Option Investor

Daily Newsletter, Thursday, 5/21/2015

Table of Contents

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

Market Wrap

Struggling With New Highs

by Thomas Hughes

Click here to email Thomas Hughes
The market struggled to make new highs as new data suggest upward momentum in the economy.


The debate rages on over the trajectory of the US economy and FOMC rate hike timeline. Today's data was another mixed basket of results that both supports ongoing economic trends and leaves the timing of Fed policy changes “data dependent”.

Early trading was affected by events in overseas markets, notably PMI readings. China's flash PMI reading came in at 49.1, weaker than expected and the third month of contraction. The silver lining is that it is an increase from last month, albeit a small one. The reading spurred hopes for additional QE from the Peoples Bank and helped to move indices across the region, although not all in the same direction. The Heng Seng lost -0.22, the Nikkei gained 0.03% after both put in half percent moves in early trading.

Market Statistics

In Europe PMI reveals the region is still expanding but at a slightly slower pace than last month. Composite flash PMI reading for the Eurozone fell to 53.4 from 53.9 in April. This was no surprise in light of comments made by the ECB earlier this week. European indices were largely lower in early trading but moved up by end of day to close in the green.

Jobless claims data was the only economic data released before the opening bell. Claims remain low and helped to lift futures from mixed to mixed with a positive bias. After the open trading remained mixed. The indices hovered around break even level until a little after 10Am. At 10AM a raft of housing and manufacturing data hit the market that took a minute to digest. Once the market had a chance to dig into the numbers the market was able to move higher. The broad market was able to rally to what would become a new all-time closing high but was not able to set a new all-time intraday high.

Economic Calendar

The Economy

Jobless claims remain low although there was a slight rise this week. Initial claims gained 10,000 from last weeks not revised figure to hit 274,000. This is the third weak of mild gains and puts claims above the four week moving average for the first time in about a month. The four week moving average of claims continues to trend lower however. It fell -5,500 this week and hit a new 15 year low.

Initial claims may not be setting new lows but at this level are historically low and consistent with a healthy labor market. On a not adjusted basis claims fell by -88, or less than -0.1%, versus an expected drop closer to -4%. No states had significant changes in claims. Georgia had the biggest increase at 1,480, New York had the biggest decline, -1696.

Continuing claims fell -12,000 from a downward revision to last weeks number for a net decline of -18,000. This is a new 15+ year low for this figure. The 4 week moving average also fell, -29,000 from a downward revision, setting a new low of its own. Continuing claims is moving lower, indicative of lower job turnover rates and lower long term unemployment, but may level off or rebound in the coming weeks based on the steady levels of initial claims. Regardless, claims are at historic lows and consistent with the ongoing labor market recovery.

Total claims for unemployment also fell, shedding -58,933, to hit a new low. Total claims are now 2.195 million, the lowest level since October of last year. Total claims have been in rapid decline over the past two months and may continue to fall further. Claims are now 16.2% lower on a year over year basis and have been trending lower for several years. This decline, both near term and long term, is supportive of ongoing labor market recovery and suggest that jobs creation is still steady and unemployment is still declining.

Three market moving pieces of data were released simultaneously at 10AM. Existing home sales, leading indicators and the Philly Fed Manufacturing Business Outlook Survey. Existing home sales was the rotten egg in the basket but may in fact be an ugly duckling.

Existing Home Sales fell by -3.3%, much lower than the +1% expected by the market. The reason why it may turn out to be a positive for the market is because the drop is due to lack of inventory. Traffic volumes are high but lack of inventory is leading to an overall decline in sales, which is expected to add upward momentum to home building in the coming months. Despite the drop sales remain over the 5 million mark and have been so for 3 months. Sales are also up on a year over year basis, +6.1%, and have been positive for the past 7 months.

The Philly Fed Survey declined, falling -0.7 in May from a reading of 7.5. This is below expectations for a slight rise in activity but still expansionary. Within the report new orders and current shipments both rose by 3 points while the employment component fell by 5. The future activity index remains strong at 33.9 showing only a small drop from the April reading of 35.5. Of those surveyed, 32% of respondents expect their businesses to expand in the coming months.

Leading Indicators was a positive surprise, rising by 0.7% and well ahead of expectations. This shows a moderate increase in activity from last month, +0.4%, and is the second month of increased expansion following the winter economic decline. The coincident and lagging indicators both rose as well, gaining 0.2% and 0.1% respectively.

