Option Investor

Daily Newsletter, Sunday, 7/12/2015

Table of Contents

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

Leaps Trader Commentary

Stocks Jostled By Foreign Headlines

by James Brown

Click here to email James Brown

It was a volatile week for the markets both here and abroad as stocks ricocheted from one headline to another. Last Monday stocks were reacting to the Greek vote of "no" to accept the Troika's new bailout terms. Tuesday saw a big rally off the market's intraday lows only to be crushed again the following session. One of the big stories on Wednesday was a shutdown of the NYSE where trading was halted for almost four hours. This was preceded by a network-wide outage that grounded all flights for United Continental. It was followed by a temporary outage of the Wall Street Journal website. The U.S. government and the NYSE claim that hackers were not responsible for the shutdown.

Rumors persisted throughout the week that Greek leaders had drafted a proposal that accepted a lot of their creditors' demands. On Friday we saw stocks rise around the world. Chinese stocks rallied as the government throws billions at their falling stock market to stop the sell-off. In Europe the market rallied on a new proposal from Greece that was much more cooperative and increased the likelihood of a deal. Meanwhile here in the U.S. the Federal Reserve Chairman Janet Yellen made headlines with her desire to raise rates but concerns about the labor market.

Asian market rally on Friday (by YahooFinance)

European market rally on Friday (by YahooFinance)

The small cap Russell 2000 and the big cap Dow Jones Industrials both managed a gain for the week. The NASDAQ composite and S&P 500 closed down for the week although the decline in the S&P 500 was so small it might as well have been unchanged. Semiconductors were big losers with a -3.8% drop in the SOX index last week. Crude oil turned south with a -6.5% decline. Oil inventories in the U.S. rose for the second week in a row when analysts were expecting a decline. The IEA lowered their global crude oil demand forecast. Plus there is the potential for a deal with Iran and all of these factors pressured oil lower. This weighed heavily on the oil and oil service stocks.


Two weeks ago the world was shocked when Greek Prime Minister Alexis Tsipras declared a referendum on whether or not Greece would accept new bailout terms by its creditors (the Troika: EU, ECB, and IMF). A week ago we were surprised again. Previously, polling among Greeks showed a vast majority of them wanted to stay in the Eurozone and would vote "yes" on the referendum. Thus it was big surprise when the "no" vote won with a 61% majority.

On Wednesday (July 8th) the Wall Street Journal was reporting that Greece would submit a new 3-year bailout proposal. Sure enough the next day Greek leaders did submit a new proposal. This time it was a shock for the Greeks. The new proposal was almost identical to the one that Tsipras had rejected two weeks early and forced his people to vote on. The majority voted no and yet Tsipras essentially capitulated to nearly all of the Troika's demands. The new deal would force Greece to cut spending, raise more taxes, and modify their public pensions and retirement age.

Details emerged on Friday. The new proposal is for 53.5 billion euros in rescue funds to pay for all of Greece's loan obligations between now and June 2018. The Greek Parliament needs to approve this new offer and then it must be approved by the Eurozone. One main issue separates the new Greek proposal from the one the Troika presented two weeks ago and that is debt restructuring. Greece wants some of its debt erased. Unfortunately Germany's Finance Minister Wolfgang Schaeuble said debt forgiveness would be impossible since it infringes on "the system of the European Union." What he didn't say is that if the Eurozone forgave any debt from Greece then Spain and Portugal would immediately want the same deal for their bailout debts.

One big question that many Greeks are pondering is why did Tsipras betray them? He urged his country to vote "no". They obliged with 61% voting "no". So why did Tsipras flipflop and present a deal that was nearly identical to the one he previously maligned and rejected? His own party, the leftwing Syriza, is shocked by his sudden move to accept a deal. There have been reports of a rebellion among his supporters. Tsipras could have a tough fight ahead of him to get a majority of Greek parliament to accept the new deal.

