Option Investor
Newsletter

Daily Newsletter, Sunday, 4/1/2012

Table of Contents

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

Leaps Trader Commentary

Bulls Win the First Quarter

by James Brown

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The first quarter of 2012 is in the books and it was a good one for stock investors. The talking heads on TV were giddy about the fact it was the best Q1 performance for stocks since 1998. The market did manage another gain for the week, pushing the S&P 500 up 11 out of the last 13 weeks. Overall it was a quiet week for economic data and headlines and most of the economic data we got was flat or bearish.

Early in the week the market was focused on healthcare as the U.S. supreme court held a three-day review of Obamacare. They are not expected to issue a ruling until summer but the tone of questioning suggested the individual mandate could be struck down. Later in the week the people turned their focus toward the mega-millions multi-state jackpot which hit a record-setting high of $640 million. If you're wondering, there are three winning tickets. One in Illinois, Kansas, and Maryland.

Getting back to the stock market this past week looked a lot like the prior week. Gains on Monday and Friday were bookends to a mid-week decline. The first quarter saw the Dow Industrials raise +8.1%. The NASDAQ composite rallied +18.6%, which just outpaced the XLK technology ETF's gain of +18.5%. Both the S&P 500 and the small cap Russell 2000 index gained +12.0%. The SOX semiconductor index rose +20.0% and the XLF financial ETF soared +21.5% in the first quarter. One of the most disappointing performances was the Dow Jones transportation average, which only gained +4.6% for the quarter. In Europe the major indices were up about +7%. Meanwhile the Japanese NIKKEI index rallied about +20% for its best quarter in 24 years.

Helping fuel stock market gains last Monday were comments out of Fed Chairman Ben Bernanke that suggested the Fed is still leaning toward further easing. Many are expecting some sort of announcement out of the FOMC's late April meeting. Speaking of the Federal Reserve the Chicago, Dallas, Kansas City, and Richmond Fed Reserve business survey's all came in below expectations. Elsewhere the Chicago PMI fell from 64.0 in February to 62.2 in March. The internal components for this index showed a drop in new orders and a drop in employment. The weekly initial jobless claims ticked higher with a +9,000 jump to 359,000, which was worse than expected.

The final Q4 GDP estimate was unchanged at 3.0%. The durable goods orders for February came in at +2.2% but economists were expecting a +3.0% rise. The prior month was revised up to +3.6%. Housing data last week was disappointing with pending home sales for February falling -0.5%. The Case-Shiller 20-city price index dropped to its lowest level since 2003. The University of Michigan consumer sentiment for March ticked up from 74.3 to a final 76.2, marking its seventh month of gains. Yet the Conference Board's consumer confidence index fell from 71.6 in February to 70.2 in March. Personal income for February rose +0.2% and personal spending rose +0.8%. Economists were expecting +0.3% in income and +0.6% in spending.

Overseas the United Kingdom adjusted its Q4 GDP estimate lower to -0.3% growth. The latest Germany IFO business confidence survey rose to its best levels since last July in spite of falling German retail sales data. Italy's consumer confidence data hit an eight-month high. Meanwhile Canada has decided to follow countries like Australia, Brazil, Israel, New Zealand, and Sweden, and eliminate their one-cent coin. The Canadian penny will remain legal tender for now but the country will stop minting them since they cost 1.5 cents to manufacture. There have been several attempts in congress to eliminate the U.S. penny but it never seems to gain any traction.

Major Indices:

The S&P 500 is up 11 out of the last 13 weeks. Even though the index hit a new multi-year high on Tuesday morning near 1,419 it seems like upward momentum is fading. The MACD and stochastics indicators on the daily chart are suggesting a potential correction lower. On the daily chart below you can see that the bottom of its prior channel is now acting as resistance. Of course the bulls will point out that the trend of higher highs and higher lows remains intact. The real question is now that the first quarter is over will there be any window "undressing" as fund managers unwind positions.

Given the current bull market environment we can look for brief -3% to -5% corrections. At this point that would be a dip to the 1376-1348 area. Although I suspect that the prior highs from 2011 in the 1370-1360 zone could be support. Overhead the next level of potential resistance is the 1430-1440 area.

