Something To Read With Your Coffee & Cheerios

Market Overview

SPY was down 1% on the week not bad considering we are down 6 out of 7 sessions there has been some fine action and certainly strength in a lot of names despite the market flopping around like a fish out of water.  Levels in SPY have really been working well as we saw on Friday we have been talking about 168.50 as the bounce spot and it did so just shows the selling is orderly and there is zero panic, yet.  So our level into next week is again 168.50 to the downside although the second test is not going to be as high probability as the first also the freak show in Washington is beginning. After that you got 167.50 area, which should hold and if that fails then you have 165.23-165.08, at which point I think is the spot to buy like its 1999.  To the upside you've got 169.50, 170-170.17, 170.53.  QQQ was basically flat on the week, up a tad 79.54 is the next spot to the upside & 78.75-78.59 to the down.  IWM squeaked out a .25% gain on the week, so there is strength within this weakness.

Economic Calendar

Technical Set-Ups

ALXN really looks good here as do many names in this sector as well as the IBB in general, I have my eyes on the 117 break looked like it was going to go Friday, but just could not get it done and then it got to lunch time and it did not have a chance.  Alert set for that 117 break.

 BA shares pulling in a bit, which is fine and should allows this to set up better in time, alert set for the 120 area break.

 BIDU strong performer and definitely a great trade for us this week, while I do not think this set-up is as good I am still very interested in the 155 break higher. Next weeks 160 calls found a 2 seperate100 block buyers on Friday prefer 155 calls myself on the breakout. 

 BP continues to be interesting here and I am waiting for a break out of this massive wedge on the weekly for a swing long.  I noted the bullish options activity last week Friday saw some more with 1,000+ Nov. 45 calls.  Stalking entries here as shares are acting well and could really go on a run here soon as this is a long consolidation.

 CBI pushed today but really lacked volume continue to monitor the volume here and looking for a break through Friday's highs.

 DLPH watching that 58.60 break for a move higher, break above should target 60-61.

 FXCM was on our list last week but fell on Thursday shares quickly recovered on Friday and continue to watch for the 20 break, which should target 21-21.50.

 GCI a lot of names in the group are hot and we got a big stick and two rest days 26.90 break should send this one for a nice day trade.

 GILD again names in this group are setting up well despite some weakness in the market so important to seek out strength in the weaker tapes.  Back through all moving averages RSI curling higher , as MACD looks to confirm the strength & ACCUM/DIST also curling higher. 64.75 break.

 HOG been a strong performer and pretty straight forward here watching for a 65.15 break.

 LTD on our list last week actually made a late day run at it despite the weak tape but fell back into range, eyes on those Fridays highs as this looks ready to run.

NFLX is on watch everyday for me but really like how its is setting up and believe it is again ready to run watching a break of that 314 area for a run back up through 320.

 ORLY I think the street was expecting a disaster from AZO and the report looked pretty solid so some relief in those shares and ORLY here so watching to see how it handles that 127.70 area.

 PXD sets up well here for the 190 area break.

 REGN again a bio love this set-up through 311 could put in a nice stick.

 ROST continue to wait for that 72.84-73 area break.

 SBUX upgraded on Friday but didn't react much but still watching the 77.85 break.  A lot of good happening here and my long term thesis has been and still is $100 by 2014.

 ST  a tad thin but really look good here through 39 RSI beginning to move higher bullish MACD cross and accum/dis at highs just waiting on a tad more volume to lead the way here should target 41 area.

 UPS 92.12 break continue to watch as it consolidates and works off over bought conditions here going to set up soon.

 WTW is interesting here as it continues to bottom RSI is grinding higher as are other momentum indicators 38.19 break should tag 50 day and one could evaluate commitment there.  Trades a bit thin so volume is going to be key.

Options Activity

MU seems to everyday break to new 52 week highs, and is just in one of those grooves where it is a name to watch everyday for a trade, it has become a great trading vehicle and bulls continue to be active in longer dated calls.

The Trades: Buyers: 8,500 Oct 18 calls .96, 3,500 Jan 18 calls 1.90, 2,500 Oct 20 calls .37, 3,000 Jan 21 calls .86.

Sellers: 4,000 Jan 18 calls, 7,000 Jan 16 calls.

My Take:  The action has been bullish for months open interest in calls is over 1.8MM now, Jeffries  slapped a $25 target on shares, but for me it is just a great trading stock and not something I am interested in for longer-term trades.

JCP selling 84MM shares caused a massive sell off and a view of the monthly chart shows shares down 27% in that time span and looks like the next stop could be low $7's.

