Lululemon (LULU) Surges on Earnings Beat

Shares of Lululemon Athletica (LULU, $69, up $x) are rocketing higher today following an earnings beat after Wednesday's close. The company reported a profit of $0.47 a share on revenue north of $544 million while analysts were expecting $0.43 a share on sales just south of $540 million.

Looking forward, LULU said Q4 earnings would come in between $0.96-$1.01 a share on revenue of $765-$785 million. The suit-and-ties had penciled-in a profit of $1.01 a share on sales just below $787 million.

Despite the lowered guidance, shares are surging 15% and are trying to clear the early September gap down from $76 to $68. Continued closes above this level would be bullish for a possible run towards $78-$80 over the next few months. The 52-week peak is at $81.81. Support will try to hold at $68-$66 and the 200-day moving average on a pullback.

LULU

The LULU December 60 calls (LULU161216C00060000, $9.18, up $6.28) are zooming 217% on the stock's breakout and expire next Friday. The LULU January 60 calls (LULU170120C00060000, $10.02, up $5.88) are soaring 142% on the news.

While there could be further upside to LULU shares and the aforementioned options, there could be an opportunity down the road to go short if shares fail to hold $68-$66 going forward.

NextOptions.com Index and Earnings Options Play List for 12/7/2016

NextOptions.com Index and Earnings Options Play List for 12/7/2016

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8:00am (EST)

The market was sluggish for much of Tuesday before picking up steam in the second half of action. The continued momentum was beautiful to see as I mentioned the bulls needed to show some follow through. The run to fresh all-time peaks were lead by the small-caps and another bullish sign.

The Dow advanced 35 points, or 0.2%, to close at 19,251. The blue-chips were weak throughout the first half of trading with the bears pushing a low of 19,184. Support at 19,100-19,000 has now held for 10-straight sessions with a solid floor being formed. The push to 19,255 keeps upper resistance at 19,200-19,350 in play. Continued closes above the latter could lead to a move towards 19,500-19,600 by yearend.

The S&P 500 added 7 points, or 0.3%, to finish at 2,212. The index slipped a couple of points to 2,202 shortly after the open with rising support at 2,200-2,195 holding. A move back below 2,190 would be a bearish development. Resistance at 2,215-2,225 was challenged on the bounce to 2,212 ahead of the closing bell. If the latter is cleared, pencil-in a test to 2,250, possibly, over the next 3-4 weeks.

The Nasdaq gained 24 points, or 0.5%, to settle at 5,333. Tech made a brief trip into negative territory midday to 5,299 with fresh upper support at 5,300-5,275 getting slightly stretched. The turnaround to just below 5,334 into the close was a bullish signal. Near-term resistance remains at 5,350-5,375.

The Russell 2000 surged nearly 15 points, or 1.1%, to end at 1,352. The small-caps tested 1,335 intraday with rising support at 1,330-1,325 trying to be established for the rest of the week. Prior resistance at 1,335-1,340 was blown away following the move to 1,353 and another all-time high.

The S&P 500 Volatility Index ($VIX, 11.79, down 0.35) traded in negative territory for much of the day following a brief look at 12.30 on the opening sluggishness. Short-term resistance has now moved down to 12.50-11.50. Continued closes below 11.50 should get a 10 handle and possibility, single-digits on the map.

Analogic (ALOG), Dave & Buster's Entertainment (DAVE), Sigma Designs (SIGM) announced earnings after Tuesday's close.

Hooker Furniture (HOFT), Lulelemon Athletica (LULU), Star Gas Partners (SGU), United Natural Foods (UNFI) are announcing numbers this morning.

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12/7/2016 comments:

Sprint (S, $8.17, up $0.12)

January 8 calls (S170120C00008000, $0.65, up $0.10)

Profiled Price: $0.55 (11/16/2016)

Exit: $1.10

Profit: 18%

Stop: None

Thoughts: Monday's high reached $8.61. Resistance is at $8-$8.25. Support is at $7.75-$7.50.

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12/7/2016 comments:

Rambus (RMBS, $13.46, up $0.48)

January 14 calls (RMBS170120C00014000, $0.30, up $0.13)

Profiled Price: $0.36 (11/21/2016)

Exit: $0.75+

Profit: -18%

Stop: None

Thoughts: Resistance is at $13.50-$13.75. Fresh support is at $13.