Daily chart of the S&P 500 index:

The NASDAQ outperformed the other major indices with a +18% gain for the quarter. This index is overbought and is due for a correction. Furthermore the weekly chart definitely looks like it's showing a potential top. However, that's no guarantee that the NASDAQ is going to reverse. The trend of higher highs and higher lows is still in effect. I would expect potential resistance at 3150 and 3200. We can look for short-term support at 3050, at 3000, and near the 50-dma. Yet a -3% to -5% correction would mean a dip into the 3040-2975 range.

Weekly chart of the NASDAQ Composite index:

Trading in the small cap Russell 2000 index is showing mixed signals. On the weekly chart the $RUT has broken out past key resistance and should be poised to move higher in spite of last week's lousy performance. Yet the daily chart shows a potential bear wedge pattern forming. A breakdown under 820 and its 50-dma would definitely look bearish for the small caps although I suspect the 780 area with the 100-dma, 200-ema, and 300-dma all seem to be converging will probably be support.

Daily chart of the Russell 2000 index

Weekly chart of the Russell 2000 index

The Dow Jones Transportation Average ($TRAN) has not been very supportive. Two weeks ago the transports topped out under resistance near 5400 and they have been slipping under a short-term bearish trend of lower highs. Is this sector forming a bearish double top? Or is it forming a sideways trading range in the 5100-5400 area?

If the situation with Iran heats up and we see oil prices rise again it could put pressure on the transports. Why are transports important? Dow Theory would suggest that if the economy is healthy then the transports should be healthy as well since they are moving freight around the country. Weakness in transports would suggest the economy is struggling.

chart of the Transportation Average

Shares of Apple Inc. (AAPL) have helped keep the rally in technology and the NASDAQ alive. It's the largest stock by market cap and it just hit a new all-time high over $620 a share last week. When this stock corrects, and eventually it will, it's going to put a lot of downward pressure on the major indices. It looks like a key area to watch might be the $520 level although I suspect the $550 level might offer some support.

Daily chart of the Apple Inc. (AAPL)

We have a busy week of economic data in front of us. We'll see both the ISM and ISM services index. Vehicle sales come out on Tuesday. Analysts will scour the FOMC minutes from the last meeting for any hint of QE3. As the first week of the month of April we'll see the ADP employment numbers and the government's nonfarm payroll (jobs) report on Friday. Plus, the U.S. market is closed on Friday in observance of Good Friday.

- Monday, April 2 -
ISM Index
construction spending

- Tuesday, April 3 -
Factory Orders
FOMC minutes from the last meeting
auto and truck sales

- Wednesday, April 4 -
ADP Employment report
ISM Services index

- Thursday, April 5 -
Weekly Initial Jobless Claims

- Friday, April 6 -
stock market closed for Good Friday
nonfarm payroll report
unemployment rate

Upcoming events:

April 10th, Alcoa (AA) unofficially kicks on Q1 earnings
April 24th FOMC meeting
April - Greek election

The Week Ahead:

Looking ahead we have a market that is overbought and bearish sentiment has fallen to a seven-week low. Investors might be deemed complacent with the "fear index" or volatility index (VIX) near multi-year lows. After a massive rally in the first quarter you can bet that odds are growing we could see traders sell the news when corporations start announcing earnings.

We only have a couple of weeks before Q1 earnings season beings. Dow-component Alcoa (AA) will kick off earnings season on April 10th but earnings season doesn't really hit full swing until April 16th. So what happens between now and the onset of earnings season? The beginning of the month should see an inflow of money from mutual funds. Seasonally April tends to be a bullish month but there have been down years.

If I had a crystal ball I suspect it would show me that stocks churn sideways for a couple of weeks as investors wait for earnings season to begin. Then once earnings begin we'll see investors start to sell on the disappointing earnings data. The market could see a few spikes on the news but look for traders to sell into strength. Essentially earnings season will be the excuse to sell and lock in gains and act as an early signal to cue the "sell in May" trend. Of course all this could change if we see some sort of event overseas. Everyone is aware that military action could breakout with Iran but most don't suspect any possible escalation until summer. That leaves China and Europe.

