Option Investor
Newsletter

Daily Newsletter, Sunday, 3/25/2012

Table of Contents

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

Leaps Trader Commentary

Five Days Left for Q1

by James Brown

Click here to email James Brown

Concerns over a slowdown in China and Europe weighed on equities. Altogether it was a down week for the major global stock markets but the U.S. markets fared better than its European counterparts. Both the S&P 500 and the Dow Industrials saw a three-day decline midweek but overall the pullback was mild. A number of reports on the U.S. housing market failed to spark any major movement in stocks. We saw a handful of earnings reports but these too failed to ignite any serious sell-off. The highest profile corporate announcement was probably Apple Inc.'s news of a highly anticipated quarterly cash dividend. Overall commodities were some of the worst performers in spite of a drop in the U.S. dollar. By Friday's closing bell the S&P 500 declined -7 points for the week. The NASDAQ composite was up 12 points. The Dow Industrials was down -150 points. The small cap Russell 2000 index fell less than 0.25 of a point.

In the U.S. the latest housing starts data fell from an upwardly revised 706,000 unit pace in January to a less than expected 698,000 in February. Building permits, which help forecast starts, rose from 682,000 in January to a better than expected annual rate of 717,000 in February. The monthly existing home sales data hit an annual pace of 4.59 million sales in February. This was slightly less than expected but the months of supply remains low at 6.4.

A positive economic data point from last week was the initial jobless claims that hit a multi-year low at 348,000. Meanwhile there were several corporate earnings reports from the likes of Oracle (ORCL), Discover Financial (DFS), Nike (NKE), FedEx (FDX) and Tiffany & Co (TIF). Results were mixed. FDX's announcement was probably the most troubling. The overnight freight company said the recovery isn't as strong as they expected and management lowered their earnings guidance.

The biggest economic event for the week was China's most recent PMI survey, which hit four-month lows. This immediately sparked fears of a global slowdown and fans the flames that China was seeing a hard landing. Adding fuel to the global slowdown fire was a disappointing PMI out of the Eurozone, which hit a new three-month low.

Major Indices:

Depending on your bullish or bearish bias the S&P 500 has either just produced a top with the failure to hold over the 1400 level or the index is forming a bull-flag pattern before it springs higher again. The index did try to hold above the 1400 level but Thursday's news about weak data out of China helped push the index lower.

If the index continues to correct lower I would look for likely support in the 1380-1375 zone and near 1350 and its 50-dma.

2-hour chart of the S&P 500 index:

The NASDAQ composite actually managed another gain for the week. It's now up 11 out of the last 12 weeks. On a short-term basis the NASDAQ does appear to have just created a mini-bearish double top with the failed rallies under 3,090. You can also see on the two-hour chart below how the rally has stalled at the bottom of its prior channel.

If the NASDAQ does correct lower we can look for support near the 3,000 level and if that breaks then the 2,900 level.

2-Hour chart of the NASDAQ Composite index:

The small cap Russell 2000 index could be a good example of investor indecision. This past week saw a breakout past significant resistance but the $RUT immediately reversed lower the next day. Thursday saw a breakdown but there was no follow through on Friday. I suspect what we are seeing in this sideways churn is fund managers merely waiting for the end of the quarter.

Naturally a new close over key resistance in the 830-835 zone would be bullish.

2-hour chart of the Russell 2000 index

We continue to watch the Dow Jones Transportation average for clues. Unfortunately this past week the $TRAN failed at resistance near its 2012 highs. I cautioned readers a week ago that it could see a consolidation first before actually breaking out to new relative highs. We still need to keep an eye on crude oil prices. Oil was content to churn sideways in choppy trading in spite of the situation with Iran.

chart of the Transportation Average

We continue to watch shares of Apple Inc. (AAPL) as a key barometer of investor sentiment. There has been speculation about AAPL announcing a dividend for months. The company's cash hoard had risen to almost $100 billion. Shares got a pop last Monday when they announced a quarterly cash dividend of $2.65 a share. If that was not enough they also announced a $10 billion stock buyback program. Shares of AAPL slowly crept higher and almost hit $610 a share on Wednesday before paring its gains ahead of the weekend.

