price target. Hepatitis C is the leading cause for liver transplants in the U.S., which can cost a minimum of $145,000. One consulting firm estimated that the annual cost of hepatitis C to the U.S. healthcare system was going to surge from $30 billion to $85 billion in the next twenty years. Sovaldi has the potential to change. that.

The company is a cash machine. Their Q2 2014 revenues soared +136%. Q3 revenues were up +117%. Q4 2014 sales were +134%. They also announced a $15 billion stock buyback program.

GILD's most recent earnings report was their 2015 Q1 announcement on April 30th. Wall Street was expecting a profit of $2.32 per share on revenues of $6.89 billion. GILD delivered $2.94 per share with revenues rising +51.9% to $7.59 billion. Management then raised their 2015 sales forecast from $26-27 billion to $28-29 billion.

Technically shares of GILD have been consolidating sideways under a trend of lower highs for months. The last half of April appears to have produced a bullish breakout but GILD still has resistance in the $106 area. Tonight I am suggesting we wait for GILD to close above $106.50 and then buy calls the next morning.

- Suggested Positions -
MAY 15, 2015 - entry price on GILD @ 109.05, option @ 7.75
symbol: GILD160115C115 2016 JAN $115 call - current bid/ask $11.55/11.80

06/28/15 GILD could see some profit taking this week. Cautious traders may want to take some money off the table or cash out now.
06/21/15 new stop @ 113.45
06/14/15 new stop @ 109.75
06/07/15 new stop @ 106.50
05/31/15 new stop @ 104.00
05/15/15 Trade begins. GILD opens at $109.05
05/14/15 Triggered. GILD closed @ 108.74, above our trigger of $106.50
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 113.45
Play Entered on: 05/15/15
Originally listed on the Watch List: 05/03/15

Hanesbrands Inc. - HBI - close: 34.35

06/28/15: HBI rallied to resistance in the $34.80 region and stalled. The stock will likely dip back into the $33.00-34.00 zone, especially if the broader market declines on the Greece drama. Nimble traders could use a dip near $33.00 as a new entry point.

Tonight I am raising the stop loss to $31.25.

Trade Description: June 14, 2015:
HBI was founded back in 1901. Today you will find Hanes products in more than 80 percent of U.S. homes.

HBI is in the consumer goods sector. According to the company, "HanesBrands, an S&P 500 company, is a socially responsible leading marketer of everyday basic apparel in the Americas, Europe and Asia under some of the world’s strongest apparel brands, including Hanes, Champion, Playtex, DIM, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra, Nur Die/Nur Der, Lovable and Gear for Sports.

We sell bras, panties, shapewear, sheer hosiery, men's underwear, children's underwear, socks, T-shirts and other activewear in the United States, Canada, Mexico and other leading markets in the Americas, Asia and Europe. In the United States, we sell more units of intimate apparel, male underwear, socks, shapewear, hosiery and T-shirts than any other company."

What makes HBI different than most of its competitors is that HBI owns and operates its own manufacturing facilities. About 90% of their apparel comes from company-run plants. That helps them control costs throughout the production process.

This year the company has been very shareholder friendly. Back in January they raised their dividend 33% and announced a 4-for-1 split. The stock split took place in March this year.

HBI's most recent earnings report was April 23rd. HBI reported their Q1 earnings were up +16% from a year ago to $0.22 a share. That missed estimates of $0.23. Revenues were up +14% to $1.21 billion. This was just below expectations of $1.22 billion.

In the company press release HBI Chairman and CEO Richard Noll commented on their results, saying, "We are off to a great start in 2015, once again delivering a double-digit increase in EPS, while tracking to our full-year growth plans. Our acquisition strategy continues to create value with DBApparel, Maidenform and Gear for Sports all contributing substantially to our double-digit growth. In addition, we are raising our 2015 performance outlook to reflect the recent acquisition of Knights Apparel."

Management raised their earnings guidance for 2015 from $1.58-1.63 to $1.61-1.66 per share. Wall Street estimates were at $1.64. HBI also raised their 2015 revenue guidance from $5.78-5.83 billion to $5.90-5.95 billion. Consensus estimates were already at $5.95 billion.

The stock was hammered on the earning miss as investors ignored the improved earnings and revenue guidance. The stock corrected from about $34.60 to under $31.00 in four days (-10% correction).

Analysts' reaction to HBI's results have been positive. Some have noted that Q1 is normally a slower season for HBI. They see the pullback in HBI's stock as a buying opportunity. Multiple firms have raised their price target since the earnings report (new targets are $37, $38, and $40 per share).

Technically HBI has been consolidating sideways the last few weeks. However, this past week the stock displayed relative strength. Not only did it rally past resistance near $32.50 but it closed technical resistance at its 50-dma. Tonight I am suggesting we wait for HBI to close above $33.00 and then buy calls the next morning. The stock does have resistance in the $34.75 area so we'll have to keep an eye on that level. Currently the point & figure chart is forecasting at $41.00 target.

