Option Investor
Newsletter

Daily Newsletter, Sunday, 4/15/2012

Table of Contents

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

Leaps Trader Commentary

Two Down Weeks in a Row

by James Brown

Click here to email James Brown

Concerns over Spain plagued the stock market for the second week in a row. As expected the market plunged on Monday in reaction to the April 6th U.S. jobs report. The week started with back to back triple-digit declines in the Dow Jones Industrial Average. U.S. economic data was way too bland to have much impact on the market last week. A worse than expected Chinese GDP number helped fuel fears of a slowdown. Corporate earnings are off to a good start but traders were selling the news in spite of better than expected results. By Friday's closing bell the NASDAQ-100 index broke its 14-week winning streak and the S&P 500 delivered its worst week of 2012 with a -1.99% loss.

Looking at U.S. data the consumer sentiment numbers for April dipped from 76.2 to 75.7. This was slightly worse than expected. The Consumer Price Index (CPI) look at inflation came in at +0.3% in March, down from +0.4% in February. This was generally in-line with estimates. The core-CPI, which doesn't count food or fuel, inched up +0.2%. The weekly jobless claims was a disappointment with a rise to 380,000 last week, up from 367K the week before. This is a ten-week high for jobless claims. The Federal Reserve's Beige Book report suggested economic activity continues to grow at a moderate pace but the news had little impact on the market. Speaking of the Fed, Vice Chairman Janet Yellen helped fuel the market's big bounce on Thursday with her comments that the Fed might need to keep rates extremely low into late 2015 instead of the current plan for late 2014.

The market wasn't moving on U.S. data. The focus was overseas. Spain remained in the spotlight with Italy just off stage ready to jump in. Bond yields for both Spanish and Italian bonds have been surging. The yield on Spain's 10-year bond hit 5.99% this past week while Italy's hit 5.67%. These are the highest levels since last December, just before the ECB launched their LTRO 1% money program. The real all-hands-on-deck warning signal is a 7% yield but the market is showing rising lack of confidence in Spain and its ability to get its budget under control.

Seriously complicating matters for Spain was a headline that Spanish banks saw their borrowing from the ECB surge +50% in March, up from February's levels. Spanish officials are calling for the ECB to start buying Spanish bonds again to push bond yields lower. That's what the LTRO money was supposed to do. The idea was the ECB would provide cheap 1% money to European banks and they would in turn buy higher-yielding Spanish bond (as well as Ireland, Portugal, etc.) and keep rates low(er). Spain will be holding another bond auction this coming Thursday and the financial world will be focused on it to see how high rates rise at the auction and if there is enough demand to complete the auction.

The EU desperately wants to avoid Spain turning into the next Greek meltdown. Greece is a small country of 11 million people with a very small economy. Spain is several times the size of Greece and what many would consider too big to bail out. There were reports that the EU economic team was planning to visit Spain this weekend. Obviously Eurozone officials are concerned. Suddenly there is speculation rising with "what if" scenarios of how or why Spain might want or need to leave the Eurozone.

Spain is getting all the attention now but Italy is next in line and there is an Italian bond auction of short-term three and five month bills on Wednesday. The Spanish and Italian stock markets plunged -5% this week. Overall European stocks have seen their longest streak of weekly losses since August 2011. Investors are desperately seeking safety and money is flowing into German bonds with yields on the 2 year, 5 year, and 10 year German bonds hitting all-time record lows.

It wasn't all about Europe. China was making headlines as well. Economists continue to worry that inflation in China might be rising too fast, which could hamper the country's ability to stimulate its economy again. The most recent CPI data rose +3.6% year over year, which was higher than expected. Meanwhile China released their Q1 GDP numbers. Analysts were expecting +8.5% growth but whispers numbers had reached +9.0% just before the report. The communist government said Q1 GDP game in at +8.1%. This disappointment helped fuel the stock market sell-off on Friday and rekindled fears that the country was seeing a hard landing. China is the biggest consumer of commodities and commodity prices spiked lower on this news.

Major Indices:

Monday and Tuesday last week were pretty ugly for the U.S. market. A drop to 1375 was a -3% correction but the S&P 500 index plunged to 1360 instead. There was a sharp two-day bounce midweek but it failed near prior support and now new resistance near 1390. The market appears to be in correction mode and the S&P 500 looks poised to drop toward the next level of major support in the 1350-1340 zone. The key level there is 1340. If the 1340 level fails then we're probably headed for 1300, which would be a -8.5% correction from the highs near 1420.

Daily chart of the S&P 500 index:

60-minute chart of the S&P 500 index:

The NASDAQ composite fell -2.2% for the week. Traders bought the dip near its 50-dma and the 3000 level (actual low was 2987) but the bounce has reversed. I cautioned readers a week ago that the prior two weeks was looking like a top. Odds are growing that we will see the NASDAQ break support near the 3000 level and its 50-dma. If that happens I would expect a drop toward 2900 and the 38.2% Fibonacci retracement of the rally.

