Option Investor
Newsletter

Daily Newsletter, Sunday, 4/22/2012

Table of Contents

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

Leaps Trader Commentary

Earnings Avalanche

by James Brown

Click here to email James Brown

Stocks ended a two-week sell-off with a mild gain for the week. Leadership was not very broad. The NASDAQ composite was an exception to the market's bounce with a -0.3% drop for the week. Prior big cap technology leaders like AAPL, GOOG, and PCLN all underperformed and weighed heavily on the NASDAQ-100. By the end of the week the U.S. dollar faded lower. The euro ended on a high note. Gold drifted sideways. There was very little movement in oil following the U.N. Security council meeting with Iran last weekend.

Economic data in the U.S. was underwhelming. Initial jobless claims came in at 386,000. Economists were expecting a drop from 380K to 375K but last week was actually revised higher to 388K. The existing home sales number fell to a lower than expected 4.48 million pace in March, down from 4.60 million pace in February. One of the biggest disappointments was the Philly Fed survey, which dropped from 12-month high of 12.5 the prior month to 8.5 in April. Economists had been expecting a dip to 10. The new orders component of the survey plunged to 2.7, the lowest level since September. Yet the employment component surged from 6.8 to 17.9.

In Europe the focus was all about Spain and its upcoming debt auction. Traders were either hot or cold on the prospects for Spain, which helped fuel the volatility in the equity markets. Monday saw yields on Spanish 10-year bonds hit 6.1%. Remember, the key level to watch is 7% where it is generally believed that a country can't service its debt with rates above 7% so crossing the 6% level is definitely a warning signal. On Tuesday Spain had a very successful debt auction but it was for short-term 12-month and 18-month bonds. The big event was Thursday where Spain auctioned off 2.54 billion euros worth of 10-year notes. Yields had dropped to 5.74% with "solid" demand as one news source put it but other market watchers thought the bond sale was "staged." Conspiracy theorists believe that the powers at be made sure Spain had a successful auction so as not to spook the markets.

Major Indices:

The S&P 500 index eked out +0.6% gain for the week, ending a two-week slide. yet the action last week still looks bearish. Looking at the chart below you can see that the index appears to be forming a bear-flag consolidation pattern. A breakdown under short-term support at 1370 will probably signal a drop to 1340. If 1340 fails then we're looking at a drop toward the 1300 area.

Daily chart of the S&P 500 index:

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

The NASDAQ Composite and the NASDAQ-100 index were both plagued by selling pressure in the big cap technology names. Traders were selling into strength and prior short-term support is now new short-term overhead resistance. The index looks poised to drop toward the 2900 area. A breakout higher past 3060 might signal a bullish reversal but currently the short-term path of least resistance is down.

Daily chart of the NASDAQ Composite index:

60-minute chart of the NASDAQ Composite index:

We are seeing a similar bear-flag consolidation pattern building in the small cap Russell 2000 index. There is overhead resistance at the 50-dma and the 820 level. There is potential support at the 100-dma as well as the 200-ema and 300-dma (all visible on the daily chart below). I suspect that a breakdown from this flag pattern will signal a drop toward the 760 area and its simple 200-dma.

Daily chart of the Russell 2000 index

60-minute chart of the Russell 2000 index

It's not surprising that the bounce in the Dow Jones Transportation index failed at its prior tend line of support. This also coincided with a rebound toward its early April high. Right now this sector does not have a clear direction but you can almost see a pattern of lower highs and higher lows, which is neutral. Future direction is going to depend on the price of oil and signs of economic growth (or lack thereof).

chart of the Transportation Average

We've been warning readers that AAPL appeared to be topping. Shares are now in correction territory, down more than -10% from its high. Volatility has increased substantially and will likely continue until AAPL finds support again. The stock settled on its 50-dma so it could see another oversold bounce come Monday. However, the short-term trend is down and I am expecting a drop into the $525-500 zone. With AAPL correcting lower it's going to be harder for the NASDAQ and the technology sector to turn higher.

Don't forget that AAPL reports earnings on April 24th, after the closing bell. You can bet the stock is going to see some post-earnings volatility the next morning (up big or down big, or both).

Daily chart of the Apple Inc. (AAPL)

We survived the first full week of Q1 earnings but we're about to see an avalanche of corporate earnings news. There will be hundreds of companies reporting. This is going to generate a lot of volatility for individual stocks. Thus far 82% of the 75 S&P 500 components that have already reported have beaten earnings estimates. That's better than normal but it was likely due to depressed expectations. Of the remaining 425 S&P 500 companies current estimates are for an average of -0.9% earnings growth. If you subtract AAPL from that figure the average falls to -2.3%. Investor sentiment could take a hit if we see a wave of disappointing earnings announcements.