I'm sure most Greeks are wondering if and when the banks will open again. Greek banks have been closed for two weeks and no one knows when they will reopen. There has been a growing worry that if they don't open soon they never will. A week ago it was feared that they were down to their last 500 million euros. They reduced the amount of money citizens could withdraw from ATMs from 60 euros to 50 euros. Yet that hasn't stopped the outflow, which has been estimated at almost 100 million euros a day. Customers have been lining up at midnight so they'll be first in line to withdraw cash before the ATMs run out.

As of Sunday there seemed to be some hope that Greece and its creditors were closer to another deal. Eurozone President Jeroen Dijsselbloem said the two sides have "come a long way" in the last two days of negotiations. French leaders have been very positive on Tsipras' reversal and encouraging a deal among the Eurozone members. Yet German Chancellor Angela Merkel, who has been feeling pressure at home to reject a deal, is calling for Greece to surrender its fiscal sovereignty to restore trust to its creditors. The next big deadline for Greece is July 20th where they are supposed to make a 3.5 billion euro debt payment to the European Central Bank.

Chinese Market Volatility

The bigger story last week may have been the bear market plunge in the Chinese stock market. Last weekend the Chinese government announced they were injecting 1.8 trillion yuan of liquidity into the financial system. This followed an interest rate cut the prior week. This liquidity news helped spark a +8% bounce in the stock market on Monday but gains faded to just +2.4% by the closing bell.

The sell-off continued on Tuesday with a -1.3% decline and on Wednesday with a -5.9% plunge. The Shanghai index was down more than -30% in just the last three weeks. Investors were panicking. Corporations were panicking as well. By Wednesday nearly half of companies with class-A shares on the Shanghai market had requested their stock halted for trading. This is a blatant attempt to avoid any further losses in their market value. We are talking about more than 1,300 companies. Could you imagine the reaction if that happened on the NYSE? In China a company can request their stock be halted and it can stay halted for months or even years if they get regulatory approval.

The three-week plunge in the Chinese stock market had erased more than $3.2 trillion worth of market value. To put that number into perspective, that's like seeing the French stock market crash and burn to zero. The average PE on the Chinese market had fallen from 108 to 57. Compare that to the S&P 500, which currently trades with a PE of 20.

Chart of the Shanghai Stock Exchange

The Chinese government has been desperately trying to stop the slide and so far they have resorted to a number of tactics. They convinced twenty of China's biggest brokerages to spent $19 billion (about 120 billion yuan) on stocks, and these firms promised not to sell until the market had rebounded to a specific level. They have suspended all IPOs for further notice. They have announced a ban on selling stock if you're a major stockholder or corporate executive of a publically traded company for the next six months. Two weeks ago they announced a special task force to investigate market manipulation. This past week they announced another task force to look into short sellers.

The final trick may have been the news out Thursday morning where the People's Bank of China (central bank) said they would lend money to the state-run Securities Finance Corp. who will use the money to "support" the stock market. That's on top of the 260 billion yuan (about $42 billion) the Securities Finance Corp. has already lent to 21 brokerages to buy stocks.

It appears that this central bank backstop was enough to stop the market slide. On Thursday the Shanghai index bounced +5.8%. The rally continued on Friday with a +4.5% gain. It was the biggest two-day rally since 2008.

The question now is what happens next. China has been trying to boost consumer spending for years. They see how 70% of the U.S. economy is consumer spending and they want their 1.35 billion people to spend more and boost their economy, which is growing at its slowest pace in years. The government had been encouraging people to invest in the stock market. Leaders were probably hoping the wealth effect, when consumer feel wealthy because of their stock holdings, would generate more spending.

Now the opposite could happen. Yes, it is true that prior to the sell-off the Chinese stock market had doubled (+100%) in less than a year. Unfortunately, as humans, we remember pain a lot more vividly. The sell-off in the last three weeks may have scarred investor sentiment. There is a concern among analysts and investors that the Chinese market sell-off may hurt consumer spending going forward. UBS China analysts Wang Tao is arguing this will not happen. In a note out on Friday, Tao suggested that any impact to the Chinese economy by the market decline will likely be limited. Stocks only account for about 12% of household wealth in China.

