Option Investor

Daily Newsletter, Thursday, 9/24/2015

Table of Contents

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

Market Wrap

Back In Correction Territory

by Thomas Hughes

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


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

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

Market Statistics

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

Economic Calendar

The Economy

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

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

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

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

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

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

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

The Oil Index

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

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

The Gold Index

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

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

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

In The News, Story Stocks and Earnings

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

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

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

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

The Indices

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

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

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

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

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

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

Until then, remember the trend!

Thomas Hughes

New Plays

Lowering Guidance Again

by James Brown

Click here to email James Brown


Bristow Group, Inc. - BRS - close: 28.12 change: -0.28

Stop Loss: 32.85
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 24, 2015
Time Frame: Exit prior to earnings in early November
Average Daily Volume = 553 thousand
New Positions: Yes, see below

Company Description

Trade Description:
The collapse in crude oil hasn't not just hurt the energy producers but also the oil services company that support the energy sector. This has driven BRS to five-year lows.

BRS is part of the basic materials sector. According to the company, "Bristow Group Inc. is a leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. The Company has major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, Canada, Russia and Trinidad."

The prolonged drop in oil prices has forced most energy companies to cut their capex budgets and expenses. That means less demand for oil services like BRS. The company has missed Wall Street's earnings estimates and lowered guidance the last three quarters in a row.

On February 5, 2015, BRS lowered their 2015 guidance from $4.70-5.20 down to $4.05-4.45 compared to estimates of $4.92 per share. On August 6th BRS lowered their 2016 guidance to $3.10-3.75 versus Wall Street estimates of $4.01 per share.

Unfortunately there appears to be no end in sight for the downturn in energy and crude oil. BRS could have much farther to fall. The last couple of days have seen shares of BRS breakdown below their prior September low. Today's intraday low was $27.83. I am suggesting a trigger to launch small bearish positions at $27.70. We want to start with small positions since BRS is already oversold (there is nothing stopping it from getting a lot more oversold).

Trigger @ $27.70 *small positions to limit risk*

- Suggested Positions -

Short BRS stock @ $27.70

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

Buy the DEC $25 PUT (BRS151218P25) current ask $2.15
option price is a current quote and not a suggested entry price.

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

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

Daily Chart:

Weekly Chart:

In Play Updates and Reviews

Stocks Rebound Off Morning Lows

by James Brown

Click here to email James Brown

Editor's Note:
The selling pressure resumed this morning but stocks staged a comeback this afternoon. The major market indices managed to significantly trim their losses by Thursday's closing bell.

ZFGN hit our stop loss. The SOHU trade is now open.

Current Portfolio:

BULLISH Play Updates

CDW Corp. - CDW - close: 40.59 change: +0.12

Stop Loss: 39.85
Target(s): To Be Determined
Current Gain/Loss: -1.5%
Entry on September 14 at $41.20
Listed on September 12, 2015
Time Frame: Exit prior to earnings in early November
Average Daily Volume = 1.1 million
New Positions: see below

09/24/15: Bulls are still defending CDW at $40.00 support. Shares hovered near this level most of the morning before rebounding back into positive territory. After looking at CDW's intraday chart I would wait for the stock to rally past $40.70 before considering new bullish positions.

Trade Description: September 12, 2015:
Consistent earnings and revenue growth have helped drive shares of CDW to new all-time highs.

CDW is in the technology sector. According to the company, "CDW (NASDAQ: CDW) is a Fortune 500 company and a leading provider of integrated information technology (IT) solutions in the U.S. and Canada. We help our customer base of approximately 250,000 small, medium and large business, government, education and healthcare customers by delivering critical solutions to their increasingly complex IT needs. Founded in 1984, CDW employs more than 7,200 coworkers. In 2014, the company generated net sales of more than $12.0 billion.

Our broad array of offerings range from discrete hardware and software products to integrated IT solutions such as mobility, security, data center optimization, cloud computing, virtualization and collaboration. We are technology 'agnostic,' with a product portfolio that includes more than 100,000 products from more than 1,000 brands. We provide our products and solutions through our sales force and service delivery teams, consisting of more than 4,500 coworkers, including over 1,800 field sellers, highly skilled technology specialists and advanced service delivery engineers."

Recent quarterly reports have seen CDW beating Wall Street estimates on both the top and bottom line. Investors were very happy to see the company's most recent report on August 3rd. Earnings were up +20% from a year ago and revenues beat expectations. Management said they expect to grow +2-to-3% above the U.S. IT market in 2015.

Shares of CDW surged on its August 3rd report. When the market corrected sharply lower in late August shares of CDW actually weathered the storm relatively well. The stock filled the gap from its August 3rd earnings pop and then bounced. Now shares have broken through major resistance at $40.00.