Tomorrow only one release, CPI, and I think it could be a real market mover. The read on consumer level inflation is expected to remain unchanged from last months slight rise. Any deviation from that is going to be heavily watched as sign of when the FOMC will move on raising interest rates. If it is light then rate hikes expectations get pushed back, if it's hot then those expectations get moved up.

The Oil Index

Oil prices climbed today as tensions flare across the middle east. ISIS militants continue to gain ground and dig in around Ramadi, coalition attacks on rebels continue in Yemen and Iranian propaganda keeps the nuclear deal in the spotlight. On top of this, another draw down of US stockpiles has added to speculation oversupply is easing, helping to support prices. WTI gained 2.9%, Brent 2.26% but there is still no sign of declining production.

The Oil Index rose in tandem with the underlying commodity. The index gained about 0.75% in a move creating a small bodied candle just under the short term moving average. The index has been drifting lower since dropping below 1,400 and may have found near term support. The indicators remain bearish but are consistent with a near term bottom. The long term trend is up so this could develop into a trend following buy signal but we are far from that yet. Near term trend is down with resistance at 1,400.

The Gold Index

Gold prices drifted lower in today's action but remain above $1200. Today's move is in response to the dollar's rebound from support, a move which may already be over; the index fell from support today and if the CPI is as weak as the PPI could easily fall further and lift gold. Gold prices are now trading just above $1200 which is now my target for support. A break below $1200 could take the metal down to test longer term support near $1,175, a bounce could go as high as $1250.

The gold miners ETF GDX is now trading near the short term moving average, along the rising support line, after falling back to support earlier this week. The sector still looks strong for longer term trades but is having trouble holding significant gains in the short term. The indicators are consistent with support along my line and suggestive that prices will continue to find higher levels of support on each dip. Higher gold prices are helping to support the index, so long as they remain supported so should the gold miners sector. A break below the rising trend line could see the ETF fall to $17.50, a break above resistance, near $21.15, has a target between $22.50 and $25.

In The News, Story Stocks and Earnings

Lumber Liquidators plunged today on reports the CEO quit. This is the second surprise exodus from the plagued company and could be the signal this company is on the skids. Now that the CFO and CEO have both quit, in the wake of the Chinese formaldehyde scandal, there is little hope the company can make a substantial recovery in the foreseeable future. Shares of the stock dropped more than 15% on the news, gapping lower and hitting a new three year low. The stock is now trading near a long term support level that may add volatility to prices.

Best Buy beat on the top and bottom line as traffic and sales in smart phones and TV's were stronger that expected. Despite the beat earnings and revenue are down more than 70% from the comparable quarter last year and not enough to sustain the early pop. The stock jumped more than 10% in the early pre-open session, gapping above resistance at the open and the sold off during the day. Volume was high and left prices below the short term moving average and the $35.25 support line.

Gap Stores reported mediocre results after the bell. The clothing store met expectations for earnings but fell short on revenue. Full year guidance was reaffirmed in a range around consensus expectations, largely due to performance at Old Navy; Gap comp sales fell 4%, Old Navy grew by 3%. Shares of the stock were little changed in after hours trading.

Ross Stores delivered a double dose of positive surprise in its report. The company beat on the top and bottom lines, and raised guidance. Full year guidance is now in line with consensus estimates near $4.80 per share. The new is evidence that not all retailers are suffering, just some of them. Shares of the stock rose in after hours trading

The Indices

The market moved higher today but barely. Today's action saw the indices hover near break even in the early morning, rise to test recent highs, dip back to test break even and then rise again going into the close. The major indices were able to close with gains today, led ironically by the Dow Jones Transportation Average. I say ironically because it continues to lag the broader market and persists in testing support along the long term trend line while other indices are pushing new highs.

Today's action lifted the index 0.56%.Today's move up from 8,500 was halted beneath the long term trend line and the bottom of the previous 6 month range. The current positioning of the index is alarming as it is beneath two major support lines and at the intersection of those two lines, a set-up I have noticed can result in substantial moves. The long term trend remains up so I am not turning bearish just yet. However, if it does not regain the upper side of the trend line and support a deeper correction could follow.