Is this a top in AAPL with its inability to hold gains above $600 a share? We won't know that until it's in the rear-view mirror but as you can see from the chart AAPL is extremely overbought and due for a correction lower.

chart of the Apple Inc. (AAPL)

It seems that investors have already forgotten about Greece. I barely heard anything regarding the country's debt deadlines last week. Hopefully Greece will remain out of the headlines for another several weeks. Investor worry is now turning toward Portugal and Spain with bond yields rising. Last week's disappointing PMI data for the Eurozone merely confirms that the region is going to struggle to stay out of recession. Areas like Greece and Spain are facing depression-level business activity and high unemployment. We could hear more about Greece depending on how their April elections turn out.

Looking ahead it's a another relatively quiet week for economic data. We'll get additional data on the U.S. housing market. There will be two reports on consumer confidence/sentiment. The latest estimate on Q4 GDP, which is expected to come in unchanged at +3.0%. The key events will be the Chicago Fed survey, Richmond Fed survey, and Kansas City Fed survey on business activity.

Looking beyond the end of March and the end of the first quarter will be the beginning of Q1 earnings season in less than three weeks.

- Monday, March 26 -
pending home sales
Chicago Fed report (CFNAI)

- Tuesday, March 27 -
Consumer Confidence for March
Case-Shiller 20-city home price index
Richmond Fed survey

- Wednesday, March 28 -
Durable goods orders

- Thursday, March 29 -
Weekly Initial Jobless Claims
Q4 GDP estimate
Kansas City Fed survey

- Friday, March 30 -
personal income and spending
Chicago PMI
Michigan Sentiment (final estimate for March)

Upcoming events:

April 6th, Nonfarm Payroll report for March
April 10th, Alcoa (AA) unofficially kicks on Q1 earnings
April 24th FOMC meeting
April - Greek election

The Week Ahead:

The last few days have seen commodities lead stocks lower on worries over a slowdown in China. That trend could continue although oil could be an exception. WTI crude oil futures ended the week at $106.75 a barrel. Brent crude oil ended the week at $127/bbl. You already know that the situation with Iran is heating up. Oil exports out of Iran are starting to decline due to intense sanctions by the U.N. Meanwhile Saudi Arabia says they will make up the difference by pumping extra oil to cover Iran's shortfall. Unfortunately I don't see how this is going to help with gas prices in the U.S.

We already have a temporary overabundance of oil in the central U.S. This country has actually started exporting oil (or oil equivalents) for the first time in years. Yet gas prices continue to climb. The average price of gas in the U.S. hit $3.89 a gallon on Friday. Several parts of the country are already paying more than $4 a gallon. This rising cost of fuel could end up having a major impact on our slowly improving economy. You've heard it a hundred times. Consumer spending accounts for almost 70% of the U.S. economy. Every dollar that gets poured into our gas tank is a dollar less for somewhere else. Seasonal trends usually mean gas prices rise as we near summer and Americans start driving even more (summer trips and vacations).

The situation with Iran could be one of the main stories affecting the market all summer long. Art Cashin is director of floor operations for UBS and Art recently shared his opinion that if war breaks out with Iran we could see the Dow Jones Industrials Average plummet more than 1,000 points on this news. Money would immediately begin flowing back into safe-haven plays like U.S. bonds (and probably gold too).

While we are on the subject of bullets flying there were rumors of a coup attempt in China this past week. All reports and Internet postings of unrest in China were quickly erased by the country's Internet censors. China is due for its once-a-decade realignment this year. This is the first time in 20 years that both China and the U.S. will see a major political event in the same year. This failed to have a big impact on U.S. stocks but could have added to the lack of enthusiasm to commit new capital.

Looking ahead at the last week of March I suspect we will either see stocks churn sideways or see a slow drift higher. Either will be a reflection of fund managers focused on the end of the first quarter. Most fund managers will fall into two camps. They are either fully invested and happy to sit tight and count down the remaining days of a very strong first quarter or they were underinvested and feel the need to window dress their portfolios and chase stocks higher. Does this mean stocks will sell-off in April? That is going to depend on Q1 earnings season. The average investor may not know this but estimates for Q1 earnings growth are pretty dismal. On the other hand Wall Street should be fully aware of Q1 earnings forecast. With expectations for a disappointing earnings season are we setting up for a bullish surprise that fuels the market higher? Or will we see investors sell the news instead? Seasonally April is usually a positive month for stocks but you know what follows April and that's the "sell in May" phenomenon.

