Option Investor
Newsletter

Daily Newsletter, Sunday, 4/8/2012

Table of Contents

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

Leaps Trader Commentary

Stocks Stumble Into the Second Quarter

by James Brown

Click here to email James Brown

After the market's best quarterly performance since 2008 stocks stumbled in their first week of the second quarter. It was a holiday-shortened week with several factors sapping investor appetite for risk. Gold prices fell to new relative lows while the U.S. dollar produced a sharp three-day rally. Trading in bonds was mixed but yields were lower by Thursday's closing bell. The S&P 500 ended the week down -0.7% marking its third weekly decline in the last 14 weeks. The small cap Russell 2000 index fell -1.4% for the week while the NASDAQ composite only slipped -0.3%.

Volatility ticked higher last week with the S&P 500 index posting a -1% loss for the second time in 2012. Two biggest events impacting trading was the FOMC minutes and bond yields in Spain. Tuesday saw the release of the FOMC minutes from the most recent meeting and the market was shocked that the fed governors took a much more hawkish tone toward policy. The minutes weakened the belief that the Federal Reserve might offer some sort of QE 3 program later this year. The very next day (Wednesday) Europe took the spotlight with Spain struggling to complete a debt auction due to very weak demand. The yields on Spanish bonds were marching higher, which suggests that investors do not have any faith in the country's ability to meet its austerity targets and control its deficits.

There were a number of economic headlines from overseas. China saw its manufacturing PMI rise from 51.0 a month ago to 53.1. The communist country also reported that its PMI Services data hit a six-month high. Meanwhile in Europe we saw France, Germany, and the U.K. all report that their PMI services data was improving. Britain also announced that its PMI construction data hit its best levels since 2010. Yet the U.K.'s manufacturing and industrial production data missed expectations. Another dark cloud for Europe was the unemployment rate for the Eurozone rising to 10.8% (unemployment for individual countries like Greece and Spain are a lot higher). Another disappointment was German industrial production missed estimates by a wide margin. While we're on the subject of Europe, investors didn't like the hawkish tone ECB President Draghi seemed to have when he spoke on Wednesday.

In the U.S. we saw factory orders rise +1.3%, which was generally in line with expectations. The ISM services data for March came in at 56.0 but that was less than the 56.7 estimate and down from February's 57.3. The ADP employment report said private companies added 209,000 jobs but that was less than the 217,000 expected. Last week we also saw consumer credit decline after twelve months of improvement. Meanwhile U.S. auto and truck sales for March were showing strong improvement. March same-store sales for the retailers still reporting this data was generally better than expected thanks to one of the warmest Marchs on record.

The biggest economic report for the U.S. was released on Friday morning while the stock market was closed. I am referring to the nonfarm payroll (jobs) report. Economists had been expecting +205,000 jobs with some whisper numbers near +250K. Yet the government's report said March jobs came in at +120,000. February's number was revised up +13,000 but January's was revised down by -9,000. The unemployment rate actually ticked down from 8.3% to 8.2% but that was solely due to a drop in the number of people in the work force.

The S&P futures immediately plunged -20 points on the jobs number miss. The last couple of weeks the tone of analysts and economists suggested that the American economic recovery was finally self sustaining. This big miss in the March jobs number throws that view in doubt. Now the first thing most analysts said on Friday was that "it's just one month of data" and we shouldn't read too much into it. Second, there was a chorus of analysts suggesting that March's jobs number was so bad because the warmer than expected weather in January and February had pulled hiring forward. Both opinions could be right but that's not going to stop the stock market from surging lower on this dismal economist data.

You've heard it before, the U.S. needs at least +150,000 new jobs a month just to keep pace with our population growth (new graduates and immigration). The last two years the job growth has averaged +143,000. The U.S. economy lost 8.8 million jobs during the recession. We've only gained 3.6 million back. That leaves 5.2 million out of work plus two years worth of new entrants to work force. The real unemployment rate should be a lot, lot higher but the number of people not counted in the work force has been skyrocketing and hit a new record of 87.8 million people. There are a few pundits out there suggestion the BLS data is extremely out of sync due to gross miscalculations in their seasonal adjustments while some analysts are actually suggesting that these numbers are being politically motivated to make the economy look better than it really is.