- Suggested Positions -
JUN 17, 2015 - entry price on HBI @ 33.04, option @ 1.85
symbol: HBI160115C35 2016 JAN $35 call - current bid/ask $2.00/2.25

06/28/15 new stop @ 31.25
06/17/15 trade begins. HBI opens at $33.04
06/16/15 triggered. HBI closed @ $33.06, above our trigger at $33.00
Option Format: symbol-year-month-day-call-strike

Current Target: To Be Determined
Current Stop loss: 31.25
Play Entered on: 06/17/15
Originally listed on the Watch List: 06/14/15

iShares US Home Construction ETF - ITB - close: 28.03

06/28/15: Last week the economic data on the residential real estate industry was bullish. New home sales hit their best levels since early 2008 with a +2.2% jump in May to an annual pace of 546,000 units. Shares of the ITB surged to new two-month highs.

If the market retreats we could see the ITB dip to what should be new support in the $27.00 region.

Earlier Comments: January 11, 2015:
The ITB is an exchange traded fund that mimics the Dow Jones U.S. Select Home Construction Index. The top 12 holdings are DHI, LEN, PHM, TOL, NVR, HD, TPH, LOW, RYL, SHW, KBH and MTH.

This index has been stuck in a trading range for years. That looks like it's about to change. Have you looked at a chart of the 10-year bond yield lately? Bond yields are going lower. That's going to pressure mortgage rates lower and that's bullish for home sales. This past week saw 30-year mortgage rates dip below 3.6%. That's a 19-month low.

If that wasn't enough of a tailwind President Obama wants to help. On January 7th the White House announced plans to reduce the government mortgage insurance premiums in an effort to boost home ownership. Another positive for the homebuilders is the U.S. Federal Reserve. We just had two fed governors come out last week saying they think the Fed should hold off on raising rates. The longer the Fed waits to start raising rates the better it will be for homebuilders.

Currently the ITB appears to be breaking out past major resistance and closed at multi-year highs. I'd like to see a little bit more follow through. Tonight I'm suggesting we wait for the ITB to close above $27.00 and then buy calls the next morning with a stop loss at $23.95.

- Suggested Positions -
FEB 11, 2015 - entry price on ITB @ 27.09, option @ 1.70
symbol: ITB160115C30 2016 JAN $30 call - current bid/ask $0.75/1.00

06/28/15 last week new home sales surged to their best levels since early 2008
06/15/15 the NAHB confidence survey hits 9-month highs
05/31/15 the ITB is not performing well. Investors may want to consider an early exit.
03/01/15 new stop @ $25.45
02/11/15 trade begins. ITB opens at $27.09
02/10/15 ITB closes at $27.10, above our trigger at $27.00
Option Format: symbol-year-month-day-call-strike

Current Target: ITB @ TBD
Current Stop loss: 25.45
Play Entered on: 02/11/15
Originally listed on the Watch List: 01/11/15

Level 3 Communications - LVLT - close: 53.79

06/28/15: I'm pulling the plug on this LVLT trade. Shares have continued to disappoint. Last week saw the rally fail at its trend line of lower highs. Shares accelerated toward its recent lows.

Plan on exiting immediately on Monday, June 29th.

- Suggested Positions -
MAR 04, 2015 - entry price on LVLT @ 54.71, option @ 3.90
symbol:LVLT160115C60 2016 JAN $60 call - current bid/ask $1.90/2.10

06/28/15 Prepare to exit immediately on Monday morning (June 29th)
06/21/15 new stop @ 53.40
06/07/15 new stop @ 52.75
05/10/15 new stop @ 51.45
04/29/15 Better than expected earnings
04/12/15 Caution! LVLT looks weak. A breakdown under $53.00 probably portends a drop to support at $50.00
03/04/15 trade begins. LVLT opens at $54.71
03/03/15 Triggered. LVLT closed at $54.90, above our trigger of $54.50
02/22/15 Strategy update: Wait for LVLT to close above $54.50, then buy calls the next morning with a new stop at $49.45. Adjust the option strike to 2016 Jan $60 call
02/08/15 Adjust entry point strategy: Buy calls on a dip at $50.75 with a stop loss at $46.25. Option Format: symbol-year-month-day-call-strike

Current Target: LVLT @ TBD
Current Stop loss: 53.40
Play Entered on: 03/04/15
Originally listed on the Watch List: 12/28/14

MasterCard Inc. - MA - close: 94.51

06/28/15: MA spent most of the week consolidating sideways near its all-time highs in the $96.00 area. The market's pullback on Thursday and Friday pulled MA back toward $94 and its 20-dma.

I suspect that if the market retreats we could see it pull MA towards the $90-92 area. If MA falls any further it would hit our stop at $89.75.

No new positions at this time.

Trade Description: May 3, 2015:
We are adding MA back to the watch list. Here's our recent watch list play description from April:

Do you have a credit card? How about a debit card? Odds are you do. About 70% of Americans have a credit card and many have more than one. Inside the United States there are over 500 million credit cards between American Express, MA, and Visa. There's more than 1.12 billion globally (not counting the U.S.). There's also another 572 million MA or Visa debit cards in the U.S. (MasterCard has more than 144 million). Not counting America there are more than 1.2 billion debit cards around the world.

Now what if you could charge a small percentage for consumers using their plastic every time they make a purchase? That's MA's business model. As of 2013 their market share of global transactions (credit or debit) was about 27%. They are the second biggest credit and debit card company behind Visa (V). According to the company, "MasterCard (MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world's fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard's products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone."

