Last week the S&P 500 hit yet another record. In an eerily complacent fashion, the market marched up 1.4%. Investors have been sailing calm seas for quite some time. There have been only a handful of 1-2% sell-offs in the S&P this year, the most recent being the selling squall precipitated by the firing of FBI director James Comey. You would have to go back more than a year to find a 5% sell-off.

On the surface, all looks good. Janet Yellen’s testimony before Congress implies the Fed will use patience in its plan to escalate interest rates, and economic data released last week was once again of the Goldilock’s flavor, not too fast, not too slow.

Retail sales fell 0.2% in June after a similar drop in May. While the number was less than analysts had hoped for, growth that fluctuates between up and down one-half a percent is just the mundane kind of data that keeps the Fed happy.

The Department of Labor reported that consumer prices were up just 1.7%, well below the 2% benchmark the Fed has called out as its internal target. If prices rise above 2%, the Fed would likely accelerate interest rate increases.

Yet the market may see some turbulence ahead. The second quarter earnings parade begins in earnest in the next few weeks. Many bank stocks reported last week and offered little good news to excite investors. I typically avoid this industry due to difficulty in analyzing its unusually opaque balance sheets. But I do look and listen to reactions to these earnings as a measure of investors’ risk tolerance.

I offered up two new bearish trades last week. I recommended put purchases for firearm manufacturers Sturm, Ruger & Company (NSDQ: RGR) and American Outdoor Brands (NSDQ: AOBC). Profitability in these put trades is not reliant on a market sell-off but should perform better in a weak market. Almost all of my options trades are tied to company specific issues and events.

This trade, for example, is based on overly optimistic earnings estimates which do not take into account the huge one time surge in gun sales last fall. Gun enthusiasts rushed out to purchase firearms and ammunition when it appeared that Hillary Clinton would likely win the presidential election. Firearms sales typically peter out when gun control exuberance quiets down.

Look for more bearish trades coming soon. Although the trades are not reliant on a decline in the overall market, it certainly helps to have some puts in your portfolio when storm clouds roll onto the horizon.

Around the Portfolio:
First off, we have three option series that expire this week. Unfortunately, the Church & Dwight puts will likely expire worthless. Despite some horrible news in the consumer goods industry, the stock has refused to budge down.

The Big Five calls are in the same boat. The company reported a fabulous quarter in early May which sent the stock up briefly above the $17.50 strike. However, malaise in the sporting goods group weighed more heavily on the stock and it’s yet to lift back to that level. These will expire worthless also.

The Gap calls will hopefully deliver a nice profit. The calls have a $24 strike price, and Gap closed at $23.28 last week. It’s impossible to know how the stock will trade this week, but retail, in general, is gaining more fans. See the details below on why the stock jumped last week and what my attack plan is for the calls.

Ambarella (NSDQ: AMBA) rose 6% last week partly due to optimism from a brokerage analyst and partly due to the market’s renewed love affair with tech stocks. Analyst Charles Anderson from Dougherty sees Ambarella shares rallying towards the end of the year ahead of the annual Consumer Electronics Show in Las Vegas.

He predicts significant new product releases to be demoed at that industry conference and the company’s analyst day in early 2018. The analyst said Ambarella’s computer vision chips give it a unique entry into the multi-billion dollar market for autonomous vehicles. He rates Ambarella a Buy with a $75 price target.

Criteo (NSDQ: CRTO) jumped 5% when the company reported growing adoption of its Predictive Search product, which offers retail marketers a way to increase revenue at Google Shopping. Since launching the product last fall, Criteo has more than doubled its customers between Q1 and Q2. Over 150 U.S. retailers are using Criteo’s solution to target shoppers and improve the ad bidding process for Google Shopping. Many retailers are looking to include additional sites to lessen their dependence on Amazon.

This product is Criteo’s first foray into the search market. Criteo’s basic product focuses on targeting and delivering the most relevant advertisements to consumers on their desktops, laptops and mobile phones. Investors have been eager to get a read of how well this product is performing.

Gap’s (NYSE: GPS) one-week stock chart looks just like a smiley face. Early in the week a downgrade of Costco by an influential analyst at BMO group sent retail stocks into a tailspin, including Gap Inc.

But that frown turned upside down when Target surprised investors Thursday with a positive update for its yet to be completed second quarter. Better than expected sales allowed the company to boost revenue and earnings estimates for the quarter. A stronger consumer bodes well for all retail stocks.

Finally, Gap was added to Analyst Focus List at JPMorgan on Friday. Analyst Matthew Boss upped his price target on the shares to $27 from $26 and said Gap’s near-term risk/reward is “too hard to ignore.”

The Profit Catalyst Alert portfolio holds Gap calls with a strike price of $24. These calls expire this week, on July 21. I am hopeful the stock will trade above the strike and deliver a profit. If the stock moves early in the week and the price of the calls jumps, I will likely sell the calls. However, with the stock moving so close to the strike price right near expiration, I may wait and hold them until expiration.

If the stock closes just above the $24 strike at the close of July 21, your calls will exercise automatically.

This means your account will be charged for the value of the number of shares times the strike price. In this example, if you owned one contract of the $24 strike price call option on Gap Inc, you would be charged $24 x 100 (each contract corresponds to 100 shares of stock) or $2,400.

Remember, the stock will be above the $24 level if the option is exercised so you can choose to sell that stock and collect the profit immediately. Alternately you can keep the shares in your portfolio if you share my long term bullishness on the stock.