Major Indices:

The S&P 500 index ended the short week closing under what should have been round-number support at 1400 as well as short-term technical support at its 20-dma. If you look at the daily chart you have to wonder if the market is forming a top. The last three weeks in a row have seen gains on Monday followed by a three-day decline. Of course that pattern would have been broken this Friday if the market was open. The S&P futures spiked down toward the 1375 area on Friday following the release of the jobs data. A dip to 1375 would be a -3% correction. There is a chance that the 2011 highs in the 1370-1360 area could offer some support. Yet if these levels fail (and its 50-dma) then we're probably looking at a multi-day decline down toward the next level of support near 1340.

Daily chart of the S&P 500 index:

Weekly chart of the S&P 500 index:

The NASDAQ composite only gave up -0.3% last week. It's still up +18% year to date. It's worth pointing out that shares did produce a new lower high last week and the weekly chart is definitely showing a slowdown in momentum with two long-tailed doji candlesticks. The NASDAQ composite will probably test support near the 3,000 level. If the 3K level breaks then it's probably looking at a drop toward 2900. Remember a -3% to -5% decline would be a dip into the 3040-2975 range but since the NASDAQ is so overbought we should probably expect a deeper pullback. A -8% correction would be 2870 and a -10% correction would be 2808. Although I do expect the 2900 level to offer pretty good support. That's where we will find the 38.2% Fibonacci retracement of the December-March rally.

Daily chart of the NASDAQ Composite index:

Weekly chart of the NASDAQ Composite index:

The trading in the small caps was a bit uglier last week. The small cap Russell 2000 index has closed under both its simple 50-dma and its trend line of higher lows. This also looks like a breakdown from its bear wedge pattern. We could see the $RUT test its March lows near 785 soon. I would expect the 780-760 area to offer some decent support but the trend could be changing.

Daily chart of the Russell 2000 index

Weekly chart of the Russell 2000 index

We are still watching the transports although they didn't move much last week. As the market reacts to the jobs data on Monday we will most likely see the $TRAN break its trend line of support. I would expect a correction toward the March lows. Weakness in the transport is usually bearish for investor sentiment.

chart of the Transportation Average

We are still watching shares of Apple Inc. (AAPL). It's the largest stock by market cap and tends to be a barometer for investor sentiment toward big cap tech stocks (and the NASDAQ-100). There was no slowdown in the rally for AAPL with shares hitting new record highs. I don't see any changes from my prior comments.

When this stock corrects, and eventually it will, it's going to put a lot of downward pressure on the major indices.

Key areas to watch are $550, $520, and $500. All of which could be potential support for AAPL.

Daily chart of the Apple Inc. (AAPL)

Another chart I want to post is gold, specially the GLD gold ETF. The last couple of weeks there has been talk that the GLD is forming an inverse head-and-shoulders pattern, which is bullish. The GLD should be testing the very bottom of its right shoulder now. Aggressive traders could start initiating bullish positions now and then add to it as the GLD rises. I am not suggesting new positions in the GLD tonight but it is something to keep on your radar screen. You can also see that the GLD is near some of its long-term trend lines of higher lows (a.k.a. support). If the GLD can breakout past the neckline (resistance) of this H&S pattern it would forecast a bullish target of $200 for the ETF.

Weekly chart of the GLD gold ETF

We have a relatively quiet economic calendar this week. The big reports will be the Fed's Beige book on Wednesday and then the PPI and CPI data on inflation later in the week. The real event will be the unofficial start to the Q1 earnings season. Dow-component Alcoa reports on Tuesday. Google reports on Thursday and banking giants JPM and WFC report on Friday.