Daily chart of the NASDAQ Composite index:

Weekly chart of the NASDAQ Composite index:

The small caps tend to be more volatile than the large caps and the Russell 2000 index gave up -2.6% last week. There was a sharp plunge toward the simple 100-dma and the $RUT ended Tuesday below its March low. That counts as a new lower low. There is potential support in the 780 area but I suspect we will see the $RUT dip toward its 200-dma in the 760 area. If the small caps happen to bounce then the 820 area and its 50-dma should be new overhead resistance.

Daily chart of the Russell 2000 index

The Dow Jones Transportation Average has broken its trend of higher lows. While the group did see a sharp midweek bounce it failed to break the short-term trend of lower highs. You could argue the $TRAN is in a sideways 5000-5400 trading range. A breakdown under the 5000 area would look pretty bearish. With Friday's reversal lower I am expecting a drop toward the 5050-5000 area.

chart of the Transportation Average

We are still watching Apple Inc. (AAPL). The stock may have finally topped. Shares hit a new all-time high on Tuesday morning only to reverse lower. The stock is down four days in a row. Plaguing shares of AAPL was news that the Dept. of Justice was going forward with its anti-trust suit against AAPL for ebook price fixing. Another legal battle is shaping up in Germany. A German court claims that AAPL violated one of Motorola's push technology patents that alerts users to new emails and messages on Apple's mobile devices. This could spark a series of legal losses for Apple in other countries where similar cases are being heard. It just so happens that one of AAPL's biggest rivals, Google (GOOG), is in the process of buying Motorola Mobility Holdings (MMI).

Apple Inc. is due to report earnings on April 24th after the closing bell. What are the odds that investors decide to sell the news and lock in a gain after a +50% rally in 2012? I suspect that the profit taking may have already started. As an aside, there was a chart circulating the Internet this past week showing that AAPL's market cap has risen so high (almost $600 billion) that by itself AAPL is worth more than all the public companies in Greece, Portugal, and Spain combined.

Daily chart of the Apple Inc. (AAPL)

Weekly chart of the Apple Inc. (AAPL)

The major economic reports this week are the Empire State survey on Monday and the Philly Fed survey on Thursday. These will be overshadowed by the Spanish bond auction on Thursday. The real event for the week is Q1 earnings season, which hits full speed. There are several big cap tech stocks and big cap financial stocks reporting corporate earnings. Thus far the high profile names that have already reported have beaten expectations but traders sold the news. That trend doesn't bode well for this week.

- Monday, April 16 -
Retail Sales data for March
New York Empire manufacturing survey
Business Inventories

- Tuesday, April 17 -
Housing Starts and Building Permits
Industrial Production and Capacity Utilization

- Wednesday, April 18 -
(nothing significant)

- Thursday, April 19 -
Weekly Initial Jobless Claims
existing home sales
Philly Fed survey
Spanish bond auction

- Friday, April 20 -
(nothing significant)

Upcoming events:

April 22nd - 1st round of Presidential elections in France
April 24th FOMC meeting
May 6th - Greece national elections
May 6th, - 2nd round of French elections

The Week Ahead:

Looking ahead we could see some movement in oil prices. Gasoline prices in the U.S. have been retreating lower but that could change if we don't get good news out of Iran. The country is meeting with five members of the U.N. Security Council and Germany in Turkey this weekend. The West wants Iran to stop enriching uranium and halt its nuclear weapons program. Iran denies it's working on nuclear weapons and is focusing on nuclear power for the future. The U.S. has warned Iran that this is their last chance for a diplomatic solution before the situation escalates. If we don't see positive headlines from this weekend's meeting then we're going to hear a lot more about a possible military strike against Iran's nuclear facilities. If the U.S. or Israel does pull the trigger on a strike then Iran has promised to shut down the Straits of Hormuz, which sees nearly one third of all global oil traffic. The price of oil would skyrocket and the Dow Industrial Average could see a -1,000 point decline as some have speculated. The U.S. already has a major deployment of naval ships in the area to prevent Iran from succeeding on its threats to halt oil traffic.

In the meantime Europe will remain in focus. The region does not have a solution for Spain's problems. The impact of the ECB's LTRO program has already faded. The country of Spain is seeing rising tensions between its national government and regional governments and the market is worried that the Spanish banking system could start to fracture. Rising bond yields puts increasing pressure on Spain's budget problems. The country's upcoming bond auction will be closely watched on Thursday.

We're also going to start hearing about elections in France and Greece. France has two rounds of presidential elections. Round one is April 22nd and round two is May 6th. If France gets a new leader there could be a reaction in the stock market since we don't know what stance any new leadership might take toward the toxic debt problems of Greece, Spain, Portugal, etc. Speaking of Greece the country will hold national elections on May 6th. If Greece gets new leadership will the new leaders up hold the country's responsibilities, burdens, and budgets promised by the current government? Meanwhile we will likely hear more downgrades on European banks as Moody's reviews a host of European banks over the next several weeks.