The threat of high gasoline prices, a potential war with Iran, and a hotly contested U.S. presidential election, you could argue that "sell in May" may not be a bad idea, especially following such a strong first quarter. The wildcard here could be the April 24th FOMC meeting. The Fed's "Operation Twist" will be coming to an end soon. If the last two years is any guide then without any stimulus from the Fed stocks tend to sink. Will the Fed announce some sort of QE3? Normally the Fed does not like to be very active during an election year so they can appear to remain politically neutral. This April 24th meeting may be the last time they can act and still maintain appearance of neutrality.

What are long-term option investors to do? The market's trend is clearly higher but we definitely have some obstacles ahead of us. Of course bull markets tend to "climb the wall of worry". Readers may want to be quicker at taking profits, especially ahead of any company-specific earnings reports. You might want to re-adjust your stop loss placement as well. We will continue to add positions if we see opportunity but investors may want to start with small positions and slowly add to them as they progress. I anticipate a lot more volatility in stocks over the next couple of months.

- James


Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

Last week most of the global stock markets trended lower. The U.S. markets fared better than their European counterparts. The NASDAQ actually closed up on the week. The Russell 2000's decline was less than 1/4 of a point.

Overall the trend is still up but commodity-related stocks were underperforming last week and some of the oil/energy stocks were hit hard. We had both CVX and RDC get stopped out.

Meanwhile SBUX hit our exit target at $55.00. Plus, TIVO made the jump from our watch list to our play list.

I have updated stop losses on: NTES and TEVA.

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

Nervous About Q1 Earnings

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market continues to hold up reasonably well. Outside of commodity-related issues the profit taking last week was relatively mild. Now we're facing the last week of the first quarter. Will stocks drift sideways or will window dressing fuel another rally?

Currently estimates for the upcoming Q1 earnings season are not very optimistic. Stocks could end up seeing a sharp sell-the-news reaction to disappointing earnings news. Thus I am a little reluctant to launch new bullish positions at this time. However, we will continue to jump at opportunity when we see it. I've added two new candidates to our watch list tonight (ATVI and OMX). Plus TIVO graduated from our watch list to active trade last week.

Tonight I am updating my radar screen. Here are a few symbols that could present an entry point opportunity in the next few weeks. V, DD, GLW, CIEN, WYNN, HOTT, DIS, BIDU, HOT, and SHAW (note: SHAW has earnings on March 29th)


Play Updates

SBUX Hits Our Target

by James Brown

Click here to email James Brown

Editor's Note:

We want to go ahead and exit our NKE calls on Monday.


Closed Plays


CVX and RDC were stopped out. SBUX hit our exit target.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 31.86

Comments:
03/24/12 update: ADM posted a very small gain for the week. I did not see any news on Friday morning to explain the sharp spike lower but ADM did bounce near $31 and its 40-dma and 300-dma. ADM bounced back to close near resistance in the $32.00-32.25 area. A close over $32.25 could be used as a new bullish entry point.

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 $ 1.49/ 1.55

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: 93.61

Comments:
03/24/12 update: AGN also posted a gain for the week but shares remained inside a $92.50-94.00 trading range all week long. If the market corrects lower I would expect AGN to dip toward support near $90.00. I am not suggesting new positions at current levels.

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 $ 4.20/ 4.60

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: 36.62

Comments:
03/24/12 update: AKAM has spent the last couple of weeks churning sideways. I suspect the stock is headed for support near its 50-dma and the bottom of its wide bullish channel. More conservative traders may want to raise their stop loss closer to the $34.00 area. 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 $ 4.05/ 4.20

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 $ 4.05/ 4.20

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: 9.85

Comments:
03/24/12 update: BAC spent most of the week bouncing around the $9.50-10.00 zone. Traders did buy the dip on Friday morning at $9.40. Shares of BAC are probably still a little overbought after the +21% gain two weeks ago. If the market corrects we can look for potential support near $9.00 and then the $8.50-8.30 zone.

Earlier Comments:
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.

- Suggested Positions -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 1.45/ 1.46
(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 $ 1.45/ 1.46
(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: 32.96

Comments:
03/24/12 update: Uh-oh! Not only is BMY continuing to drift lower in a narrow band of lower highs and lower lows but volume spiked sharply on Thursday and Friday last week. We'd rather not see volume rising as the stock is sinking since that is usually a bearish signal.