- Monday, April 9 -
(nothing significant announced)

- Tuesday, April 10 -
wholesale inventory data
Alcoa (AA) reports earnings

- Wednesday, April 11 -
Import/Export prices
Federal Reserve's Beige Book Report

- Thursday, April 12 -
Weekly Initial Jobless Claims
PPI index for March
Google (GOOG) reports earnings

- Friday, April 13 -
CPI index for March
Michigan sentiment survey for April
JPM and WFC both report earnings

Upcoming events:

April 24th FOMC meeting
April - Greek election

The Week Ahead:

What can we expect as we look at the week ahead of us? The U.S. markets will likely gap down and spike lower as investors react to the disappointing jobs data released on Friday. Complicating matters could be widespread sell-offs in Asian and European markets reacting to the same data. The jobs report could be the perfect excuse investors need to hit the sell button and lock in gains after such a stunning first quarter performance.

If you could put a positive spin on the jobs report it would be that the March report probably helps keep the Federal Reserve in their easy money stance. It seems that the market can't decide which way they think the Fed is going to go. Two weeks ago stocks were in rally mode on comments from Ben Bernanke because it sounded like he was leaning toward more stimulus. Now this past week the minutes from the last meeting come out and the FOMC sounds more hawkish (less chance of QE3). If the U.S. economy is self sustaining then there is less need for QE. If the recovery is not self sustaining then the Fed will probably announce another round of stimulus.

Bill Gross, the head at PIMCO, the largest bond fund on the planet, believes that Bernanke doesn't have a choice and will come out with some sort of QE3 program. Many believed that the Fed might announce something at the late April meeting. Yet now Goldman Sachs just released their opinion that the Fed probably won't move in April but will announce some sort of new stimulus at the June meeting instead. That would make sense because the current "Operation Twist" is due to end on June 30th. Yet there are plenty of pundits that believe the Fed is done with their QE programs. Wall Street can't decide and the markets hate the unknown, which could be just another reason for investors to sell and lock in gains.

While we're on the topic of selling we are approaching the "sell in May" time frame. April ends the best six months of the year for stocks on a historical basis. Once investors recognized this trend there formed a pattern of many investors to sell in May and not come back until October. It doesn't always pay off but over a long period of time October-April does outperform the rest of the year. I've mentioned it before but I believe April earnings will disappoint and they will be an early catalyst for traders to sell stocks, which could start the "sell in May" trend early. However, I will mention another historical trend and that is April tends to be an up month for stocks. We definitely have some crosswinds impacting investor sentiment.

There is always the chance that Q1 earnings results beat the currently lowered expectations but corporations are facing tougher year over year comparisons. Plus there is still the issue of guidance. The fear is that both Europe and China are slowing down. There is the potential for leadership change in Washington. Corporate management could be cautious on their guidance given all the unknowns and that could be a reason for investors to sell stocks following their earnings reports.

Speaking of China, the country is going to release their latest inflation data on Sunday night. If the inflation rate is too high it will impact China's ability to loosen their monetary policy which will impact their ability to fight a hard landing (a.k.a. slowdown). This report could have an influence on stocks Monday morning. China will also release their Q1 GDP numbers later in the week.

Bull markets do tend to climb the "wall of worry" but we're facing a lot of obstacles for the bulls to overcome. On top of everything already mentioned we have rising gasoline prices in the U.S. and rising bond yields in Spain. You already know the story with gas prices. Eventually high gas prices will impact consumer spending, which accounts for nearly 70% of the U.S. economy. Meanwhile rising bond yields in Spain are a sign the toxic debt issue in Europe hasn't been solved. The yield on the Spanish 10-year bond hit 5.75% on Friday. That is the highest levels since December, just before the ECB launched their LTRO program. They key level to watch is 7% yields, which is generally considered unsustainable for a country to service its debt levels. Plus there is still the dark cloud of Iran on the horizon. Tensions between Iran and the West are heating up and many believe it could come to a head sometime this summer.

Is the market's larger trend still up? Yes, it is. Yet the U.S. market is overdue for a correction so short-term the trend is probably done, at least for a few days and maybe for a few weeks. That makes me cautious when it comes to launching new long-term bullish LEAPS trades. We welcome a correction because it will provide a new entry point but we need to be patient when it comes to actually initiating new positions.

- James


Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

The major U.S. indices posted a loss for the first week of Q2. Worries over rising Spanish bond yields and the thought that the Fed might not create any additional QE sparked some selling pressure for equities. The S&P 500 saw a -1% decline for the second time this year.