MA has been delivering steady growth. They reported their Q3 results on October 30th with earnings up +19% from a year ago to $0.87 a share. That beat estimates. Revenues were up +12.8% to $2.5 billion, also above expectations. The bullish trend continued when MA reported its 2014 Q4 results on January 30th. Earnings per share soared +32% from a year ago to $0.69 and revenues grew +13.6% to $2.42 billion. Both metrics were above Wall Street expectations.

The company did warn that the surge in the U.S. dollar was impacting results but they still see strong single-digit revenue growth for 2015. They reaffirmed +20% earnings growth.

Meanwhile one of MA's biggest rivals, American Express (AXP), is not having a good year. AXP lost its exclusive deal with Costco (COST) last month. This deal generated 20% of AXP's loans and about 10% of their annual card growth. AXP is also losing its partnership with JetBlue (JBLU). AXP's losses will likely be MA's and Visa's gain.

Recently MA announced it had signed a 10-year deal with Citigroup. Not only is Citigroup one of the biggest banks on the planet they are the largest credit card issuer in the world. The press release states "Citi will begin aligning the company's consumer proprietary credit and debit portfolios to the MasterCard network in 2015." One analyst has already opined that the deal should provide a "decent tailwind for EPS growth" (for MA). Speaking of opinions, a couple of analysts at Nomura believe that MA is cheap at current valuations and could be seen as safe haven investment given their steady earnings growth.

"Despite a mixed global economy, we delivered solid results for the quarter and for the full year in 2014," said Ajay Banga, president and CEO, MasterCard. "This year is off to a good start with several new wins, as well as renewals of some important customer agreements, with more in the pipeline. Looking ahead, we will continue to be at the forefront of our industry by driving payment innovation with solutions such as MasterPass, and by increasing electronic payments usage globally as demonstrated by our significant expanded acceptance footprint across Africa."

Shares of MA look like a potential trade again. The company recently reported earnings on April 29th. The beat estimates on the bottom line with a profit of $0.89 per share. Revenues were only up +2.7% to $2.23 billion, which was below expectations. Part of the challenge were currency headwinds.

Wall Street seems to think that MA will do well in spite of the tough business environment. The spike higher on April 22nd was news that the country of China was going to open up their market to foreign companies. Previously companies like MA and Visa could only do business in China by partnering with a domestic firm (China UnionPay). Now the Chinese government is opening up the bank card-clearing market to foreigners. This is huge. The Chinese market for this business was $6.8 trillion in transactions last year. Now MA gets a chance to compete for its share of this business.

Shares of MA still have resistance near $93.00. We want to see MA close above $93.25 and then buy calls the next morning with a stop loss at $88.00.

- Suggested Positions -
MAY 11, 2015 - entry price on MA @ 93.48, option @ 5.95
symbol: MA160115C95 2016 JAN $95 call - current bid/ask $5.20/5.40

06/21/15 new stop @ 89.75
05/11/15 trade begins. MA opens at $93.48
05/08/15 triggered with a close @ $93.51 (above $93.25)
Option Format: symbol-year-month-day-call-strike

Current Target: MA @ TBD
Current Stop loss: 89.75
Play Entered on: 05/11/15
Originally listed on the Watch List: 05/03/15

Nike, Inc. - NKE - close: 109.71

06/28/15: Better than expected earnings news helped launch NKE to new all-time highs on Friday. Shares gapped open higher and spent the day hovering just below the $110 level. This marks NKE's fourth weekly gain in a row.

Earnings results came out on Thursday night. Wall Street was expecting a profit of $0.83 per share on revenues of $7.69 billion. NKE delivered $0.98 per share. Revenues were up +4.8%, in spite of a strong dollar, and hit $7.78 billion. On a currency neutral basis NKE's revenues would have been up +13%. Future orders, backing out currency headwinds, would be up +13%, which is above expectations. Gross margins improved last quarter to 46.2%.

Multiple analysts raised their price targets on NKE following its earnings results. Most of these new targets are in the $120-122 range.

While the earnings news is bullish I do expect NKE to see some profit taking, especially if the market drops on the Greek drama. We can watch for support in the $104-106 area. Tonight we'll raise the stop loss to $102.25. No new positions at this time.

Earlier Comments: March 29, 2015:
In Greek mythology Nike is the winged goddess of victory. It's an appropriate brand name for the American athletic wear giant. Nike is the 800-pound gorilla in the industry with annual sales of more than $30 billion.

If you're not familiar with the company, "NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiaries include Converse Inc., which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International LLC, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories."

The company's most recent earnings report was March 19th, after the closing bell. NKE reported its Q3 2015 results. Analysts were expecting a profit of $0.84 a share on revenues of $7.62 billion. NKE delivered a profit of +0.89 a share or +16% from a year ago. Revenues were up +7% to $7.46 billion. However, if you back out the currency headwinds, their revenues were up +13%.

The company reported sales growth across every geographical region. Their gross margins improved 140 basis points to 45.9 percent. Management said their online sales are soaring. Nike.com saw its revenues jump +42% last quarter.