BMY should still have support near $32.00 and then again near its 200-dma around the $31.00 area. I'm not ready to abandon ship just yet but I am not suggesting new positions at this time.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 0.94/ 0.98

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: 81.38

Comments:
03/24/12 update: BRK.B ended the week on a up note. The stock has spent the last few days consolidating sideways in the $80.50-81.50 zone. If you are looking for a new entry point consider waiting for a close over $81.65.

- 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

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: 3.37

Comments:
03/24/12 update: Ouch! Homebuilders had a rough week. Most of the housing starts and building permit data was generally mixed. What really hurt was an earnings miss from rival KBH, which sent the sector lower. Shares of BZH lost almost -8% for the week. The close under $3.40 and its 50-dma is short-term bearish for BZH. If this sell-off continues we can look for support near $3.00 and its exponential 200-dma. 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 $ 1.30/ 1.40

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: 95.94

Comments:
03/24/12 update: CL continued to drift higher. The stock tagged new record highs midweek while the rest of the market was sinking. CL does not move super fast. While I would consider new positions now you could choose to wait for a dip into the $95-94 zone as an alternative entry point.

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 $2.77/2.87

- or -

MAR 16, 2012 - entry price on CL @ 95.48, option @ 5.57
symbol: CL1418A100 2014 JAN $100 call - current bid/ask $5.25/6.10

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: 20.53

Comments:
03/24/12 update: CSCO is up 50 cents for the week. The stock broke out to new multi-month highs on the 20th and then spent the rest of the week consolidating sideways. Last week's performance negated the potential double top pattern. If the market and CSCO were to correct I would look for support near $20.00 or near the $19.40 area.

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 $2.09/2.12

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


The Dow Chemical Co. - DOW - close: 35.02

Comments:
03/24/12 update: DOW saw a minor pullback last week but trades were buying the dip on Thursday and Friday. If the market cooperates DOW looks poised to rally off this dip near $34.00 but I remain cautious here. I'm not suggesting new positions at this time. More conservative investors may want to raise their stop loss toward the $32 area.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 3.30/ 3.40

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 3.05/ 3.20

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: 37.09

Comments:
03/24/12 update: EBAY gave up 60 cents for the week and almost all of that was on Friday. Shares essentially consolidated sideways in the $37-38 zone all week long. I will point out that Friday's performance did produce a bearish engulfing candlestick reversal pattern. If EBAY does correct lower we can look for support in the $35-34 zone. I would use a dip or a bounce near $35 as a new entry point.

- Suggested Positions -
Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 2.85
symbol: EBAY1319A40 2013 JAN $40 call - current bid/ask $ 3.00/ 3.10

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 5.45/ 5.65

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: 50.88

Comments:
03/24/12 update: EPD managed a small bounce for the week but the short-term trend is still negative. If shares break down under support near the 50-dma and the $50.00 level then it could see a drop toward $48.

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 $ 2.55/ 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: 92.38

Comments:
03/24/12 update: FDX was flirting with a breakout past the $96.00 level until the company reported earnings. Wall Street was expecting a profit of $1.35 a share on revenues of $10.6 billion. FDX delivered $1.55 a share but revenues were only $10.5 billion. Traders ignored the 20-cent earnings beat and focused on management's cautious comments and their lowered earnings forecast. FDX now expects its fiscal Q4 earnings in the $1.75-2.00 range compared to analysts estimates at $2.00. FDX officials said the recover was not as strong as they expected. This pushed the stock lower. Actually I am surprised the stock did not see a sharper sell-off. Traders were buying the dip on Friday morning.

I am concerned that the February and March peaks near $96 could be a bearish double top. More conservative traders may want to exit early right now. 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 $ 5.25/ 5.40

03/24/12 FDX lowered its earnings guidance. The stock may have formed a top. Conservative investors may want to exit early now.
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: 85.75
Play Entered on: 01/11/12
Originally listed on the Watch List: 12/31/11


iShares China 25 Index ETF - FXI - close: 36.92

Comments:
03/24/12 update: The FXI gave up almost -5% last week on growing concerns over a slowdown in China. Rumors of a possible coup attempt in China didn't inspire any confidence either. The short-term trend in the FXI is now bearish. This ETF has closed under its 100-dma, its 200-dma, and its exponential 200-dma. Shares did seem to bounce (a bit) off its 150-dma Friday morning.