Economic Data

There was not any significant economic data for the U.S. last week. Any report would have been overshadowed by the Chinese market sell-off and Greek crisis anyway. We did hear from Federal Reserve Chairman Janet Yellen on Friday. She spoke in Cleveland and repeated her desire to raise rates later this year. However, she claims the outlook for the U.S. economy and labor market remains "highly uncertain". This could be her excuse to hold off on raising rates. The Fed hasn't raised rates since 2006. Their lending rates have been near zero since 2008.

Yellen speaks before the House and the Senate this week. She will probably be asked directly by both congressmen and senators on when the Fed will raise rates next. You might recall that the IMF has twice asked the Fed in the last few weeks to postpone any rate hikes until 2016. The IMF warns that raising rates now could stall the U.S. economy.

There are four more FOMC meetings between now and yearend. Current consensus among analysts suggest the Fed is likely to raise rates in December this year.

Overseas Economic Data

It was a relatively quiet week for economic data overseas as well. We did hear from a few central banks. The Reserve bank of Australia left their interest rate unchanged at 2.0%. The Bank of Korea left their interest rate unchanged at 1.5%. The Bank of England also left their rate unchanged at 0.5%.

Meanwhile Germany said their industrial production in May was flat for the month +0%, which was less than expected and below April's +0.6% gain. Germany also reported factory orders in May were up +0.2%, which is a sharp drop from the prior month's +2.2% gain. Spain announced that their industrial production in May was up +3.4%. That's not only above expectations but up sharply from April's +1.7% gain.

Major Indices:

It was a volatile week for the S&P 500 with the index churning sideways between support near 2,045 and resistance in the 2,085 region. The big bounce on Friday left the S&P 500 virtually unchanged for the week and up +0.9% year to date.

If the market rallies the S&P 500 faces resistance around 2,085 and again near 2,100 and its 50-dma. If stocks sink the index should find support near 2,040 and near the 2,000 mark.

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

chart of the S&P 500 index:

The NASDAQ composite fell to round-number support near 4900 before bouncing. Coincidentally this lined up with a bounce from a bullish trend line of higher lows going back to the October 2012 low.

The NASDAQ did post a loss for the week and that reduced its 2015 gains down to +5.5%. The 5,000 level is immediate resistance. The 50-dma overhead near 5,040 is also potential resistance. Although I suspect that if the market rallies we could see the NASDAQ run towards resistance near 5,100. On the other hand, if stocks retreat, we can look for short-term support at 4,900 and then again near 4,800 (and its 200-dma near 4,815).

chart of the NASDAQ Composite index:

Weekly chart of the NASDAQ Composite index:

The small cap Russell 2000 index ($RUT) eked out a gain for the week thanks to the big bounce on Friday (+1.4%). Unfortunately the rally on Friday stalled right at resistance beneath the simple 50-dma. The index is still below its prior trend line of support, which is now new resistance.

The 1,250-1,280 area could be really tough for the $RUT to work through with a lot of congestion in that area. If stocks retreat then the 1,200-1,220 area should offer some support. Year to date the $RUT is up +3.9%.

chart of the Russell 2000 index

Economic Data & Event Calendar

The week ahead is very busy for the calendar. There are several economic reports in the U.S. including both the New York and Philadelphia regional fed surveys. We'll also see the wholesale and retail inflation reports (PPI and CPI).

The ECB is unlikely to change its interest rate policy midweek but markets will be paying attention to Draghi's press conference. Plus, Yellen speaks for two days in the U.S. capital.

We are also in the early stages of Q2 earnings season.