The market was closed on Friday but the futures spiked lower following the disappointing jobs data. Currently stocks are poised to gap down and spike lower on Monday morning. If the sell-off is too steep we could see several of our bullish candidates get stopped out.

The Q1 earnings season is about to start. I am reposting my comments from last week:

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.

We did see our new trade on OMX get stopped out. No stop losses were changed in tonight's update.

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

Did It Start Early?

by James Brown

Click here to email James Brown

Editor's Note:

My comments in last week's "new plays" section discussed concerns that stocks could see a sell-off in April as investors react to Q1 earnings results. Now it seems the correction may have started early. Worries that the Fed may not follow through on any further QE and concerns about rising bond yields in Spain sparked selling pressure this past week.

Now the market is poised to drop on Friday's worse than expected jobs data. Could this be the catalyst that begins an overdue correction following the Q1 rally? It's definitely possible. With stocks poised to gap down and correct lower I am not adding any new long-term positions tonight.

The good news is that a correction lower should end up providing a much better entry point. Now is a great time to start making a list of stocks you'd like to buy if the market sees a -5% to -10% pullback.

Enjoy your Easter weekend!


Play Updates

Q2 Off to Lackluster Start

by James Brown

Click here to email James Brown

Editor's Note:

This could be an ugly week for stocks. The U.S. markets were closed on Friday but futures plunged on the worse than expected jobs data Friday morning. That means the U.S. market will most likely gap down and spike lower on Monday morning. We could see some of our candidates get stopped out. More conservative traders may want to raise their stop losses.


Closed Plays


OMX has been stopped out.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 31.32

Comments:
04/07/12 update: ADM followed the market's major indices. The stock tagged a new relative high on Monday and then reversed lower the rest of the week. Shares are nearing technical support at the 50-dma and 300-dma. Odds are good we could see ADM spike lower toward support near $30 and its 100-dma. I am not suggesting new positions at this time.

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

- Suggested (small) Positions -
Feb 21, 2011 - entry price on ADM @ 31.31, option @ 1.74
symbol: ADM1319A35 2013 JAN $35 call - current bid/ask $ 1.30/ 1.36

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: 94.99

Comments:
04/07/12 update: It was a quiet week for AGN. Shares gave up about half a point and consolidated sideways. If the market dips on Monday we could see AGN drop toward $92. If the market really corrects I would expect a dip toward support near $90.00. I am not suggesting new positions at this time.

Earlier Comments:
We will sell half of our position at $99.00 and sell the remainder at $109.00.

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 $ 4.60/ 5.00

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: 36.33

Comments:
04/07/12 update: AKAM drifted toward support near $36.00 and its 50-dma. If the market spikes down like we think it will on Monday look for AKAM to break this level. The $34.00 mark should be the next level of support. 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 $ 3.90/ 4.05

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 $ 3.90/ 4.05

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: 9.23

Comments:
04/07/12 update: BAC broke down from its $9.40-10.00 trading range. It also closed under its 300-dma. If the market corrects we can look for BAC to dip toward support near $8.50 and its 50-dma. BAC doesn't report earnings for another week and a half but rivals JPM and WFC will report earnings on Friday, April 13th and these reports could have an impact on BAC. I am not suggesting new positions at this time.

FYI: BAC 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 $ 1.05/ 1.06
(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 $ 1.05/ 1.06
(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: 33.68

Comments:
04/07/12 update: BMY only lost seven cents for the week. However, we're expecting a market decline on Monday. Look for BMY to find support in the $32.50-31.50 zone. I am not suggesting new positions at this time.

FYI: Earnings are coming up on April 26th.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.27/ 1.31

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: 37.40

Comments:
04/07/12 update: It was not a great week for BRCM. Shares gave up almost two dollars and closed under short-term support near $37.65. Now BRCM is testing technical support at its 50-dma. Odds are really good we could see BRCM spike down and hit our stop loss at $35.75 this week. I am not suggesting new positions at this time.