Friday's high was $41.11. We are suggesting a trigger to open bullish positions at $41.20.

- Suggested Positions -

Long CDW Stock @ $41.20

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

Long DEC $45 CALL (CDW151218C45) entry $1.15

09/19/15 new stop @ 39.85
09/14/15 triggered @ $41.20
Option Format: symbol-year-month-day-call-strike

GoPro, Inc. - GPRO - close: 33.92 change: +1.28

Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 22, 2015
Time Frame: Exit prior to earnings in late October
Average Daily Volume = 8.0 million
New Positions: Yes, see below

09/24/15: GPRO displayed significant relative strength today with a +3.9% gain. While we would like to buy it on a dip at $30.00 that may not happen.

Tonight we are adjusting our entry strategy. Instead of a dip at $30.00 we will use a breakout trigger at $34.25. The $34.00 level has been short-term resistance the last few days. We will adjust the option strike to the $40s.

Trade Description: September 22, 2015:
GPRO is down nearly 50% from its early August highs. All the bad news might be baked into the stock as shares near their IPO first day's closing price of $31.34.

If you're not familiar with GPRO here is 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 priced at $24.00 a share and opened for trading at $28.65. Shares closed at $31.34 on their first day of trading. A few months later (October) GPRO was challenging $100 a share. That proved to be the peak (so far) for the stock. As a high-growth, momentum name, investors will eventually jump back in.

GPRO's Earnings 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 adjusted their Q2 revenue forecast to be 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.

GPRO reported its Q2 report on July 21st. Results were way above expectations. Analysts were expecting earnings of $0.26 per shares on revenues of $396 million. GPRO said Q2 earnings came in at $0.35 per shares. That's a +337% improvement from a year ago. Revenues were up +71.7% to $419.9 million, significantly above the estimate. Gross margins improved from 42.2% to 46.4%.

Naturally GPRO management was enthusiastic. GoPro Founder and CEO, Nicholas Woodman, commented on their quarterly results saying, "I couldn't be more proud of our aggressive pace of innovation. With the introduction of HERO4 Session and HERO+ LCD, we've launched five new cameras in the past 10 months, exciting both new and existing customers and contributing to strong second quarter results. Our core business is enjoying terrific momentum as we charge forward into attractive adjacent markets."

Bearish Argument

The biggest argument against GPRO is competition from a Chinese rival Xiaomi who has produced a competitive action camera that they're selling for about half of GPRO's similar model. GPRO critics are worried this could kill GPRO's growth in China and the rest of Asia.

This past weekend Barron's published a bearish thesis on GPRO suggesting the company was a one-trick pony. Actually the article said GPRO was a "one product wonder" and compared it to companies like Blackberry who lost to competitors who came after Blackberry had already established the market.

The Barron's analyst also suggested that GPRO was still overvalued and could fall to $25.00 a share. Shares of GPRO plunged more than -8% on Monday in reaction to the Barron's article.

Today GPRO CEO Nick Woodman defended his company and said, "I think to say that we're a one-trick pony is shortsighted. The content that the world loves has grown so much value into our brand." Woodman is suggesting that GPRO is more than a product company and should also be considered a media company. We are not going to argue either way on the media versus consumer products company debate. Tonight's trade is more technical.

The Trade

The selling in GPRO may be nearing a capitulation. Average daily volume is about 8 million shares. These past three weeks has seen volume surge into the 13-19 million zone almost every day. Shares are also down -48% from their August 10th, 2015 high of $64.74. That's a pretty sharp decline in only six weeks.

We suspect that bulls will defend GPRO near its IPO debut in the $28-30 range. Tonight we are suggesting a buy-the-dip entry point to open bullish positions at $30.00. This is a speculative, higher-risk trade. Use small positions to limit risk.

Trigger @ $34.25

- Suggested Positions -

Buy GPRO stock @ $34.25

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

Buy the NOV $40 CALL (GPRO151120C40) current ask $1.86

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.

09/24/15 Entry Strategy Update: Instead of a trigger at $30.00, use a trigger at $34.25
Update the option from the November $35 call to the Nov. $40 call
Option Format: symbol-year-month-day-call-strike

Ingram Micro Inc. - IM - close: 26.76 change: +0.15

Stop Loss: 25.75
Target(s): To Be Determined
Current Gain/Loss: -3.9%
Entry on September 09 at $27.85
Listed on September 8, 2015
Time Frame: Exit prior to earnings in late October
Average Daily Volume = 1.0 million
New Positions: see below

09/24/15: The stock market's sell-off this morning sent IM toward the $26.00 level. Shares bounced all the way back into positive territory and outperformed the market with a +0.5% gain.