Last week was a rough one for the U.S. markets. Bullish sentiment plunged and U.S. equity funds saw their biggest outflows of the year. Has the sell-in-May phenomenon already started? Historically April is one of the strongest months of the year. The third week of April (this coming week) tends to be the strongest week of the month. Is this year going to break with seasonal trends? Analysts expectations for Q1 earnings growth is pretty low. There is a decent chance for corporations to beat expectations but the key will be management's guidance. If we hear more and more corporations guiding lower it could be the death knell for this rally.

It's going to be a very, very busy week for earnings announcement and it will set the tone for the rest of earnings season. I also suspect that this week will either accelerate the market's current correction lower or it will fuel a bounce back toward the recent highs. Yet even if stocks bounce I would hesitate to buy the rebound. A bounce back to the highs probably sets the market up for a bearish double top pattern.

Big picture the market looks tired. Earnings growth is slowing. Expectations for more QE from the Fed are fading. The Fed might announce something at the late April meeting but analysts like those at Goldman Sachs believe the Fed will wait until its next meeting, which is closer to the end of Operation Twist which stops at the end of June. At the very least we have several more weeks of guessing by market participants on if the Fed will launch any more QE this year. The situation in Europe is heating up again. A large chunk of the Eurozone is facing a potential recession. That's going to impact economic growth in China, which is already seeing a slowdown in growth. Meanwhile we have rising tensions with Iran.

Do I think the market has peaked for the year? No, but I do suspect the next couple of months could be rough if you're bullish. It's a good time to make a list of high quality companies we want to buy LEAPS on and then wait for a -10% to -20% pullback in their stock price as a potential entry point. I would not be in a rush to launch new long-term bullish LEAPS positions. We will get a better chance to buy stocks cheaper down the road.

- James


Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

Looking at the weekly scoreboard for the second quarter so far it's Bears: 2, Bulls: 0. Stocks declined again with growing concerns over Spain evident in the country's rising bond yields. A slower than expected Q1 GDP report out of China didn't inspire any confidence either. Now the U.S. indices are starting to break support levels.

We want to be defensive here. Readers will want to double check their stop loss placement. I am suggesting we exit our FDX trade on Monday morning. We also want to take profits and exit half of our position in the LVS and QCOM trades on Monday morning.

I have updated stop losses on: LVS.

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 Correction

by James Brown

Click here to email James Brown

Editor's Note:

I have cautioned readers over the last couple of weeks that stocks looked like they might pull back in April. The correction certainly looks like it has begun. Now we'll have to see if a full week of Q1 earnings announcements will produce a bounce or accelerate the decline.

The market's are facing a number of headwinds mentioned in tonight's market commentary. Big picture it looks like stocks could struggle over the next couple of months. Thus I am hesitant to launch new long-term bullish trades. On the other hand this long over due market correction will provide us a new entry point.

I am not adding any new trades tonight. However, tonight we have added four new candidates to the watch list. In addition to our watch list here's a list of what's on my radar screen as possible candidates should we see an entry point:

On my radar: CI, MCP, SCHW, HSY, M, SHAW, YUM, V, GLW, BIDU, BBBY, MAKO, SYK, JBHT


Play Updates

Poised for Further Weakness

by James Brown

Click here to email James Brown

Editor's Note:

2012's Q1 earnings season has begun. So far most of the high-profile names have beaten estimates but that has not stopped investors from selling the news. This reaction doesn't bode well for earnings season, which is about to hit full speed this week.

We can expect more market volatility and more individual stock volatility. Readers may want to raise their stop loss or scale back positions or consider some other type of hedge (maybe puts on the major indices?).

I am suggesting we exit our FDX play on Monday morning. Plus we want to take profits and sell half of our LVS and QCOM trades on Monday morning to lock in a gain.


Closed Plays


BZH and TSN were stopped out.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 30.75

Comments:
04/14/12 update: I want to caution readers on ADM. The stock didn't lose that much but the action this past week was bearish. Shares gapped down on Monday and churned sideways the rest of the week with traders selling into any strength. I strongly suspect we will see ADM dip toward potential support at $30.00 and possibly the simple 200-dma near $29.00. Currently we have a stop loss at $28.40.

I am not suggesting new positions at this time. ADM is not expected to report earnings until early May but the date is not confirmed.

Earlier Comments:
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 $ 1.22/ 1.28

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: 94.65

Comments:
04/14/12 update: AGN's bounce on Friday erased a lot of its losses for the week. The bounce was likely fueled by positive comments from Jim Cramer on MadMoney Thursday night.

The larger trend is up but AGN could easily dip toward what should be support near $90.00 if the market corrects lower. I am not suggesting new positions at this time.

NOTE: AGN is due to report earnings on May 2nd.