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12/7/2016 comments:

Array BioPharma (ARRY, $8.66, down $0.05)

January 8 calls (ARRY170120C00008000, $1.15, down $0.10)

Profiled Price: $0.75 (11/28/2016)

Exit: $1.50

Profit: 48%

Stop: None

Thoughts: Resistance is at $9. Support is at $8.50. We have a Price Target of $10 by mid to late January for the stock that would get these call options to $2 "in-the-money".

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12/7/2016 comments:

Toll Brothers (TOL, $31.93, up $1.46)

January 30 calls (TOL170120C00030000, $2.50, up $0.90)

Profiled Price: $1.00 (12/5/2016)

Exit: $2.00+

Profit: 60%

Stop: $2.05

Thoughts: Set a Stop at $2.05 to ensure a triple-digit profit.

Shares traded to a peak of $32.18 yesterday with the calls kissing $2.55. We said we liked these calls to play a run to $32 on better-than-expected numbers and the company delivered.

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12/7/2016 comments:

PowerShares QQQ ETF (QQQ, $116.88, up $0.28)

January 120 calls (QQQ170120C00120000, $0.75, flat)

Profiled Price: $0.65 (12/5/2016)

Exit: $1.50

Profit: 12%

Stop: None

Thoughts: Resistance is at $117.50-$118. Support is at $115. We like these call options to play a rebound to $120 and all-time highs by mid-January.

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Upcoming Earnings

Wednesday

After the close: Casey's General Store (CASY), H&R Block (HRB), Ollie's (OLLI)

Thursday

Before the open: Argan (AGX), Ciena (CIEN), Hovnanian Enterprises (HOV), Methode Electronics (MEI), Peak Resorts (SKIS), Vince Holding (VNCE)

No new recommendations today.

Russell 2000 Closes at Record High

The market was sluggish for much of Tuesday before picking up steam in the second half of action. The continued momentum was beautiful to see as I mentioned the bulls needed to show some follow through. The run to fresh all-time peaks were lead by the small-caps and another bullish sign.

The Dow advanced 35 points, or 0.2%, to close at 19,251. The blue-chips were weak throughout the first half of trading with the bears pushing a low of 19,184. Support at 19,100-19,000 has now held for 10-straight sessions with a solid floor being formed. The push to 19,255 keeps upper resistance at 19,200-19,350 in play. Continued closes above the latter could lead to a move towards 19,500-19,600 by yearend.

The S&P 500 added 7 points, or 0.3%, to finish at 2,212. The index slipped a couple of points to 2,202 shortly after the open with rising support at 2,200-2,195 holding. A move back below 2,190 would be a bearish development. Resistance at 2,215-2,225 was challenged on the bounce to 2,212 ahead of the closing bell. If the latter is cleared, pencil-in a test to 2,250, possibly, over the next 3-4 weeks.

The Nasdaq gained 24 points, or 0.5%, to settle at 5,333. Tech made a brief trip into negative territory midday to 5,299 with fresh upper support at 5,300-5,275 getting slightly stretched. The turnaround to just below 5,334 into the close was a bullish signal. Near-term resistance remains at 5,350-5,375.

The Russell 2000 surged nearly 15 points, or 1.1%, to end at 1,352. The small-caps tested 1,335 intraday with rising support at 1,330-1,325 trying to be established for the rest of the week. Prior resistance at 1,335-1,340 was blown away following the move to 1,353 and another all-time high.

The S&P 500 Volatility Index ($VIX, 11.79, down 0.35) traded in negative territory for much of the day following a brief look at 12.30 on the opening sluggishness. Short-term resistance has now moved down to 12.50-11.50. Continued closes below 11.50 should get a 10 handle and possibility, single-digits on the map.

Analogic (ALOG), Dave & Buster's Entertainment (DAVE), Sigma Designs (SIGM) announced earnings after Tuesday's close.

Hooker Furniture (HOFT), Lulelemon Athletica (LULU), Star Gas Partners (SGU), United Natural Foods (UNFI) are announcing numbers this morning.