The current quarter is NKE's 2015 Q4 (March-July) and the company said orders for Q4 in North America are up +15%, which is above analysts' estimates of +11.6%. Orders from China are up +11%, also above estimates. In the company's earnings release NKE said, "As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel scheduled for delivery from March 2015 through July 2015 were 2 percent higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 11 percent."

One big concern is the U.S. dollar. Sales in Europe were up +21% but when you factor in euro weakness and dollar strength that sales growth drops to +10%. The strength in the U.S. dollar is a major headwind but after NKE's Q3 results Wall Street feels that the company is managing the currency impact very well. The company is forecasting low double digit sales growth in the current quarter.

Wall Street applauded the results and shares of NKE gapped open higher on March 20th to hit all-time highs. There was a parade of bullish analyst comments. Several firms raised their price target on NKE. Here's a brief list of new price target: $106, $110, $115, $116.00. The point & figure chart is more optimistic as it is forecasting at $125.00 target.

Shares of NKE have seen some profit taking, which isn't a surprise considering the market's recent decline. However, now that NKE has filled the gap, traders jumped in to buy the dip. The stock looks poised to breakout past round-number resistance at $100.00 (again). Tonight I am suggesting investors wait for NIKE to close above $101.00 and then buy calls the next morning with a stop loss at $94.45.

- Suggested Positions -
MAY 11, 2015 - entry price on NKE @ 102.42, option @ 4.20
symbol: NKE160115C110 2016 JAN $110 call - current bid/ask $6.10/6.20

06/28/15 new stop @ 102.25
06/25/15 NKE beats earnings and revenue estimates
06/21/15 new stop @ 99.50
06/07/15 new stop @ 97.85
05/31/15 NKE down last week on rumors it might be involved in the FIFA scandal
05/11/15 trade begins. NKE opens at $102.42
05/08/15 Triggered with a close @ $102.44 (above 102.00)
05/03/15 move the stop loss from 95.75 to 97.45
04/12/15 Strategy update: adjust the trigger to a close above $102.00 and the stop loss to $95.75 (from a close above $101.00 and a stop at $94.45)
Option Format: symbol-year-month-day-call-strike

Current Target: NKE @ TBD
Current Stop loss: 102.25
Play Entered on: 05/11/15
Originally listed on the Watch List: 03/29/15

Starbucks Corp. - SBUX - close: 54.62

06/28/15: We're getting spoiled with SBUX's performance. Another week, another gain. The stock is up seven weeks in a row. Last week another analyst raised their price target, this time to $63.00. Shares ended the week at another record high.

The stock is overbought and will see a correction eventually. I am leaving our stop loss at $49.65. However, I am suggesting that readers sell half their positions immediately on Monday morning to lock in a potential gain. The current bid is over $3.00 on our option.

Trade Description: April 26, 2015:
SBUX shares are soaring to new all-time highs.

The world seems to have an insatiable appetite for coffee. Starbucks is more than happy to help fill that need. The first Starbucks opened in Seattle back in 1971. Today they are a global brand with locations in 66 countries. SBUX operates more than 21,000 retail stores with more than 300,000 workers.

A few years ago Business Insider published some facts on SBUX. The average SBUX customer stops by six times a month. The really loyal, top 20% of customers, come in 16 times a month. There are nearly 90,000 potential drink combinations at your local Starbucks. The company spends more money on healthcare for its employees than it does on coffee beans.

The company's earnings results were only mediocre most of 2014 year. You can see the results in SBUX's long-term chart below. After incredible gains in 2013 SBUX has essentially consolidated sideways in 2014. The good news is that looks the consolidation is over.

Five-Year Plan

Late last year SBUX announced their five-year plan to increase profitability. Here's an excerpt from a company press release:

"The seismic shift in consumer behavior underway presents tremendous opportunity for businesses the world over that are prepared and positioned to seize it," Schultz said (Howard Schultz is the Founder, Chairman, President, and CEO of Starbucks). "Over the next five years, Starbucks will continue to lean into this new era by innovating in transformational ways across coffee, tea and retail, elevating our customer and partner experiences, continuing to extend our leadership position in digital and mobile technologies, and unlocking new markets, channels and formats around the world. Investing in our coffee, our people and the communities we serve will remain at our core as we continue to redefine the role and responsibility of a public company in today's disruptive global consumer, economic and retail environments."

"Starbucks business, operations and growth trajectory around the world have never been stronger, and we are more confident than ever in our ability to continue to drive significant growth and meet our long term financial targets," said Troy Alstead, Starbucks chief operating officer. "We have more customers visiting more stores more frequently, both in the U.S. and around the world, than at any time in our history. And we expect both the number of customers visiting our stores and the amount they spend with us to accelerate in the years ahead. With a robust pipeline of mobile commerce innovations that will drive transactions and unprecedented speed of service, Starbucks is ushering in a new era of customer convenience. We believe the runway of opportunity for Starbucks inside and outside of our stores is both vast and unmatched by any other retailer on the planet."

The company believes they can grow revenues from $16 billion in FY2014 to almost $30 billion by FY2019. To do that they will expand deeper into regions like China, Japan, India, and Brazil. SBUX expects to nearly double its stores in China to over 3,000 locations in the next five years

They're also working hard on their mobile ordering technology to speed up the experience so customers don't have to wait in line so long at their busiest locations. This will also include a delivery service.

