didn't you get the memo? it's all good. or maybe not. anyway, we're here live at the nasdaq market site. the guys are getting ready behind me. here's what's coming up. ♪ that's what stocks did this week. but a classic indicator says the ral hi may soon end. we'll tell you what it and is how you can protect yourself. plus -- >> and we're going to have a big, big, big lot of fun. >> we sure are, donald. because we have a way to make money in apple if shares go up, down, or nowhere at all. we'll explain. and -- soup and cereal stocks have been on fire. but the chart master has a simple message for traders.

>> no soup for you! >> we'll explain why. the action begins right now. let's get to it. if the bear had reason to run scared maybe it is this. check out transports. the economically sensitive group of stocks touching a year to date high today. this is a sign that maybe things are on firmer footing? dan what do you think? >> no doubt about it. i think you could take the price action year to date and say, this is a group that was one of the worst-performing groups late in 2014, it topped out, it spent most of last year just trending lower, top left, bottom right. here's the thing. this year's improvement doesn't seem to be based on anything particularly fundamental. when you think about some of the stocks that make up this group, shippers, rails, airlines. that sort of thing. i actually see a lot of economic headwinds to these companies right now. so the fact that they've outperformed in a year that's been kind of dicey is really -- doesn't make me warm and fuzzy about it. i think it kind of sets up for an interesting opportunity.

>> first of all, i don't know that you can put all those transport stocks together. i don't think there are so many headwinds for airlines, for example. low fuel costs, that is helpful. it also promotes better load factors. getting into a good travel season. i think the airlines right now are basically making as much money as they're ever going to make. that's the reason that they're trading at these obscenely low multiples. people don't think the great times are going to continue forever. cyclical stock where you see green p/es, that's usually a sign this is the best they're ever going to do, that's what the street is pricing in. >> it's all about the preceding condition. what causes steep ricochets is preceding weakness. this is the single worst area of the market, going down all last year when the market was trying to make new highs. even if visited for beta the 16% move off the low, almost double that of the s&p, is not really important in the sense that it hasn't changed the complex of this group. we know that in fact the big names at the top, like fed ex and u.p.s., the transportation

is a price-weighted index. the bottom five, six names are the same impact of the top two. these stocks are not generally up trend. let's say one is bullish. they've already expended a tremendous amount of energy just to get here. higher from here? i would say the chances are 1%. nothing's zero. >> you mentioned parts of financials -- not financials, transports -- aren't doing well, you're talking about the rails? >> rails would be a very good example. truckers are basically right in the middle. so the fed ex, u.p.s., the truckers don't have as much direct exposure to oil in a negative way as the rails do. rails are big in transporting oil, they benefit from higher oil prices and better energy markets. the other ones are in the middle. there's a secular tail wind to the u.p.s. and fed exs of the world that beck acknowledge. u.p.s.'s results weren't that bad. we lump these together and once upon a time that made sense, i don't think it makes as much

sense now. >> it may in the instrument that i want to use to track this index, heavy on these ones that had big runs. i put my carter hat on and i have charts i think are really important. this is what got me looking at the iyt today, the one-year chart. the stock -- excuse me, the etf has come all the way back to the august low level that it really found some good support. the breakdown level in january. it's had a 15% run off the low. i think this is probably a good spot. if it can't get through early next week to lay out a short for traders over the next couple of months. the next chart is an eight-year chart from the 2009 lows. look at that it held that up trend like a boss. it got just over there. i think if it fails and it gets below 130 here, it fails at that breakdown level, 134, gets below that up chart, i think you have a trading opportunity back to the january low, 115. there's really no room below that. so this is a trade that i'm looking at early next week. if we fail at 134 i think it sets up well. looking at april explanation

when the etf was 133.50. you could buy the april 130, 115, put spread paying 2.5 for a 15-wide put spread, less than 2% of the underlying etf price. i like the risk/reward. i can make up to $12.50 if the etf goes back to 115 where it was trading in early january. so to me i think you have a whole host of really central bank volatility coming. we know that we have a bunch of stuff going on next month. i just think that the rally off the bottom in the broad market here in the u.s. is going too far, too fast. >> notice the construct of the conversation that started. if we were in an uptrend, 16% decline in aggregate, the conversation would start, isn't this an opportunity to buy weakness? now a counter trend rally of 16% we're not saying, you are, the conversation is, is this the beginning of a few bull? it's exactly resip ra call, you sell rallies. >> i'm not as wish as you are action i said that last week too. this trade makes a lot of sense.

