Option Investor
Newsletter

Daily Newsletter, Sunday, 3/18/2012

Table of Contents

  1. Leaps Trader Commentary
  2. Portfolio
  3. New Plays
  4. Play Updates
  5. Watch

Leaps Trader Commentary

End of Quarter In Sight

by James Brown

Click here to email James Brown

It was another impressive week for stocks. The market raced higher with the S&P 500 closing above the 1,400 level for the first time since 2008. Financials helped lead the rally thanks to a positive response to the Fed's stress tests results. The financials are the best performing sector with +20% gains for the year and it's only March. As stocks rallied the volatility index (VIX), often called the "fear index", fell to multi-year lows. There is speculation that the bond market has topped with a sharp decline this past week sending yields to four-month highs. Analysts are wondering if we could see a flood of money come out of the bond market and into equities. At the end of the week the S&P 500 is up five weeks in a row and up 10 out of the last 11 weeks.

There were a number of economic reports last week. I'm just going to touch on the highlights. February retail sales results rose a better than expected +1.1% from an upwardly revised +0.6% the prior month. The consumer price index (CPI) rose +0.4% in February with core CPI up +0.1%. The producer price index (PPI) was also up +0.4% while the core PPI rose +0.2%. Both reports were relatively benign and within expectations. The Philly Fed survey rose from 10.2 in February to 12.5 in March. The good news continues with the New York Empire manufacturing survey rise from 19.5 in February to 20.2 in March. Analysts had been expecting a decline in the Empire survey. The weekly initial jobless claims fell -14,000 to 351,000. One disappointment was an unexpected drop in Consumer Sentiment for March, which fell from 75.3 to 74.3. Economists had been expecting a rise toward 77.0. Meanwhile overseas we saw Germany's ZEW investor confidence survey surge higher from 5.4 to 22.3. Analysts were only expecting a rise to 10.

One of the biggest events for the week was the FOMC meeting on Tuesday. The Fed left rates unchanged in the 0.00% to 0.25% zone and reaffirmed that conditions could call for rates to remain this low into 2014. There is a growing consensus that our improving U.S. economy is likely to delay any further stimulus by the Fed. Gold prices plunged following the Fed's announcement as the dollar rallied. I heard plenty of bearish comments about gold this past week but I'm not convinced. Short-term gold is moving lower but long-term the trend is still higher. You could argue that gold is forming an inverse (bullish version) of a head-and-shoulders pattern. If you are willing to stomach the volatility in gold then a bounce off the bottom of its prior bullish channel (see chart below) could be a bullish entry point. It could also be the right shoulder to that inverse H&S formation. Looking at the GLD, the H&S pattern would forecast a rise to $200 if the ETF can breakout past $175.

Weekly chart of the Gold GLD ETF:

Major Indices:

It has been a pretty amazing year for the bulls. The S&P 500 is up +11.6% year to date. There has only been on -1% session and the S&P 500 has closed higher almost 70% of the time. The breakout past the index's late February highs quickly culminated with a test and breakthrough potential round-number resistance at the 1,400 level. There is no doubt about the bullish trend but the S&P 500 is now both short-term overbought and remains longer-term overbought with its +17% surge from its December 2011 lows.

Can the S&P 500 continue higher from here? Yes, it can and the next level of likely resistance is probably the 1420 area. If stocks see a correction I would look for potential support near 1375 and the 1340 level (near its 50-dma).

FYI: For the point & figure chart fans the triple-top breakout buy signal that started when the S&P 500 crossed the 1,270 level is now forecasting a long-term bullish target of 1,790. I'm not sure how much faith I would put into such a big target but it will be interesting to watch.

Daily chart of the S&P 500 index:

Weekly chart of the S&P 500 index:

The NASDAQ composite continues to soar and is up +17.2% year to date. The breakout past round-number resistance at the 3,000 level is definitely a big win for the bulls. This index is hitting levels not seen since late 2000. Looking at the daily chart I am concerned that the bottom of the prior channel could become new resistance. If the market does see a correction we can look for support near 3,000 and near the 2,900 level.

Daily chart of the NASDAQ Composite index:

Weekly chart of the NASDAQ Composite index:

The small cap Russell 2000 index continued to bounce but it has failed to breakout past its February resistance. Currently the $RUT is up +12.0% for the year. We need to see the small caps reaffirm the rally or it will spell trouble for the rest of the market. You can see on the weekly chart that this index is testing the trendline of lower highs. A breakout past the 830-835 area would be another bullish signal for stocks.

Daily chart of the Russell 2000 index

Weekly chart of the Russell 2000 index

The last few weeks we have been paying attention to the transports. Dow Theory suggests that we can't have a sustained market rally without participation in the transports. During the month of February the transports were not performing well. Fortunately for the bulls the $TRAN index has produced a significant breakout higher. The five-week correction lower now looks like a bull-flag pattern. The $TRAN is testing its February highs. I would expect a little consolidation or pullback now before it breaks out higher. The wildcard here is oil. If oil starts accelerating higher it could put the brakes on any transport rally since fuel costs is a major constraint on margins for this sector.

chart of the Transportation Average

The Federal Reserve was not planning to release the results of their 2012 bank stress tests until Thursday. Yet JPMorgan Chase (JPM) let the cat out of the bag early when they declared a dividend raise on Tuesday afternoon. JPM said they were raising their quarterly cash dividend by 5 cents to 30 cents a share. Plus, JPM announced a massive $15 billion stock buyback program. This news ignited a fire under the financial stocks and the group exploded higher. Many of the major banks are up double-digit percentage moves for the week. You can see the XLF financial ETF has broken out past resistance at the $15.00 level. After such a big gain it might be time for a little dip to consolidate those gains. Odds are there will be investors waiting to buy that dip.

Weekly chart of the Financial ETF (XLF)

Another stock I feel almost obligated to mention is Apple Inc. (AAPL). The stock has continued to defy gravity. You could argue the rally has gone parabolic. Veteran traders know that these types of rallies almost always turn ugly when the move finally runs out of gas. I am aware that plenty of analysts still consider AAPL to be "cheap" given its valuations even at $600 a share. However, even if you buy the long-term fundamentals of the company the stock can still get ahead of itself. It's way past due for a correction lower. If and when AAPL does see a correction it will be very ugly for the broader market. Some market watchers have started using AAPL as a trader sentiment gauge. It is a stock that requires watching.

Daily chart of the Apple Inc. (AAPL)

Weekly chart of the Apple Inc. (AAPL)

It was very nice to have an entire week where the focus was not on Greece. The country could be back in the spotlight again with a debt auction for its CDS-backed bonds on Monday and its $19 billion debt payment on Tuesday. Honestly, I don't know enough details to know if the $19 billion debt payment is still there or if the numbers have changed given the debt swap/haircut deal that happened two weeks ago. The rest of the week is relatively quiet for economic data but we will see a number of reports focused on the U.S. residential housing market. Pretty soon the focus will turn toward Q1 earnings season in the middle of April.