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/ 5.10

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: 36.76

Comments:
04/14/12 update: AKAM bucked the market's trend by posting a gain for the week. Shares dipped to round-number support near $35.00 on Tuesday. The stock clawed its way back to positive territory and closed back above all of its key moving averages by Friday's closing bell. The relative strength is encouraging but I would still expect AKAM to decline if the market corrects lower.

We have a stop loss at $31.75. More conservative traders may want to raise their stop. I am not suggesting new positions at this time.

NOTE: AKAM is due to report earnings on April 25th.

- 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: 8.68

Comments:
04/14/12 update: It was a volatile week for BAC and shares ended the week with a -5.9% loss. Rivals JPM and WFC both beat earnings estimates on Friday but traders sold the news. That doesn't bode well for BAC, which reports earnings on April 19th (Thursday morning). If you look at trading this past week BAC has found support twice at the simple 50-dma. Yet if the market drops again I am expecting a potential plunge toward the $8.00 area (another -7.5%). I am not suggesting new positions at this time.

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 $ 0.88/ 0.89
(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 $ 0.88/ 0.89
(no stop loss on this position)

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

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


Bristol Meyers Squibb - BMY - close: 32.54

Comments:
04/14/12 update: Ouch! It was a rough week for BMY. The stock was down every day and is now testing technical support at its rising 150-dma. A breakdown here probably leads to the simple 200-dma near $31.60. We have a stop loss at $30.90. More aggressive traders may want to keep their stop under the $30.00 level but if BMY breaks the 200-dma we want to get out. I am not suggesting new positions at this time.

Note: 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 $ 0.99/ 1.01

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: 36.71

Comments:
04/14/12 update: Readers will want to seriously consider an early exit from our BRCM trade now. Shares did bounce off the $36.00 level but the bounce reversed under resistance near $38.00. I strongly suspect we will see BRCM continue lower and hit our stop loss at $35.75 but I've been wrong before. The third week of April is normally a bullish one for stocks. That season trend will be put to the test this week. I am not suggesting new positions at this time.

Note: BRCM is due to report earnings on May 1st.

- Suggested Positions -
Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 2.30
symbol:BRCM1319A45 2013 JAN $45 call - current bid/ask $ 1.73/ 1.76

- or -

Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 4.50
symbol:BRCM1418A45 2014 JAN $45 call - current bid/ask $ 3.95/ 4.40

04/14/12 trading action looks bearish. readers may want to exit early immediately.
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: 78.82

Comments:
04/14/12 update: Warning! Last week's breakdown under support near $80.00 is very bearish. Furthermore the bounce failed near $80 and its 50-dma. This stock should have some support near $78.00 but if the market continues lower we will most likely see BRK.B hit our stop loss at $77.25. More conservative traders may want to abandon ship right now. 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 $ 3.10/ 3.25

04/14/12 The breakdown under $80.00 is bearish. Readers may want to exit early right now to cut our losses.

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


Colgate-Palmolive Co. - CL - close: 97.21

Comments:
04/14/12 update: CL has seen a relatively light correction lower with traders buying the dip near $96 on Tuesday. Of course if the market continues lower CL will likely follow. I would look for support in the $95-94 area. I'm not suggesting new positions at this time but we'll be looking for a new entry point on a dip if we see one.

Note: CL is due to report earnings on April 26th.

- 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 $5.15/6.45

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: 19.85

Comments:
04/14/12 update: I cautioned readers a week ago that CSCO would likely spike down toward its 100-dma. It didn't quite get that low but the trading last week was definitely bearish. Furthermore the oversold bounce has reversed near technical resistance at its 50-dma. That doesn't bode well for this week. I am now expecting a correction lower toward the $19.00 area, which would be a new lower low.

More conservative traders will want to seriously consider an early exit now and avoid a loss. I am not suggesting new positions at this time.

Note: CSCO is due to report earnings on May 9th.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $1.76/1.79

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: 33.20

Comments:
04/14/12 update: It was a volatile week for DOW. I warned you that this stock would likely drop toward $32 and its 100-dma. Sure enough that's what we saw. Fortunately DOW produced a strong oversold bounce but don't be fooled by it. DOW has now created a new lower low. This could portend a drop toward the $30.00 area, which should be psychological support. I'm not suggesting new positions at this time.

Note: We don't have a confirmed earnings date for DOW but it will probably report in the last week of April.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 2.58/ 2.63

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 2.40/ 2.61

04/14/12 DOW produced a new lower low, last week. The correction may not be over yet.
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: 36.12

Comments:
04/14/12 update: Investors bought the dip near EBAY's simple 50-dma more than once last week. However, if the market continues to drop I would expect this technical support to break. Complicating matters is EBAY's earnings report on April 18th. The company announces earnings after the closing bell on Wednesday. If there is a post-earnings sell-off I'm looking for support near $34.00. We have a stop loss at $33.45 but more aggressive traders may want to put their stop under the 100-dma near $33.00 or the 200-dma near $32.30. I am not suggesting new positions at this time.