Last week the market was struggling with concerns over a slowdown in China and what that might do to the global economy. Concerns over China remain and are unlikely to change any time soon. China's largest trading partner is Europe and Europe is slowing down, which means less demand for Chinese products. Speaking of Europe the toxic debt issue in Europe could flare up again. Greece may be on the backburner but Spain is heating up. Germany just agreed to a stronger "firewall" of up to 800 billion euros in the combined EFSF/ESM programs just as Spanish bond yields are creeping higher again. Greece was a small country with a very small economy. Spain is another story and a meltdown in Spain, while still a ways off, would seriously rock the boat for both Europe and the U.S.

Longer-term we're starting to hear talk about a "fiscal cliff" for the U.S. on January 1st, 2013. The Pragmatic Capitalism blog explained that the expiration of the Bush tax cuts, payroll tax cuts, and emergency unemployment benefits on the first day of 2013 could put a -2% to -3.5% drag on the U.S. GDP. Plus, if last summer's showdown over the rising U.S. debt limit wasn't enough we'll get to go through that process again.

Looking forward to this spring and summer we will likely have rising gasoline prices putting pressure on consumer spending. Plus we'll have a nasty presidential election going on. The fact that we could have a change of leadership in Washington might actually stall business spending as corporations wait to see who wins. We all know that a bull market likes to climb the wall of worry. We definitely have a lot of potential potholes for the market but none of them are guarantees of a market downturn. Q1 earnings results could surprise to the upside (but I doubt it). Furthermore the Federal Reserve could announce some kind of QE3 at the April 24th meeting. If they do then stocks will likely rally on the news. If they don't then it could spark a new round of selling pressure.

I remain cautious when it comes to launching new long-term bullish positions. The trend is still up but stocks are overbought and the Q1 earnings season could be the excuse traders need to sell stocks and lock in gains. If we actually see a decent -5% to -10% correction then we could use it as a new bullish entry point.

- James


Portfolio

Portfolio Update

by James Brown

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Current Portfolio


Portfolio Comments:

It was the best first quarter performance since 1998. The NASDAQ outperformed the major indices with a +18% surge. The S&P 500 and small cap Russell 2000 both posted +12% gains for the quarter.

Now that the quarter is over earnings season is just around the corner. Investors need to consider how they are going to approach earnings season. Do you consider some sort of hedge against your bullish positions? Or do you ride out any post-earnings volatility? It might be a good time to double check your stop loss placement.

FXI and LXK were stopped out. We closed NKE at the open on Monday. OMX, KO, and BRCM all made the jump from our watch list.

NOTE: BRCM met our entry point requirement at the close on Friday. We will open positions on Monday morning.

I have updated stop losses on: QCOM and UNH

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 Is Overbought

by James Brown

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Editor's Note:

Currently the U.S. market looks overbought and extended after an exceptional first quarter performance. The major indices are up between +12% and +18% in just the first three months of the year. Normally that would be a great return for the entire year.

I am concerned that stocks could sell off and begin a correction once Q1 earnings season begins. Thus I am cautious on launching new positions so I'm not listing any new trades tonight. However, I will point out that our watch list continues to generate new entry points on a weekly basis. We just had three watch list candidates get triggered this past week.

In addition to our watch list readers may want to keep an eye on these stocks below. These symbols are on my radar screen for a potential addition to the watch list or an outright trade if conditions warrant adding them to the active trade list.

On my radar: CI, MCP, EXPE, WFC, FNSR, SCHW, JNPR, CREE, AIG, LRCX.


Play Updates

First Quarter Closes on a Quiet Note

by James Brown

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Closed Plays


FXI and LXK were stopped out. We closed NKE on Monday.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 31.66

Comments:
03/31/12 update: ADM lost 20 cents by week's end. Shares continue to bounce around the $32.50-31.00 zone. A close over $32.25 or $32.50 could be used as a new bullish entry point but I would keep positions small.