- Monday, March 19 -
Greek debt auction for CDS-backed bonds

- Tuesday, March 20 -
Greek deadline for $19 billion debt payment
Housing starts and building permits

- Wednesday, March 21 -
existing home sales

- Thursday, March 22 -
Weekly Initial Jobless Claims
Leading indicators

- Friday, March 23 -
New home sales

The Week Ahead:

Looking ahead to this week the focus could turn back to Greece but I doubt it given the successful bond haircut deal two weeks ago that qualified the country for its 130 billion euro bailout. Odds are rising that the focus could turn toward Iran and the oil markets. Oil surged on Friday as war drums beat louder between the West and Iran. As part of the U.N.'s tighter sanctions on Iran the Society for Worldwide Interbank Financial Telecommunications (SWIFT), which handles 80% of international wire transactions, planned to cut off Iran from its wire transfer system on 4:00 p.m. this Saturday. This is a major event since most countries use SWIFT to purchase Iran's oil exports.

Further compounding matters with Iran were headlines on Friday that Israel's Prime Minster Netanyahu spoke with his cabinet ministers and they voted 8 out of 14 in favor of a pre-emptive strike on Iran's nuclear infrastructure. There is growing speculation that Israel (or the U.S.) could use a military strike on Iran before the end of this year and others believe it could be by the end of summer. U.S. Secretary of State Hillary Clinton allegedly asked the Russian government to warn Iran that the upcoming six-nation talks was Iran's last chance for a diplomatic solution before more aggressive action was taken. To pile on the pressure the U.S. Navy is sending four additional mine sweeping ships to the Persian Gulf. The U.S.S. Enterprise carrier group is also heading to the Gulf to join two carriers already there. Iran has claimed that the first thing they would do is shut down the Straits of Hormuz, which accounts for more than 33% of the world's oil tanker traffic. A military strike on Iran or Iran trying to block the straits would send oil prices skyrocketing higher.

Economists are already worried about what the rising price of gasoline in the U.S. will do to our slowly growing economy. Some parts of the nation are already seeing $4.00 a gallon gasoline. Every penny that fuel creeps higher is taking more and more money out of consumers' pockets. It is said that consumer spending accounts for 70% of the U.S. economy. If Americans are spending a rising amount of cash at the pump that leaves less money to be spent elsewhere.

We've hit the halfway point for March. We only have two weeks left before the end of the first quarter. Some of the talking heads on TV claim that plenty of mutual fund managers were caught off guard by the strength of the 2012 rally and they were underinvested when the year started. That means they are behind their benchmarks and could be compelled to chase stocks higher. The pressure to window dress their portfolios for their end of quarter statements could be overwhelming. This idea would suggest that stocks should continue to rise over the next two weeks even though the market is already overbought now.

Will we see and end of quarter push higher? To determine that I would focus on a few areas to watch. We want to see the small cap Russell 2000 index breakout past its February highs. We want to watch AAPL to see if it maintains its gains. We want to watch crude oil since rising oil will put pressure on transports and longer-term the consumer-discretionary names. To a lesser extent we can watch the financials but they are short-term overbought and probably need a little dip lower before they move higher.

- James


Portfolio

Portfolio Update

by James Brown

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Current Portfolio


Portfolio Comments:

The U.S. markets continue to extend their gains. The S&P 500 index has broken out past the 1400 level. The NASDAQ is above the 3,000 mark and the Dow Industrials are setting at multi-year highs above 13,200. Financials helped fuel the rally after investors bought the group following generally positive stress tests results.

We want to keep an eye on the small cap Russell 2000 index, shares of AAPL, and oil prices as potential barometers on the market (see the wrap tonight for details).

BRK.B, CL, and CVX all graduated from our watch list to our active trade list. LDK was stopped out on Monday. I am suggesting we prepare to take profits on NKE by selling at least half of our call position prior to NKE's earnings report this week.

I have updated stop losses on: MMM, QCOM, and SBUX

Disclaimer: At any given time the author may have positions in any or all of any companies mentioned in the Leaps Newsletter.

--Position Summary Table--
Table lists Directional CALL or PUT/LEAPS only.
Insurance puts, if applicable, are not shown.

Red symbol/name represents a play or option position exited or closed this week.




New Plays

Market Short-term Overbought Again

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market remains overbought. I don't want to chase it and we already have a HUGE play list of active trades. Fortunately our watch list continues to generate new entry points and we just added two new candidates tonight.

I was tempted to add VAR to the watch list with a trigger to wait for a close over $72.50 but the stock doesn't have LEAPS. I also wanted to add CLB with a trigger to wait for a close over $130 but the stock doesn't have LEAPS either.

A few symbols still on my radar screen for potential entry points are: TSO, JDSU, CREE, EXPE, SCHW, and C.


Play Updates

Financials Surge on Stress Test Results

by James Brown

Click here to email James Brown

Editor's Note:

BRK.B, CL, and CVX have been added from the watch list.


Closed Plays


LDK has been stopped out.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 31.80

Comments:
03/17/12 update: It has been volatile the last couple of weeks but the trend of higher lows and higher highs continues. ADM tagged a new multi-month high on Tuesday. More conservative investors may want to consider raising their stop loss closer to the $30.00 level. I am not suggesting new positions at this time.

Earlier Comments:
The P&F chart is bullish with a $43 target. We are aiming for $37.75. We want to keep our new position size small to limit our exposure here. Start with half your normal position size or less.

- Suggested (small) Positions -
Feb 21, 2011 - entry price on ADM @ 31.31, option @ 1.74
symbol: ADM1319A35 2013 JAN $35 call - current bid/ask $ 1.53/ 1.60

02/21/12 trade opened on Tuesday @ 31.31
02/18/12 start with small positions to limit our exposure.
02/17/12 ADM meets our entry point requirements with a close over $31.25. Open positions the next day (Feb. 21st).
02/11/12 adjust entry trigger to wait for close over $31.25
FYI: 2014 calls are also available.

Current Target: $37.75
Current Stop loss: 28.40
Play Entered on: 02/21/12
Originally listed on the Watch List: 01/28/12


Allergan Inc. - AGN - close: 93.00

Comments:
03/17/12 update: AGN continues to advance higher after breaking out past major resistance at $90.00 a couple of weeks ago. Shares did see some profit taking on Friday with a -1.2% decline. Friday's move could be viewed as a short-term bearish reversal. I would not be surprised to see AGN dip back into the $92-90 zone. Nimble traders could buy calls on a bounce near $90.00.

Earlier Comments:
Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

- Suggested Positions -
OCT 17, 2011 - entry price on AGN @ 85.46, option @ 5.10
symbol: AGN1319A100 2013 JAN $100 call - current bid/ask $ 4.10/ 4.50

03/10/12 new stop loss at $84.50
02/02/12 earnings in-line but guided lower for 2012
01/28/12 earnings are due on Feb. 2nd. Readers might want to raise their stop or consider some sort of hedge prior to the report.
12/24/11 new stop loss @ 81.60
12/10/11 spreads on our 2013 calls are getting wider!
11/19/11 Taking an aggressive stance on our stop loss and moving it down to $77.45
10/22/11 Earnings are coming up. Readers might want to consider raising their stop loss. We are keeping ours at $79.45.