- Monday, July 13 -
Latest deadline for the Iranian nuclear negotiations

- Tuesday, July 14 -
U.S. Retail Sales for June
Import/Export prices
Business inventory data
Eurozone Industrial Production

- Wednesday, July 15 -
Producer Price Index (PPI)
New York Empire State manufacturing data
U.S. Industrial Production
Federal Reserve Beige Book
Bank of Japan rate decision
Fed Chairman Yellen testimony before the House

- Thursday, July 16 -
Fed Chairman Yellen testimony before the Senate
Philadelphia Fed survey
NAHB Housing market survey
ECB interest rate decision
ECB President Mario Draghi press conference

- Friday, July 17 -
Consumer Price Index (CPI)
Housing Starts & Building Permits
University of Michigan Consumer Sentiment Survey

Additional dates to be aware of:

July 19th - Eurozone Summit on Greece
July 29th - FOMC meeting (end of two-day meeting)

Looking Ahead:

Hopefully investor attention will focus on earnings. Right now expectations are relatively low and that should make it easier for companies to beat estimates. There are almost 40 S&P 500 companies reporting earnings in the week ahead. These include several large banks and financial companies (BAC, BLK, C, GS, JPM, and WFC). We'll also hear from technology companies like Google (GOOG) and Intel (INTC).

It's probably wishful thinking on my part to hope the market focuses on earnings and not China or Greece. If the Chinese market continues to bounce it will certainly help. The Chinese government might be able to prop up their market for a little while but it won't last forever. Meanwhile the Greece story will be front and center on Monday as the Troika is expected to formally reply to Greece's proposal submitted last week. Everyone says the two sides are close to a deal. I'm just surprised Greece hasn't seen more unrest considering Tsipras' unexpected reversal.

Iran Nuclear Negotiations

Another big story for Monday could be the Iran nuclear negotiations. The last deadline was July 7th but they blew past that and gave themselves until Monday night. It's the 7th time they have extended the deadline during the current round of negotiations. It seems that nerves are getting raw among the negotiators with reports of shouting matches between U.S. and Iran diplomats.

Meanwhile the U.S. is working on $6 billion in military sales to our allies in the Middle East. As Iran's regional power grows the country's neighbors are feeling uneasy. According to Bloomberg the U.S. is planning to sell radar systems, hellfire missiles, and military helicopters.

Another story you may not have heard much about is Iran giving a $1 billion line of credit to the Syrian government led by President Bashar al-Assad. The U.S. wants Assad to step down and a new government to start that is "inclusive" of all the people of Syria. Shiite Iran is supporting fellow Shiite Assad who is battling Sunni terrorists from ISIS.

If Iran and the P5+1 nations do agree to a deal it will likely spark another decline in oil prices. If they don't, then oil could spike higher on geopolitical fears of a military option to degrade Iran's nuclear infrastructure.

This Week

The U.S. stock market will likely be held captive to headlines overseas. Investors will be watching the Chinese market for signs of stabilization. They will also be watching for the next move in the Greek negotiations.

~ James


Portfolio Update

by James Brown

Click here to email James Brown

Current Portfolio

Portfolio Comments:

Stocks had a lot to digest last week. There was the ongoing drama in Europe with the Greek debt crisis. The Chinese market was crashing. The NYSE had a four-hour trading halt and Fed Chairman Yellen still wants to raise rates.

The market's widespread volatility last week was too much for a handful of our trades. ANTM, EWI, FEYE, GILD, and TXT have been stopped out.

I have updated the stop loss on DATA, ITB, 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

Captive To Headlines

by James Brown

Click here to email James Brown

- New Trades -

Editor's Note:

(July 12, 2015)

It was a confusing week for the U.S. market with big swings in both directions. Neither bulls or bears could generate enough momentum so the major indices just churned sideways, albeit somewhat violently.

Europe seems close to actually getting a deal done with Greece in spite of the prior week's "no" vote on a deal. Iran seems close to getting a deal as well as negotiations over their nuclear program continue to stretch on. Meanwhile China's market is bouncing after a very painful -30% plunge in the last three weeks. These could all be big stories again in the week ahead. The U.S. markets could be held captive to headlines overseas.

Without any clear direction in the U.S. market I am hesitant to launch new positions tonight. However, we are seeing some strength among individual names. Tonight I am adding GD and HSIC to the watch list. Plus, FEYE, which was stopped out last week, has been re-added to the watch list.

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

China & Greece Rattle The Market

by James Brown

Click here to email James Brown

Editor's Note:

It was a volatile week for the market. Several trades were stopped out.

Closed Plays

ANTM, EWI, FEYE, GILD, and TXT hit our stop loss.