the likelihood that iyt basically tracks sideways from here is essentially nil. and this actually the magnitude of the move you're targeting is exactly the magnitude of the move we had over a comparable period of time. 2.50 for a 15 spread is really, really cheap in a high volatility environment like the one we're in now. i think the put spread makes a lot of sense. >> the long-term chart, the uptrend was great, now it's in a down trend since late 2014. to carter's point that's what you want to sell. you get back to that resistance, you get in there, doing it with defined risk. the risk/reward of the dream, how close it is to the money, i like the trade setup. another trade that has been on fire this year. consumer staples and specifically the food stock. take a look at this, tyson, campbell's soup, the two pest-performing stocks in the consumer staples sector. up 22% and 18%. not far behind is hormel, up 9%. but carter says one of these hot stocks might be ready to cool

off. >> we know staples are a place to be in an environment like this and they are getting morn some of them are literally off the chart. that's what's kind of a problem here. so let's just take a look at some setups and then get to soup. staples. what we have here is just the absolute chart going back to 1990 recession. and the performance, of course, of this group is stunning. it's quite good versus the market. in fact, close to double, not quite. what's interesting is through the entire bull market, actually staples have underperformed. we know this to be the case. these are defensive assets. so in a big bull market, staples actually underperform. in a bear market they outperform. right now this is the move, but they have not outperformed the market. so that's what's expected in a bull market, yes, because these are low beta names. the beta, the sector's half the s&p. what we're starting to get now is certain individual stocks

that have actually gone nuts. so here is campbell's soup. if you're able to maintain an orderly uptrend and check back to your line over and over and over like that, you can do this at infinitum. that's not what it's done. it's taken off and gone parabolic, if you will. so how much has it taken off? this is a long-term chart. right now the stock is 20% above its average trailing brace over 150 days. going all the way back to '90, giving you every instance. what this bottom panel shows you is whenever it's gotten to the 20% above its moving average, it typically runs out of gas. so optically it's steep. you can see it here. mathematically it's at a range where it never gets much more than. guess what happened today, it closed on the absolute low after touching a high of 64, close on the low, and it was a reversal day. look where it's struggling. it has gotten right back to its

all-time high of 1998. touch there and close down on the day. we think that's exactly where it stops. a situation of a whole bunch of this or a bunch of that. the third opportunity or prospect of this higher we would say is 1%. there are no zeros. >> so mike, you short this stock? directionally? >> yeah, directionally i think we're right around the peak valuation. take a look back to 2006-2007, the last time that this thing was trading at these kinds of multiples, probably around 21 times. estimated next 12-month earnings 22, 23 times going back. and to me, that's definitely towards the upper end of the range. i think you certainly want to fade that from a fundamental standpoint. it's not a growth stock. they were doing about $8 billion in revenues in 2008. that's what they did this last year. so we're right -- it hasn't even kept up with inflation. so -- as low as inflation is. simple thing, look out to may, buy the 60 strike put. you know, this is only going to

cost you about 1.60. you need to watch your limit orders on this one. even though there's a low volatility name, spread's a bit wide. this is one of those places, i think 150, put in a 160 bid. >> carter said parabolic. i looked at this chart. it literally has gone up in a straight line and it makes no sense. you have to listen to carter because a month ago, i don't know if you remember we did the xlp. i tried to fade the breakout. he said wait, wait. you have waited. the thing has gotten a lot more constructive. today's reversal in the whole space is really powerful. you had a fail breakout, all-time highs. something like this -- >> news related. they had news. classic thing. buying disney for "star wars"? no, that's exactly the opposite. buying campbell's because it had good news? no, it's exactly the opposite, it's time to get out of the trade. >> in the food companies there was a lot talk over the course of the last 18 months or so about mergers, acquisitions, that's kind of what we were expecting. don't expect to see it at these valuations. even if you did get it, the only

reason i was looking at the rally and thinking what could that possibly mean, i don't think you'd see much higher prices. >> if you look at the 17, 18 analysts that have this as on coverage, their price target is below the current price. >> oh. yeah. in terms of just outright buying a put, how do you feel about that? >> it's okay. >> it's okay, that's not a ringing endorsement. >> we know option prices are up across the board for most single stock names, especially a stock like this. you've got to be on the timing. sometimes we talk about calendars. if you can time some of this and think there's a potential for a range bound situation, selling short -- >> it's moving like this. straight up and straight down. you can't short a stock that's spiking although like that although today's weakness might have been your entry point. you're going to get your head taken off doing that. >> got a question, send us a tweet. if it doesn't say "your mama" we