No new positions at this time.

Trade Description: September 8, 2015:
IM looks like it is about to break out from a huge consolidation pattern.

The company operates in the services sector. According to the company, "Ingram Micro helps businesses fully realize the promise of technology® - helping them maximize the value of the technology that they make, sell or use. With its vast global infrastructure and focus on cloud, mobility, supply chain and technology solutions, Ingram Micro enables business partners to operate more efficiently and successfully in the markets they serve.

No other company delivers as broad and deep a spectrum of technology and supply chain services to businesses around the world. Founded in 1979, Ingram Micro's role as a leader and innovator in technology and supply chain services has fueled its rise to the 69th ranked corporation in the FORTUNE 500.

Ingram Micro amplifies the value of its position at the intersection of thousands of vendor, reseller and retailer partners by customizing and delivering highly targeted applications for industry verticals, business to business customers and commercial needs. From provisioning solutions for system integrators working at the heart of the network to offerings through the full lifecycle of mobile devices, SMB to global enterprise software and computing, point of sale to cloud services, professional AV to physical security-Ingram Micro is trusted by customers to have the expertise and resources to help them define and push the boundaries of what's possible.

The company supports global operations by way of an extensive sales and distribution network throughout North America, Europe, Middle East and Africa, Latin America and Asia Pacific."

The company's most recent earnings report was July 30th. Wall Street was expecting a profit of $0.54 per share on revenues of $10.9 billion. IM delivered $0.55 cents. Revenues were down -3.3% to $10.55 billion. However, if you back out the impact of currency headwinds then IM's results look a lot better. Negative currency translations shaved off -8% from their revenues.

IM management's guidance was a little soft but they announced the initiation of a $0.10 per share dividend and that they were boosting their stock buyback program by $300 million. The stock soared on this news. Shares rallied from $24.50 to $27.25 the next day.

IM was not immune to the market's late-August crash but investors bought the dip at support near its July lows. Shares have since erased the sell-off. Now IM is poised to breakout past resistance and what looks like a consolidation that started in early 2014.

A rally past $28.00 would generate a new buy signal on the point & figure chart. We want to jump in a little earlier. Tonight we are suggesting a trigger to open bullish positions at $27.85.

NOTE: I want to caution readers about the options. The spreads on most of IM's options are a little bit wide. Actually some of them are probably too wide. Be careful with the options.

- Suggested Positions -

Long IM stock @ $27.85

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

Long DEC $30 CALL (IM151218C30) entry $1.15

09/15/15 Caution - IM did not participate in the market's rally today
09/09/15 triggered @ $27.85
Option Format: symbol-year-month-day-call-strike

Starbucks - SBUX - close: 58.37 change: +0.58

Stop Loss: 54.75
Target(s): To Be Determined
Current Gain/Loss: +5.8%
Entry on August 27 at $55.15
Listed on August 25, 2015
Time Frame: Exit prior to earnings in October
Average Daily Volume = 8.0 million
New Positions: see below

09/24/15: Shares of this coffee giant continue to flex their relative strength muscle. The stock added +1.0% and broke through short-term resistance at the $58.00 level. The next obstacle for the bulls is SBUX's all-time highs near $59.30 from this past summer.

No new positions at this time.

Trade Description: August 25, 2015:
The sell-off in shares of SBUX is a bit ridiculous. The Thursday-Friday-Monday sell-off in the market saw SBUX fall from $57.59 to $42.05. That was a -27% drop in less than three days. The company's fundamentals didn't deteriorate -27%. The recent market turmoil presents an opportunity to buy SBUX. Jump to the bottom of this play description for details.

Here's a little bit about SBUX and the company's performance:

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.

Earnings results:

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.

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 trend of earnings pops continued in July with shares gapping up to new all-time highs following its Q2 report on July 23rd. Earnings were $0.42 per share, a penny above estimates. Revenues were up +17.5% to $4.88 billion, just a hair above expectations. Global same-store sales were up +7% and their non-GAAP operating margin improved 100 basis points to 19.5%. Management is still guiding 2015 revenues to rise +17% in the $19.1-19.4 billion range.

Recent Sell-off & Entry Point

The recent stock market bloodletting saw SBUX breakdown below a multitude of support levels. The weakness on Monday morning was just ridiculous. SBUX opened on Monday, August 24th near technical support at its 200-dma and then it plunged to $42.05. The stock bounced back to $50 by the closing bell. The rebound struggled today but SBUX displayed relative strength with a +1.48% gain versus a -1.35% drop in the S&P 500 and a -0.4% decline in the NASDAQ.