- Suggested Positions -
Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 2.85
symbol: EBAY1319A40 2013 JAN $40 call - current bid/ask $ 2.62/ 2.68

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 5.05/ 5.30

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: 50.42

Comments:
04/14/12 update: EPD's correction of lower highs and lower lows is now eight weeks old. Shares dipped to their simple 100-dma on Tuesday before bouncing back. Unfortunately if the market continues to drop we could see EPD accelerate lower and fall into the $48-47 area. Conservative traders may want to take profits now and exit early.

I am not suggesting new positions at this time.

Note: EPD is due to report earnings on May 2nd.

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 $ 2.40/ 2.60

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: 88.03

Comments:
04/14/12 update: The situation looks grim for shares of FDX. The breakdown under support near $90 is bearish. The oversold bounce has already failed at $90, which is new resistance. Odds are we will see FDX drop to the next support level near $85.00. More aggressive traders may want to adjust their stop loss so it's somewhere in the $84.50-84.00 zone and give FDX room to tag the $85 area and bounce. I am suggesting we actually exit immediately on Monday morning to limit our losses and free up cash.

- Suggested Positions -
Jan 11, 2011 - entry price on FDX @ 88.08, option @ 5.52
symbol: FDX1319A100 2013 JAN $100 call - current bid/ask $ 3.45/ 3.60

04/14/12 prepare to exit positions on Monday morning
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: 28.09

Comments:
04/14/12 update: INTC managed to eke out a very small gain for the week. I suspect INTC will churn sideways until its earnings report due out April 17th (Tues) after the closing bell. Wall Street is expecting a profit of 53 cents a share.

The stock has short-term support at the 50-dma. If this level fails then the next level of support is the $26.00 area. I am not suggesting new positions at this time.

- 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 $ 1.31/ 1.34

- or -

Feb 21, 2011 - entry price on INTC @ 27.34, option @ 2.11
symbol: INTC1418a30 2014 JAN $30 call - current bid/ask $ 2.42/ 2.55

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: 37.35

Comments:
04/14/12 update: It was a rough week for KFT. The stock broke down under what should have been support near $37.00. Shares did see a two-day bounce on Thursday and Friday but KFT has now created an intermediate lower low. If the correction lower continues KFT should find technical support near its 200-dma and price support near $36.00. I am not suggesting new positions at this time.

Note: KFT is due to report earnings on May 3rd.

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 $ 3.45/ 3.60

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: 74.35

Comments:
04/14/12 update: KMB essentially closed the week unchanged but that in itself was a show of relative strength. A quick look at a chart and you can see that the rally stalled right at its early April highs. If KMB were to turn south it should see some support in the $72-70 zone.

I am not suggesting new positions at this time.

Note; KMB is due to report earnings on April 20th, before the opening bell.

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 $ 2.55/ 2.70

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: 71.94

Comments:
04/14/12 update: KO spent last week churning sideways in the $72.00 area. If shares correct there should be additional support near $70.00. The stock should see some movement following its earnings report due out Tuesday morning, before the opening bell (April 17th). I am not suggesting new positions at this time.

- 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 $ 3.50/ 3.75

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: 39.18

Comments:
04/14/12 update: It was a rough week for LLY. A week ago LLY looked poised to breakout higher. Unfortunately the stock reversed lower and closed on its lows for the week. Shares look headed for their February or March lows in the $38.50 area and its simple 200-dma. I am not suggesting new positions at this time.

Note: LLY is due to report earnings 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 $ 1.18/ 1.23

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.56/ 1.76

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: 60.76

Comments:
04/14/12 update: LVS continues to show relative strength and broke out past round-number resistance at the $60.00 level last week. While the trend is up for LVS, I am worried about the broader market. Therefore, I am suggesting we go ahead and sell half of our position on Monday morning to lock in a partial gain.

We'll keep our final exit target for the remaining position at $69.00 and we'll raise our stop loss up to $49.75. More conservative traders may want to use a stop loss closer to the simple 50-dma.

I am not suggesting new positions at this time.

I can't find an earnings date yet but LVS will probably report in the last week of April or the first week of May.

Earlier Comments:
The Point & Figure chart is bullish and has seen its target rise from $69 to $92. 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 $ 8.30/ 8.45

04/14/12 Prepare to sell half on Monday morning at the open. Current bid on the 2013 Jan $60 call is $8.30 (+88.6%).
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: 49.75
Play Entered on: 02/06/12

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


3M Co. - MMM - close: 85.69

Comments:
04/14/12 update: Hmm... the situation does not look promising for MMM. The stock plunged past technical support at its 100-dma and exponential 200-dma on Tuesday. The big bounce back has already started to reverse. I strongly suspect we will see MMM drip toward $84.00 and its simple 200-dma near $83.65. Since we have a stop loss at $83.75 we are at risk of getting stopped out.