Play Updates

Apple Inc. - AAPL - close: 123.28

07/12/15: AAPL displayed some relative weakness midweek. Shares plunged toward round-number support at $120 and technical support at its 200-dma. Shares hit an intraday low of $119.22 on Thursday. The market's big bounce on Friday helped fuel the oversold bounce in AAPL and shares rebounded +2.6%, although still at a loss for the week.

There seems to be some nervousness around AAPL's Q2 results ahead of their earnings report coming in the next couple of weeks. Assuming the market doesn't crash between now and earnings on July 21st, I wouldn't be surprised to see AAPL trade sideways in the $120-125 zone until its earnings announcement.

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 $10.30/10.40

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: 80.59

07/12/15: Traders bought the dip in ADBE near its rising 50-dma. Shares bounced back above support in the $80.00 area. I am tweaking my comments from last week. Wait for a close above $81.75 before considering new bullish positions.

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 $3.95/4.05

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

Capital One Financial - COF - close: 87.67

07/12/15: Traders bought the dip in COF near $86.00. The stock's bounce managed to pare its loss for the week to less than $1.00. While I would be tempted to buy calls on a dip near $85.00 support I am suggesting investors wait until after COF reports earnings.

No new positions at this time.

FYI: COF's earnings are July 23rd.

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 $2.90/4.00

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: 121.01

07/12/15: DATA displayed relative strength with a $4.00 rally last week. The bullish trend of higher lows remains intact. Tonight we are raising the stop loss to $112.75.

No new positions at this time.

FYI: DATA's earnings are expected on July 29th.

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 takeover 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 $19.00/21.70

07/12/15 new stop @ 112.75
06/29/15 Sell half of position. DATA opens lower at $115.40
2016 Jan $110 call exit $15.31 (+26.5%)
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: 112.75
Play Entered on: 04/27/15
Originally listed on the Watch List: 04/26/15

Dunkin' Brands Group - DNKN - close: 55.27

07/12/15: DNKN was downgraded to a "neutral" by Goldman Sachs last week but the news didn't have much impact. Shares ended the week unchanged, which isn't bad considering the market's volatility.

Investors may want to consider new positions on a close above $55.65. However, I am suggesting readers wait until after we see the market's reaction to the company's earnings report first.

FYI: DNKN is scheduled to report earnings on July 23rd.

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 $1.15/1.55

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

Facebook, Inc. - FB - close: 87.95

07/12/15: FB ended the week on a strong note. Shares outperformed the market with a +2.4% gain. The stock remains stuck in an $85.00-88.20 trading range but FB looks poised to breakout of this range soon.

I am not suggesting new positions at this time.

FYI: FB's earnings are July 29th.

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 $5.80/5.95

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

Hanesbrands Inc. - HBI - close: 33.69

07/12/15: HBI dipped to technical support at its simple 100-dma and bounced. Shares pared their loss for the week to less than 30 cents.

I am not suggesting new positions at this time. The $34.80 level remains overhead resistance.

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 $1.55/1.90

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: 27.98

07/12/15: The ITB did not see that much volatility last week. The ETF managed to post a gain for the week as well. Shares look like they're poised to rally past the June high if the market cooperates.

Thursday could be interesting as the market reacts to the monthly NAHB Housing market survey, which is a confidence survey among the biggest homebuilders.

Tonight I am raising our stop loss to $25.90, which is just below technical support at the 200-dma, currently near $26.00.

No new positions at this time.

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 $0.70/1.00

07/12/15 new stop @ 25.90
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: 25.90
Play Entered on: 02/11/15
Originally listed on the Watch List: 01/11/15

MasterCard Inc. - MA - close: 94.62

07/12/15: MA got some bad press on Friday but it did not seem to impact the stock's rally. EU regulators are accusing MasterCard of charging excessive fees. The European Commission antitrust department did a two-year investigation into MA's business and how it impacts cross-border trade.

The EU did file formal charges against MA. Now the company gets to respond. If EU regulators win this legal battle then MA could be fined up to 10% of its global annual turnover, which was $9.5 billion last year.