The NASDAQ Composite made the next largest gain today. The tech heavy index moved up to test the current all-time-closing high but fell short of setting one. The index is moving higher and looks like it will test the all-time high, closing and intra-day, in the near term. Momentum is bullish, weak but bullish, and stochastic is moving higher supporting this view. We still need a break to new highs, which would have a target near 5,250 in the near to short term, to get bullish for the summer. If the test of new highs is rejected first support target is 5,000 with the long term trend line next target, near 4,800. A correction to the trend line would be close to 6%.

The Dow Jones Industrial Average made the third largest gain today, about 0.34%. The blue chips did not make a new high but they traded in a tight range just below the current high. The index appears to be struggling with resistance but the indicators are consistent with higher prices so a retest of resistance is likely. MACD and stochastic are both bullish, stochastic showing strength in a crossover of the upper signal line that could lead to another 250 points of upside. It looks like the index wants to move higher but without a more decisive break-out I remain cautious.

The S&P 500 brings up the rear in today's action. The broad market gained only 0.23% but was able to set a new all time closing high. Today's candle tested the current all-time intraday high but was not able to break it. The indicators are bullish and stochastic at least is gaining strength so it looks like a test of the high or another new high is likely. Regardless of making a new high, today is the 5th day of trading above the recently broken previous all-time high and a good sign for the bulls. The longer the index can trade and consolidate at this level the better.

There is a divergence in the market that is gaining attention. The transportation average persists in trading at the bottom of its range while the blue chips and broader market are setting new highs. Depending on which way you look at it the transports are going to lead the broader market lower, or the broader market is going to lead the transports higher. It all comes down to economic and earnings outlook. If you are in the camp that sees economic growth stalling then the transports could be leading the broad market lower. If you are in the camp that sees economic growth and expansion continuing into the future then the broad market is leading the transports higher. I for one still see economic expansion and earnings growth on the horizon.

Until then, remember the trend!

Thomas Hughes

New Plays

Grinding Lower

by James Brown

Click here to email James Brown


Hi-Crush Partners - HCLP - close: 29.60 change: +0.12

Stop Loss: 32.05
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 21, 2015
Time Frame: 8 to 12 weeks (stock traders)
Average Daily Volume = 384 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
There has been some speculation that the low in crude oil prices back in March this year might be a bottom. Yet the impact of oil's slide from its 2014 highs will be felt for months, if not years to come. Oil and gas companies have been cutting spending plans and that's going to hurt the oil services companies like HCLP.

HCLP is in the basic materials sector. According to the company, "Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wisconsin, consist of 'Northern White' sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America."

HCLP has delivered some impressive revenue growth over the past few quarters. Yet it can't seem to nail the earnings number. Last November they reported revenues grew +92% from a year ago. This February, their Q4 report, showed revenues were up +104%. Their most recent earnings report was May 6th and revenues were up +44%. Yet all three quarters saw HCLP miss the earnings estimate.

Wall Street was expecting HCLP to deliver a profit of $0.78 a share. HCLP's Q1 earnings were only $0.60. Robert Rasmus, Co-CEO at HCLP, commented on his company's results, saying, "The first quarter was challenging due to the decline in drilling activity and adverse weather conditions, particularly in February, in the Northeast. While we see the impact of fewer well completions and reduced demand for sand continuing through the second quarter, the long-term fundamental trends for sand demand remain favorable."

Shares of HCLP have seen multiple downgrades and reduced price targets over the last few weeks. In April Moody's Investor Services said, "the negative outlooks for Exploration and Production and Oilfield Services sectors will increasingly lead to weakness among proppant companies. Moody's analysts expect to see EBITDA decline 10% - 20% for rated proppant companies based on their base-case oil, natural gas and natural gas liquids price assumptions and expectations of continued volatility in the sector." (source).

Last week David Einhorn, the influential hedge fund manager at Greenlight Capital, was bearish on the fracking-related stocks. Then a few days later Credit Suisse issued a bearish outlook on HCLP. They reduced their rating on HCLP from outperform to neutral and slashed their price target from $60 to $35. The Credit Suisse analyst is worried that margins could come under pressure due to plenty of supply. According to Credit Suisse, "as we see an extended period of subdued drilling and completions activity in the face of a prolonged low oil price environment; in the long term, we see an industry that is being paid essentially for its logistics infrastructure rather than for the value delivered by the commodity itself."

Dividend investors might be tempted to own HCLP since the company has a big dividend yield (currently about 9%). Why own HCLP now when you might get better entry point at a lower price? Shareholders may get a 9% yield but they just lost 25% of their capital with the recent sell-off from April's peak. The point & figure chart is bearish and forecasting at $24.00 target.