Part of the five-year plan is a new marketing campaign called Starbucks Evening experience. The company wants to be the "third place" between home and work. After 4:00 p.m. they will start offering alcohol, mainly wine and beer, in addition to new tapas-like smaller plates.

The company recently launched its first ever Starbucks Reserve Roastery and Tasting Room in Seattle, near their iconic first retail store. The new roastery is supposed to be the ultimate coffee lovers experience. CEO Schultz said they will eventually open up about 100 of these Starbucks Reserve locations.

SBUX is having a pretty good 2015 so far with the stock up +26%, outperforming the broader market. A lot of this gain was thanks to a post-earnings pops. SBUX reported its Q1 2015 results on January 22nd. Adjusted earnings, backing out one-time charges, were $0.80 a share. That's in-line with estimates. Revenues were up +13.3% to $4.8 billion, also in-line with estimates. It was a very strong holiday period for SBUX thanks in part to astonishing gift card sales. The amount of money loaded onto SBUX gift cards during the holidays surged +17% to a record $1.6 billion. One out of every seven Americans received a SBUX gift card. The company also saw significant growth overseas with its China and Asia-Pacific business soaring +85% to sales of $495 million. Their mobile transactions have reached seven million transactions a week. Investors applauded the news anyway and sent SBUX soaring to new all-time highs the next day.

That whole scenario just happened again on Friday with the company delivering exceptional growth. SBUX reported its Q2 (2015) on April 23rd. Earnings of $0.33 a share were in-line with estimates. Revenues were up +17.8% to $4.56 billion, slightly above expectations. It was their strongest growth in four years. Customers are responding well to new drink options and an updated food menu. They're also developing new delivery options, mobile pay options, and alcoholic drinks available at select locations.

Worldwide same-store sales grew +7%. This was significantly above estimates. It also marked the 21st consecutive quarter where SBUX's comparable store sales were +5% or more.

The company issued mixed guidance. The stronger dollar is having an impact. They see fiscal 2015 results in the $1.55-1.57 range. That compares to Wall Street estimates for $1.57 per share. However, the company's revenue estimates are more optimistic. They're forecasting +16-18% sales growth into the $19.1-19.4 billion zone compares to analysts' estimates of $19.1 billion.

The stock market applauded SBUX's results and shares popped to new highs. We do not want to chase it. Shares will likely fill the gap from Friday morning. Tonight I am suggesting a buy-the-dip trigger at $50.00. More nimble traders may want to consider a trigger closer to $49.70 instead.

- Suggested Positions -
APR 28, 2015 - entry price on SBUX @ 50.00, option @ 1.59
symbol:SBUX160115C55 2016 JAN $55 call - current bid/ask $3.10/3.20

06/28/15 Sell half of our call position on Monday, June 29, to lock in a potential gain
06/21/15 new stop @ 49.65
06/07/15 new stop @ 49.25
05/31/15 new stop @ 48.25
04/28/15 triggered @ 50.00
Option Format: symbol-year-month-day-call-strike

Current Target: SBUX @ TBD
Current Stop loss: 49.65
Play Entered on: 04/28/15
Originally listed on the Watch List: 04/26/15

Textron Inc. - TXT - close: 45.63

06/28/15: TXT spent the week fading lower with a drop from $46.50 to $45.50. I remain cautious on this trade. Shares remain in a long-term up trend but the momentum is very slow.

No new positions.

Earlier Comments: February 15, 2015:
TXT is in the industrial goods sector. They deal mostly in the aerospace industry. According to the company, "Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems."

The earnings picture last year was mixed. Better than expected results and bullish guidance helped power a big rally last October. Their most recent earnings report was January 28th. TXT's earnings of $0.76 a share were up +26% from a year ago but 1 cent worse than Wall Street estimates. Revenues were up +16.8% to $4.1 billion, also below estimates.

It's interesting how TXT missed Wall Street's earnings estimates on both the top and bottom line and management lowered their guidance for all of 2015. Yet the stock did not sell off. Normally an earnings miss or weak guidance would spark significant selling. Instead investors just calmly bought the dip and now TXT is breaking out to new multi-year highs.

If bad news like that can't shake the stock lower then the path of least resistance is definitely higher. The last couple of months look like a significant consolidation pattern and now TXT has produced a bullish breakout past resistance in the $44.00-44.50 zone. The point & figure chart is bullish and forecasting a long-term target at $67.00.

Tonight I am suggesting small bullish positions if TXT can close above $45.10. Wait for shares to close above this level and then buy calls the next morning.

- Suggested Positions -
FEB 25, 2015 - entry price on TXT @ 45.30, option @ 3.00
symbol: TXT160115C50 2016 JAN $50 call - current bid/ask $1.36/1.64

06/21/15 new stop @ 43.80
06/07/15 new stop @ 42.90
05/03/15 new stop @ 42.40
04/12/15 new stop @ 41.85
02/25/15 trade begins. TXT opens at $45.30
02/24/15 TXT closed @ $45.33, above our trigger of $45.10
Option Format: symbol-year-month-day-call-strike

Current Target: TXT @ TBD
Current Stop loss: 43.80
Play Entered on: 02/25/15
Originally listed on the Watch List: 02/15/15

Under Armour, Inc. - UA - close: 85.93

06/28/15: The better than expected earnings from larger rival Nike (NKE) was viewed as bullish for UA. Shares ended the week at new two-month highs. I would not chase it here.