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 $ 1.36/ 1.42

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: 95.43

Comments:
03/31/12 update: AGN garnered some positive analyst comments this past week and shares rallied to a new high. I am adjusting our exit strategy. We will sell half of our position at $99.00 and sell the remainder at $109.00. I would expect a correction once AGN tags round-number, psychological resistance at the $100 mark.

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 $ 4.70/ 5.10

03/31/12 adjusted exit strategy. Sell half at $99.00 and sell the remainder at $109.00
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: 36.70

Comments:
03/31/12 update: AKAM remains stuck inside the $36-38 trading range. Shares are also inside a wide, rising channel with support near its rising 50-dma. More conservative traders may want to raise their stop loss toward 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: 9.57

Comments:
03/31/12 update: The market's widespread rally on Monday pushed BAC toward $10.00 again but the stock failed to close over this level. Shares have been fading lower all week and seem to have found some short-term support at their simple 300-dma. It would be nice to see BAC consolidate sideways instead of correcting lower but I would still expect a correction. The nearest support is the 50-dma near $8.30.

FYI: earnings are coming up on April 19th.

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 $ 1.23/ 1.25
(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 $ 1.23/ 1.25
(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: 33.75

Comments:
03/31/12 update: BMY is still slowly working its way higher. Traders bought the dip at its rising 10-dma on Thursday. The trend of higher lows and higher highs is bullish 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 $ 1.21/ 1.25

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


Broadcom Corp. - BRCM - close: 39.30

Comments:
03/31/12 update: BRCM displayed some volatility last week but by Friday's closing bell the stock had broken out past resistance. Our plan was to buy calls if BRCM could close over $39.00. The stock met this entry condition on Friday. We will open positions on Monday morning with a stop loss at $35.75. Our long-term target is $47.00.

FYI: The rally past $39.00 has created a brand new triple-top breakout buy signal on the Point & Figure chart with a $50.00 target.

- Suggested Positions -
Apr 02, 2012 - entry price on BRCM @ --.--, option @ -.--
symbol:BRCM1319A45 2013 JAN $45 call - current bid/ask $ 2.43/ 2.49

- or -

Apr 02, 2012 - entry price on BRCM @ --.--, option @ -.--
symbol:BRCM1418A45 2014 JAN $45 call - current bid/ask $ 4.95/ 5.10

Chart of BRCM:

Current Target: $47.00
Current Stop loss: 35.75
Play Entered on: 04/02/12
Originally listed on the Watch List: 03/17/12


Berkshire Hathaway (B shares) - BRK.B - close: 81.15

Comments:
03/31/12 update: For the week BRK.B didn't move very much but the action was actually short-term bearish. Monday hit a new relative high but it was reversed on Tuesday with a bearish reversal candlestick pattern. On a short-term basis I would expect BRK.B to dip back toward $80 and its 50-dma.

- 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 $ 3.65/ 3.75

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: 3.25

Comments:
03/31/12 update: Trading in the homebuilding stocks was mixed. Shares of BZH underperformed its peers and slowly slipped lower finding technical support at its descending 300-dma. At this time I would expect a correction lower toward the $3.00 level and likely technical support at the 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 $ 1.15/ 1.30

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: 97.78

Comments:
03/31/12 update: CL has continue to perform well and shares rallied to another new record high. The stock is now up four weeks in a row. I do expect the $100 level to act as round-number, psychological resistance. We can expect some profit taking once CL nears this level. Shares could dip back toward the $95-94 zone. I am not suggesting new positions at this time.

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 $3.15/3.30

- or -

MAR 16, 2012 - entry price on CL @ 95.48, option @ 5.57
symbol: CL1418A100 2014 JAN $100 call - current bid/ask $5.70/6.80

03/31/12 CL is performing well but expect resistance at the $100 level and a possible pullback.

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: 21.15

Comments:
03/31/12 update: CSCO has been showing some relative strength with a three-week rally to new 52-week highs. Broken resistance near $20.50 should offer some short-term support. Please note with nine months left in the year I am adjusting our exit target on CSCO from $21.75 to $23.00.