If the stock market continues to sink we want to take advantage of the weakness in SBUX and launch bullish positions on a dip near its 200-dma. Today the simple 200-dma is at $48.04. We will set our entry trigger at $48.00. We are starting this play without a stop loss. More conservative investors might want to wait on launching positions since the next few days could be volatile for the broader market (SBUX included).

- Suggested Positions -

Long shares of SBUX @ $55.15

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

Long NOV $57.50 CALL (SBUX151120C57.5) entry $2.00

09/16/15 new stop @ 54.75
08/29/15 new stop at $51.15
08/27/15 Triggered @ $55.15
08/26/15 Entry point adjustment - move the buy-the-dip trigger from $48.00 to $50.00. Plus, add a secondary trigger to open bullish positions at $55.15.
Option Format: symbol-year-month-day-call-strike

BEARISH Play Updates

Hornbeck Offshore Services - HOS - close: 14.26 change: -0.04

Stop Loss: 17.05
Target(s): To Be Determined
Current Gain/Loss: +6.3%
Entry on September 22 at $15.22
Listed on September 21, 2015
Time Frame: Exit prior to earnings in late October
Average Daily Volume = 925 thousand
New Positions: see below

09/24/15: Crude oil managed a bounce on Thursday but that didn't stop HOS from hitting new lows. Traders were buying the dips near the $14.00 mark but that may not last.

No new positions at this time.

Trade Description: September 21, 2015:
HOS has been crushed over the last couple of years and there appears to be no end in sight.

HOS is part of the basic materials sector. They're in the oil equipment and services industry. According to the company, "Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore service vessels primarily in the Gulf of Mexico and Latin America. Hornbeck Offshore currently owns a fleet of 66 vessels primarily serving the energy industry and has eight additional ultra high-spec Upstream vessels under construction for delivery through 2016."

The energy sector has been hurt by the bear market in crude oil. The sell-off in crude started in June 2014. Yet the sell-off in HOS started in late 2013, more than six months before crude oil turned lower. Falling oil prices make it unprofitable for companies to do a lot of drilling offshore, which is significantly more expensive than normal drilling methods. Today there are only 31 active offshore oil rigs. That's down from 66 offshore rigs a year ago.

HOS management seems to be doing a good job in slashing expenses. They have managed to beat Wall Street's estimates on the bottom line number. Yet HOS has been unable to stop the plunge in revenues. Last quarter revenues fell -20% from a year ago.

Moody's just downgraded HOS' credit rating and changed their outlook to negative. Here is an excerpt from the Moody's press release,

"Hornbeck benefits from the scale and quality of its fleet, and good liquidity, but its credit metrics will continue to be negatively impacted by the very challenging environment facing the offshore sector through 2017" said Sreedhar Kona, Moody's Senior Analyst. "The negative outlook reflects our expectation of continued deterioration in the utilization of offshore supply vessels and their day rates"
The bearish conditions in the energy sector are not secret. Investors have been selling the rallies. Bears have piled on HOS with short interest at 33% of the small 25.5 million share float. That does raise the risk of a short squeeze.

Technically the trend is down. It was just a few days ago that Goldman Sachs outlined their worst-case scenario that saw crude oil falling to $20 a barrel. It could take years for the world to work through the current supply glut that will keep oil prices depressed.

HOS' point & figure chart is forecasting at $12.00 target. Today HOS displayed relative weakness with a -4.3% decline. Tonight we are suggesting a trigger to launch bearish positions at $15.30. More conservative traders might want to wait for a breakdown below $15.00 before launching bearish positions.

*Due to the high short interest I am suggesting small positions to limit risk*

*small positions to limit risk* - Suggested Positions -

Short HOS stock @ $15.22

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

Long DEC $15 PUT (HOS151218P15) entry $2.15

09/22/15 triggered on gap down at $15.22, suggested entry was $15.30
Option Format: symbol-year-month-day-call-strike

Helmerich & Payne, Inc. - HP - close: 47.38 change: +0.25

Stop Loss: $54.35
Target(s): To Be Determined
Current Gain/Loss: +4.7%
Entry on September 10 at $49.70
Listed on September 9, 2015
Time Frame: Exit prior to earnings in November
(option traders exit prior to October expiration)
Average Daily Volume = 2.1 million
New Positions: see below

09/24/15: HP added +0.5% but the bounce was running into resistance near the $48.00 level intraday. The trend is down but HP could see more of an oversold bounce.

More conservative traders may want to lower their stop again. No new positions at this time.

Trade Description: September 9, 2015:
The bear market in crude oil has crushed shares of HP, an oil driller. The stock has fallen from its 2014 highs near $118.00 down to $50.00.