might read it on air. sign up for our newsletter. it will change your world. promise. check it out. in the meantime, here's what else is coming up. walmart. always low prices. >> sums up walmart shares today but there's something in the charts that suggest they could go higher. we'll tell you what it is. plus the government standoff with apple is creating a rare and unique situation to make money if apple goes up or down. >> it's a win-win. >> you have no idea, johnny. we'll explain when "options action" returns. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time.

did you finish your derivatives pricing model, honey? td ameritrade. yeah! ahh... you probably say it a million times a day. ahh... ahh! ahh... ahh! but at cigna, we want to help everyone say it once a year. say "ahh". >>ahh... cigna medical plans cover one hundred percent of your in-network annual checkup. so america, let's go. know. ahh! and take control of your health. cigna. together, all the way.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement.

there's no way to predict that. td ameritrade. welcome back to "options action." apple continuing to make headlines after ceo tim cook filed a legal motion to deny the fbi's request for access to the data on the iphones of the san bernardino shooters. the company holding a shareholders meeting today. josh lipton is at the tech giant's headquarters with the very latest, josh? >> reporter: at that shareholder meeting here in cupertino, california, one big topic was that fight between apple and the u.s. government. and one question is what has that all meant for apple stock? if you look at the past week when this whole event began unfolding, apple stock is basically flat over that time. meanwhile, have you seen about a 1.5% pop for the s&p 500. so some recent underperformance.

i spent time today speaking to apple shareholders in from all over the country, nashville to boston. i asked them, you have your hard-earned money to work in apple, are you concerned about what this court case is going to mean for your investment? here's what they had to say. >> i am concerned about that. but i think apple has the opportunity here to really right the ship, to make this better, and i think the investors will realize that. >> actually, i think it's only going to strengthen people's respect for the company. >> if they hold their position and are able to maintain it, i think it will be a great accolade for them. i think it will help them gain respect and strength and it will definitely be in their favor. >> so generally the shareholders i was speaking to today supportive of apple, supportive of apple ceo tim cook. we know this case far from over. the next date you want to circle on your calendar is next tuesday. and that is when apple's legal chief is going to head to d.c. and testify on capitol hill.

>> josh lipton, thank you. while the stock has been nailed to the wall during this ordeal options prices have remained relatively high. that's created a great opportunity for one particular options strategy. mike's at the smart board to explain. >> yeah, so one of the things we're looking at is identify a stock you want to own. we're talking about apple here. obviously it looks fundamentally cheap. it is under a little bit of pressure because of the news that's coming out. the second thing is when you're looking at a trade you want to figure out where you want to own the stock. so right now i'm thinking maybe a little bit cheaper than where it is right now wouldn't be bad, around $95. pick a stock with a yield of 1% a month. what we're referring to is if you're going to sell options we're looking to collect 1% in premium every 30 days. right now we can see obviously the kind of pressure the stock has been under. despite the recent rally the s&p has had because of what's been going on this stock is basically trading right here. as i pointed out it's trading at a very cheap multiple. probably around nine times

earnings or less net cash. what's the trade that i'm looking at? i'm looking at here and looking at the april '95 puts. okay, so these have less than two months to go to expiration. right now collect $2.40 to do that trade. think about it. $95, 1% is 95 cents. so two times that number, we're getting well more than the 1% per month that we were trying to get. here's the thing. if the stock does get put to me at that level, that means the stock is still under pressure. options premiums will still be bid. i'll have an opportunity to sell calls against my long position. >> key question that you bring up is, do you want to own that stock you're selling puts on? carter, in terms of the chart, we've seen apple's pormgts the past 12 months. this week it has underperformed technology which was up 1.5% for the week. >> just one of those very rare moments. most things are moving, either improving or deteriorating. this stock is just dead flat. probably has nothing to do with