Current Target: $99.00
Current Stop loss: 84.50
Play Entered on: 10/17/11
Originally listed on the Watch List: 09/24/11


Akamai Technologies - AKAM - close: 37.36

Comments:
03/17/12 update: Upward momentum slowed a bit this last week for AKAM but the trend is still higher following its March 7th reversal higher. AKAM remains inside a wide bullish channel. I am not suggesting new positions at this time.

- Suggested Positions -
FEB 10, 2012 - entry price on AKAM @ 37.60, option @ 5.40
symbol:AKAM1319A40 2013 JAN $40 call - current bid/ask $ 4.55/ 4.65

2nd Position (enter on Monday, March 12th)
MAR 12, 2012 - entry price on AKAM @ 36.80, option @ 4.45
symbol:AKAM1319A40 2013 JAN $40 call - current bid/ask $ 4.55/ 4.65

03/12/12 2nd position opened. AKAM @ 36.80. option @ $4.45
03/10/12 new stop loss @ 31.75
03/10/12 consider adding a second position on Monday morning,
let's keep our position size small.
02/10/12 trade is opened on Friday morning
02/09/12 AKAM gapped higher in reaction to strong earnings news. The stock closed above our trigger at $35.25.

Current Target: $44.00
Current Stop loss: 31.75
Play Entered on: 02/10/12
Originally listed on the Watch List: 02/04/12


Bank of America - BAC - close: 9.80

Comments:
03/17/12 update: It was an amazing week for some of the banking stocks. JPM announced plans to raise its dividend and a $15 billion stock buyback program two days before the Fed planned to release the results of its 2012 bank stress tests. JPM announcement essentially declared "we passed" the Fed's test. The Fed chose to release its results early. BAC did pass this test and the stock exploded higher. Shares are up +21.7% for the week and almost all of that was in the last three and a half days.

BAC is now short-term overbought and approaching likely round-number, psychological resistance at $10.00. Odds of a consolidation sideways or a pullback lower are pretty strong but broken resistance in the $8.50-8.30 zone should be new support. If you were inclined to trade this play with a stop loss I'd be tempted to put a stop loss near the $8.00 level.

Currently we do not have a specific exit target. The plan has been to exit in the $12.00-15.00 zone. We still have nine months left on our 2013 calls so we're not in a rush to exit just yet. However, more conservative traders may want to take some money off the table early since odds of a pullback are pretty high. You could exit now and buy calls again on a dip. FYI: If you noticed, last week, I suggested buying calls again on a close over $8.35 so Tuesday was a new entry point.

- Suggested Positions -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 1.33/ 1.34
(No stop loss on this position)

(2nd Position, bought the dip at $5.15)

NOV 23, 2011 - entry price on BAC @ 5.15, option @ 0.35
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 1.33/ 1.34
(no stop loss on this position)

03/17/12 BAC has broken out from its multi-week trading range. Broken resistance near $8.30 should be new support.
01/28/12 financials seem a bit overbought here.
01/21/12 2012 Jan. $10 calls have expired (-100%)
01/14/12 earnings are due out on Jan. 19th
01/07/12 BAC broke out past its 50-dma and the $6.00 this past week
12/17/11 expect BAC to retest the $5.10-5.00 zone.
11/23/11 BAC hits new trigger @ 5.15 to buy calls.
11/19/11 New trigger to buy calls @ $5.15 (see 2nd position)
10/03/11 Sept. 26th position stopped out at $5.75.
2012 Jan. $7.50 call @ 0.48 (-27.2%)
2013 Jan. $10 call @ 0.74 (-26%)
10/01 raising our stop loss on the Sep. 26th position to $5.75
09/24 adding 2nd position, stop loss at $5.40
09/03 no stop loss on this trade at this time.

Current Target: $12.00-to-$15.00
Current Stop loss: see details above
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Bristol Meyers Squibb - BMY - close: 33.18

Comments:
03/17/12 update: BMY managed to rally to new six-week highs before pulling back late in the week. The trend of higher lows continues. I would expect BMY to find support near $32.00 and its 150-dma.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.13/ 1.16

02/11/12 adjust stop loss to $30.90
01/03/12 planned exit, sell half, bid on 2013 Jan $35 call @ 2.58 (+115%)
12/31/11 new stop loss @ 31.45.
12/31/11 Prepare to lock in gains and sell half of our position on Tuesday morning (Jan 3rd, 2012). The 2013 Jan $35 call currently has a bid at $2.60 (a +116.6% gain).
12/16/11 BMY hit our previous exit target at $34.50, more conservative traders may want to take profits now and exit early.
12/10/11 adjust exit target to $37.50
12/03/11 reduce our two exit targets to just one at $34.50
10/22/11 BMY is due to report earnings this week on Oct. 27th. Readers may want to take profits now or prior to the report.
10/08/11 new stop loss @ 29.40
09/16 Friday's close at $30.53 is our trigger to buy calls. Our entry will be Monday morning.

Current Target: $37.50
Current Stop loss: 30.90
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


Berkshire Hathaway (B shares) - BRK.B - close: 81.07

Comments:
03/17/12 update: BRK.B is a watch list candidate that has made the leap to our active trade list. Shares broke out past resistance in the $80.00 area. Our strategy was to wait for BRK.B to close over $80.75 and then buy calls the next day. I would still consider new positions now or you could wait for a new dip or bounce near the $80.00 level, which should be new short-term support. I am suggesting we launch small bullish positions if BRK.B can close over $80.75. If triggered we'll use a stop loss at $77.25. Our long-term target is the $94-98 range.

- Suggested (Small) Positions -
MAR 14, 2012 - entry price on BRK.B @ 80.69, option @ 3.90
symbol: BRKB1319A85 2013 JAN $85 call - current bid/ask $ 3.85/ 4.00

Chart of BRK.B:

Current Target: $94-98
Current Stop loss: 77.25
Play Entered on: 03/14/12
Originally listed on the Watch List: 03/03/12


Beazer Homes - BZH - close: 3.66

Comments:
03/17/12 update: BZH traded sideways the first half of the week before finally moving higher. This week the market will digest a lot of news associated with the residential real estate market. This could generate volatility for the homebuilders. I am not suggesting new positions at this time.