Cautious investors will want to seriously consider an early exit right now. We are going to hold on since the third week of April is normally bullish for stocks. I am not suggesting new positions at this time.

Note: 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 $ 2.17/ 2.25

04/14/12 Readers will want to seriously consider an early exit right now. The short-term trend for MMM is down.
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: 48.40

Comments:
04/14/12 update: MSI lost $1.60 for the week. More importantly the stock has broken down under short-term support near $50.00 and its 50-dma. I cautioned readers that the $48.00 level should be support. Now it looks like MSI will definitely test the $48.00 level soon. We have a stop loss at $45.75 but more conservative traders may want to up their stop loss closer toward the $47.50 area instead.

Nimble traders could use a bounce off the $48.00 level as a new bullish entry point I am wary of the broader market so readers may want to wait on initiating new positions.

Note: earnings are expected on April 25th.

- Suggested Positions -
Feb 17, 2012 - entry price on MSI @ 49.35, option @ 2.27
symbol: MSI1319A55 2013 JAN $55 call - current bid/ask $ 1.49/ 1.63

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: 56.98

Comments:
04/14/12 update: Profit taking in NTES was relatively mild last week. The short-term trend is still down. You could argue that NTES is building a bull-flag pattern. Shares should have short-term support near $55.00.

I am not suggesting new positions at this time.

Earnings are not expected until May.

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 $ 6.10/ 6.70

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

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

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


QUALCOMM Inc. - QCOM - close: 66.67

Comments:
04/14/12 update: Traders bought the dip in QCOM at technical support near its rising 30-dma again. The market's big bounce on Thursday pushed QCOM toward its recent highs. Unfortunately shares underperformed on Friday with a -2.4% decline. There is a good chance that QCOM churns sideways until its earnings report this week. If not, then we can look for a correction into the $63-62 area.

QCOM is due to report earnings on Wednesday, April 18th after the closing bell. Wall Street is expecting a profit of 95 cents a share. Will the earnings news fuel a breakout past $70 or will it spark more profit taking? We don't know and I don't want to wait around. A few weeks ago I suggested we sell half if QCOM hits $69.50. The stock has been unable to rally past $69.00 since we set that exit target. Tonight I am suggesting adjust that plan and sell half of our QCOM calls at the open on Monday morning (April 16) to lock in a gain. We will adjust our final exit for the remaining half to $79.00.

I am not suggesting new positions at this time.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $10.05/10.15

04/14/12 scrap plans to take profits at $69.50. Instead sell half of our calls at the open on Monday morning. current bid is $10.05 (+105%). We will adjust our final target for the remaining position to $79.00.
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: $79.00
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: 41.60

Comments:
04/14/12 update: RAI is still churning sideways under resistance near $42.00 but it seems to be doing so with a bullish trend of higher lows. RAI is not immune to the market's ups and downs but its high dividend yield (5.4%) could make it a safe haven play if stocks see a prolonged decline. I am not suggesting new positions at this time.

- Suggested Positions -
Nov 18, 2011 - entry price on RAI @ 40.02, option @ 2.00
symbol: RAI1319A42.5 2013 JAN $42.50 call - current bid/ask $ 1.60/ 1.75

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: 44.19

Comments:
04/14/12 update: TEVA spent last week slowly drifting lower and reaffirming its 300-dma as overhead resistance. Shares should see support at its 100-dma near $43.00 but I wouldn't count on it. Odds are if the market really starts to drop we'll see TEVA dip toward $42.00 and its simple 200-dma. I am not suggesting new positions at this time.

Note: earnings are not due until May.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 1.32/ 1.38

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 3.05/ 3.60

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: 11.30

Comments:
04/14/12 update: I remain concerned with TIVO. Shares did not recover after breaking the multi-week trend of higher lows. Instead TIVO dipped to support near $11.00. If the market continues to drop then odds are pretty high we will see TIVO breakdown under $11.00 and hit our stop loss at $10.75. More aggressive traders may want to give TIVO more room to maneuver and place their stop loss under $10.00 instead. The newsletter is going to keep our stop at $10.75.

I am not suggesting new positions at this time.

Note: earnings are not due until late May.

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 $ 1.29/ 1.42

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


UnitedHealth Group - UNH - close: 58.05

Comments:
04/14/12 update: UNH lost just under a dollar for the week. Shares were chopping sideways on either side of the $58.00 level. The stock will likely see more volatility this week after the company reports earnings on April 19th, before the opening bell (Thursday morning). If shares see any weakness look for support near $56 or $54. I am not suggesting new positions at this time.