This story should make investors cautious on new bullish positions. I am not suggesting new positions at this time.

FYI: MA's earnings are July 29th.

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 $5.55/5.80

07/10/15 EU files charges against MA regarding excessive fees
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: 110.52

07/12/15: NKE managed to ignore most of the market's volatility last week. Shares just hovered near all-time highs in the $109-111 range.

I am not suggesting new positions at this time. Well adjust our stop loss up to $104.25.

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 $6.65/6.75

07/12/15 new stop @ 104.25
07/05/15 new stop @ 103.25
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: 104.25
Play Entered on: 05/11/15
Originally listed on the Watch List: 03/29/15

Starbucks Corp. - SBUX - close: 54.57

07/12/15: SBUX bounced off its trend line of support and closed virtually unchanged for the week (down five cents).

News that SBUX has raised prices on most of its coffee drinks is bullish. Depending on the drink, prices went up five cents to 20 cents each. At the same time SBUX is paying lower coffee prices to its suppliers. This should mean stronger margins going forward

The stock looks poised to breakout to new all-time highs soon. No new positions at this time.

FYI: SBUX's earnings are July 23rd. Comments:
07/05/15: Traders also bought the dip in SBUX. Shares slipped toward their rising 20-dma and bounced, trimming their losses for the week. Goldman Sachs added SBUX to their "conviction buy" list last week. Another firm raised their price target on SBUX to $64.00.

Last weekend we decided to take some money off the table. The plan was to sell half of our positions on Monday morning, June 29th. Unfortunately SBUX gapped open lower like most of the market. SBUX opened at $53.87. The option opened at $2.67 (+67.9%)

No new positions at this time.

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 $3.05/3.15

06/29/15 Sold half, SBUX gapped down. Option exit $2.67 (+67.9%)
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

Under Armour, Inc. - UA - close: 86.24

07/12/15: UA displayed relative strength last week. Shares bounced off their rising 20-dma and rallied to a new two-month closing high. I would be tempted to buy calls at current levels. However, it might be safer to wait and see how the market digests UA's earnings report before initiating new positions.

We are raising the stop loss to $79.75.

FYI: UA's earnings are July 23rd.

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 $5.20/5.70

07/12/15 new stop @ 79.75
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: 79.75
Play Entered on: 06/17/15
Originally listed on the Watch List: 06/14/15


Anthem Inc. - ANTM - close: 159.73

07/12/15: ANTM encountered more selling pressure on Monday and shares hit our stop loss at $159.00 on Monday morning (July 6th). ANTM spent the rest of the week churning sideways on either side of $160.00.

- Suggested Positions -
MAY 18, 2015 - entry price on ANTM @ 162.00, option @ 7.95
symbol: ANTM160115C170 2016 JAN $170 call - exit $6.15 (-22.6%)

07/06/15 stopped out
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

iShares MSCI Italy Capped ETF - EWI - close: 15.30

07/12/15: It was an extremely volatile week for Europe and that was especially true for shares of the EWI. Fears and hopes over a Greek deal or no deal sent the EWI to low of $13.66 on Tuesday and a high of $15.33 on Friday.

For the week the EWI fell -8.8% (Monday-Tuesday) and then rallied +12% off Tuesday's lows. Our play was stopped out on Monday with the gap down below our stop loss.

- Suggested Positions -
APR 07, 2015 - entry price on EWI @ 15.31, option @ 2.35
symbol: EWI170120C15 2017 JAN $15 call - exit $1.20 (-48.9%)

07/06/15 stopped out on gap down @ 14.29. Stop was $14.70
07/05/15 EWI will likely gap down on Monday morning in reaction to Greek vote
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

FireEye Inc. - FEYE - close: 49.69

07/12/15: It was a frustrating week for me concerning the FEYE trade. I noted last week that our stop might be a little too high and that maybe we should move it to below support near $45.00.

Market volatility on Tuesday helped push FEYE to a new one-month low at $45.35 before bouncing. Shares hit our stop loss at $45.85. As of today FEYE has rebound and looks poised to breakout past resistance near $50.00 soon.