I would seriously consider an early exit now since the FXI appears to have broken the bullish trend of higher lows. If we don't see the ETF recover soon I will close this play early assuming it does not hit our stop loss at $35.75 first. 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 $ 0.60/ 0.65

03/24/12 the short-term trend is bearish and the FXI is breaking technical support. Readers may want to exit early.
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: 27.88

Comments:
03/24/12 update: It was a quiet week for INTC. Shares continue to churn sideways under resistance at the $28.00 level. It is worth noting that INTC is developing a subtle trend of higher lows, which is bullish. If INTC can close over $28.00 I would be tempted to launch new positions.

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/ 1.22

- or -

Feb 21, 2011 - entry price on INTC @ 27.34, option @ 2.11
symbol: INTC1418a30 2014 JAN $30 call - current bid/ask $ 2.33/ 2.39

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: 38.25

Comments:
03/24/12 update: It's been a while since I mentioned KFT's plans to spin off its global snack unit. This past week the company announced it will name this new spin off Mondelez International, Inc. According to a Zack's article the two independent public companies will be "a high-growth global snacks business and a high-margin North American grocery business." The KFT plans to complete the spin off by the end of 2012.

Meanwhile little is happening in shares of KFT with the stock drifting sideways (inside its larger up trend).

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 $ 3.90/ 4.05

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: 73.13

Comments:
03/24/12 update: KMB managed to breakout past short-term resistance near $73.00 this past week. Unfortunately there wasn't much follow through. Friday saw KMB produce a bearish engulfing candlestick reversal pattern. This might forecast a drop back toward the 50-dma or the $72.00 level.

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 $ 2.00/ 2.15

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: 39.87

Comments:
03/24/12 update: LLY spent last week slowly consolidating lower. Traders did buy the dip on Thursday near $39.50 and its 50-dma. Readers may want to consider new bullish positions if we see LLY close over $40.50 again.

- Suggested (SMALL) Positions -
Jan 05, 2012 - entry price on LLY @ 39.50, option @ 1.19
symbol: LLY1319A45 2013 JAN $45 call - current bid/ask $ 1.20/ 1.24

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.70/ 1.78

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: 57.53

Comments:
03/24/12 update: Hmm... LVS continues to work its way higher but momentum may have stalled. The stock spiked toward round-number resistance at $60.00 on Monday and quickly reversed. Shares then spent the rest of the week consolidating sideways. I am still concerned that LVS is overbought here. Eventually shares will see a correction but we can use that pullback as a new entry point. 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 $ 6.60/ 6.75

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: 34.28

Comments:
03/24/12 update: The situation is looking grim for our LXK trade. The stock tried to hold support near the $35.00 level but accelerated lower on Thursday and Friday. Shares fell to an low of $33.92 on Friday morning and we have a stop loss at $33.75. After a five-week correction lower I'd like to think the sell-off is over. Yet I am starting to suspect that LXK will dip toward the $33.00-32.00 area before it turns around.

More conservative traders may want to abandon ship immediately. 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 $ 1.80/ 2.00

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: 88.46

Comments:
03/24/12 update: MMM lost just over a dollar for the week. The stock was finding support near $88.00 on Thursday and Friday. Aggressive traders could buy a bounce from current levels. More conservative investors might want to consider buying calls if we see MMM close over $90.25.

- Suggested Positions -
Jan 19, 2012 - entry price on MMM @ 85.10, option @ 3.30
symbol: MMM1319A95 2013 JAN $95 call - current bid/ask $ 3.05/ 3.15

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: 50.67

Comments:
03/24/12 update: MSI has spent two weeks now consolidating sideways in the $50.00-51.00 zone. Traders were buying the dip at $50.00 on Thursday and Friday. While the larger trend is still up if the market corrects we could easily see MSI dip toward $48.00, which should be significant support. I am not suggesting new positions at this time.

- Suggested Positions -
Feb 17, 2012 - entry price on MSI @ 49.35, option @ 2.27
symbol: MSI1319A55 2013 JAN $55 call - current bid/ask $ 2.10/ 2.26

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: 107.42

Comments:
03/24/12 update: We were concerned about a potential sell-off in NKE following its earnings report. That's why we chose to sell half of our option position on Wednesday, March 21st at the closing bell. At our exit the bid on the 2013 Jan $110 calls was at $9.65 (+94.9%).