- Suggested Positions -

(stock position)
OCT 28, 2011 - entry price on BZH @ $2.12

(option position)
OCT 28, 2011 - entry price on BZH @ 2.12, option @ 0.70
symbol: BZH1319A2.5 2013 JAN $2.50 call - current bid/ask $ 1.50/ 1.60

02/11/12 new stop loss @ 2.75
02/04/12 new stop loss @ 2.60
01/14/12 new stop loss @ 2.30, adjust exit target to $4.75
01/07/12 new stop loss @ 2.15
12/24/11 new stop loss @ 1.95
12/03/11 new stop loss @ 1.85
11/26/11 new stop loss at $1.75
11/15/11 BZH reports a loss of 57 cents a share, worse than expected
11/12 BZH has seen a big bounce. Cautious investors may want to take profits now before BZH reports earnings on Nov. 15th. (BZH +13.2%, option +21.4%)
10/28 trade begins: BZH opens @ $2.12
10/27 BZH meets our entry point requirement with a close over $2.05

Current Target: $4.75
Current Stop loss: 2.75
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/22/11


Colgate-Palmolive Co. - CL - close: 94.79

Comments:
03/17/12 update: Personal products giant CL has broken out past significant resistance near $94.00. CL is a watch list candidate that has made the jump to our active trade list. The plan was to wait for CL to close over $95.25 and buy calls the next day. CL flirted with our entry point on Tuesday and Wednesday but it didn't actually close over $95.25 until Thursday. Our trade opened on Friday morning at $95.48 and CL almost immediately sank. I blame the profit taking on option expiration but I have to put out that Friday's session did create a bearish engulfing candlestick reversal pattern. Look for support near $94.00.

Our long-term target is $109.00. Coincidentally the point & figure chart is bullish with an $108 target.

- Suggested Positions -
MAR 16, 2012 - entry price on CL @ 95.48, option @ 2.92
symbol: CL1319A100 2013 JAN $100 call - current bid/ask $2.49/2.58

- or -

MAR 16, 2012 - entry price on CL @ 95.48, option @ 5.57
symbol: CL1418A100 2014 JAN $100 call - current bid/ask $4.75/5.65

Chart of CL:

Current Target: $109.00
Current Stop loss: 89.00
Play Entered on: 03/16/12
Originally listed on the Watch List: 03/10/12


Cisco Systems - CSCO - close: 20.03

Comments:
03/17/12 update: The big headline for CSCO last week was news of a $5 billion acquisition to buy NDS, a software designer for TV set-top boxes. The news did not have much impact on CSCO's stock price. Unfortunately I have to warn you that last week looks like a new lower high for CSCO. Combine that with what could be called a bearish double top with CSCO's two failed rallies at $20.50 in February and this technology giant could be facing a correction lower. I would expect CSCO to find support near $19.00 and $18.00 but more conservative investors may want to have their finger closer to the exit trigger.

I am not suggesting new positions at this time.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $1.79/1.83

02/04/12 new stop loss @ 17.75
01/21/12 new stop loss @ 17.20
10/29/11 new stop loss @ 16.40
10/28/11 stock opens at $18.28
10/27/11 CSCO meets our entry requirement: close at $18.44
10/22/11 Added entry to buy a close over $17.75
10/15/11 We are adjusting our entry point. Wait for a dip to $16.65
10/14/11 CSCO hit our entry point requirement for a close over $17.50.

Current Target: $21.75
Current Stop loss: 17.75
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/08/11


Chevron Corp. - CVX - close: 110.28

Comments:
03/17/12 update: CVX tagged new all-time, record highs this past week with its spike past $112.00 on Wednesday. Our plan was to wait for shares to close over $111.00 and buy calls the next day. CVX hit our trigger on Tuesday. Our play was opened Wednesday morning at $111.05. Since then CVX has consolidated sideways. The trend is up but shares have not yet convincingly broke away from resistance in the $110-111 zone. At this time I would wait for a close over $111.50 or $112.00 before considering new positions. FYI: the Point & Figure chart for CVX is bullish with a $133 target.

- Suggested Positions -
Mar 14, 2012 - entry price on CVX @ 111.05, option @ 4.00
symbol: CVX1319A120 2013 JAN $120 call - current bid/ask $3.50/3.60

- or -

Mar 14, 2012 - entry price on CVX @ 111.05, option @ 8.20
symbol: CVX1418A120 2014 JAN $120 call - current bid/ask $7.25/7.98

Chart of CVX:

Current Target: $125.00
Current Stop loss: 105.75
Play Entered on: 03/14/12

Originally listed on the Watch List: 02/25/12


The Dow Chemical Co. - DOW - close: 35.30

Comments:
03/17/12 update: A week ago it looked like DOW's bounce was going to roll over. Now a week later the stock is breaking out to new multi-month highs. The short-term trend is up but I'm a little wary of new positions at this time. More conservative investors may want to raise their stop loss.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 3.60/ 3.70

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 3.20/ 3.45

02/11/12 adjust stop loss to $29.45. Readers may want to take profits now.
02/02/12 missed earnings estimates by five cents
01/28/12 Readers will want to seriously consider taking profits right now, prior to the earnings report on Feb. 2nd.
01/28/12 new stop loss @ 29.75
01/21/12 new stop loss @ 28.40
01/14/12 new stop loss @ 27.75
01/06/12 DOW meets our entry requirement with a close over $30.25. Plan is to buy calls on Monday morning (01/09/12).

Current Target: $39.50
Current Stop loss: 29.45
Play Entered on: 01/09/12

Originally listed on the Watch List: 12/31/11


eBay Inc. - EBAY - close: 37.69

Comments:
03/17/12 update: Our new play on EBAY is off to a good start. Shares have continued to rally and closed the week at multi-year highs. The Paypal unit of EBAY said they are developing the domestic transfer payments business in China soon. Plus the Paypal unit is also launching a mobile credit card reader.

If you're looking for a new entry point I would be tempted to wait for a dip. EBAY should have support in the $36-35 zone.

- Suggested Positions -
Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 2.85
symbol: EBAY1319A40 2013 JAN $40 call - current bid/ask $ 3.35/ 3.45

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 5.85/ 6.05

Current Target: $44.50
Current Stop loss: 33.45
Play Entered on: 03/12/12
Originally listed in the New Plays 03/10/12


Enterprise Products Partners - EPD - close: 50.57

Comments:
03/17/12 update: The correction in EPD continues. The stock is down two weeks in a row and down three out of the last four weeks. Odds are EPD will see a bounce near likely support at $50.00 and its 50-dma but the correction could easily pull EPD down toward the $48-47 zone.

I am not suggesting new positions at this time.

Earlier Comments:
Our long-term target is $59.00 but bear in mind that EPD doesn't normally move very fast.

- Suggested Positions -
Nov 21, 2011 - entry price on EPD @ 45.17, option @ 1.45
symbol: EPD1319A50 2013 JAN $50 call - current bid/ask $ 2.50/ 2.70

02/18/12 new stop loss @ 46.75
02/04/12 new stop loss @ 44.75
01/28/12 new stop loss @ 43.75
01/21/12 new stop loss @ 43.40
01/06/12 EPD (and PAA) both see sharp intraday dips (-5% or more)
12/31/11 2013 Jan $50 call spreads have improved significant.
12/24/11 spreads on the 2013 Jan $50 calls have widened significantly.
12/08/11 EPD gapped down on news of a 9 million share secondary price at $44.68.

Current Target: $59.00
Current Stop loss: 46.75
Play Entered on: 11/21/11
Originally listed in the New Plays 11/19/11


FedEx Corp. - FDX - close: 94.34

Comments:
03/17/12 update: The transports have delivered a nice bounce this past week. Yet while the major indices are hitting new multi-year highs the transports are still trading under the early February highs. FDX is not even close to its February high. The short-term trend is up but I am not suggesting new positions at this time.