The Trades: Trader rolls down 12,000 Feb 12 puts to buy 12,000 Feb 9 puts.  Oct 12 puts rolled down to Oct 10 puts 17,000. A bullish trader buys 16,500 Jan 2015 10/15 call spreads at 1.37.

My Take: Well I have highlighted the bearish action many times in the past weeks and had the alert set for the 12.12 breakdown, if one did not trade it then I really see no reason to be chasing it down here down 27% in the past 4 weeks.

KO shares continue to tread water with the market, and just cannot seem to stage any rallies but traders continue to place bullish bets on the name.

The Trades: Trader buys 1,900 Oct 25th 38.50 calls & another rolls out of 8,400 Oct 40 calls to 8,400 Nov 40 calls.

My Take: Shares need to reclaim the 39 level before I would even consider it at this stage earnings are on 10/15 so noting the action for a possible play there.  Also of note on 9/11 trader bought 13,000 Nov 40 calls.  I have an alert set for 39 & also have the action noted for any potential earnings plays.

INTC shares rolling over and holding above the 50 day, but for how long is now the question.  Bears smell blood and got extremely active today.

The Trades: 30,000+ Dec 22 puts

My Take:  Hard to disagree with a bearish stance here and with $2MM in put premium bought today and 2x avg put volume with Net Delta -836K it is significant positioning.  50 day break sets up for a short and earnings are 10/15, and these Dec 22 puts at .62 may not be a bad play.  Noted the action with a 50 day alert break down and for potential earnings plays.

COP shares in a nice orderly pull back here with a couple tests of the 10 day which has had a chance to catch up to price.

The Trades: 2,600 Jan 2014 65 puts bought for 1.14 & 300 Oct 70 puts bought at the end of the day for 1.24.  Also some smaller size buys in Oct 67.50 puts.

My Take:  I see no reason to be wanting to have short exposure to the name at the moment, earnings are 10/21, which is after Oct. expiration and not a name I am interested in an Earnings play so just information to me. 

MGM and the gaming names in general have just been on magnificent runs this year as shares make new 52 week highs this week as did many of the names, but came back in Friday but bounced off the 10 day and rallied to close near the highs.

The Trades: Over 3,000 Oct 4th 20.50 calls bought from .11-.24 (Nice trade already for the early dip buyers)

My Take:  As I said earlier seek out strength and I have been active in these names, and I have an alert set for the 20.40 break and will be piggy backing the same trade.

ESRX came under some heavy selling pressure of late but shares have stabilized and have held a key level right above the 200 day.

The Trades: Over 2,500 Oct 65 calls.

My Take: On 9/18 Trader bought 1,000 Nov. 72.50 calls at .11. These are low delta shots and just not my thing and I do not really see an edge here as shares need more time to stabilize.

MSFT shares have been volatile on a few news events earnings & CEO change. But are showing signs of life here late in the week and could set-up for a trade.

The Trades: Trader buys 10,000 Jan 34 calls, 2,700 Oct 34 calls, 3,000 Oct 33 calls rolled up to Oct 35 calls, also some smaller size buyers in Oct 34 calls.

My Take: I have seen worse set-ups for sure, and showed good strength on Friday in a weak tape so I have an alert set for 33.75-34 area and may look to either play weekly 34 calls or those Oct 34 calls.

EXXI we noted the bullish action earlier in the week and shares continue to grind higher.

The Trades: March 2014 29/36 call spread 1,000, Oct 31 calls 1,000 & seller of March 22 puts (1,000 in open interest already so could be closing action, confirm it on Monday).

My Take:  Shares certainly look decent here and trader bought 4,200 Dec. 30/34 call spreads earlier in the week, won't be on my A list but I will set an alert and keep an eye on it.

CSIQ shares up 12.5% on the week as solars caught bids, and this one was able to go out on highs.

The Trades: 1,500 Oct 16 calls, 1,000+ Oct 15 calls ran 5X daily call avg with mostly offer side action.

My Take: 10% short and the weekly below shows about another $1 through last weeks highs if your a momentum player it could be in play, chasing solars is a dangerous game but I may take a look for an intra day scalp.

TSLA well really no introduction needed.

The Trades: Oct 4th 225 calls 600, Oct 4th 210/225 call spread 200, Oct 19th 195/200 call spreads 300 & Oct 4th 195/205 call spreads 300.

My Take:  Always on watch everyday basically opening range highs, through Friday's highs, and/or intra day range breaks.  $200 definitely achievable next week.

Other Options Activity

ELN- Traders active for over 14,000 Nov 16 calls from .20 chased all the way up to .35.  Personally I would not chase this VOL pop with your money.

CSCO- Buys- 5,000 Oct 24 calls, Oct 26/21 strangle 3,700, 8,000+ Dec 20 calls.  Some bullish positioning but really nothing to see here 22.90 alert set for a short into that May gap.