The company reported earnings on Thursday night (March 22nd). Wall Street was expecting a profit of $1.17 a share with revenues coming in at $5.82 billion. NKE beat estimates with $1.20 a share and revenues of $5.85 billion. Yet the stock sold off anyway because investors didn't like the -2% drop in gross margins. Plus a 32% surge in inventory levels was a bit concerning. The company said they will cut prices in China and Europe to help get rid of excess inventory.

The stock initially traded higher on Friday morning but eventually reversed and dipped toward its 50-dma. NKE settled with a -3.2% drop on Friday. For the week shares have created a huge, bearish engulfing candlestick reversal pattern on the weekly chart. That definitely does not bode well. I suspect NKE could see a correction toward the $100 level. Therefore I am suggesting we go ahead and exit the remainder of our position on Monday morning at the open.

We will keep NKE on our radar screen for new entry point near $100.

- Suggested Positions -
Jan 13, 2012 - entry price on NKE @ 98.39, option @ 4.95
symbol: NKE1319A110 2013 JAN $110 call - current bid/ask $ 7.45/ 7.55

03/24/12 prepare to exit the remainder of our position on Monday.
03/22/12 NKE reported earnings, beat estimates, but margins declined.
03/21/12 sold half at the closing bell.
2013 Jan $110 call exit $9.65 (+94.9%)
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

Chart of NKE:

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: 59.71

Comments:
03/24/12 update: NTES has continued to show relative strength. The stock's rally is accelerating but I am concerned NTES is now overbought and testing potential round-number resistance at $60.00. Nimble traders may want to take profits now and then just wait for a pullback to consider a new entry point.

I am not suggesting new positions at this time. We will raise our stop loss up to $49.40.

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 $ 7.80/ 8.10

03/24/12 new stop loss @ 49.40
Nimble traders may want to take profits now (current bid $7.80, +66%) and they re-enter positions on a correction.

Current Target: $ 64.50
Current Stop loss: 49.40
Play Entered on: 02/29/12

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


QUALCOMM Inc. - QCOM - close: 66.69

Comments:
03/24/12 update: QCOM just spent the past week consolidating sideways in the $66-67 zone. Traders bought the dip at its rising 10-dma on Friday. Short-term traders may want to buy calls on a breakout past $67 and target a run toward $70. Actually I am tempted to exit our LEAPS position near $70.00 as well. More conservative traders may want to exit now (+103%).

I am suggesting we go ahead and sell half of our position at $69.50. Our final target remains $74.50. 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 $ 9.95/10.05

03/24/12 prepare to sell half (exit) at $69.50
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: 41.00

Comments:
03/24/12 update: Hmmm... RAI had been consolidating sideways in the $41.00-41.50 zone for several days. Then on Friday, before the bell, the stock was downgraded. Shares gapped open lower and spiked down to $40.31 before paring its losses. I remain cautious given the potential top in early March. More conservative traders may want to raise their stop loss closer to $40.00. 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 $ 1.35/ 1.45

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


Teva Pharmaceuticals - TEVA - close: 43.07

Comments:
03/24/12 update: TEVA is little changed after a week of consolidating sideways. Traders bought the dip again near its 100-dma. I remain concerned with the stock's relative weakness. You can see the short-term trend of lower highs. Readers may want to exit positions now to cut your losses. I am raising our stop loss from $41.40 to $41.80. I am not suggesting new positions at this time.

FYI: In other news TEVA announced plans to move its U.S. listing from the NASDAQ market to the NYSE market. It will begin trading on the NYSE with the same symbol on May 30, 2012.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 1.01/ 1.05

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 2.70/ 2.87

03/24/12 new stop loss @ 41.80
03/24/12 TEVA is still underperforming. Consider an early exit
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: 41.80
Play Entered on: 01/19/12

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


TiVo Inc. - TIVO - close: 12.09

Comments:
03/24/12 update: TIVO and MSFT decided to play nice and announced that both companies were dropping their patent infringement lawsuits against each other. At least one analyst suggested that the removal of this lawsuit with MSFT makes TIVO a more attractive buyout target. In other news TIVO announced upgrades for some of its set-top boxes with increased storage capacity. Their entry level boxes now hold up to 75 hours of HD content.

TIVO was on our watch list with a trigger to buy call LEAPS if shares closed over $11.75. The stock met that requirement on Thursday so our trade opened on Friday morning. We have 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.