- Suggested Positions -
Jan 11, 2011 - entry price on FDX @ 88.08, option @ 5.52
symbol: FDX1319A100 2013 JAN $100 call - current bid/ask $ 6.30/ 6.45

03/03/12 tweaking our stop loss and moving it lower to $84.45
02/18/12 caution: FDX has produced a bearish reversal on the weekly chart
02/04/12 new stop loss @ 85.75
01/28/12 new stop loss @ 84.75
01/21/12 new stop loss @ 83.40

Current Target: $98.00
Current Stop loss: 84.45
Play Entered on: 01/11/12
Originally listed on the Watch List: 12/31/11


iShares China 25 Index ETF - FXI - close: 38.76

Comments:
03/17/12 update: It was a volatile week for the FXI. The ETF's performance is worrisome. The midweek rally failed at the $40.00 mark. This looks like a new lower highs and could be forecasting a deeper correction ahead of us. I am suggesting caution here. I warned you a week ago I didn't believe the correction was over. There is potential support in the $38-37 zone. I am not suggesting new positions at this time.

Earlier Comments:
There is a growing expectation that the Chinese government will start to fuel growth in an effort to avoid a hard landing. The most recent data listed GDP growth at under 9%, the lowest reading in 10 quarters. Our target for the FXI is $49.50.

- Suggested Positions -
Feb 06, 2012 - entry price on FXI @ 39.80, option @ 1.81
symbol: FXI1319A45 2013 JAN $45 call - current bid/ask $ 1.10/ 1.15

02/06/12 FXI gapped open lower at $39.80.
02/04/12 FXI met our entry point requirement at the close on Friday. Open positions on Monday, Feb. 6th.

Current Target: $49.50
Current Stop loss: 35.75
Play Entered on: 02/06/12

Originally listed on the Watch List: 01/21/12


Intel Corp. - INTC - close: 27.73

Comments:
03/17/12 update: INTC is helping lead the semiconductor sector higher. This tech giant has rallied to new four-year highs. The $28.00 level was resistance back in late 2007 and a breakout sets up for a run at $30. The SOX index has not yet broken out to new relative highs so I am a little cautious on launching new positions here.

Our long-term target is $34.00. The P&F chart is bullish with a $31.50 target. We want to keep our initial position size small to limit our risk (start with half your normal trade size or smaller).

- Suggested (small, half-sized) Positions -
Feb 21, 2011 - entry price on INTC @ 27.34, option @ 1.30
symbol: INTC1319A30 2013 JAN $30 call - current bid/ask $ 1.20/ 1.23

- or -

Feb 21, 2011 - entry price on INTC @ 27.34, option @ 2.11
symbol: INTC1418a30 2014 JAN $30 call - current bid/ask $ 2.34/ 2.40

02/21/12 INTC opened at $27.34.
02/18/12 start with small positions to limit our exposure.

Current Target: $34.00
Current Stop loss: 24.75
Play Entered on: 02/21/12

Originally listed on the Watch List: 02/11/12


Kraft Foods Inc. - KFT - close: 38.38

Comments:
03/17/12 update: It looks like the consolidation in KFT might be ending soon. Shares are poised to break the six-week trend of lower highs. We have a target at $40.00 but more aggressive traders may want to aim for the $41.50-42.00 zone instead.

Earlier Comments:
The Point & Figure chart is forecasting a long-term target at $49.50. KFT is normally a very slow moving stock. It will take months to make any progress. Once a position is open readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 4.10/ 4.25

02/04/12 new stop loss @ 35.90
01/21/12 new stop loss @ 35.40
Readers may want to exit now with the call +102%
12/31/11 Investors may want to take profits now.
12/28/11 begins trading ex-dividend
12/24/11 new stop loss @ 34.25
12/03/11 new stop loss @ 33.85, adjusted exit target to $40.00
11/12/11 new stop loss @ 32.40

Current Target: $40.00
Current Stop loss: 35.90
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Kimberly-Clark Corp. - KMB - close: 72.92

Comments:
03/17/12 update: KMB rallied with the market on Tuesday and spent the next three days consolidating sideways. The stock is kind of in no man's land with support at its trend of higher lows and resistance near $74.00.

I am not suggesting new positions at this time.

Earlier Comments:
KMB does have long-term resistance in the $73.00-73.50 area. Therefore we will only start with small (half-sized) positions. When KMB closes above $74.00 we'll reconsider adding new positions to this play. Our long-term target is $79.75 but we'll readjust it as the play progresses. The Point & Figure chart is currently suggesting a long-term target of $109.

- Suggested Positions -
(half sized position)
Nov 07, 2011 - entry price on KMB @ 69.50, option @ 2.05
symbol: KMB1319A75 2013 JAN $75 call - current bid/ask $ 2.10/ 2.20

12/24/11 New stops loss @ 68.25. KMB has broken out to all-time highs.

Current Target: $79.75
Current Stop loss: 68.25
Play Entered on: 11/07/11
Originally listed in the New Plays 11/05/11


Eli Lilly - LLY - close: 40.20

Comments:
03/17/12 update: The rally in LLY continued and shares are now back above the $40.00 level. The last few days shares have been drifting sideways near $40.00 but I suspect that was due to March options expiration on Friday. The action this past week looks like a new bullish entry point.

- Suggested (SMALL) Positions -
Jan 05, 2012 - entry price on LLY @ 39.50, option @ 1.19
symbol: LLY1319A45 2013 JAN $45 call - current bid/ask $ 1.41/ 1.49

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.95/ 2.12

03/17/12 LLY's close over $40.00 looks like a new bullish entry point
01/28/12 new stop loss @ 37.75

Current Target: $44.75 & 48.00
Current Stop loss: 37.75
Play Entered on: 01/05/12

Originally listed on the Watch List: 12/17/11


Las Vegas Sands - LVS - close: 56.60

Comments:
03/17/12 update: Hmm... LVS continues to show strength but I would be cautious here. The stock's bounce has stalled under its early March highs. A reversal here would look like a bearish double top. Shares should have short-term support near $54.00 and stronger support near $50.00. I am not suggesting new positions at this time.

Earlier Comments:
The Point & Figure chart is bullish and has seen its target rise from $69 to $72. Our long-term target is $69.00.

- Suggested Positions -
Feb 06, 2012 - entry price on LVS @ 51.35, option @ 4.40
symbol: LVS1319A60 2013 JAN $60 call - current bid/ask $ 5.95/ 6.10

02/06/12 LVS gapped open lower at $51.35
02/04/12 LVS met our entry point requirement at the close on Friday. Open positions on Monday, Feb. 6th.