- Suggested Positions -
Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 2.30
symbol:BRCM1319A45 2013 JAN $45 call - current bid/ask $ 1.83/ 1.88

- or -

Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 4.50
symbol:BRCM1418A45 2014 JAN $45 call - current bid/ask $ 4.20/ 4.40

04/07/12 it doesn't look good for BRCM. Shares could hit our stop loss at $35.75 soon

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: 80.91

Comments:
04/07/12 update: BRK.B only lost about a quarter last week. Yet the action over the last couple of weeks looks like a potential top. There is a good chance we could see BRK.B testing the $78.00 region and its 100-dma. I am not suggesting new bullish positions at this time.

FYI: I can't find an earnings release date yet but it's normally late April or early May.

- 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/ 3.80

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: 2.93

Comments:
04/07/12 update: Ouch! It's been an ugly three weeks for BZH. The stock has fallen -20% during this time and this past week just saw a breakdown under what should have been support at the $3.00 level and its exponential 200-dma. The intraday low on Thursday was $2.90. Odds are really good with the market poised to spike lower on Monday that we will see BZH hit our stop loss at $2.75. 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 $ 0.90/ 1.10

04/07/12 odds are good we could see BZH hit our stop loss soon
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: 98.16

Comments:
04/07/12 update: CL bucked the market's trend and posted another weekly gain. Shares did pare its gains by Thursday. If the market does correct lower we could see another bullish entry point if CL dips toward support near $95.00.

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

- Suggested Positions -
MAR 16, 2012 - entry price on CL @ 95.48, option @ 2.92
symbol: CL1319A100 2013 JAN $100 call - current bid/ask $3.35/3.50

- or -

MAR 16, 2012 - entry price on CL @ 95.48, option @ 5.57
symbol: CL1418A100 2014 JAN $100 call - current bid/ask $5.80/6.90

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: 20.22

Comments:
04/07/12 update: CSCO management spoke at a conference on Tuesday and investors did not like what they heard. CSCO said that government spending would likely get worse before it gets better. That helped spark a sharp sell-off lower. CSCO is now testing support at its 50-dma and the $20 level. Odds are, with the market poised to drop, we could see CSCO spike down toward its 100-dma.

I am not suggesting new positions at this time.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $1.89/1.92

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: 33.42

Comments:
04/07/12 update: DOW trended lower this past week. Shares look poised to correct further. I would expect a drop toward the $32.00 area and possibly its 100-dma. 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 $ 2.53/ 2.60

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 2.43/ 2.59

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: 35.62

Comments:
04/07/12 update: The correction in EBAY has accelerated lower. The stock is now testing support near its simple 50-dma. The low on Thursday was $35.35. Last week I suggest a dip or a bounce near $35 as a new entry point. Now given the market's likely spike down this coming Monday we will want to adjust that and buy a dip or a bounce near $34.00 instead.

FYI: Earnings are coming up on April 18th.

- Suggested Positions -
Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 2.85
symbol: EBAY1319A40 2013 JAN $40 call - current bid/ask $ 2.26/ 2.30

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 4.60/ 4.90

04/07/12 EBAY could see a dip toward $34.00
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: 50.69

Comments:
04/07/12 update: It was a bit of a volatile week for EPD but the stock did manage a gain. I remain cautious on the stock. Shares could see a dip toward the $48.00 area if the market really corrects lower.

I am not suggesting new positions at this time.

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

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

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

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


FedEx Corp. - FDX - close: 90.39

Comments:
04/07/12 update: FDX drifted lower toward short-term support near $90.00. Unfortunately I don't think the $90 level is going to hold. Shares will likely drop toward the $87.50-87.00 area and odds are rising that we could see FDX hit our stop loss at $85.75. More conservative traders may want to raise their stop or just exit early. While aggressive traders may want to lower their stop under the simple 200-dma near $85.00 to give FDX room to maneuver. I am still concerned that FDX may have formed a bearish double top with the peaks in February and March so I'm leaning towards the early exit idea. 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 $ 4.05/ 4.15

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: 28.07

Comments:
04/07/12 update: INTC lost a nickel for the week. Naturally the options didn't move very much. We're expecting the market to open weak on Monday. INTC could see a correction back into the $27-26 area. I am not suggesting new positions at this time.

FYI: Earnings are coming up on April 17th.