- Suggested Positions -
Mar 23, 2012 - entry price on TIVO @ 11.82, option @ 1.78
symbol: TIVO1319A12.50 2013 JAN $12.50 call - current bid/ask $ 1.73/ 1.89

03/23/12 trade is opened on Friday morning.
03/22/12 TIVO meets our entry requirement with a close over $11.75
03/10/12 adjust entry strategy to buy calls after TIVO closes over $11.75 with a stop at $10.75.

Chart of TIVO:

Current Target: $16.00
Current Stop loss: 10.75
Play Entered on: 03/23/12
Originally listed on the Watch List: 03/03/12


Tyson Foods, Inc. - TSN - close: 19.48

Comments:
03/24/12 update: TSN dipped toward technical support at its simple 50-dma this past week. I don't see any changes from my prior comments. Readers may want to wait for TSN to close over the $20.00 mark before launching new bullish positions.

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 $ 1.45/ 1.50

- or -

Mar 12, 2011 - entry price on TSN @ 19.82, option @ 3.34
symbol: TSN1418A20 2014 JAN $20 call - current bid/ask $ 2.85/ 3.10

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: 53.66

Comments:
03/24/12 update: I have to warn you that the action in UNH last week is a little ugly. Monday's breakout over resistance didn't last and shares reversed lower. Furthermore UNH has closed under what should have been short-term support near $54.00 and its 50-dma. Altogether this action has created a bearish reversal pattern on the weekly chart. I would expect a correction toward the $50 level and its simple 200-dma. 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 $ 2.14/ 2.22

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 4.65/ 5.40

03/24/12 action this past week has turned bearish. expecting a correction toward the $50 area.

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: 39.42

Comments:
03/24/12 update: Profit taking in VZ was relatively minor but shares have closed under their simple 10-dma. If the market corrects I would not be surprised to see VZ dip toward its 50-dma near $38.50. 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 $ 1.46/ 1.50

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 2.38/ 2.54

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: 85.55

Comments:
03/24/12 update: XOM fared better than some of its rivals in the energy space. Shares spent most of the week consolidating sideways above $86 and its 50-dma. The stock remains inside its $84-88 trading range. Nimble traders could buy dips near $84 but I'd use a tight(er) stop if you do. Otherwise I'd probably wait for a close over $88.00 before considering new bullish positions.

- Suggested Positions -
Dec 22, 2011 - entry price on XOM @ 83.56, option @ 4.63
symbol: XOM1319A90 2013 JAN $90 call - current bid/ask $ 3.20/ 3.25

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 4.50/ 4.70

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


Chevron Corp. - CVX - close: 106.36

Comments:
03/24/12 update: Oil stocks underperformed last week as commodities moved lower thanks to growing concerns for a global slowdown. The drop in CVX was exacerbated by news that Brazilian oil regulators blamed CVX for the oil spill back in November.

Shares of CVX hit our stop loss at $105.75.

- Suggested Positions -
Mar 14, 2012 - entry price on CVX @ 111.05, option @ 4.00
symbol: CVX1319A120 2013 JAN $120 call - exit $2.10 (-47.5%)

- or -

Mar 14, 2012 - entry price on CVX @ 111.05, option @ 8.20
symbol: CVX1418A120 2014 JAN $120 call - exit $5.50 (-32.9%)

03/22/12 CVX hit our stop loss at $105.75

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


Rowan Companies - RDC - close: 33.52

Comments:
03/24/12 update: RDC is another oil/energy stock that was crushed this past week. Shares fell from $37.00 to almost $33.00 with a four-day plunge through multiple layers of support. Our stop loss was hit on Thursday at $33.70.

- Suggested Positions -
Feb 03, 2012 - entry price on RDC @ 37.54, option @ 4.30
symbol: RDC1319A40 2013 JAN $40 call - exit $1.60 (-62.7%)

03/22/12 stopped out at $33.70
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

Chart of RDC:

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: 55.35

Comments:
03/24/12 update: The rally in SBUX continues and shares hit a series of new record highs. Our exit target was hit at $55.00 on Thursday.

- Suggested (SMALL) Positions -
Dec 27, 2011 - entry price on SBUX @ 45.40, option @ 4.00
symbol: SBUX1319A50 2013 JAN $50 call - exit $8.25 (+106.2%)

03/22/12 exit target hit at $55.00
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

Chart of SBUX:

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



Watch

Video Games & Office Supplies

by James Brown

Click here to email James Brown


New Watch List Entries

ATVI - Activision Blizzard

OMX - Officemax Inc.