Tonight I am raising our stop loss to $78.90.

Trade Description: June 14, 2015:
UA is in the consumer goods sector. They make shoes and athletic wear. According to the company, "Under Armour (UA), the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. The Under Armour Connected Fitnessâ„¢ platform powers the world's largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal."

The athletic shoe and athletic apparel business is very competitive. Nike (NKE) has dominated the space for years. UA is about 10% the size of NKE but it's actively fighting for market share and recently overtook Adidas as the second biggest athletic wear brand inside the United States. Nike had sales of $27.8 billion in 2014. UA is a fraction of that with 2014 sales of $3.08 billion but they saw growth of +32%.

UA has been firing on all cylinders with its earnings results. Most of last year saw the company not only beating Wall Street's estimates but also raising guidance. UA reported their 2014 Q4 results on February 4th. The company reported a profit of $0.40 a share with revenues climbing +31% to $895 million, which was above estimates for $849 million. UA's CEO Kevin Plank, in a recent interview, said his company will grow at 20%-plus in 2015. The company's current estimates are $3.76 billion in sales for the year.

There was a steady stream of analysts raising their price targets on UA after its February earnings report. The company's most recent earnings report was April 21st when UA announced Q1 results. After raising guidance back in February the company reported earnings of $0.05 per share, which was in-line with Wall Street's new estimates. Revenues were up +25.4% to $804.9 million, which beat expectations.

UA management raised their outlook again. They expect 2015 operating income to improve +13-to-15%. UA expects 2015 revenues to rise +23% to $3.78 billion. The stock has rallied sharply into its earnings report and shares suffered some post-earnings depression with a -$12.00 drop (-13.6%) in the next two weeks. The price target upgrades continued but UA spent most of May consolidating sideways inside a narrow range. Finally on June 5th shares of UA broke out past multiple layers of resistance on another upgrade. The stock was upgraded to a "buy" with a $91 price target. Since then UA has been digesting its gains in a sideways consolidation between what should be support at $80 and short-term resistance near $82.00.

Tonight I am suggesting we wait for UA to close above $82.25 and then buy calls the next morning with a stop loss at $75.90.

FYI: I am listing the 2016 calls but investors may want to consider the 2017 January calls if you're willing to pay for the time premium.

- Suggested Positions -
JUN 17, 2015 - entry price on UA @ 83.06, option @ 4.50
symbol: UA160115C90 2016 JAN $90 call - current bid/ask $5.30/5.60

06/28/15 new stop @ 78.90
06/17/15 trade begins: UA opens at $83.06
06/16/15 Triggered: UA closed at $82.78, above our trigger at $82.25
Option Format: symbol-year-month-day-call-strike

Current Target: UA @ TBD
Current Stop loss: 78.90
Play Entered on: 06/17/15
Originally listed on the Watch List: 06/14/15


Akamai Technology - AKAM - close: 71.13

06/28/15: Shares of AKAM were not performing. Last weekend we decided to exit this trade on Monday, June 22nd. AKAM opened at $72.73 on Monday. Shares eventually broke support near $72.00 and have now fallen five weeks in a row.

Readers may want to keep an eye on AKAM since a drop toward support near $65.00 could be a potential entry point for new bullish positions.

- Suggested Positions -
MAR 25, 2015 - entry price on AKAM @ 71.50, option @ 4.15
symbol: AKAM160115C80 2016 JAN $80 call - exit $3.05 (-26.5%)

06/22/15 planned exit
06/20/15 prepare to exit on Monday morning (June 22)
05/17/15 new stop @ 71.75
05/02/15 new stop @ 69.00
03/25/15 Triggered at $71.50
03/22/15 Strategy update: Move the buy-the-dip trigger to $71.50, move the stop loss to $67.90, adjust the option to the 2016 Jan. $80.00 call
Option Format: symbol-year-month-day-call-strike


Current Target: To Be Determined
Current Stop loss: 71.75
Play Entered on: 03/25/15
Originally listed on the Watch List: 03/08/15


Cross Your Fingers, Hope For A Pullback

by James Brown

Click here to email James Brown

New Watch List Entries

DIS - The Walt Disney Co.

Active Watch List Candidates

ADI - Analog Devices Inc.

ATVI - Activision Blizzard Inc.

STZ - Constellation Brands

Dropped Watch List Entries

DNKN has graduated to our active play list.

New Watch List Candidates:

The Walt Disney Co. - DIS - close: 114.99

Company Info

Scrooge McDuck isn't the only one with a wealth of riches these days. Long-term investors in DIS have been rewarded with big gains in recent years. From Mickey Mouse to the thousands of characters owned by Marvel to Pixar, everything DIS touches has turned to gold lately.