- 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 $ 1.22/ 1.25

- or -

Feb 21, 2011 - entry price on INTC @ 27.34, option @ 2.11
symbol: INTC1418a30 2014 JAN $30 call - current bid/ask $ 2.33/ 2.44

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: 38.04

Comments:
04/07/12 update: KFT is essentially unchanged for the week and continues to churn in the $37.50-38.75 range. I suspect we could see KFT breakdown below the $37.50 level this week. There is potential support at $37.00 and then the $36.00 level. I am not suggesting new positions at this time.

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: 74.37

Comments:
04/07/12 update: KMB managed to post a gain for the week. More importantly it has broken out past key resistance near $74.00. Yet just like last time it managed to close over $74.00 the stock could reverse due to market-wide weakness. More conservative traders may want to raise their stop losses.

I am not suggesting new positions at this time.

FYI: Earnings are coming up on April 20th.

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 $ 2.45/ 2.55

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: 73.47

Comments:
04/07/12 update: After several weeks of gains KO finally hit some profit taking but it wasn't that bad. KO only fell about half a point. That could change this week if the market surges lower. Broken resistance in the $72-71 zone should be support so we can look for a new entry point there.

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 $ 4.10/ 4.30

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: 40.48

Comments:
04/07/12 update: LLY continues to slowly drift higher. Shares actually look poised to rally but that could get short circuited by a market drop on Monday. Look for support at the 50-dma and if that fails then potential support near $38.50.

FYI: 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 $ 1.23/ 1.24

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.74/ 1.89

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: 58.76

Comments:
04/07/12 update: LVS was showing relative strength this past week with traders buying the dip near its trend of higher lows. If the market were to cooperate we could see LVS testing resistance near $60 soon. Instead we're likely to see LVS dip toward the $56-54 area soon.

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 $ 7.00/ 7.10

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

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

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


3M Co. - MMM - close: 87.27

Comments:
04/07/12 update: It was not a good week for MMM. The stock gave up almost $2 and broke down under short-term support near $88 and its 50-dma. Odds are growing that we could see MMM correct toward the March lows or its exponential 200-dma. I am not suggesting new positions at this time.

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 $ 2.28/ 2.38

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: 50.00

Comments:
04/07/12 update: MSI has spent weeks consolidating above support at the $50.00 level. I strongly suspect we'll see MSI breakdown below this level on Monday. Readers can use a dip or a bounce near $48.00 as a new bullish entry point.

- Suggested Positions -
Feb 17, 2012 - entry price on MSI @ 49.35, option @ 2.27
symbol: MSI1319A55 2013 JAN $55 call - current bid/ask $ 1.89/ 2.04

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: 57.86

Comments:
04/07/12 update: After two weeks of failing to breakout past the $60 level NTES is starting to correct lower. Look for support near $55.00 and near the $52.50 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 $ 6.60/ 6.90

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: 67.19

Comments:
04/07/12 update: I really hope we don't regret not selling part of our position right here. QCOM has stalled twice in the $68.80-68.85 area in the last two weeks. A couple of weeks ago I suggested we take some profits and sell half if QCOM hit $69.50. Now the stock market looks poised to spike lower and QCOM will likely follow suit. We can look for QCOM to find support near $64 or its 50-dma.

I am not suggesting new positions at this time.

Currently our plan is to sell half of our position at $69.50 and then sell the remainder at $74.50.

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 $10.30/10.40

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: 42.07

Comments:
04/07/12 update: RAI was showing relative strength on Thursday with a +1.5% gain and a close above resistance near $42.00. If shares correct lower with the market we can look for potential support in the $41-40 zone. 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 $ 1.75/ 1.85

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:
04/07/12 update: In spite of a little volatility shares of TEVA closed unchanged for the week. I did read some positive analyst comments on the stock, suggesting TEVA is undervalued. Yet that won't stop the stock from correcting lower if the market declines. TEVA should have some support near its 100-dma around $43.00. I am not suggesting new positions at this time.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 1.54/ 1.58

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 3.55/ 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: 11.51

Comments:
04/07/12 update: Uh-oh! TIVO has broken one of its trend lines of higher lows. It's also flirting with a breakdown under its simple 50-dma. Odds are good we could see TIVO hit our stop loss at $10.75 if the market sell-off gets too sharp. More aggressive traders may want to place their stop loss under $10.50 instead.