HP is in the basic materials sector. According to the company, "Helmerich & Payne, Inc. is primarily a contract drilling company. As of July 30, 2015, the Company's existing fleet includes 342 land rigs in the U.S., 40 international land rigs, and 9 offshore platform rigs. In addition, the Company is scheduled to complete another 12 new H&P-designed and operated FlexRigs, all under long-term contracts with customers. Upon completion of these commitments, the Company's global fleet is expected to have a total of 394 land rigs, including 373 AC drive FlexRigs."

You have to give HP's management team credit for slashing expenses. The company managed to turn out an adjusted profit of $0.27 a share in the third quarter during a very tough period for the industry.

HP reported its Q3 results on July 30th. Wall Street was only expecting $0.14-to-0.17 per share. Revenues still fell -30% from a year ago to $659 million but that was much better than expected.

Unfortunately for HP the oil market has not recovered. After a huge bounce from its August lows the price of oil has begun to slide. Global oil production is still near record highs while consumption has been weak. An economic slowdown in China and much of the world is hurting demand for oil.

If oil prices stay depressed it's going to hurt business for drillers. The sell-off in HP's stock price has boosted the dividend yield to 5.2%. The current dividend is about $2.75 a year. Rival driller Transocean (RIG) recently cut their dividend. Slower business for drillers could lead HP to reduce its dividend too, which should send the stock lower.

Technically shares of HP are in a bear market and hovering near support at $50.00. A breakdown below $50 could spark a drop toward the next support level around $40.00. The point & figure chart is bearish and forecasting at $38.00 target. Tonight we are suggesting a trigger to launch bearish positions at $49.70.

- Suggested Positions -

Short HP Stock @ $49.70

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

Long OCT $45 PUT (HP151016P45) entry $1.75

09/19/15 new stop @ 54.35
09/10/15 triggered @ $49.70
Option Format: symbol-year-month-day-call-strike

Intl. Paper Company - IP - close: 38.93 change: -0.33

Stop Loss: 42.35
Target(s): To Be Determined
Current Gain/Loss: +2.3%
Entry on September 22 at $39.85
Listed on September 19, 2015
Time Frame: Exit prior to earnings in late October
Average Daily Volume = 2.9 million
New Positions: see below

09/24/15: IP fell -2.8% this morning. The stock bounced at $38.15 and managed to pare its loss to just -0.8%. The big intraday rebound almost looks like a potential bullish reversal pattern. I am suggesting a little extra caution here. I would not be surprised to see IP bounce back toward the $40 area, which should be new resistance. More conservative traders might want to lower their stop loss.

Trade Description: September 19, 2015:
Over supply issues and currency headwinds are hurting IP's results.

IP is in the consumer goods business. According to the company, "International Paper (IP) is a global leader in packaging and paper with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include industrial and consumer packaging along with uncoated papers and pulp. Headquartered in Memphis, Tenn., the company employs approximately 58,000 people and is strategically located in more than 24 countries serving customers worldwide. International Paper net sales for 2014 were $24 billion."

The last few earnings reports have seen IP beat Wall Street's bottom line estimate but that was mainly due to cost cutting. Revenues have been slowing down. Their 2014 Q4 revenues were only up +1.6%. Q1 revenues fell -3.6%. Their most recent report saw Q2 revenues fall -3.6%. The last two quarters saw revenues come in below analysts' expectations.

IP's management did manage to slash selling and administrative costs by almost -8% last quarter. Unfortunately their international packaging, consumer packaging, and printing papers businesses all saw sharp sales declines.

Dividend investors might be drawn to this stock. IP currently has a yield near 4%. Is it worth buying a big yield when the stock has fallen -30% from its 2015 highs and shows no signs of stopping? A Bank of America analysts said their previously bullish thesis for IP doesn't work anymore. Over supply issues in the containerboard industry remain a trouble spot.

The stock is bearish with a clear trend of lower highs and lower lows. Today shares are poised to breakdown under round-number support at $40.00. We are suggesting a trigger to launch bearish positions at $39.85.

- Suggested Positions -

Short IP stock @ $39.85

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

Long 2016 Jan $40 PUT (IP160115P40) entry $3.00

09/24/15 Caution - the big intraday bounce is a potential warning for bears
09/22/15 triggered @ $39.85
Option Format: symbol-year-month-day-call-strike

Murphy Oil Corp. - MUR - close: 24.68 change: -0.59

Stop Loss: 29.05
Target(s): To Be Determined
Current Gain/Loss: +3.8%
Entry on September 23 at $25.65
Listed on September 22, 2015
Time Frame: Exit prior to earnings in late October
Average Daily Volume = 2.4 million
New Positions: see below

09/24/15: MUR actually tried to rally this morning. The oversold bounce made it to $25.60 before reversing sharply. The stock underperformed the market with a -2.3% drop by the closing bell. The breakdown under the $25.00 mark is bearish.