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 recent success of movie "Jurassic World", which was produced by Universal (not a Disney company), has generated even more excitement for DIS' upcoming Star Wars films. Jurassic World has broken all sorts of records and was the fastest movie to reach $1 billion in global box office sales. This has analysts expecting even bigger numbers from Star Wars. The next Star Wars film: "The Force Awakens" (episode seven), doesn't hit theaters until December 2015.

Morgan Stanley analyst Benjamin Swinburne is forecasting "Force Awakens" to do almost $2 billion in box office sales. This could boost DIS' bottom line by more than $1 billion. Plus the merchandising associated with Star Wars will bring a bountiful harvest for DIS too. Consumers spend close to $3 billion a year on licensed toys, clothing, and similar merchandise. The Star Wars movies will rake in the money in this category. DIS plans to release a Star Wars movie every year between now and 2020 (six more movies).

The stock surged to new all-time highs back in early May after its Q2 earnings report. Shares followed that rally with a six-week consolidation allowing DIS to digest its gains. A couple of weeks ago DIS started to rally again and broke through major resistance in the $112.00 area. Today the stock is at all-time highs.

Credit Suisse recently upped their price target to $130. Meanwhile the point & figure chart is bullish and forecasting at long-term target of $160.00.

We want to be ready to take advantage of weakness in DIS due to any broader market sell-off. Just because stocks might plunge on the Greece debt story doesn't mean DIS' business is going to change. Any dip near support should be a buying opportunity. Tonight I am suggesting a buy-the-dip trigger at $111.00. We'll start with a stop loss at $107.00.

You could definitely play the 2016 calls but tonight I'm listing the 2017s.

Buy-the-Dip trigger @ $111.00 (use a stop at $107.00)

BUY the 2017 Jan $125 call (DIS170120C125) current ask $8.05

Option Format: symbol-year-month-day-call-strike

Chart of DIS:

Originally listed on the Watch List: 06/21/15

Active Watch List Candidates:

Analog Devices - ADI - close: 65.80

06/28/15: Weakness in the semiconductor stocks weighed on shares of ADI. The stock has fallen toward support at the bottom of its five-week trading range ($65-69) and the bottom of its five-month bullish channel. A breakdown here could jeopardize the long-term up trend. The breakdown hasn't occurred yet so we'll keep ADI on our watch list.

The plan is to wait for ADI to close above $69.00.

Trade Description: May 24, 2015:
Shares of ADI are hitting 15-year highs as investors react positively to its most recent earnings report.

ADI is in the technology sector. They are part of the semiconductor industry. According to the company, "Analog Devices (NASDAQ: ADI) is a world leader in the design, manufacture, and marketing of a broad portfolio of high performance analog, mixed-signal, and digital signal processing (DSP) integrated circuits (ICs) used in virtually all types of electronic equipment. Since our inception in 1965, we have focused on solving the engineering challenges associated with signal processing in electronic equipment.

Used by over 100,000 customers worldwide, our signal processing products play a fundamental role in converting, conditioning, and processing real-world phenomena such as temperature, pressure, sound, light, speed, and motion into electrical signals to be used in a wide array of electronic devices. We focus on key strategic markets where our signal processing technology is often a critical differentiator in our customers' products, namely the industrial, automotive, communications, and consumer markets.

We currently produce a wide range of innovative products—including data converters, amplifiers and linear products, radio frequency (RF) ICs, power management products, sensors based on microelectromechanical systems (MEMS) technology and other sensors, and processing products, including DSP and other processors—that are designed to meet the needs of our broad base of customers."

The company's earnings performance has definitely improved in the last few quarters. Last August they reported earnings that were in-line with estimates as revenues rose +7.9%. The next three quarters in a row have seen ADI beat Wall Street estimates on both the top and the bottom line. Revenues were up +20%, +22.9% and +18.2%, respectively.

Their most recent report was May 19th when ADI reported its Q2 results. Earnings were up +23.7% from a year ago to $0.73 a share, which was a penny above estimates. Management's guidance was in-line with Wall Street estimates and the stock rallied.

ADI's President and CEO Vincent Roche commented on his company's quarterly performance, "We had a very successful second quarter driven by the quality of our innovation, the diversity of our business, and our strong execution. Revenue increased to a record $821 million, and our operating model generated strong cash flows and diluted earnings per share growth that was well ahead of revenue growth. Looking ahead, our book to bill ratio was positive in the second quarter and we are seeing stable order rates across all our end markets. As a result, we are planning for sequential growth in the third quarter and for revenue to be in the range of $825 million to $865 million."

Multiple analyst firms raised their price target on ADI following this report. Shares rallied to multi-year highs. We do not want to chase it here. Broken resistance in the $64-65 zone should be new support. Tonight I am suggesting a buy-the-dip trigger to buy calls at $65.10. We will try and limit our risk with a stop loss at $59.85.

Breakout: Wait for a close above $69.00
Then buy calls the next day with a stop at $61.85

BUY the 2016 Jan $75 call (ADI160115C75)

06/21/15 Strategy Adjustment: new trigger - wait for ADI to close above $69.00 then buy calls the next morning. Adjust the option strike to 2016 Jan $75 call. Adjust the stop loss to $61.85
06/14/15 adjust the entry trigger lower fro $65.10 to $64.10
Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 05/24/15

Activision Blizzard, Inc. - ATVI - close: 25.04

06/28/15: ATVI has held up reasonably well during last week's widespread market decline. The stock did reverse lower on Friday. We have been waiting for a dip to support near $24.00. That could happen soon if the broader market sinks on the Greek story.