BBD- Trader buyers 1,000 Oct. 14 straddles for .80, alert set for 14.45 break out of this flag.

FB- Trader rolls 2,700 Oct 47 calls to Oct 50 calls, Trader buys 2,500 Nov 52.50/45 put spreads Nov 45 calls with over 3K & the most interesting and unrealistic the 1,000 March 2014 95 calls bought for .52 debit.  Like MU just been a really great trading vehicle and will continue to be earnings 10/21 could shift it.

DAL- Follow on action to the interesting spread from Thursday trader buys 5,000 Jan 2014 27/30 call spreads and another trader rolls 2,000 Jan 22 calls to 2,000 Jan 24 calls. (Still stalking the other bull calendar spreads).

CTCT- Trader sells 4,500 Nov 25 calls to open.  

GERN- Trader buys 3,000 Nov 3/5 call spreads.  Also smaller size buyers in Nov 3 calls running 20x daily avg call volume.

ACXM- Long-Term bull buys 2,400 May 2014 30 calls as shares make new 52 week highs.

KSS- Trader buys 1,600 Nov 50 puts.

NE- Traders active in Oct. 41 calls over 1,000 & Dec 42 calls about 300.

XOM- Shares continue to trade poorly but some bullish action with 1,500+ Jan 2014 95 calls & 500+ Nov. 92.50 calls.

DOW- Some ugly candles and traders flew out of Oct 36 calls and booked their profits.  Caution if long here.

JKS- Trader sells to open 1,200 March 2014 37 calls for .95 credit.

MTW- Jan 2015 25 & 30 calls finding buyers 5x daily avg volume, interesting longer term bulls.

XLU- 2,000+ Oct 25th 36 puts bought.

Trade Idea Of The Week

MRK been noting the bullish call flow as shares continue to attempt to reclaim 10 day supply and make a run back to 52 week highs.  Also in a prior note I mentioned the tendency for shares to run into earnings so I posted a chart below and the blue dots at the bottom represent earnings days and as you can see there is that tendency to run into the event.  With that said I also mentioned MRK as not being a great Earnings reactor so I will be out of this trade ahead of earnings.

The options action: 9/27 Oct 4th 48.50 calls 1,000+, Oct 4th 48.50 calls 1,000ish, 9/26 2,500 Nov 47/49 call spreads & 3,500 Nov 50 calls, 9/25 1,300 Nov 48 calls, 9/24 6,700 Oct 50 calls (low delta shot, little impact on me)

The Trade: Long Nov. 48 calls through 47.91 area and hold.

Catalyst- Earnings 10/21

Theta Thrasher

INTU shares are consolidating there latest move as they continue to bounce between 65-67 for all of September as they seek a catalyst on 11/11 earnings.  Traders see limited movement through November expiration.

The Trades: On 9/17 a trader sells 2,500 67.50/65 strangles for $1.60 credit & on 9/26 a trader sells 5,000 Nov. 67.50/65 strangles for $2.90 credit.  Both trades remain in open interest.

Trade to consider: Short INTU Nov. 70/62.50 strangle for $1.40 credit.  Largest earnings reaction past 4 quarters is $1.50 of 2.2%.  Profitability range- 61.11-71.39.

Volatility Seeker

GMCR shares down 11% last week in some volatile trade as a trade seeks the wide price movements to continue into next week.

The Trade: Trader buys 2,000 77.50/75 strangles for 3.25 (I always put calls first, except in bear risk reversals). Currently quoted at 3.30ish.

My Take: Shares of GMCR can put in vicious moves Alla 50% move down on earnings a year or so ago.  26% short despite this run up this year.  The trader is net bearish as he seeks higher delta buy on the put side while I am not interested in this play, I am interested in the action behind the play and the volatility of shares of GMCR and I will be watching any green to red scenarios and how shares handle a test of Friday's lows at 74.50.

Earnings

Will post day before event.

Net Delta

FB +964K

MSFT +963K

ELN +830K

BAC +622K

CSCO +528K

CSIQ +487K

ZNGA +448K

KO +331K

INTC -821K

MBI -545K

RAD -435K

IWM -400K

F -400K

DOW -400K

C -350K

Implied Volatility Gainers

TWGP +45

NDRO +31

ONE +18

BGCP +11

ROYT +11

RUE +9.5

HOS +9

EW +8.5

Implied Volatility Losers

NKTR -49

RDA -32

ZOLT -21

NVMI -16

FINL -16

BBRY -13

NKE -12

SLF -10

Be Well,

Keeblerelf3

This is for informational purposes only and should not be viewed in anyway as investment advice.