I am not suggesting new positions at this time.

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 $ 1.34/ 1.47

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: 18.80

Comments:
04/07/12 update: Hmm... it's not looking good for our TSN trade. Shares are down a dollar from our entry point. The stock closed the week on support at its converging 200-dma and 300-dma. A breakdown here could spell trouble. There is potential support at $18.50 but there is a chance that TSN spikes down and hits our stop loss at $18.25.

I am not suggesting new positions at this time.

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 $ 1.05/ 1.15

- or -

Mar 12, 2011 - entry price on TSN @ 19.82, option @ 3.34
symbol: TSN1418A20 2014 JAN $20 call - current bid/ask $ 2.25/ 2.50

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


UnitedHealth Group - UNH - close: 59.01

Comments:
04/07/12 update: It was a quiet week for UNH. The stock drifted sideways as it digests the prior week's gains. Broken resistance near $56.00 should be support if the stock corrects lower.

- Suggested Positions -
Feb 15, 2012 - entry price on UNH @ 54.53, option @ 3.25
symbol: UNH1319A60 2013 JAN $60 call - current bid/ask $ 4.60/ 4.75

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 7.80/ 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: 37.66

Comments:
04/07/12 update: VZ's drop on Thursday looked worse than it really is. The stock started trading ex-dividend on Thursday, April 5th. The company has an upcoming quarterly dividend of 50 cents payable on April 30th. Shares only lost -23 cents on Thursday. The question now is will VZ hold technical support near $37.00 on Monday or will it breakdown? We have a stop loss at $36.75.

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 $ 0.90/ 0.93

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 1.78/ 1.85

04/05/12 VZ began trading ex-div for its upcoming April 30th dividend
03/10/12 VZ is starting to see some positive momentum higher
01/28/12 readers may want to consider an early exit immediately
01/24/12 VZ reported earnings and missed by a penny. Shares broke down on this news.

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

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


Exxon Mobil - XOM - close: 84.82

Comments:
04/07/12 update: XOM traded lower toward the bottom of its trading range near support at $84.00. I doubt this support level will hold on Monday. XOM could see a dip toward the next level of support at $82.00. I am not suggesting new positions at this time.

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 $ 2.78/ 2.84

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 4.05/ 4.25

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


Officemax Inc. - OMX - close: 5.35

Comments:
04/07/12 update: Our new trade on OMX didn't last very long. Shares broke out past key resistance near $6.00. Met our requirement to go long with a close over $6.20. Then shares immediately reversed lower into an eight-day sell-off. OMX broke support at its 50-dma and its 200-dma. The stock hit our stop loss at $5.49 on April 4th.

- Suggested Positions -
Mar 27, 2012 - entry price on OMX @ 6.26, option @ 0.75
symbol: OMX1319A7.5 2013 JAN $7.50 call - exit $0.50 (-33.3%)

- or -

Mar 27, 2012 - entry price on OMX @ 6.26, option @ 1.60
symbol: OMX1418A7 2014 JAN $7.00 call - exit $1.20 (-33.3%)

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



Watch

Financials & Games

by James Brown

Click here to email James Brown


New Watch List Entries

AIG - American Intl. Group

HAS - Hasbro

JPM - JPMorgan Chase


Active Watch List Candidates

ATVI - Activision Blizzard

F - Ford Motor Co.

JDSU - JDS Uniphase

LTD - Limited Brands

MCD - McDonald's Corp

URBN - Urban Outfitters


Dropped Watch List Entries

(none)



New Watch List Candidates:


American Intl. Group - AIG - close: 32.89

Company Info

Financial giant AIG has been showing plenty of relative strength. The stock broke out past key resistance near the $29-30 level recently. Now the stock looks a little overbought and due for a pullback. I am suggesting we launch small bullish positions on a dip at $29.00 with a stop loss at $26.75. Our long-term target is $39.00.

FYI: AIG is due to report earnings in early May.