- Suggested Positions -
Feb 15, 2012 - entry price on UNH @ 54.53, option @ 3.25
symbol: UNH1319A60 2013 JAN $60 call - current bid/ask $ 4.40/ 4.55

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 7.50/ 8.00

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: 37.26

Comments:
04/14/12 update: VZ ended a volatile week with a 40-cent loss. The stock broke support at $37.50 and temporarily broke technical support at its 200-dma and 300-dma during last week's declines. VZ came within 5 cents of hitting our stop loss at $36.75. If the market continues lower odds are pretty good we will see VZ hit our stop. Plus, there is always the chance for some post-earnings volatility. VZ is due to report earnings on April 19th, before the opening bell (Thursday).

I am not suggesting new positions at this time.

- Suggested Positions -
Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.17
symbol: VZ1319A40 2013 JAN $40 call - current bid/ask $ 0.87/ 0.91

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 1.67/ 1.81

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: 82.95

Comments:
04/14/12 update: Energy stocks have not been performing well. The OIX oil index is down six out of the last seven weeks. XOM has fared better than many of its peers during that time but last week XOM did break support near $84 and its 100-dma. This is also a breakdown from its three-month trading range. Traders did buy the dip at short-term support near $82.00 but I suspect we will see XOM test the $80.00 level soon if the market continues to fall. We have a stop loss at $79.40.

I am not suggesting new positions at this time.

Note: 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 $ 2.36/ 2.43

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 3.50/ 3.75

04/14/12 XOM has broken down from its 3-month trading range.
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


Beazer Homes - BZH - close: 2.90

Comments:
04/14/12 update: It has been a very rough few weeks for BZH. The stock's plunge continued on Monday and Tuesday. BZH dropped to $2.63 on Tuesday afternoon and hit our stop loss at $2.75 along the way. Shares saw a big oversold bounce the very next day but that bounce was struggling on Friday. It's rough trading a stock that drops -25% in three weeks. I cautioned readers last week that odds were high we could see BZH hit our stop loss.

- Suggested Positions -

(stock position)
OCT 28, 2011 - entry price on BZH @ $2.12, exit $2.75 (+29.7%)

(option position)
OCT 28, 2011 - entry price on BZH @ 2.12, option @ 0.70
symbol: BZH1319A2.5 2013 JAN $2.50 call - exit $0.80 (+14.2%)

04/10/12 stopped out at $2.75
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

Chart of BZH:

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


Tyson Foods, Inc. - TSN - close: 17.93

Comments:
04/14/12 update: The sell-off in TSN continued. Shares broke technical support at the 200-dma and 300-dma on Monday and hit our stop loss on Tuesday at $18.25. TSN has continued to sink after hitting our stop.

- Suggested Positions -
Mar 12, 2011 - entry price on TSN @ 19.82, option @ 1.80
symbol: TSN1319A20 2013 JAN $20 call - exit $0.85 (-52.7%)

- or -

Mar 12, 2011 - entry price on TSN @ 19.82, option @ 3.34
symbol: TSN1418A20 2014 JAN $20 call - exit $1.90 (-43.1%)

04/10/12 stopped out at $18.25

Chart of TSN:

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



Watch

Financials, Tech, & Gold

by James Brown

Click here to email James Brown


New Watch List Entries

AXP - American Express

CREE - Cree, Inc.

GLD - Gold ETF

MSFT - Microsoft Corp.


Active Watch List Candidates

ATVI - Activision Blizzard

AIG - American Intl. Group

HAS - Hasbro

JDSU - JDS Uniphase

JPM - JPMorgan Chase

LTD - Limited Brands

MCD - McDonald's Corp

URBN - Urban Outfitters


Dropped Watch List Entries

Ford was removed from the watch list.



New Watch List Candidates:


American Express - AXP - close: 57.28

Company Info

The market looks poised to correct lower and AXP has created what looks like a top back in late March. Shares have been slowly drifting lower. I suspect the pullback will accelerate but we want to be ready to buy the dip.

I am suggesting small bullish positions if AXP dips to $52.50. We'll use a stop loss at $49.40. Our long-term target is $64.00.

Buy-the-Dip trigger: $52.50 (stop $49.40) (small positions)

BUY the 2013 Jan $55 call (AXP1319A55)

- or -

BUY the 2014 Jan $60 call (AXP1418A60)

Chart of AXP:

Originally listed on the Watch List: 04/14/12


Cree, Inc. - CREE - close: 31.55

Company Info

We've had our eye on CREE for several weeks. The stock has slowly been chewing its way through overhead resistance. Now it's close to breaking out past resistance in the $33-34 zone. I am suggesting we launch small bullish positions if CREE can close over $34.50. We'll buy calls the next morning with a stop loss at $29.45. Our long-term target is $44.50.

Breakout trigger: a close over $34.50 (small positions)

BUY the 2013 Jan $40 call (CREE1319A40)

Chart of CREE:

Originally listed on the Watch List: 04/14/12


Gold ETF - GLD - close: 160.85

Company Info

I have mentioned gold and the GLD in the market commentary recently. The GLD appears to be forming an inverse head-and-shoulders pattern. This also happens to line up with the long-term trend line of higher lows.