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 $2.41/2.44

03/31/12 adjust exit target to $23.00
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: $23.00
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: 34.64

Comments:
03/31/12 update: It was a volatile week for DOW. Shares hit a new multi-month high near $36.00 only to reverse lower. Shares broke down under technical support near the 50-dma but bounced back. All this chopping around could be a sign of investor indecision. More conservative traders may want to take profits early. I'm not suggesting new positions at this time.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 3.20/ 3.30

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 2.95/ 3.10

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: 36.90

Comments:
03/31/12 update: Warning! The action in EBAY last week looks short-term bearish. The stock hit a new multi-year high above $38.00 and reversed lower. Shares had been inside the $37.00-38.00 trading range but EBAY is below that right now. The stock could easily correct lower toward 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 $ 2.79/ 2.84

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 5.25/ 5.45

03/31/12 action this past week looks short-term bearish. Look for a pullback

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: 50.47

Comments:
03/31/12 update: The correction in EPD is now six weeks old. Traders did buy the dip under $50.00 but the stock remains inside a bearish trend of lower highs and lower lows. EPD broke down under its 50-dma this past week and the moving average is now overhead resistance. If this trend continues we could see EPD dip toward $48 or its 100-dma.

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 $ 2.30/ 2.45

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: 91.96

Comments:
03/31/12 update: FDX is holding up reasonably well. I don't see any changes from my comments a week ago. I remain concerned that FDX may have produced a bearish double top with the peaks in February and March. 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 $ 4.70/ 4.85

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


Intel Corp. - INTC - close: 28.12

Comments:
03/31/12 update: INTC managed to rally to new multi-year highs to close the first quarter on a high note. Now can maintain these levels. Earnings are coming up on April 17th. A disappointing report could send INTC plunging back toward $26 or worse. Technically this close over $28.00 is a bullish breakout over recent resistance.

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 $ 2.35/ 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: 38.01

Comments:
03/31/12 update: It was a disappointing week for KFT. On Monday it looked like shares had broken out past the trend of lower highs. Unfortunately the rally reversed and KFT fell to new two-week lows. Furthermore the bounce on Friday reversed at technical resistance near its 50-dma. This doesn't bode well for KFT and readers may want to exit early now.

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).

FYI: KFT is spinning off its global snacks business by the end of 2012.

- 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

03/31/12 short-term action is bearish. readers may want to exit early
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: 73.89

Comments:
03/31/12 update: It was a bullish week for KMB as the trend of higher lows and higher highs continues. The stock actually broke out to new record highs on Friday before paring its gains. The stock is at significant 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 $ 2.25/ 2.35

03/31/12 KMB is testing major resistance near $74.00
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


Coca-Cola Company - KO - close: 74.01

Comments:
03/31/12 update: It was a very bullish week for Dow-component KO. The stock saw its rally higher accelerate and shares gained +3.5% for the week. The stock has broken out to levels not seen since 1998. Our plan was to buy calls when KO closed over $72.00. Shares closed at $72.66 on March 28th. Our trade opened on the 29th. At this point I would wait for a dip back toward $72.00 before considering new positions.

FYI: Earnings are coming up on April 17th.

- Suggested Positions (start with small positions) -
Mar 29, 2012 - entry price on KO @ 72.35, option @ 3.60
symbol: KO1418A75 2014 JAN $75 call - current bid/ask $ 4.15/ 4.30

Chart of KO:

Current Target: $87.00
Current Stop loss: 67.75
Play Entered on: 03/29/12
Originally listed on the Watch List: 03/17/12


Eli Lilly - LLY - close: 40.27

Comments:
03/31/12 update: Traders bought the dip again on Thursday and LLY Is testing resistance in the $40.40-40.50 zone again. A close over $40.50 would be short-term bullish. Earnings are coming up on April 25th.