Current Target: $69.00
Current Stop loss: 47.45
Play Entered on: 02/06/12

Originally listed on the Watch List: 01/28/12


Lexmark Intl. Inc. - LXK - close: 35.06

Comments:
03/17/12 update: Uh-oh! Traders sold the bounce midday. LXK has reversed under its 20-dma and 30-dma and now shares are down three days in a row. I don't see any significant news to explain this relative weakness. More conservative investors may want to abandon ship now or raise their stop loss. LXK settled the week near prior resistance and what should be support at the $35.00 level. I am not suggesting new positions at this time.

Earlier Comments:
There is some resistance near $40 but our long-term target is $44.00. FYI: The Point & Figure chart on LXK is bullish with a $51 target.

- Suggested Positions -
Jan 19, 2012 - entry price on LXK @ 35.46, option @ 3.40
symbol: LXK1319A40 2013 JAN $40 call - current bid/ask $ 2.30/ 2.55

02/18/12 new stop loss @ 33.75
02/04/12 new stop loss @ 32.75

Current Target: $44.00
Current Stop loss: 33.75
Play Entered on: 01/19/12
Originally listed on the Watch List: 01/07/12


3M Co. - MMM - close: 89.56

Comments:
03/17/12 update: After a month of failing to breakout past the $88.50 area MMM finally did it with a dramatic two-week rebound and surge to new relative highs. MMM is now testing round-number resistance at the $90.00 mark. The stock is short-term overbought so I would expect a dip. Broken resistance near $88.50-88.00 should be support. I am raising our stop loss to $83.75.

I am not suggesting new positions at this time.

- Suggested Positions -
Jan 19, 2012 - entry price on MMM @ 85.10, option @ 3.30
symbol: MMM1319A95 2013 JAN $95 call - current bid/ask $ 3.60/ 3.75

03/17/12 new stop loss @ 83.75
02/04/12 new stop loss @ 81.75

Current Target: $97.00
Current Stop loss: 83.75
Play Entered on: 01/19/12
Originally listed on the Watch List: 12/03/11


Motorola Solutions, Inc. - MSI - close: 50.53

Comments:
03/17/12 update: MSI spent the entire week chopping sideways. On a short-term basis MSI has technical resistance at its 10-dma and technical support at its 20-dma. I am not convinced the correction is over and would still expect a dip toward the $48.00 level, which should be significant support and a potential entry point.

- Suggested Positions -
Feb 17, 2012 - entry price on MSI @ 49.35, option @ 2.27
symbol: MSI1319A55 2013 JAN $55 call - current bid/ask $ 2.37/ 2.50

02/18/12 new stop loss @ 45.75
02/17/12 trades opens on Friday morning at $49.35
02/16/12 MSI meets our requirement to open positions
02/04/12 if triggered, use a stop loss at $43.95
01/28/12 MSI underperformed as investors sold the stock following its earnings report. If MSI doesn't improve this week we'll drop it as a candidate.

Current Target: $64.50
Current Stop loss: 45.75
Play Entered on: 02/17/12

Originally listed on the Watch List: 12/10/11


Nike Inc. - NKE - close: 111.22

Comments:
03/17/12 update: Our 2013 Jan $110 call has more than doubled in value with a bid at $10.30 (+108%). NKE has earnings coming up on March 22nd and it could be an excuse to "sell the news" and lock in gains. I am suggesting we go ahead and sell at least half of our option position at the closing bell on Wednesday, March 21st. More conservative investors may want to go ahead and exit completely right here.

I am not suggesting new positions at this time.

- Suggested Positions -
Jan 13, 2012 - entry price on NKE @ 98.39, option @ 4.95
symbol: NKE1319A110 2013 JAN $110 call - current bid/ask $10.30/10.45

03/17/12 prepare to sell half of our position on Wednesday, Mar. 21st at the closing bell.
03/10/12 readers may want to take profits now with the bid on our call at $9.75
03/03/12 new stop loss @ 99.40
02/18/12 new stop loss @ 96.75
02/04/12 new stop loss @ 94.75

Current Target: $119.00
Current Stop loss: 99.40
Play Entered on: 01/13/12
Originally listed on the Watch List: 12/24/11


NetEase.com - NTES - close: 54.93

Comments:
03/17/12 update: NTES spent the week consolidating sideways under resistance at its old highs near $55.00. A breakout here would be very bullish and mark new record highs for the stock. While I would prefer to launch positions on a dip in the $52-50 zone readers could use a close over $55.00 as an entry point.

Earlier Comments:
Our long-term target is $64.00. Currently the Point & Figure chart is bullish with a $68 target. I want to remind readers that NTES can be volatile so we want to start with small positions (at least half your normal trade or smaller).

- Suggested (Small) Positions -
Feb 29, 2012 - entry price on NTES @ 52.74, option @ 4.70
symbol:NTES1319A60 2013 JAN $60 call - current bid/ask $ 5.30/ 5.60

Current Target: $ 64.50
Current Stop loss: 46.50
Play Entered on: 02/29/12

Originally listed on the Watch List: 02/25/12


QUALCOMM Inc. - QCOM - close: 65.41

Comments:
03/17/12 update: QCOM continues to march higher and closed at new 11-year highs. QCOM was getting press this past week as news surfaced that some of QCOM's devices are inside the new Apple iPad that was just released. I heard one analyst give QCOM an $85 price target.

The stock's trend is definitely up but QCOM looks a little overbought here. Please note our new stop loss at $58.50. Cautious investors may want to move their stop closer to $60 or the March lows instead. Actually conservative investors may want to take profits now with the bid on our call at $9.15 (+86.7%). I am not suggesting new positions at this time.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $ 9.15/ 9.30

03/17/12 new stop loss @ 58.50
02/18/12 new stop loss @ 55.75
02/11/12 new stop loss @ 54.75
02/04/12 new stop loss @ 53.75
01/07/12 new stop loss @ 51.45. Investors may want to exit early. The worry of potential accounting risks have cast a shadow over QCOM.
11/23/11 QCOM hits our trigger @ 52.50

Current Target: $74.50
Current Stop loss: 58.50
Play Entered on: 11/23/11
Originally listed on the Watch List: 11/05/11


Reynolds American Inc. - RAI - close: 41.35

Comments:
03/17/12 update: I am concerned about the action in RAI. After breaking out to new highs just two weeks ago this past week the stock has started to crumble lower. Now its bullish breakout over resistance near $42.00 is looking like a bull trap. More conservative traders may want to raise their stop losses. I am not suggesting new positions at this time.

- Suggested Positions -
Nov 18, 2011 - entry price on RAI @ 40.02, option @ 2.00
symbol: RAI1319A42.5 2013 JAN $42.50 call - current bid/ask $ 1.60/ 1.70

03/10/12 another close over $42.50 could be used as a bullish entry point.
01/28/12 RAI and the rest of the tobacco stocks are underperforming. Readers might want to exit early now given RAI's relative weakness.

Current Target: $49.00
Current Stop loss: 37.85
Play Entered on: 11/18/11
Originally listed on the Watch List: 10/22/11


Rowan Companies - RDC - close: 37.03

Comments:
03/17/12 update: Energy stocks were showing strength again thanks to a surge in oil prices. RDC outperformed on Friday with a +3.1% gain and a breakout from its recent consolidation. I would be tempted to launch new bullish positions right here but I am somewhat concerned that the major market indices are overbought and a correction could easily reverse RDC's gains.