We think HCLP goes lower. Shares are currently chewing through support in the $29-30 area. Tonight we are suggesting a trigger to launch bearish positions at $28.90. More conservative traders may want to wait for HCLP to breakdown below its January 2015 low of $28.23 before initiating positions.

Trigger @ $28.90

- Suggested Positions -

Short HCLP stock @ $28.90

- (or for more adventurous traders, try this option) -

Buy the JUL $30 PUT (HCLP150717P30) current ask $2.25
option price is a current quote and not a suggested entry price.

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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

Daily Chart:

Weekly Chart:

In Play Updates and Reviews

Poised For Another Weekly Gain

by James Brown

Click here to email James Brown

Editor's Note:
The big cap U.S. indices are poised for another weekly gain. The S&P 500 is on the verge of its third weekly gain in a row. The NASDAQ is about to post its second weekly gain in a row and could hit new multi-year highs tomorrow.

ATI hit our stop loss. It was our plan to exit the SNCR trade today.

Prepare to exit the EMES trade tomorrow morning.

Current Portfolio:

BULLISH Play Updates

GoPro, Inc. - GPRO - close: 53.50 change: -0.38

Stop Loss: 49.25
Target(s): To Be Determined
Current Gain/Loss: +5.4%
Entry on May 14 at $50.75
Listed on May 13, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 6.5 million
New Positions: see below

05/21/15: Today's -0.7% decline snapped a three-day winning streak for GPRO's stock. I would not chase it here. The nearest support is the $50-51 area.

Trade Description: May 13, 2015:
GPRO looks like a short squeeze waiting to happen. This company is the premier brand for wearable "action" cameras.

Here's the company's rather self-confident description, "GoPro, Inc. is transforming the way consumers capture, manage, share and enjoy meaningful life experiences. We do this by enabling people to self-capture engaging, immersive photo and video content of themselves participating in their favorite activities. Our customers include some of the world's most active and passionate people. The quality and volume of their shared GoPro content, coupled with their enthusiasm for our brand, virally drives awareness and demand for our products.

What began as an idea to help athletes document themselves engaged in their sport has become a widely adopted solution for people to document themselves engaged in their interests, whatever they may be. From extreme to mainstream, professional to consumer, GoPro has enabled the world to capture and share its passions. And in doing so the world, in turn, is helping GoPro become one of the most exciting and aspirational companies of our time."

GPRO came to market with its IPO in June 2014. The stock opened for trading at $28.65 and by October 2014 shares were nearing $100 per share. That proved to be the peak. GPRO spent the next six months correcting lower and finally bottomed near $37 in March this year. Now the stock is building on a steady trend of higher lows as investors digest the company's massive growth.

GPRO reported their 2015 Q1 results on April 28th. Wall Street was expecting a profit of $0.18 per share on revenues of $341.7 million. GPRO beat estimates with a profit of $0.24 a share. Revenues were up +54% from a year ago to $363 million.

Management said it was their second highest revenue quarter in history. Their GAAP results saw gross margins improve from 40.9% in Q1 2014 to 45.1% today. Their net income attributable to common stockholders increased 98.2% compared to the first quarter of 2014. International sales surged +66% and accounted for just over half of total sales in Q1 2015. GPRO shipped 1.3 million devices in the first quarter. This was the third quarter in a row of more than one million units.

GPRO management raised their guidance. They now expect 2015 Q2 revenues in the $380-400 million range with earnings in the $0.24-0.26 region. Analysts were only forecasting $335 million with earnings at $0.16 a share.

The better than expected Q1 results and the upgraded Q2 guidance sparked several upgrades. Multiple analysts raised their price target on GPRO. New targets include: $56, $65, $66, $70, and $76.

There are plenty of bears who think GPRO is overpriced with P/E above 47 and rising competition. The biggest argument against GPRO is competition from a Chinese rival Xiaomi who has produced a competitive action camera that they're selling for less than half of GPRO's similar model. GPRO critics are worried this could kill GPRO's growth in China and the rest of Asia. It's too early to tell who will be right but momentum is currently favoring the bulls.

The most recent data listed short interest at 24% of the 55.5 million share float. That's plenty of fuel to send GPRO soaring. Right now the stock is hovering around the psychological resistance level at $50.00. We are suggesting a trigger to launch bullish positions at $50.75.