the government. it is a massive could and this dust-up about give us your phone -- i mean, this is a moment where after selling off 35% it's probably cheap for enough people that their buyer's holding it up and no one's willing to sell it down. you have a dormant asset. there's no trade here. or do something like this. but getting directional makes no sense. it's a dead, lifeless moment in a very big stock. >> with that said would you sell puts here? >> i think what mike's targeting is interesting. april expiration is not going to catch the next earnings event. that's going to be the thing that's going to catalyze the stock, maybe news on capital return that sort of thing. in some ways $93 is held off year long, that's not a bad level. mike really gets put the stock just above $93 if you factor in the put sell. march 15th, this iphone event, update the watch. i think there's risk to that. i think if people are not impressed with what they have. then you have to start thinking about september and the iphone 7. here's the thing. it could set up as a great trade but it has to be from lower

levels. it has to get washed out. there's still 44 buys and six holds on it from wall street analysts and we know investors are not particularly sanguine about it. there's a great trade setting up. this is the first year in many where they've actually had declining estimates for sales -- >> you asked would you, i did. just to put things on the table. i'm short the 94 1/2 in march. obviously i like the trade. next, financials rebounding this week along with the broader market. have they come too far, too fast? we'll tell you why you might not want to get in just yet. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated

range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.

steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade.

it's time for "total recall." we take a look back to some of our open trades. last week dan made a trade on jpmorgan. check it out. >> today when the stock was about 57.50 you could buy a put counter and you have to finance longer dated puts and ply volatility, the price of options is really high, so i want to sell february 19th, next friday, expiration 55 puts for about 60 cents and buy the april 55 puts for $2.60. it cost me $2. that is my max risk.

>> so the first leg of this trade expired. >> i was long on the april 55 puts. i have those events i'm looking out to. it's the fed stretch test and the q1 earnings. we had that investor meeting this past week which the stock got hit on. it gave me an opportunity to spread the long april calls into a vertical put spread. the stock went through 55. it gave me a great opportunity to sell the downside 50s. i have a 55, 50 put spread, i got almost two months and all those events to look forward to. >> three weeks back mike and carter were bullish on walmart. >> you can call ate trend line. it surely is that. what it's done clearly is broken above that trend line. or you could do one of these. people call them things like heads and shoulders. bottoms or top. here's our neckline. the presumption is we're going to move above that neckline. buy walmart. >> i think the bullish way to play this without risking too much money is go out to april, buy the 67.50, 72.55 call

spread. >> the stock is flat. so carter, do you like the chart still? >> we do. obviously the bottom we think is in place. the question is do you get absolute returns? we think you do. we like this because it's a low data defensive stock and we think the market is a bad proposition. >> i'm willing to stick with the trade. it is down slightly, trading flat. you definitely want to use call spreads to do it. the stock down more than 1.50 today close to the total amount we risked to make our bullish bet. and certainly more than you'd be risking if you stayed in that trade today. walmart, fair value as far as the fundamentals are concerned. if you're going to make a bullish bet, maybe this is the place to do it. next the "final call" from the options pits. here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store.

it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. time to answer your tweets. first tweet, any suggestions for a sideways trade on xom?

>> sure, you didn't happen to mention whether you were long the stock. if you are long the stock you could consider selling strangles against it. i was looking at april. you could sell the 75, maybe 87.5 strangle. you'll get called off your stock fit rallies through that stock, you'll get to buy more at that lower price. in the meantime you'll collect $1.60, nice rate of return. >> the next is twitter, when will the iron condor of technical analysis, carter worth, open a twitter account? we get this question all the time. >> you do? really? >> yes. >> do you have to have a facebook page first? how does this work? here's the deal. i just -- what am i going to do with it? i know where my wife is, where my kids are, where my dear friends are -- am i going to ramble at strangers? >> and watch more "options action" by the way. finalal. >> i don't know, take your

camels and enjoy it, it's a great win, trim your stock. >> i'm looking at selling puts in apple, i am short them myself. >> iyt fail breakdown. >> see you back next friday, have a great weekend. >> announcer: the following is a paid advertisement for the new shark rotator powered lift-away from sharkninja. looking for a better vacuum? talk to someone who owns a shark. they'll tell you the rotator has more suction than the newest $700 dyson cinetic vacuum. >> my shark makes my home cleaner and my job easier. >> announcer: and now the shark goes from upright to powered lift-away to bring superior suction and a powered brush roll where other uprights can't go. >> there's no place dirt can hide from my shark rotator. >> announcer: the powered lift-away is the total transformation of the upright vacuum. it's no wonder americans now choose shark 2 to 1 over dyson. a year ago, shark re-invented