Trade Description: September 22, 2015:
The outlook for crude oil continues to worsen. We are bringing MUR back to the Premier Investor newsletter.

Here's an updated trade description:

The crash in crude oil prices in the second half of 2014 was pivotal turning point for the U.S. energy industry. Suddenly the booming oil and gas sector had its future being questioned with the price of oil now unprofitable for many drillers. Oil has managed a bounce from its 2015 lows while many of the oil and gas producers are still seeing their stocks decline.

MUR is in the basic materials sector. According to the company, "Murphy Oil Corporation is an independent exploration and production company with a strong, oil-weighted portfolio of global offshore and onshore assets. Exploration activities are focused in four main regions: Deepwater Gulf of Mexico, the Atlantic Margin, Southeast Asia and Australia."

The company reduced its 2015 capex outlook by -33% when they reported their 2014 Q4 results back in January. MUR's Q1 results came out in May. Profits evaporated with MUR delivering a loss of ($1.11) per shares versus a profit of $0.96 a year ago.

Management is trying to prop up their floundering stock price. On May 20th the company announced an accelerated stock buyback program of $250 million. This is part of a previously announced $500 million repurchase program from August 2014. The buyback doesn't seem to be working.

Goldman Sachs downgraded MUR to a "sell" in late May. Nearly a month later UBS has also downgraded MUR to a "sell". The UBS analyst expressed concern that MUR's production would likely decline in 2015 and 2016 since the company has cut back on investment. (edit: UBS later pulled its "sell" rating after MUR reported earnings on July 30th). Soon other analysts jumped on the downgrade bandwagon. Morgan Stanley and Oppenheimer have both downgraded MUR in the last several weeks. The Oppenheimer analyst expressed concern that MUR would face a significant cash flow deficit and would need to fund operations through cash on hand and additional debt.

MUR's most recent earnings report on July 30th did beat Wall Street estimates but the company posted a loss of $0.48 per share versus estimates for a loss of $0.54.

Shares of MUR have continued to race lower with investors selling every rally. The trend of lower highs and lower lows has pushed MUR to levels not seen since early 2004. The point & figure chart is bearish and forecasting a long-term target of $12.00. I see potential support at $20.00. The September 11th low was $25.77. Tonight we are suggesting a trigger to launch bearish positions at $25.65.

- Suggested Positions -

Short MUR stock @ $25.65

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

Long 2016 JAN $25 PUT (MUR150115P25) entry $2.40

09/23/15 triggered @ $25.65
Option Format: symbol-year-month-day-call-strike

QUALCOMM Inc. - QCOM - close: 53.27 change: -0.29

Stop Loss: 56.65
Target(s): To Be Determined
Current Gain/Loss: +2.2%
Entry on September 04 at $54.45
Listed on September 1, 2015
Time Frame: Exit prior to earnings in early November
Average Daily Volume = 12.5 million
New Positions: see below

09/24/15: The stock market's sharp decline this morning pushed QCOM below its August 24th low of $52.59. Unfortunately the sell-off didn't last very long and QCOM spent the rest of the day trying to claw its way back. Shares ended with a -0.5% loss on the session.

The big intraday rebound makes me cautious. No new positions at this time.

Trade Description: September 1, 2015:
There seem to be a ton of bulls shouting at everyone to buy QCOM even though the stock is in a bear market. QCOM peaked in early 2014 around $81-82 a share. Since then it has been a very bumpy decline lower.

The company is facing rising competition. More importantly some of that competition is coming from its own customers. QCOM has been a very dominant player in the mobile phone chipset market. Yet lately the company has been facing competition from mobile phone manufacturers choosing to use their own chips instead of QCOM's.

Almost half of QCOM's revenues come from two companies: Apple (AAPL) and Samsung. Both of these mobile phone makers have been slowly beefing up their own in-house chip design and production abilities. Earlier this year QCOM lost out when Samsung picked its own chip sets for a handful of new mobile phone models instead of QCOM's.

The rising competition is taking a bite out of sales. QCOM's earnings performance has been mixed over the last year. It tends to beat estimates on the bottom line but revenues have been disappointing. After a couple of quarters of revenue growth in the +7-8% range QCOM just reported Q3 revenues fell -14.3%, which was worse than expected. Another big challenge is management's guidance. QCOM has lowered its guidance the last four quarterly reports in a row!