- Suggested (SMALL) Positions -
Jan 05, 2012 - entry price on LLY @ 39.50, option @ 1.19
symbol: LLY1319A45 2013 JAN $45 call - current bid/ask $ 1.21/ 1.26

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.75/ 2.00

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: 57.57

Comments:
03/31/12 update: LVS managed to eke out a very small gain for the last week of the quarter. Yet the action this past week actually looks bearish. Shares are testing short-term technical support at the rising 20-dma. We should not be surprised. LVS is overbought and due for a correction. The question is how deep will the pullback be? Will LVS find support near $55.00 or $54.00? Or will it dip all the way back toward $50.00? When the correction shows up we can use it as a new entry point but until then 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 $ 6.50/ 6.65

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


3M Co. - MMM - close: 89.21

Comments:
03/31/12 update: After hitting resistance at $90.00 two weeks ago MMM has been consolidating in what looks like a bull-flag pattern. Traders bought the dip near its 50-dma on Thursday morning. If the market cooperates I would expect shares to breakout higher soon. More conservative investors might want to consider buying calls if we see MMM close over $90.25.

FYI: Earnings are coming up on April 24th.

- Suggested Positions -
Jan 19, 2012 - entry price on MMM @ 85.10, option @ 3.30
symbol: MMM1319A95 2013 JAN $95 call - current bid/ask $ 3.00/ 3.10

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: 50.83

Comments:
03/31/12 update: MSI bounced off support near $50.00 again. Unfortunately shares appear to have put in what looks like a new lower high. If this stock breaks support at $50 we can expect a drop toward the next level of support near $48.00. 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 $ 2.15/ 2.33

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


NetEase.com - NTES - close: 58.10

Comments:
03/31/12 update: We were expecting NTES to find resistance at $60.00 and then correct lower. Thus far the stock has held up reasonably well. You could argue the stock is consolidating in a bull-flag pattern. I suspect if the wider market corrects lower then we could see NTES dip toward the $55-54 area.

I am not suggesting new positions at this time.

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 $ 6.90/ 7.20

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


Officemax Inc. - OMX - close: 5.72

Comments:
03/31/12 update: Hmm... I am urging caution on our new OMX trade. The stock was on our watch list with a plan to open bullish positions if shares could close over $6.20. The stock met that requirement on Monday with a close at $6.23. Our trade opened on Tuesday morning. Unfortunately OMX has been trading lower ever since. Broken resistance near $6.00 should have been new support but this level has already failed. Now OMX could be facing a dip toward technical support at the converging 50-dma and 200-dma near $5.65.

Nimble traders could buy a bounce off the $5.65 area. I would wait for a new close over $6.15 before considering new positions.

Earlier Comments:
The stock could see a short squeeze. The most recent data listed short interest at almost 20% of the 84.6 million-share float. Our first target is $9.50. FYI: The Point & Figure chart has turned bullish and is currently forecasting a $9.50 target.

- Suggested Positions -
Mar 27, 2012 - entry price on OMX @ 6.26, option @ 0.75
symbol: OMX1319A7.5 2013 JAN $7.50 call - current bid/ask $ 0.45/ 0.60

- or -

Mar 27, 2012 - entry price on OMX @ 6.26, option @ 1.60
symbol: OMX1418A7 2014 JAN $7.00 call - current bid/ask $ 1.25/ 1.45

Chart of OMX:

Current Target: $ 9.50
Current Stop loss: 5.49
Play Entered on: 03/27/12

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


QUALCOMM Inc. - QCOM - close: 68.06

Comments:
03/31/12 update: QCOM rallied sharply higher on Monday and almost hit the $69.00 level on Tuesday morning. Shares spent the rest of the week digesting gains and moving sideways. QCOM is definitely overbought here. More conservative traders may want to take profits early right now. I am raising our stop loss up to $61.50.

Currently our plan is to sell half of our position at $69.50 and then sell the remainder at $74.50. I am not suggesting new positions at this time.

FYI: Earnings are coming up on April 18th.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $10.90/11.05

03/31/12 new stop loss @ 61.50
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: 61.50
Play Entered on: 11/23/11
Originally listed on the Watch List: 11/05/11


Reynolds American Inc. - RAI - close: 41.44

Comments:
03/31/12 update: RAI spent another week churning sideways this time between its 50-dma below and its 20-dma overhead. I don't see any changes from my prior comments. 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 $ 1.50/ 1.65

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: 45.06

Comments:
03/31/12 update: Healthcare and biotech stocks were showing relative strength this past week. TEVA managed to add a couple of points. Friday saw a breakout past its 50-dma and its 300-dma but the rally stalled right at its two-month trend line of lower highs. 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 $ 1.53/ 1.59

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 3.60/ 3.80

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: 11.99

Comments:
03/31/12 update: TIVO only lost 10 cents for the week but it was a volatile week. Monday saw TIVO spike to a new multi-year high before immediately reversing lower. This prompted a two-day sell-off but traders bought the dip near its trend of higher lows.