- Suggested Positions -
Feb 03, 2012 - entry price on RDC @ 37.54, option @ 4.30
symbol: RDC1319A40 2013 JAN $40 call - current bid/ask $ 3.10/ 3.50

03/17/12 RDC's rally past $36.60 looks like a new bullish entry point
03/03/12 stop loss might be too tight, adjust to $33.70
02/25/12 new stop loss @ 34.75

Current Target: $44.50
Current Stop loss: 33.70
Play Entered on: 02/03/12
Originally listed on the Watch List: 01/28/12


Starbucks Corp. - SBUX - close: 53.21

Comments:
03/17/12 update: The rally in SBUX continues with shares setting a series of new record highs. SBUX is still riding the wave of news regarding its planned launch of a single-cup serving machine and being added to the S&P 100 index. The stock is short-term overbought. Readers may want to go ahead and take profits now. Our exit target is $55.00. More aggressive traders (or more patient investors) may want to aim higher. I am raising our stop loss to $47.40. I'm not suggesting new positions at this time.

- Suggested (SMALL) Positions -
Dec 27, 2011 - entry price on SBUX @ 45.40, option @ 4.00
symbol: SBUX1319A50 2013 JAN $50 call - current bid/ask $ 6.90/ 7.00

03/17/12 new stop loss @ 47.40
03/10/12 new stop loss at $44.75
03/09/12 S&P announces SBUX will be added to the S&P 100 index
03/08/12 SBUX announces the "Verisimo" single-cup machine
01/28/12 new stop loss at $42.40
12/27/11 launch positions at the open on Tuesday

Current Target: $55.00
Current Stop loss: 47.40
Play Entered on: 12/27/11
Originally listed on the Watch List: 12/10/11


Teva Pharmaceuticals - TEVA - close: 43.08

Comments:
03/17/12 update: Hmm... TEVA is not looking well. The stock has started to accelerate lower and shares are down five days in a row. TEVA dipped toward its 100-dma and 200-dma on Friday. I don't see any reason for TEVA to be underperforming like this. The company announced the launch of a generic version of Lexapro. Did someone decide to sell the news on this event? TEVA is based in Israel. Are investors worried that rising tensions between Israel and Iran could result in military action against Israel?

This relative weakness while the market's major indices hit new relative highs is troubling. Readers may want to consider an early exit right now or maybe a stop loss closer to $42.00 or $42.50 instead. I am not suggesting new positions at this time.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 1.08/ 1.12

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 2.70/ 2.92

03/17/12 TEVA is underperforming. Readers may want to exit early or raise their stop loss.
02/04/12 new stop loss @ 41.40

Current Target: $54.00
Current Stop loss: 41.40
Play Entered on: 01/19/12

Originally listed on the Watch List: 01/14/12


Tyson Foods, Inc. - TSN - close: 19.86

Comments:
03/17/12 update: It proved to be a quiet week for TSN. The stock churned sideways between $19.50 and $20.00. Readers may want to wait for TSN to close over the $20.00 mark before launching new bullish positions. I don't see any other changes from my prior comments (last week's new plays).

Earlier Comments:
The $20 and $21 levels are overhead resistance but I'm setting our long-term target at $24.50. FYI: The Point & Figure chart is bullish with a $31.50 target.

- Suggested Positions -
Mar 12, 2011 - entry price on TSN @ 19.82, option @ 1.80
symbol: TSN1319A20 2013 JAN $20 call - current bid/ask $ 1.75/ 1.85

- or -

Mar 12, 2011 - entry price on TSN @ 19.82, option @ 3.34
symbol: TSN1418A20 2014 JAN $20 call - current bid/ask $ 3.20/ 3.50

Current Target: $24.50
Current Stop loss: 18.25
Play Entered on: 03/12/12
Originally listed in the New Plays 03/10/12


UnitedHealth Group - UNH - close: 55.59

Comments:
03/17/12 update: UNH is still struggling to get past resistance in the $56.00 area. If the market corrects we can look for short-term support near the 50-dma and stronger support near $50.00. I am not suggesting new positions at this time.

- Suggested Positions -
Feb 15, 2012 - entry price on UNH @ 54.53, option @ 3.25
symbol: UNH1319A60 2013 JAN $60 call - current bid/ask $ 2.91/ 2.95

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 5.55/ 5.85

Current Target: $63.00
Current Stop loss: 49.45
Play Entered on: 02/15/12

Originally listed on the Watch List: 02/11/12


Verizon Communications - VZ - close: 39.57

Comments:
03/17/12 update: VZ is still drifting higher. Shares are up three weeks in a row and the stock is nearing prior resistance near $40.00. I am not suggesting new positions at this time.

- Suggested Positions -
Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.17
symbol: VZ1319A40 2013 JAN $40 call - current bid/ask $ 1.63/ 1.67

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 2.55/ 2.65

03/10/12 VZ is starting to see some positive momentum higher
01/28/12 readers may want to consider an early exit immediately
01/24/12 VZ reported earnings and missed by a penny. Shares broke down on this news.

Current Target: $45.00
Current Stop loss: 36.75
Play Entered on: 12/23/11

Originally listed on the Watch List: 12/17/11


Exxon Mobil - XOM - close: 84.44

Comments:
03/17/12 update: It was a good week for XOM. The stock bounced off the bottom of its wide bullish channel but the rally stalled on Wednesday. Fortunately the energy sector looks poised for further gains. If XOM can get past resistance near $88.00 we could see the stock accelerate higher. I am tempted to raise our long-term exit target from $94 to $99.00. Readers may want to use a close over $88.00 as a new bullish entry point.

- Suggested Positions -
Dec 22, 2011 - entry price on XOM @ 83.56, option @ 4.63
symbol: XOM1319A90 2013 JAN $90 call - current bid/ask $ 3.70/ 3.80

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 5.00/ 5.20

03/17/12 XOM has bounced off the bottom of its bullish channel.
03/03/12 bears could argue that XOM is forming a potential double top pattern with the peak in late January and late February
02/11/12 recent action looks like a bearish H&S pattern with an $80 target.
01/28/12 readers may want to raise their stop prior to earnings
01/21/12 new stop loss at $79.40
01/07/12 new stop loss @ 77.90

Current Target: $94.00
Current Stop loss: 79.40
Play Entered on: 12/22/11

Originally listed on the Watch List: 12/03/11


CLOSED Plays


LDK Solar Co. Ltd. - LDK - close: 4.90

Comments:
03/17/12 update: LDK ended the week with a four-cent loss but that does not tell the whole story. Shares have continued to underperform. The stock broke down to new relative lows on Monday and shares hit our stop loss at $4.75. It is worth noting that the LDK appears to have found support in the $4.65-4.60 area near its exponential 200-dma and its 100-dma.