I am suggesting we wait for the GLD to close over $165.50 and we'll buy calls the next morning with a stop loss at $154.90. This is an aggressive entry point since the H&S pattern would not be complete until shares breakout past the $175 area. The U.S. dollar is likely to see a lot of movement over the next several months, which could cause volatility in gold. Therefore we want to keep our position size small. Our long-term target is $195.

Breakout trigger: A close over $165.50 (small positions)

BUY the 2013 Jan $190 call (GLD1319A190)

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BUY the 2014 Jan $190 call (GLD1418A190)

Chart of GLD:

Originally listed on the Watch List: 04/14/12


Microsoft - MSFT - close: 30.81

Company Info

Shares of MSFT have helped lead big cap tech stocks higher in the first quarter with a very impressive rally. Now the stock has begun to correct. I suspect shares will actually over-correct to the downside and retest prior resistance near $28.00 as new support.

I am suggesting a trigger to launch bullish positions when MSFT dips to $28.50. We'll use a stop loss at $25.75 if triggered. Our long-term target is $36.00.

Note: MSFT is due to report earnings on April 19th.

Buy-the-Dip trigger: $28.50 (stop @ $25.75)

BUY the 2013 Jan $30 call (MSFT1319A30)

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BUY the 2014 Jan $30 call (MSFT1418A30)

Chart of MSFT:

Originally listed on the Watch List: 04/14/12


Active Watch List Candidates:



American Intl. Group - AIG - close: 32.48

Comments:
04/14/12 update: AIG was showing some relative strength with only a minor loss for the week. The stock's trend is still higher but I am expecting a correction as the broader market pulls back.

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.

Note: AIG is due to report earnings on May 3rd.

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)

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


Activision Blizzard, Inc. - ATVI - close: 12.42

Comments:
04/14/12 update: ATVI has also held up reasonably well with only a minor decline for the week. Shares found support at their rising 50-dma. We are waiting for a breakout past overhead 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: $11.92

Comments:
04/14/12 update: Trading in Ford has taken a turn for the worse. Shares appear to be in the process of breaking down from the $12.00-13.00 trading range. I am dropping Ford from the watch list. If the market corrects the stock could drop toward support near $10.00. I'll keep Ford on my radar screen for either a drop toward $10 or a breakout past $13.

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

Our Trade Never Opened.

04/14/12 removing Ford from the watch list.

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


Hasbro Inc. - HAS - close: 36.18

Comments:
04/14/12 update: Shares of HAS have retreated toward technical support near its 50 and 200-dma. The stock is in danger of breaking the intermediate trend of higher lows. Currently we are waiting for a breakout past resistance near $39.00.

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.

HAS does not move very fast so we'll need to be patient.

Note: HAS reports earnings on April 23rd.

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)

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


JDS Uniphase - JDSU - close: 13.00

Comments:
04/14/12 update: The trend in JDSU is in serious jeopardy. The stock appears to have formed a bearish double top with the peaks in February and March. If we see JDSU close under $12.00 we'll drop it as a candidate. Currently the plan is to wait 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)

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BUY the 2014 Jan $20 call (JDSU1418A20)

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


JPMorgan Chase & Co - JPM - close: 43.21

Comments:
04/14/12 update: JPM reported earnings on Friday. The company beat estimates by 16 cents and beat Wall Street's revenue estimate as well. Yet traders sold the news, which isn't a surprise. We've been expecting a pullback.

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.

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

BUY the 2013 Jan $45 call (JPM1319A45)

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BUY the 2014 Jan $45 call (JPM1418A45)

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


Limited Brands, Inc. - LTD - close: 47.67

Comments:
04/14/12 update: The correction in LTD saw shares dip toward technical support at their 50-dma before bouncing. We are waiting for a deeper correction. The plan is to buy calls when shares hit $44.00 with a stop loss at $39.75. Our long-term target is $54.50.

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

BUY the 2013 Jan $45 call (LTD1319A45)

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

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


McDonald's Corp. - MCD - close: 96.97

Comments:
04/14/12 update: MCD has created a new lower high with the failed rally near $99 this past week. Shares look headed for the $95-94 zone and I suspect we'll see MCD tag technical support at the simple 200-dma. Currently the 200-dma is at $93.37. I am raising our buy-the-dip trigger to $94.00. We will leave our stop at $88.50. If triggered our long-term target is $108.00.

Buy-the-Dip trigger: $94.00, stop 88.50

BUY the 2013 Jan $100 call (MCD1319A100)

04/14/12 adjust buy-the-dip trigger to $94.00.

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


Urban Outfitters Inc. - URBN - close: 28.67

Comments:
04/14/12 update: URBN spent the week hovering above technical support at its simple 50-dma. We are still waiting for a close over resistance. The stock has come close but it has not met our entry requirement yet.

Our plan is to wait for URBN to close above $30.50 and then buy call LEAPS the next day.

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