Buy-the-Dip trigger: $29.00, stop $26.75

(Small Positions)

BUY the 2013 Jan $35 call (AIG1319A35)

- or -

BUY the 2014 Jan $35 call (AIG1418A35)

Chart of AIG:

Originally listed on the Watch List: 04/07/12


Hasbro Inc. - HAS - close: 37.00

Company Info

It looks like shares of this toy and game maker are building a bottom. You could argue that HAS formed an inverse head-and-shoulders pattern over the last five months. The stock doesn't move very fast so we'll need to be patient.

I am suggesting we launch bullish positions when HAS closes above $39.25. More aggressive traders might want to jump in early when HAS closes over $38.00 instead. Our long-term target is $44.75.

Breakout trigger: wait for a close over $39.25, stop 36.25

BUY the 2013 Jan $40 call (HAS1319A40)

- or -

buy the 2014 Jan $45 call (HAS1418A45)

Chart of HAS:

Originally listed on the Watch List: 04/07/12


JPMorgan Chase & Co - JPM - close: 44.34

Company Info

JPM is considered the "best in breed" among the major banks. The stock has been a consistent winner since its lows last November. Yet now the stock is starting to correct lower. We want to be ready to take advantage of any correction. Broken resistance near $40.00 should offer support.

I am suggesting we buy calls on a dpi at $40.25 with a stop loss at $37.25. Our long-term target is $49.75.

Investors should note that JPM is due to report earnings on Friday, April 13th, before the opening bell. More conservative traders might want to wait until after the earnings report before launching positions even if JPM happens to hit our buy-the-dip trigger prior to the earnings report.

Buy-the-Dip trigger: $40.25, stop loss 37.25

BUY the 2013 Jan $45 call (JPM1319A45)

- or -

BUY the 2014 Jan $45 call (JPM1418A45)

Chart of JPM:

Originally listed on the Watch List: 04/07/12


Active Watch List Candidates:



Activision Blizzard, Inc. - ATVI - close: 12.69

Comments:
04/07/12 update: ATVI has spent the last couple of weeks churning sideways in the $12.50-13.00 range. We're still waiting for a breakout higher.

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)

- or -

BUY the 2014 Jan $15 call (ATVI1418A15)

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


Ford Motor Co. - F - close: $12.47

Comments:
04/07/12 update: U.S. auto sales dipped to a 14.4 million unit pace in March but that's still well above last year's levels. It will be interesting to see if rising gasoline prices have any impact on vehicle sales going forward.

Right now Ford continues to churn inside the $12.00-13.00 zone. 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


JDS Uniphase - JDSU - close: 13.49

Comments:
04/07/12 update: Ouch! JDSU lost a dollar last week. The correction lower began to accelerate in the last couple of days. The breakdown under the simple 50-dma is short-term bearish. Currently we're still on the sidelines waiting for a breakout past resistance.

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)

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


Limited Brands, Inc. - LTD - close: 48.25

Comments:
04/07/12 update: LTD managed to eke out a 25-cent gain this past week. The trend of higher lows remains intact for now. I still don't want to chase it. 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: 98.62

Comments:
04/07/12 update: It was a bit of a volatile week for MCD. The stock was removed from the "conviction buy" list at Goldman Sachs, which caused some selling pressure. You could argue that MCD has produced a new lower high this past week. I am sticking to our game plan and waiting for a dip to $93.00 (at this point that's near the rising 200-dma).

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


Urban Outfitters Inc. - URBN - close: 30.03

Comments:
04/07/12 update: In a 10-K filing last week URBN offered some positive guidance. Shares also garnered some positive analyst comments. The stock vaulted higher above resistance at $30.00 and spiked to $31.36 on Tuesday. Yet the rally faded and URBN closed at $30.22 on Tuesday. Our plan is to wait for URBN to close above $30.50 and then buy call LEAPS the next day. URBN's ability to close above $30.00 and stay there the last few days is bullish. The stocks' recent strength will definitely be tested on Monday with the market poised to spike lower.

I don't see any changes from my prior comments. 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)

04/07/12 URBN broke out above resistance at $30.00 this past week but it has yet to close over our trigger at $30.50.

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