Readers may want to wait for a close over $12.25 before considering new bullish positions.

Earlier Comments:
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 $ 1.63/ 1.78

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.

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: 19.15

Comments:
03/31/12 update: TSN is down two weeks in a row. Shares underperformed this past week and closed under its simple 50-dma on Friday. This action is short-term bearish. Shares look headed for technical support at the rising 200-dma near $18.75. Nimble traders could buy calls on a dip near the 200-dma.

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 $ 1.20/ 1.30

- or -

Mar 12, 2011 - entry price on TSN @ 19.82, option @ 3.34
symbol: TSN1418A20 2014 JAN $20 call - current bid/ask $ 2.45/ 2.75

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: 58.94

Comments:
03/31/12 update: It was a bullish week for UNH with the stock rising almost +10%. Shares really accelerated higher when they broke through resistance near the $56.00 level. Helping fuel the rally was the recent three-day review by the U.S. supreme court on Obamacare. Wall Street is speculating that the worse-case scenario for the health insurers will not happen. That would be the individual mandate to buy insurance is struck down but the court leaves in place the law's requirement for insurers to cover higher-risk Americans.

There is no denying the breakout in UNH is bullish but I would not chase it here. You could wait for a dip back toward $56.00, which should be support. I am raising our stop loss up to $52.75. I am also adjusting our exit target from $63.00 to $64.00.

- Suggested Positions -
Feb 15, 2012 - entry price on UNH @ 54.53, option @ 3.25
symbol: UNH1319A60 2013 JAN $60 call - current bid/ask $ 4.50/ 4.70

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 7.65/ 8.15

03/31/12 new stop loss @ 52.75. Adjust exit to $64.00
03/24/12 action this past week has turned bearish. expecting a correction toward the $50 area.

Current Target: $64.00
Current Stop loss: 52.75
Play Entered on: 02/15/12

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


Verizon Communications - VZ - close: 38.23

Comments:
03/31/12 update: It was an ugly week for shares of VZ. Bearish analyst comments helped fuel the decline. Shares broke down under its 50-dma and 100-dma. Traders bought the dip near its rising 150-dma. More conservative traders may want to raise their stops toward this recent low (37.56). I am not suggesting new positions at this time.

FYI: Earnings are coming up on April 19th.

- Suggested Positions -
Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.17
symbol: VZ1319A40 2013 JAN $40 call - current bid/ask $ 0.94/ 0.95

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 1.81/ 1.99

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: 86.73

Comments:
03/31/12 update: It was a quiet week for XOM with shares churning sideways in the $85.00-87.50 zone. I would wait for a close over $88.00 before considering new bullish positions.

FYI: Earnings are coming up on April 26th.

- Suggested Positions -
Dec 22, 2011 - entry price on XOM @ 83.56, option @ 4.63
symbol: XOM1319A90 2013 JAN $90 call - current bid/ask $ 3.45/ 3.55

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 4.65/ 5.00

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


iShares China 25 Index ETF - FXI - close: 36.67

Comments:
03/31/12 update: It was not a good week for the FXI China ETF. Shares continue to correct lower and fell under the $36.00 level on Thursday, hitting our stop loss at $35.75. This ETF has seen a -12% correction from its February highs and broken through a cloud of potential support in the last four weeks.

There is still a chance that the FXI turns around if the Chinese government increases their stimulus to ramp up their economy again.

- Suggested Positions -
Feb 06, 2012 - entry price on FXI @ 39.80, option @ 1.81
symbol: FXI1319A45 2013 JAN $45 call - exit $0.45 (-75.1%)

03/29/12 stopped out at $35.75
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.