The company has tried to soften the bad news by announcing a massive $15 billion stock buyback program but that was back in March this year. They promised to spent $10 billion on buybacks between March 2015 and March 2016. The big buyback has not stopped QCOM's stock from falling to new multi-year lows.

Bullish investors have tried to argue that QCOM might split up the company to unlock value. That was a very popular idea when activist investors Jana Partners got involved in QCOM. Jana is one of the reasons QCOM did such a big stock buyback earlier this year.

Right now the market's focus on China's weakness could be killing QCOM's stock. The company does a huge amount of business with China.

Meanwhile technically QCOM looks very weak. The point & figure chart is bearish and forecasting at $48.00 target. The oversold bounce from last week's lows appears to be rolling over. Today's intraday low was $54.69. We are suggesting a trigger to launch bearish positions at $54.45. We'll plan on exiting in the next four to six weeks.

Please note that I do want to offer one potential warning. Apple Inc. (AAPL) has a special event scheduled for September 9th. We do not know what AAPL will announce. If they happen to announce something that uses QCOM equipment then it could be a bullish catalyst for QCOM but that's probably a big "if" at the moment.

- Suggested Positions -

Short QCOM stock @ $54.45

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

Long OCT $50 PUT (QCOM151016P50) entry $0.96

09/23/15 QCOM's breakdown below support at $54.00 is bearish
09/12/15 new stop @ 56.65
09/04/15 triggered @ $54.45
Option Format: symbol-year-month-day-call-strike

Sohu.com Inc. - SOHU - close: 42.12 change: +0.57

Stop Loss: 45.30
Target(s): To Be Determined
Current Gain/Loss: -2.7%
Entry on September 24 at $41.03
Listed on September 23, 2015
Time Frame: Exit prior to earnings in early November
Average Daily Volume = 607 thousand
New Positions: see below

09/24/15: SOHU continued to sink as expected. What was not expected was the gap down. Our trigger to launch bearish positions was $41.35. Our trade opened on the gap down at $41.03. That was actually the low of the day. A bounce in Chinese stocks helped fuel a rebound in SOHU, which closed up +1.3%.

The breakdown to new lows, below support, and reversal back into positive territory looks like a bear trap. I would wait for a new decline under $41.50 before considering new positions.

Trade Description: September 23, 2015:
China's economy is slowing down. Earlier today the country said their manufacturing growth fell to six-year lows. This slowdown is being felt throughout the economy, including the technology space and Internet companies.

SOHU is considered part of the technology sector. I'd consider them a Chinese Internet stock. According to the company, "Sohu.com Inc. is China's premier online brand and indispensable to the daily life of millions of Chinese, providing a network of web properties and community based/web 2.0 products which offer the vast Sohu user community a broad array of choices regarding information, entertainment and communication. Sohu has built one of the most comprehensive matrices of Chinese language web properties and proprietary search engines, consisting of the mass portal and leading online media destination www.sohu.com; interactive search engine www.sogou.com; developer and operator of online games www.changyou.com/en/ and leading online video website tv.sohu.com .

Sohu corporate services consist of online brand advertising on its matrix of websites as well as bid listing and home page on its in-house developed search directory and engine. Sohu also provides multiple news and information service on mobile platforms, including Sohu News App and mobile news portal WAP.Sohu.com. Sohu's online game subsidiary, Changyou.com (CYOU) has a diverse portfolio of popular online games , such as Tian Long Ba Bu, one of the most popular massively multi-player online ('MMO') games in China, as well as a number of mobile games. Changyou also owns and operates the 17173.com Website, a leading game information portal in China. Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers, is in its nineteenth year of operation."

Looking at SOHU's recent earnings reports the company has been beating estimates on the bottom line but business is slowing down. SOHU has guided lower three of the last four quarterly reports. Their most recent earnings report was July 27th when SOHU announced their Q2 results.

Wall Street expected a loss of ($0.81) per share on revenues of $479.5 million. SOHU delivered a loss of just ($0.37) while revenues grew +23% to $493.6 million. Unfortunately management lowered their guidance again. SOHU expects Q3 revenues to come in the $470-500 million range. That's below analysts' estimates of $530 million. SOHU is also forecasting Q3 earnings in the minus $0.55 to minus $0.80 per share versus Wall Street's estimate for minus $0.39. This is SOHU's lowest revenue growth in the last three years.

Technically the stock is in a bear market with a -40% drop from its June highs (SOHU is down -21% year to date). The stock has been trading with a bearish trend of lower highs. Now SOHU is poised to breakdown under significant support in the $42 area. A drop below $41.00 would generate a new triple-bottom breakdown sell signal on its Point & Figure chart. Tonight I am suggesting a trigger to launch bearish positions at $41.35. If shares break down the next support level could be the $35 region.