Tonight I am tweaking our entry trigger. Move the buy-the-dip trigger down to $23.75. We will adjust the stop loss to $21.85.

Trade Description: May 24, 2015:
Consumer spend more money on video games than they do at the movie theater. ATVI is the biggest with annual sales of $4.58 billion. Electronic Arts (EA) is hot on its heels with revenues of $4.52 billion a year.

ATVI is home to some of the biggest franchises in video game history. According to the company, "Activision Blizzard, Inc. is the largest and most profitable western interactive entertainment publishing company. It develops and publishes some of the most successful and beloved entertainment franchises in any medium, including Call of Duty , Call of Duty Online, Destiny , Skylanders, World of Warcraft , StarCraft , Diablo, and Hearthstone: Heroes of Warcraft. Headquartered in Santa Monica, California, it maintains operations throughout the United States, Europe, and Asia. Activision Blizzard develops and publishes games on all leading interactive platforms and its games are available in most countries around the world."

Investors have been pretty forgiving when it comes to ATVI's recent earnings reports. On February 5th they beat the bottom line estimate but missed the revenue number. Revenues were down -2.6% from a year ago. ATVI blamed currency headwinds for the revenue miss since half of their sales are outside the U.S. and represent a significant chunk of their profits. Plus, the video game business is prone to lumpy quarters as sales rise and fall on new releases and expansions. Management lowered their Q1 and 2015 guidance.

ATVI just reported its Q1 results on May 6th. Earnings per share fell -15.7% from a year ago to $0.16 but that was actually 9 cents better than expected. Revenues fell again, this time down -8.9%. Management lowered their Q2 guidance but they raised their fiscal 2015 earnings guidance above Wall Street estimates. That was enough to send shares of ATVI higher. A few analysts have commented that ATVI's 2015 guidance is too conservative.

Bobby Kotick, Chief Executive Officer of Activision Blizzard, commented on his company's quarterly results, "...This deepening level of engagement with a widening base of players across our franchises is what drove another successful quarter. We delivered better-than-expected Q1 results, increased our 2015 non-GAAP revenue outlook to $4.425 billion and earnings per share outlook to $1.20. Last quarter, on a non-GAAP basis, we delivered record higher-margin digital revenues of over half a billion dollars a Q1 record on an absolute basis and an all-time high on a percentage basis."

There were a number of headlines about how ATVI's Warcraft MMORPG saw its subscriber numbers fall from 10 million to 7.1 million in the last quarter. Investors don't seem to care. The Warcraft game is a cash cow but it's 11 years old. Investors could be looking forward.

ATVI said their new Destiny sci-fi shooter game and the Blizzard's fantasy card game have more than 50 million registered players (between them) with over $1 billion in sales.

ATVI also has several new titles coming out. They're on the verge of releasing "Heroes of the Storm", which will take on the current category champion "League of Legends" for the MOBA-style video game. More than ten million people have already signed up for the Heroes beta. ATVI has announced the next iteration of their Call of Duty franchise (CoD), which will be "Call of Duty: Black Ops III", which is another major cash-generating franchise. ATVI is also launching a new game called "Overwatch" and they'll release a new version of "Guitar Hero", which had 40 million players at its peak.

Currently shares of ATVI are up three weeks in a row and look a little bit overbought. Broken resistance near $24.00 should be significant support. Tonight I am suggesting a buy-the-dip trigger at $24.25 with a stop loss at $21.85.

Buy-a-dip trigger: $23.75 (intraday trigger, stop 21.85)

BUY the 2016 Jan $25 call (ATVI160115C25)

06/28/15 adjust the entry trigger to $23.75 and the stop to $21.85.
06/21/15 move the stop loss to $22.85
Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 05/24/15

Constellation Brands - STZ - close: 117.40

06/28/15: STZ followed the market lower last week. Shares remain inside the $115-122 trading range. If STZ breaks down under $115.00 we'll remove it as a candidate. Our suggested entry trigger hasn't changed.

More conservative investors may want to wait until after STZ reports earnings on July 1st. You could evaluate an entry point after you see the market's reaction to STZ's earnings results and guidance.

Trade Description: June 7, 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).

Since their most recent earnings report a couple of analysts have upgraded their price targets for STZ into the $140-142 region.

Technically the stock's pullback this past week actually looks like the second half to a bearish double top pattern. Yet shares have not broken the bullish trend of higher lows just yet. If STZ bounces we could see it hitting new all-time highs soon. The resistance to watch is in the $121.85 region. I am suggesting we wait for STZ to close in the $122.00-123.00 range and then buy calls the next morning with a stop loss at $116.85.

Investors should note that STZ is scheduled to report earnings on July 1st, before the opening bell. More conservative traders may want to hesitate on launching any trades until after we see how the market reacts to this earnings report.

Breakout trigger: Wait for a close in the $122-123 zone
Then buy calls the next day with a stop at $116.85

BUY the 2016 Jan $125 call (STZ160115C125)

Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 06/07/15