- Suggested Positions -
(buy LDK stock)
Dec 23, 2011 - entry price on LDK @ 5.31, exit $4.75 (-10.5%)

- or -

Dec 23, 2011 - entry price on LDK @ 5.31, option @ 0.89
symbol: LDK1319A5 2013 JAN $5 call - exit @ $0.80 (-11.2%)

03/12/12 stopped out at $4.75
02/11/12 new stop loss @ 4.75
02/04/12 new stop loss @ 4.35
01/14/12 new stop loss @ 3.90
01/07/12 new stop loss @ 3.60

Chart of LDK:

Current Target: $ 9.00
Current Stop loss: 4.75
Play Entered on: 12/23/11

Originally listed on the Watch List: 12/17/11



Watch

Technology & Soft Drinks

by James Brown

Click here to email James Brown


New Watch List Entries

BRCM - Broadcom

KO - Coca-Cola Co.


Active Watch List Candidates

F - Ford Motor Co.

LTD - Limited Brands

MCD - McDonald's Corp

TIVO - TiVo Inc.


Dropped Watch List Entries

BRK.B, CL, and CVX have all made it to the active play list. I have removed CDE as a candidate.



New Watch List Candidates:


Broadcom Corp. - BRCM - close: 37.81

Company Info

BRCM has produced a major comeback off its 2011 lows. Now the stock is trying to breakout past major resistance in the $38.00 region. The company was getting some free press this past week as tech gurus tore apart the new Apple iPad to find some of BRCM's devices inside. That could help fuel gains as we know iPad sales will be strong.

I am suggesting we wait for BRCM to close over $39.00 and then we will buy calls the next day with a stop loss at $35.75. More conservative investors could wait for BRCM to close over $40.00 instead. Our long-term target is $47.00. FYI: A move over $39.00 will produce a brand new triple-top breakout buy signal on the P&F chart.

Breakout trigger: Wait for BRCM to close over $39.00, use a stop loss at $35.75

BUY the 2013 Jan $45 call (BRCM1319A45)

- or -

BUY the 2014 Jan $45 call (BRCM1418A45)

Chart of BRCM:

Originally listed on the Watch List: 03/17/12


Coca-Cola Company - KO - close: 70.16

Company Info

This is more of a defensive play. KO, the company with the best brand recognition in the world, is seeing its stock slowly drift higher. The bullish trend of higher lows is pushing KO toward its 2011 highs. I suspect that if KO can breakout past the $72 level the rally could accelerate and shares will be hitting levels not seen since the late 1990s.

I am suggesting we open small bullish positions when KO closes over $72.00. We'll open positions the next day with a stop at $67.75. Our long-term target is $87.00 but that might be a little optimistic and we may need to make adjustments.

Breakout trigger: Wait for KO to close over $72.00, buy calls the next day with a stop at $67.75. (Small Positions)

BUY the 2014 $75 call (KO1418A75)

Chart of KO:

Originally listed on the Watch List: 03/17/12


Active Watch List Candidates:



Coeur d'Alene Mines Corp. - CDE - close: 24.22

Comments:
03/17/12 update: Shares of silver miner CDE are not seeing much of a bounce. As a matter of fact the stock has continued to sink. Our plan to wait for a close over $30.50 may not happen for a long time. We are dropping CDE as a bullish candidate.

Our trade did not open.

03/17/12 removed CDE as a candidate
03/03/12 adjusted trigger to close over $30.50

Originally listed on the Watch List: 02/25/12


Ford Motor Co. - F - close: $12.51

Comments:
03/17/12 update: Shares of Ford tried to breakout past resistance near $13.00 but it failed. Now shares are forming a three-day bearish reversal under the $13 level. I would not be surprised to see Ford drop back toward support near $12.00 again.

Currently our plan is unchanged. I am suggesting we wait for Ford to close over $13.25 and then buy calls the next day with a stop loss at $11.75. Our long-term target is $16.50.

Breakout trigger: Wait for Ford to close over $13.25, buy calls the next day.

BUY the 2013 Jan $12.50 call (F1319A12.5)

- or -

BUY the 2014 Jan $15 call (F1418A15)

Originally listed on the Watch List: 03/03/12


Limited Brands, Inc. - LTD - close: 46.93

Comments:
03/17/12 update: LTD was slowly setting new record highs until Friday. On Friday the stock produced a bearish engulfing candlestick reversal pattern. This could signal a correction lower back toward the $45-44 area. At the moment we have a buy-the-dip entry point at $42.50. We will re-evaluate our entry point next week.

If triggered at $42.50 we want to use a stop loss at $39.50. Our long-term target is $54.50.

Buy-the-Dip trigger: $42.50 (stop loss @ 39.50)

BUY the 2013 Jan $45 call (LTD1319A45)

Originally listed on the Watch List: 03/10/12


McDonald's Corp. - MCD - close: 97.66

Comments:
03/17/12 update: Our MCD was almost triggered this week with a dip to $96.37 on Tuesday. Shares have since started to bounce. I suspect that we'll see MCD bounce into the $99-100 zone and then roll over again. Once MCD produces a lower high under $100 it will see a correction into the $95-92.50 zone and test its rising 200-dma. That seems like a plausible scenario. Thus I am adjusting our buy-the-dip trigger to buy calls on MCD at $93.50 and we will adjust our stop loss to $88.50.

If triggered our long-term target is $108.00.

Buy-the-Dip trigger: $93.50, stop 88.50

BUY the 2013 Jan $100 call (MCD1319A100)

03/17/12 adjusted buy-the-dip trigger to $93.50, stop @ 88.50
12/24/11 adjusted entry point to $95.50, stop loss to $89.50
12/17/11 adjusted entry point to $91.50, stop loss to $87.25
11/26/11 adjusted stop loss to $86.45

Chart of MCD:

Originally listed on the Watch List: 11/05/11


TiVo Inc. - TIVO - close: 11.55

Comments:
03/17/12 update: Shares of TIVO are holding very well considering some of the headlines this past week. One of them was news that Intel (INTC) could become a major competitor. A Reuters article discussed a story first broke by the Wall Street Journal. Intel plans an Internet-based TV produce that could be packaged as an Intel-branded set-top box. Another potentially troubling headline was news that James Barton, TIVO's Chief Technology Officer and Senior Vice President was resigning immediately but TIVO would retain him as a consultant for the next three years. Usually when a high-profile executive leaves it makes investors nervous. Yet shares of TIVO have continued to rebound higher off their test of the 50-dma two weeks ago.

I am still suggesting that we wait for TIVO to close over $11.75 and then buy calls the next day. More conservative trades may want to wait for a close over $12.25 instead. We'll use a stop loss at $10.75. Our long-term target is $16.00. FYI: The Point & Figure chart is bullish with a long-term $18.50 target.

Breakout trigger: Wait for TIVO to close over $11.75, buy calls the next day. Stop loss at $10.75.

BUY the 2013 Jan $12.50 call (TIVO1319A12.5)

03/10/12 adjust entry strategy to buy calls after TIVO closes over $11.75 with a stop at $10.75.

Originally listed on the Watch List: 03/03/12