FYI: Investors should be aware that SOHU has been rumored to be an acquisition target or a target to be taken private. That's our biggest risk. The cheaper this stock gets the more attractive it might become as a target. However, this is just speculation and it may never happen.

- Suggested Positions -

Short SOHU stock @ $41.03

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

Long DEC $35 PUT (SOHU151218P35) entry $2.00

09/24/15 triggered on gap down at $41.03, trigger was $41.35
Option Format: symbol-year-month-day-call-strike

iPath S&P500 VIX Futures ETN - VXX - close: 24.44 change: +0.64

Stop Loss: None, no stop at this time.
Target(s): To Be Determined
Current Gain/Loss: -12.0%
2nd position Gain/Loss: +15.8%
Entry on August 25 at $21.82
2nd position: September 2nd at $29.01
Listed on August 24, 2015
Time Frame: Exit prior to October option expiration
Average Daily Volume = 50 million
New Positions: see below

09/24/15: The stock market's plunge this morning boosted volatility-related indices and ETFs. Naturally the afternoon rebound in stocks saw these volatility gains fade. The VXX still added +2.6% on the session.

We are quickly running out of time on our October options.

No new positions at this time.

Trade Description: August 24, 2015
The U.S. stock market's sell-off in the last three days has been extreme. Most of the major indices have collapsed into correction territory (-10% from their highs). The volatile moves in the market have investors panicking for protection. This drives up demand for put options and this fuels a rally in the CBOE volatility index (the VIX).

You can see on this long-term weekly chart that the VIX spiked up to levels not seen since the 2008 bear market during the financial crisis. Moves like this do not happen very often. The VIX rarely stays this high very long.

(see VIX chart from the August 24th play description)

How do we trade the VIX? One way is the VXX, which is an ETN but trades like a stock.

Here is an explanation from the product website:

The iPath® S&P 500 VIX Short-Term Futures® ETNs (the "ETNs") are designed to provide exposure to the S&P 500 VIX Short-Term FuturesTM Index Total Return (the "Index"). The ETNs are riskier than ordinary unsecured debt securities and have no principal protection. The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity or upon redemption, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. An investment in the ETNs involves significant risks, including possible loss of principal and may not be suitable for all investors.

The Index is designed to provide access to equity market volatility through CBOE Volatility Index® (the "VIX Index") futures. The Index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects market participants' views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. Owning the ETNs is not the same as owning interests in the index components included in the Index or a security directly linked to the performance of the Index.

I encourage readers to check out a long-term chart of the VXX. This thing has been a consistent loser. One market pundit said the VXX is where money goes to die - if you're buying it. We do not want to buy it. We want to short it. Shorting rallies seems to be a winning strategy on the VXX with a constant trend of lower highs.

Today the VXX spiked up to four-month highs near $28.00 before fading. We are suggesting bearish positions at the opening bell tomorrow. The market volatility is probably not done yet so we are not listing a stop loss yet. Our time frame is two or three weeks (or less).

- Suggested Positions -

Short the VXX @ $21.82

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

Long OCT $20 PUT (VXX151016P20) entry $2.93

Sept. 2nd - 2nd position (Double Down On The September 1st Spike)

Short the VXX @ $29.01

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

Long OCT $20 PUT (VXX151016P20) entry $0.78

09/02/15 2nd position begins. VXX gapped down at $29.01
09/01/15 Double down on this trade with the VXX's spike to 6-month highs
08/25/15 trade begins. VXX gaps down at $21.82
Option Format: symbol-year-month-day-call-strike


Zafgen, Inc. - ZFGN - close: 40.56 change: -3.22

Stop Loss: $41.15
Target(s): To Be Determined
Current Gain/Loss: + 2.0%
Entry on September 17 at $40.35
Listed on September 16, 2015
Time Frame: Exit 6 to 8 weeks
Average Daily Volume = 232 thousand
New Positions: see below

09/24/15: Biotech stocks were underperformers again today. The group has suffered a really ugly week. ZFGN fared better than most of its peers until today. Shares plunged -11.6% this morning. The stock did manage a bounce and pared its loss to -7.3% but our trade was stopped out at $41.15.

Eventually this biotech weakness will be over. It's never truly safe to swim with the biotechs but I'd keep ZFGN on your radar screen. A few days from now we might see another entry point.

- Suggested Positions -

Long ZFGN stock @ $40.35 exit $41.15 (+2.0%)

09/24/15 stopped out
09/19/15 new stop @ 41.15
09/17/15 triggered @ $40.35