Our play was closed on July 7th but I still believe FEYE is a bullish candidate. We're adding it back to the watch list tonight.

- Suggested Positions -
JUN 02, 2015 - entry price on FEYE @ 47.40, option @ 3.90
symbol: FEYE160115C55 2016 JAN $55 call - exit $3.00 (-23.0%)

07/07/15 stopped out
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: 113.74

07/12/15: GILD underperformed its peers in the biotech space last week. Shares fell toward technical support at the rising 50-dma and hit our stop loss in the process at $113.45.

- Suggested Positions -
MAY 15, 2015 - entry price on GILD @ 109.05, option @ 7.75
symbol: GILD160115C115 2016 JAN $115 call - exit $8.50 (+9.6%)

07/07/15 stopped out @ 113.45
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

Textron Inc. - TXT - close: 43.68

07/12/15: We have been flirting with the idea of closing our TXT trade for lack of performance. The stock's breakdown this past week took care of it for us. Shares fell toward support near $43.00 and its 200-dma. TXT hit our stop los sat $43.80.

- Suggested Positions -
FEB 25, 2015 - entry price on TXT @ 45.30, option @ 3.00
symbol: TXT160115C50 2016 JAN $50 call - exit $0.96 (-68.0%)

07/06/15 stopped out
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


Cyber Security, Defense Contractor, and Medical Equipment

by James Brown

Click here to email James Brown

New Watch List Entries

FEYE - FireEye, Inc.

GD - General Dynamics

HSIC - Henry Schein, Inc.

Active Watch List Candidates

ATVI - Activision Blizzard Inc.

DIS - The Walt Disney Co.

STZ - Constellation Brands

Dropped Watch List Entries


New Watch List Candidates:

FireEye, Inc. - FEYE - close: 49.69

Company Info

We recently had FEYE on the LEAPStrader newsletter as a bullish candidate. The play was stopped out this past week thanks to the market's volatility and a stop loss that may have been a little too tight. FEYE recovered and now looks poised to resume its up trend.

I see last week's rebound as a new opportunity for bullish investors. Jump to the bottom of this play for new entry details.

Here's our previous play description:
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.

(July 12th update): Last week FEYE dipped toward multiple layers of support and rebounded. Today the stock is hovering just below round-number resistance at $50.00. Tonight I am suggesting we wait for FEYE to close in the $50.25-51.25 range and then open bullish positions the next morning with a stop loss at $44.85.

We're not setting a target tonight but the point & figure chart is forecasting a long-term target of $85.00.

NOTE: FEYE is scheduled to report earnings on July 30th.

Breakout trigger: Wait for FEYE to close in the $50.25-51.25 range
Then buy calls the next morning with a stop at $44.85.

BUY the 2016 Jan $60 call (FEYE160115C60) current ask $3.15

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

Chart of FEYE

Originally listed on the Watch List: 07/12/15

General Dynamics - GD - close: 146.10

Company Info

The last time we had GD in the newsletter was back in November 2014. Shares have spent the last seven months building a massive consolidation in the $130-146 range. The stock could be poised for a major breakout higher.

GD is considered part of the industrial goods sector. The company is a huge aerospace and defense company. They have four significant segments: aerospace, combat systems, information systems, and marine systems (ships and submarines). The defense industry in the U.S. has been saddled with significant budget cuts due to the 2011 sequestration deal that will shave $500 billion from U.S. defense spending from 2012 through 2021. The industry has managed to thrive in spite of these budget cuts.

GD has beaten Wall Street's earnings estimates seven quarters in a row. They're also beating analysts revenue estimates as well. Margins have been steadily improving.

The world isn't getting any safer and the major defense contractors have been working on boosting their overseas sales just in case the U.S. decides to cut defense spending again. Considering the current state of world affairs with a growing military rival in China, a new cold war brewing with Russia, and an openly hostile ISIS, defense spending should stay healthy.

I mentioned earlier that GD had consolidated sideways for the last seven months. Today it's on the verge of a bullish breakout higher. The point & figure chart is already bullish and forecasting at $175.00 target.