Chart of FXI:

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

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


Lexmark Intl. Inc. - LXK - close: 33.24

Comments:
03/31/12 update: Ouch! It was another down week for LXK. The stock is actually down six weeks in a row. This past week saw a breakdown under what should have been support near $34.00 and its exponential 200-dma. Shares ended the quarter sitting on the 300-dma. I cautioned readers a week ago that LXK looked headed for the $33 area. Our stop loss was hit at $33.75.

- Suggested Positions -
Jan 19, 2012 - entry price on LXK @ 35.46, option @ 3.40
symbol: LXK1319A40 2013 JAN $40 call - exit $2.30 (-32.3%)

03/26/12 stopped out at $33.75
02/18/12 new stop loss @ 33.75
02/04/12 new stop loss @ 32.75

Chart of LXK:

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


Nike Inc. - NKE - close: 108.44

Comments:
03/31/12 update: After the sharp sell-off on Friday a week ago we decided to exit the remaining calls we had left on Monday at the opening bell.

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 - exit @ $7.90 (+59.5%)

03/26/12 exited remaining calls
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



Watch

Telecom Equipment & Apparel Stores

by James Brown

Click here to email James Brown


New Watch List Entries

JDSU - JDS Uniphase

URBN - Urban Outfitters


Active Watch List Candidates

ATVI - Activision Blizzard

F - Ford Motor Co.

LTD - Limited Brands

MCD - McDonald's Corp


Dropped Watch List Entries

BRCM, OMX and KO graduated to the play list.



New Watch List Candidates:


JDS Uniphase - JDSU - close: 14.49

Company Info

JDSU makes telecommunication equipment. The stock appears to have built a significant bottom over the last several months in the $9.00-14.00 zone. Shares are currently flirting with resistance near $15.00 and its 300-dma.

I am suggesting we launch small bullish positions if JDSU can close over $15.30. We'll start with a stop loss at $13.90. Our long-term target is $19.75. More aggressive traders could aim higher. FYI: The Point & Figure chart is bullish and is forecasting a long-term $26 target.

Breakout trigger: Wait for JDSU to close over $15.30 (stop 13.90)

BUY the 2013 Jan $17.50 call (JDSU1319A17.5)

- or -

BUY the 2014 Jan $20 call (JDSU1418A20)

Chart of JDSU

Originally listed on the Watch List: 03/31/12


Urban Outfitters Inc. - URBN - close: 29.11

Company Info

URBN runs a small empire of apparel stores under several different brand names. The company reported earnings just over two weeks ago and missed estimates for both the top and bottom line. Yet traders bought the post-earnings sell-off at the stock's rising 50-dma. Now shares are testing major resistance near the $30.00 level.

If the stock can breakout it could see a short squeeze with the most recent data listing short interest at more than 10% of the float. I am suggesting a trigger to launch small bullish positions when URBN closes over $30.50. We'll use a stop at $27.75. Our long-term target is $35.75.

Breakout trigger: Wait for URBN to close over $30.50 (stop 27.75)

BUY the 2013 Jan $35 call (URBN1319A35)

Chart of URBN:

Originally listed on the Watch List: 03/31/12


Active Watch List Candidates:



Activision Blizzard, Inc. - ATVI - close: 12.82

Comments:
03/31/12 update: The rally in ATVI stalled with shares consolidating sideways last week. We are waiting on a breakout past resistance.

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)

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


Ford Motor Co. - F - close: $12.48

Comments:
03/31/12 update: Ford also delivered a quiet week with the stock bouncing around the $12.20-12.60 range. 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


Limited Brands, Inc. - LTD - close: 48.00

Comments:
03/31/12 update: LTD rallied to round-number resistance at $50.00 and reversed. I don't see any changes from my prior comments. We want to buy LTD calls on a correction lower. We currently have a buy-the-dip trigger at $44.00.

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: 98.10

Comments:
03/31/12 update: MCD continues to bounce and shares are testing resistance near $98.00 and its 100-dma. The stock should have additional resistance at its descending 50-dma, currently at 98.80. Right now the plan is to buy calls on a dip at $93.00 but if MCD continues to rally we might want to consider buying calls if shares can close over $100 again.

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