- Suggested Positions -

Long GPRO stock @ $50.75

- (or for more adventurous traders, try this option) -

Long JUL $55 CALL (GPRO150717C55) entry $2.00

05/20/15 new stop @ 49.25
05/14/15 triggered @ $50.75
Option Format: symbol-year-month-day-call-strike

Hanesbrands Inc. - HBI - close: 32.45 change: +0.24

Stop Loss: 29.95
Target(s): To Be Determined
Current Gain/Loss: +0.3%
Entry on May 21 at $32.35
Listed on May 20, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.74 million
New Positions: see below

05/21/15: Our brand new play on HBI is open. Shares gapped open lower but quickly recovered. The stock hit our suggested entry point at $32.35. I would still consider bullish positions at current levels.

Trade Description: May 20, 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 in the $30.50-32.00 zone the last several days and have just recently started to breakout from this trading range. We want to hop on board if this bounce continues. Tonight we're suggesting a trigger to open bullish positions at $32.35.

Long HBI stock @ $32.35

- (or for more adventurous traders, try this option) -

Long JUL $32.50 CALL (HBI150717C32.50) entry $1.05

05/21/15 triggered @ 32.35
Option Format: symbol-year-month-day-call-strike

Mobileye N.V. - MBLY - close: 47.19 change: +1.09

Stop Loss: 44.95
Target(s): To Be Determined
Current Gain/Loss: -3.0%
Entry on May 15 at $48.65
Listed on May 14, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.2 million
New Positions: see below

05/21/15: This morning, before the bell, a Citigroup analyst reiterated their bullish outlook on MBLY and raised the price target from $62 to $70. That helped shares of MBLY gap open higher. The stock spiked to $47.74 this morning.

Then midday MBLY issued a correction. In an article published in InformationWeek on May 20, 2015 quoted a company director stating that MBLY was working with Apple (AAPL) on an autonomous driving project. MBLY said that was incorrect and that they are not currently working with AAPL.

Shares of MBLY outperformed the broader market with a +2.3% gain and snapped a three-day losing streak. I am not suggesting new positions at this time.

Trade Description: May 14, 2015:
The future of hands free driving is a lot closer tha you might think. MBLY is leading the charge. Its technology is already in more than three million cars made by companies like BMW, General Motors, and Tesla.

What exactly does this technology due? DAS stands for driver assistance systems. Sometimes you might see it called ADAS for advanced driver assistance systems. This new technology helps drivers avoid collisions with other vehicles, pedestrians, bicyclists, and more while also alerting the driver to road signs and traffic lights.

The company website describes Mobileye as "a technological leader in the area of software algorithms, system-on-chips and customer applications that are based on processing visual information for the market of driver assistance systems (DAS). Mobileye's technology keeps passengers safer on the roads, reduces the risks of traffic accidents, saves lives and has the potential to revolutionize the driving experience by enabling autonomous driving."

MBLY said their technology will be available in 160 car models from 18 car manufacturers (OEMs). Further, Mobileye's technology has been selected for implementation in serial production of 237 car models from 20 OEMs by 2016.

The company is already developing a system for autonomous driving or hands free driving. They currently plan to launch an autonomous system in 2016 that will work at highway speeds and in congested traffic situations.

MBLY stock came to market in August 2014. Demand was strong enough that they upped the number of shares available from around 27 million to 35.6 million shares. They raised the IPO price from the $22 range to $25. This valued MBLY at $5.3 billion. The first day of trading saw MBLY opened at $36.00. Two months later MBLY traded at $60.00.

The IPO excitement has faded but MBLY's valuation has grown. There are now 216.6 million shares outstanding and the company's market cap is now more than $10 billion.

It's easy to see why investors are optimistic on MBLY. Annual revenues have soared from $19.2 million in 2011 to $143.6 million in 2014. Their revenues last year rose +77% from 2013. Currently a poll of analysts by Thomson Reuters is forecasting sales to rise +50% in 2015 to $218.3 million. Earnings are forecasted to surge +95%.

MBLY's most recent earnings report was May 11th. They reported their Q1 results of $0.08 per share, which was a penny above estimates. Revenues were up +28% to $45.6 million, also above estimates.