Friday's intraday high was $146.98. I am suggesting we wait for GD to close above $147.00 and then buy calls the next morning with a stop loss at $141.75.

Breakout trigger: Wait for GD to close above $147.00
Then buy calls the next morning with a stop at $141.75

BUY the 2016 Jan $160 call (GD160115C160) current ask $2.45

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

Chart of GD:

Originally listed on the Watch List: 07/12/15

Henry Schein, Inc. - HSIC - close: 145.47

Company Info

HSIC has been relatively resistant to the market's ups and downs lately. That's a good thing considering some of the recent volatility in stocks.

HSIC is in the services sector. They're part of the medical equipment industry. According to the company, "Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners. The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites. A FORTUNE 500 Company and a member of the S&P 500 and NASDAQ 100 Indices, Henry Schein employs more than 18,000 Team Schein Members and serves more than one million customers.

The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a selection of more than 100,000 branded products and Henry Schein private-brand products in stock, as well as more than 150,000 additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.

Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 30 countries. The Company's sales reached a record $10.4 billion in 2014, and have grown at a compound annual rate of approximately 16 percent since Henry Schein became a public company in 1995.

HSIC has managed to beat Wall Street estimates the last couple of quarters. Revenue growth has been negatively impacted by foreign currency headwinds but they're still seeing growth. Analysts are only forecasting +3.3% revenue growth in 2015 but they expect that to almost double in 2016 to +6.4%.

Technically the stock looks bullish with a breakout from a major consolidation pattern back in June. The point & figure chart shows a quadruple top breakout buy signal with a $195.00 target.

Shares of HSIC have been churning sideways in the $142-146 range the last couple of weeks. If it can breakout we want to be ready. Tonight I am suggesting a trigger to buy calls if HSIC can close above $146.50.

FYI: HSIC is expected to report Q2 earnings in early August.

Breakout trigger: Wait for HSIC to close above $146.50
Then buy calls the next morning with a stop at $139.75

BUY the 2016 Jan $155 call (HSIC160115C155) current ask $3.90

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

Chart of HSIC:

Originally listed on the Watch List: 07/12/15

Active Watch List Candidates:

Activision Blizzard, Inc. - ATVI - close: 25.36

07/12/15: It looks like ATVI is not going to cooperate with our buy-the-dip plans. Shares rallied last week and appear to be breaking out from what looks like a bull-flag pattern over the last few weeks.

More aggressive traders may want to consider buying calls on a close above $25.70. I am suggesting a new entry point tonight. We'll wait for a close above $26.15 and then buy calls the next morning.

Please note that ATVI could be volatile following its earnings report on August 4th. More conservative investors may want to wait until August 6th before considering new positions.

We will update the option strike as well.

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.

trigger: Wait for a close above $26.15, then buy calls the next morning. Start with a stop loss at $23.65.

BUY the 2017 Jan $30 call (ATVI170120C30) current ask $1.79

07/12/15 new entry strategy: Wait for a close above $26.15, then buy calls
Use the 2017 Jan $30 call
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

The Walt Disney Co. - DIS - close: 116.44

07/12/15: The breakout past resistance near $115.00 is bullish. Yet I do not want to chase DIS at current levels. We will adjust our buy-the-dip trigger to $113.55.

Trade Description: June 28, 2015:
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 @ $113.55 (use a stop at $107.00)

BUY the 2017 Jan $125 call (DIS170120C125)

07/12/15 adjust the trigger to $113.55
07/05/15 move the trigger to $112.00
Option Format: symbol-year-month-day-call-strike

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

Constellation Brands - STZ - close: 116.04

07/12/15: This may be STZ's last week on our watch list. Shares have been hovering in the $115-118 range. It looks like the four-week trend of lower highs is going to produce a bearish breakdown under support at $115.00.

If STZ doesn't show some improvement this week then we'll remove it. Currently our suggested entry point is a close in the $122-123 range.

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)

07/01/15 STZ reports Q1 earnings above estimates and raises 2016 guidance
Option Format: symbol-year-month-day-call-strike

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