Active Watch List Candidates

BRCM - Broadcom

F - Ford Motor Co.

KO - Coca-Cola Co.

LTD - Limited Brands

MCD - McDonald's Corp


Dropped Watch List Entries

TIVO graduated to the play list.



New Watch List Candidates:


Activision Blizzard, Inc. - ATVI - close: 12.70

Company Info

Video game giant ATVI has been showing relative strength once shares reversed off their March lows. Now ATVI is poised to breakout past key resistance in the $12.50-13.00 zone that has plagued the stock for months. Potentially driving the stock higher is Blizzard's upcoming launch of the latest Diablo game (Diablo 3) on May 15th. Later in the year will be Blizzard's "Mists of Pandaria" expansion for its massively successful Warcraft franchise.

I am suggesting we wait for ATVI to close over $13.25. We will buy calls the next day with a stop loss at $12.25. Our long-term target is the $16-18 range.

Breakout trigger: Wait for ATVI to close over $13.25, buy calls the next day with a stop at $12.25

BUY the 2013 Jan $15 call (ATVI1319A15)

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BUY the 2014 Jan $15 call (ATVI1418A15)

Chart of ATVI:

Originally listed on the Watch List: 03/24/12


Officemax Inc. - OMX - close: 5.86

Company Info

Shares of OMX suffered a dismal 2011. Yet now it looks like shares may have put in a significant long-term bottom with its base in the $4.00-6.00 range. OMX is flirting with a breakout past its 200-dma and resistance near $6.00. If shares do get past $6.00 the stock could see a short squeeze. The most recent data listed short interest at almost 20% of the 84.6 million-share float.

I am suggesting we wait for OMX to close over $6.20 and we'll buy calls the next day with a stop loss at $5.49. Our first target is $9.50. FYI: The Point & Figure chart has turned bullish and is currently forecasting a $9.50 target.

Breakout trigger: Wait for OMX to close over $6.20 and then buy calls the next day, stop loss @ 5.49

BUY the 2013 Jan $7.50 call (OMX1319A7.5)

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BUY the 2014 Jan $7.50 call (OMX1418A7.5)

Chart of OMX:

Originally listed on the Watch List: 03/24/12


Active Watch List Candidates:



Broadcom Corp. - BRCM - close: 38.47

Comments:
03/24/12 update: BRCM hit $39.00 on an intraday basis but has not yet closed over that level. Traders were buying the dip in BRCM near its rising 10-dma late this past week.

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)

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BUY the 2014 Jan $45 call (BRCM1418A45)

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


Ford Motor Co. - F - close: $12.32

Comments:
03/24/12 update: Ford is still drifting toward the bottom of its $12.00-13.00 trading range. Nimble traders might consider buying a dip at the $12.00 mark. 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)

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BUY the 2014 Jan $15 call (F1418A15)

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


Coca-Cola Company - KO - close: 71.49

Comments:
03/24/12 update: KO has been showing relative strength this past week with a rally to new six-month highs. Shares are nearing resistance in the $71.50-72.00 zone.

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)

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


Limited Brands, Inc. - LTD - close: 48.55

Comments:
03/24/12 update: Retail stocks continue to be a bright spot for the market. The RLX retail index climbed to new all-time highs this last week. LTD is hitting new highs as well. I am a little reluctant to chase it here. We will adjust our buy-the-dip entry point to $44.00 with a stop loss at $39.75.

Our long-term target is $54.50.

Buy-the-Dip trigger: $44.00 (stop loss @ 39.75)

BUY the 2013 Jan $45 call (LTD1319A45)

03/24/12 adjusted buy-the-dip trigger to $44.00 with a stop at $39.75

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


McDonald's Corp. - MCD - close: 95.55

Comments:
03/24/12 update: As expected the oversold bounce in MCD has reversed and shares are correcting lower. MCD is currently testing round-number support at $95.00 and technical support at its 150-dma. It could bounce here but I am betting MCD will continue to dip until it hits the simple 200-dma near $92.50. I'm actually tweaking our buy-the-dip trigger from $93.50 to $93.00.

If triggered our long-term target is $108.00.

Buy-the-Dip trigger: $93.00, stop 88.50

BUY the 2013 Jan $100 call (MCD1319A100)

03/24/12 adjusted trigger to $93.00
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

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