Last year the New York Post recently ran an article discussing how the White House might generate a bullish tailwind for MBLY. The National Highway Traffic Safety Administration issued a research report that estimated ADAS type of technology could eliminate almost 600,000 left-turn and intersection crashes a year. They report also suggested that adding FCAM and lane departure technology on big vehicles like over the road trucks could reduce accidents with these huge vehicles by up to 25%. Following this report the White House said they would draft new rules that required this sort of tech in new vehicles.

Most of Wall Street analysts seem bullish. Industry experts forecast the camera-based ADAS market to grow +37% CAGR from 2014 to 2020. Goldman Sachs Recently upgraded the stock to a buy. They believe MBLY will see a 34% CAGR in sales through 2020 and will have 65% of the market by then. MBLY also garnered positive comments from a Morgan Stanley analyst who raised their price target to $68. They believe the street's 2015 estimates for MBLY are too low after the company delivered super strong growth in the last couple of quarters.

Technically shares of MBLY look attractive with a bullish trend of higher lows. The point & figure chart is bullish and forecasting at $69.00 target. Currently MBLY is hovering just below its late April highs in the $48.00-48.50 zone. We want to launch positions on a breakout past this region. Tonight we're suggesting a trigger at $48.65.

- Suggested Positions -

Long MBLY stock @ $48.65

- (or for more adventurous traders, try this option) -

Long JUL $50 CALL (MBLY150717C50) entry $2.10

05/15/15 triggered @ $48.65
Option Format: symbol-year-month-day-call-strike

Starbucks Corp. - SBUX - close: 51.33 change: +0.30

Stop Loss: 48.40
Target(s): To Be Determined
Current Gain/Loss: +0.5%
Entry on May 18 at $51.05
Listed on May 15, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 5.8 million
New Positions: see below

05/21/15: Traders were in a buy the dip mood with SBUX this morning. Shares managed to outpace the major indices by the closing bell with a +0.58% gain.

Trade Description: May 16, 2015:
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. SBUX broke out of that sideways funk after it reported earnings in January 2015.

Five-Year Plan

In late 2014 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 +23%, 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 in spite of the in-line results and sent SBUX soaring to new all-time highs the next day.

This earnings scenario, where SBUX delivers results in-line with estimates and rallies anyway, just happened again in late April. Of course it's worth noting that even in-line results still represent 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.

SBUX popped to new highs following its results and then spent the next week consolidating lower. Investors started buying the dips again at its bullish trend of higher lows. It looks like the consolidation is over and SBUX is pushing higher. We want to hop on board. Tonight we are suggesting a trigger to open bullish positions at $51.05.

- Suggested Positions -

Long SBUX stock @ $51.05

- (or for more adventurous traders, try this option) -

Long JUL $50 CALL (SBUX150717C50) entry $2.07

05/18/15 triggered @ $51.05
Option Format: symbol-year-month-day-call-strike

Super Micro Computer - SMCI - close: 33.26 change: +0.22

Stop Loss: 31.65
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 18, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 622 thousand
New Positions: Yes, see below

05/21/15: SMCI also outperformed the major indices with a +0.66% gain. Yet shares remain stuck inside this $32.50-33.50 trading range. Our suggested entry point is $33.65.

Trade Description: May 18, 2015:
Sometimes the market's expectations get too high. When a company fails to meet these rising expectations the stock can get punished.

SMCI is in the technology sector. According to the company, "Supermicro® (SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro is committed to protecting the environment through its 'We Keep IT Green' initiative and provides customers with the most energy-efficient, environmentally-friendly solutions available on the market."

It's easy to see why investors might have big expectations for SMCI. Looking at three of their last four earnings reports SMCI has beaten Wall Street estimates on both the top and bottom line and raised guidance three quarters in a row. It was their most recent report where results seemed to stumble.

SMCI report its fiscal Q3 results on April 21st, after the closing bell. Earnings were up 25% from a year ago to $0.47 a share. Yet analysts were expecting SMCI to report earnings in the $0.49-0.50 range. Revenues were up +26% from a year ago to $471.2 million, but this also missed expectations.

Guidance was also a little soft. Traders were used to SMCI raising their guidance. This time guidance for the current quarter (their Q4) was generally below consensus estimates.

The market overreacted to the disappointment. Shares crashed from $35 to almost $28 following its earnings news. Then traders started buying SMCI in the $29-30 region a couple of weeks ago. The rebound has lifted SMCI back above technical resistance at its 200-dma and back above price resistance near $32.00. We are betting this rebound continues. Tonight we're suggesting a trigger to open bullish positions at $33.65.

Trigger @ $33.65

- Suggested Positions -

Buy SMCI stock @ $33.65

- (or for more adventurous traders, try this option) -

Buy the JUL $35 CALL (SMCI150717C35)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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

Total System Services, Inc. - TSS - close: 41.68 change: -0.16

Stop Loss: 40.75
Target(s): To Be Determined
Current Gain/Loss: +1.6%
Entry on May 08 at $41.02
Listed on May 07, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 843 thousand
New Positions: see below

05/21/15: TSS experienced a little bit more profit taking today with a -0.38% decline. Technically this decline would confirm yesterday's bearish reversal pattern. Proceed with caution. More conservative traders could move their stop loss closer to the 10-dma near $41.40.

No new positions at this time.

Trade Description: May 8, 2015:
Consistently beating Wall Street's earnings estimates has driven shares of TSS to new all-time highs. The company is in the financial sector. The XLF financial ETF is down -1.2% for the year. TSS is up +19% for the year.

According to the company, "At TSYS® (TSS), we believe payments should revolve around people, not the other way around. We call this belief People-Centered Payments®. By putting people at the center of every decision we make, TSYS supports financial institutions, businesses and governments in more than 80 countries. Through NetSpend®, A TSYS Company, we empower consumers with the convenience, security, and freedom to be self-banked. TSYS offers issuer services and merchant payment acceptance for credit, debit, prepaid, healthcare and business solutions. TSYS' headquarters are located in Columbus, Ga., U.S.A., with local offices spread across the Americas, EMEA and Asia-Pacific."

This company has beaten analysts' estimates on both the top and bottom line the last four quarters in a row. Their most recent earnings report was April 28th. Earnings per share soared +41% to $0.54. That was eight cents above estimates. Revenues were up +11.7% to $662.2 million.

A few months ago (January 2015) TSS announced a new 20 million share stock buyback program to replace their old one. Last quarter they repurchased 1.45 million shares. When you include the company's dividend they paid out 73% of their available free cash flow to shareholders.

TSS' President and CEO, Mr. M. Troy Woods, commented on their recent results saying, "As a result of the great start to the year, we are revising our adjusted EPS guidance to grow between 12-14% from the previous range of 11-13%."

Shares of TSS surged to new highs on its earnings report. Since then traders have been buying the dips and the stock set a record closing high today. Tonight we're suggesting a trigger to launch bullish positions at $40.85.

FYI: TSS will hold an analyst day on May 20th.

- Suggested Positions -

Long TSS stock @ $41.02

- (or for more adventurous traders, try this option) -

Long AUG $40 CALL (TSS150821C40) entry $2.50

05/19/15 new stop @ 40.75
05/18/15 new stop @ 39.85
05/08/15 triggered on gap open at $41.02, suggested entry was $40.85
Option Format: symbol-year-month-day-call-strike

BEARISH Play Updates

Emerge Energy Services - EMES - close: 39.75 change: +1.05

Stop Loss: 40.35
Target(s): To Be Determined
Current Gain/Loss: -5.6%
Entry on May 07 at $37.65
Listed on May 06, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 413 thousand
New Positions: see below

05/21/15: We give up. We're throwing in the towel on our EMES trade. Shares outperformed the market again, this time with a +2.7% gain. The stock is poised to breakout past resistance near $40.00 soon.

Plan on exiting this trade tomorrow morning.

- Suggested Positions -

Short EMES stock @ $37.65

- (or for more adventurous traders, try this option) -

Long JUN $35 PUT (EMES150619P35) entry $2.35

05/21/15 prepare to exit this trade immediately
05/18/15 Goldman upgraded EMES this morning
05/16/15 new stop @ $40.35
05/07/15 triggered @ 37.65
Option Format: symbol-year-month-day-call-strike

First Solar, Inc. - FSLR - close: 55.89 change: +0.97

Stop Loss: 57.25
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 19, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.7 million
New Positions: Yes, see below

05/21/15: FSLR shot higher at the open. An hour later the upward momentum started to fade. Shares did outperform the market with a +1.7% gain. The overall pattern has not changed. We are waiting for a breakdown to new relative lows.

Our suggested entry point $55.40.

Trade Description: May 19, 2015:
Investors may not have the patience for FSLR's plans to form a yieldco. The last several months have delivered some rocky moves in FSLR's stock with a swing from the low $70s down to $40 and then back to $65. Now shares are breaking down again.

FSLR is in the technology sector. According to the company, "First Solar is a leading global provider of comprehensive photovoltaic (PV) solar systems which use its advanced module and system technology. The Company's integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today. From raw material sourcing through end-of-life module recycling, First Solar's renewable energy systems protect and enhance the environment."

FSLR's most recent earnings report was on April 30th. Their Q1 results were a disaster. A year ago FSLR earned $1.89 per share for Q1 2014. This year analysts were expecting a loss of ($0.28) per share. FSLR delivered a loss of ($0.62). Revenues plunged -50% from a year ago to $469 million. Wall Street had been expecting $600-636 million in revenues.

Back in February, when FSLR reported its Q4 results, the company had already warned that future revenues would be weak (for multiple quarters) as they prepare to form a yieldco with another solar firm, SunPower (SPWR). At the time, the market didn't seem to care. Shares of FSLR soared on its earnings report back in February.

Three months later and investor sentiment appears to have changed. FSLR commented on their revenue declines in their Q1 report. Here's an excerpt from their earnings report, "The sequential decrease in net sales resulted from retaining projects which would otherwise have generated revenue in anticipation of the Company's announced plans to pursue a YieldCo. In addition, delays on multiple projects in the current quarter, a higher mix of module only sales and the sale of the SolarGen 2 project in the prior quarter contributed to the lower revenue."

A yieldco is similar to a real estate investment trust (REIT) which is designed to produce dividends for investors. Back in February FSLR had announced plans to partner with rival SPWR and form a new company, 8Point3 Energy Partners, as a new yieldco company. FSLR believes that long-term the yieldco will deliver for investors but traders may not have the patience to wait around at current valuations.

Technically shares of FSLR look weak. They are down sharply from their late April, pre-earnings, high near $65.00. There has been very little oversold bounce as shares churned sideways in the $55-57 zone these last several days. The point & figure chart is bearish and forecasting at $45.00 target. Odds are good that FSLR could try and fill the gap from February and that would mean a drop toward round-number support near $50.00. Tonight we are suggesting a trigger to open bearish positions at $54.40.

Trigger @ $54.40

- Suggested Positions -

Short FSLR stock @ $54.40

- (or for more adventurous traders, try this option) -

Buy the JUL $50 PUT (FSLR150717P50)

Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.

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


Allegheny Technologies - ATI - close: 34.41 change: -1.32

Stop Loss: 34.75
Target(s): To Be Determined
Current Gain/Loss: -3.6%
Entry on May 11 at $36.05
Listed on May 05, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.0 million
New Positions: see below

05/21/15: The sell-off in ATI resumed. Shares underperformed the market with a -3.69% decline. The stock fell to its next support level near $34.00 and its simple 200-dma. It's not just ATI. Rivals like CRS and X have also been falling the last several days.

ATI hit our stop loss at $34.75 today.

- Suggested Positions -

Long ATI stock @ $36.05 exit $34.75 (-3.6%)

- (or for more adventurous traders, try this option) -

JUL $37.50 CALL (ATI150717C37.50) entry $1.25 exit $0.62 (-50.4%)

05/21/15 stopped out
05/14/15 new stop @ 34.75
05/11/15 triggered $ 36.05
Option Format: symbol-year-month-day-call-strike


Synchronoss Technologies - SNCR - close: 46.10 change: +0.00

Stop Loss: 43.85
Target(s): To Be Determined
Current Gain/Loss: +0.1%
Entry on May 11 at $46.10
Listed on May 09, 2015
Time Frame: Exit prior to June option expiration
Average Daily Volume = 527 thousand
New Positions: see below

05/21/15: SNCR tried to rally but gains faded and the stock closed unchanged on the session. Our plan was to exit this trade at the opening bell. Shares look like they might be rolling over.

*small positions to limit risk* - Suggested Positions -

Long SNCR stock @ $46.10 exit $46.15 (+0.1%)

- (or for more adventurous traders, try this option) -

JUN $50 CALL (SNCR150619C50) entry $0.90 exit $0.85 (-5.6%)

05/21/15 planned exit this morning
05/20/15 prepare to exit this trade tomorrow morning
05/11/15 triggered @ 46.10
Option Format: symbol-year-month-day-call-strike