Outside of the earnings parade the big events this week will be the FOMC meeting's conclusion on Wednesday and Ben Bernanke's press conference following the Fed's interest rate decision. No one expects a change in rates so the focus will be on any hint of QE3 or some other form of stimulus. Right now no one is expecting QE3 but some analysts are speculating the Fed might extend their Operation Twist, which expires at the end of June. The question is will the Fed announce something this week or at the next meeting in June? Another potential market mover is the first look at Q1 GDP. Economists are expecting the U.S. grew at +2.3% in Q1, down from +2.95% in Q4.

Economic and Event Calendar

- Monday, April 23 -
(nothing significant)

- Tuesday, April 24 -
FOMC meeting begins
Case-Shiller 20-city home price index
Consumer Confidence for April
New Home sales

- Wednesday, April 25 -
FOMC meeting ends, interest rate announcement
Ben Bernanke press conference
Durable goods orders

- Thursday, April 26 -
Weekly Initial Jobless Claims
Pending home sales

- Friday, April 27 -
U.S. Q1 GDP estimate
Michigan consumer sentiment (final reading for April)

Upcoming events:

May 6th - Greece national elections
May 6th, - 2nd round of French elections

The Week Ahead:

Monday morning the market's focus will probably turn towards Europe again. The first round of French presidential elections did not go well for incumbent Nicolas Sarkozy. According to polls on Sunday his socialist rival Francois Hollande beat him by three percentage points. Both candidates will move to the second round of the French presidential race on May 6th. The markets will likely worry that if Hollande wins then cooperation between the EU's two biggest countries, France and Germany, could deteriorate. Sarkozy has worked closely with Germany's Merkel to present a solid front against the EU's fiscal troubles. If Hollande is elected then the EU could find itself lacking the willpower for further bailouts.

Aside from the political game in France, I don't see a lot of changes from my comments a week ago. The U.S. market still looks tired. The fact that the high-profile tech names are starting to sell-off is not a good sign but sector rotation is normal. Of course market corrections are normal too but it's painful if you're long the market when it happens. I am expecting more volatility in the market this week but I suspect the result will be a breakdown to a new lower low as we head into May.

The Q1 U.S. GDP estimate this week is backward looking but it's going to have an impact on the market anyway. What is concerning is that recent economic reports seem to be showing a slowdown for the U.S. Combine that with a slowing China and a slowing Europe and investors have reason to be concerned. Now add the unknown of presidential races in France and Greece and the ongoing tensions between Iran and the West and we have a recipe for a volatile summer.

I remain bullish for the year as a whole but my bias for the next several weeks is down. Don't rush to launch new long-term bullish trades. We will most likely get a better position to buy into stocks cheaper down the road.

- James


Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

The S&P 500 ended a two-week slide but gains are suspect. You could argue the index is building a bear-flag consolidation pattern. Thus far Q1 earnings results have been better than expected but in many cases traders are choosing to sell the news.

We're about to hit one of the busiest weeks for Q1 earnings season so we can expect more volatility. It's also the last full week of April. There is a chance that investors might continue this "sell the news" mood in an effort to front run the "sell in May" crowd.

BRCM and TIVO were stopped out. We closed FDX on Monday.

We want to be defensive here. Readers will want to double check their stop loss placement. I am suggesting we exit our BRK.B trade on Monday morning.

I have updated stop losses on: EBAY and KMB.

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

Stocks Look Vulnerable

by James Brown

Click here to email James Brown

Editor's Note:

The story hasn't changed much since last week. The U.S. market managed a bounce, which ended a two-week slide, but stocks continue to look vulnerable. You could argue that the major indices are forming a bear-flag consolidation pattern before it begins the next leg lower.

I've been warning readers that stocks might find a top in April and then begin to slide into the month of May. That's still my overall bias but we are about to see one of the busiest weeks of Q1 earnings season you never know what might change investor sentiment.

Fortunately a market correction will help provide us, as Leaps traders, a better entry point for positions as we look out over the next six to eighteen months.

I am not adding any new trades tonight. However, tonight we have added three 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 down the road.

On my radar: CCJ, WAG, DO, MRK, FDO, BBBY, SCHW, M, DFS, PAA, GSK


Play Updates

Reaction To Earnings Has Been Mixed

by James Brown

Click here to email James Brown

Editor's Note:

It's a good thing we decided to lock in some gains on our QCOM trade prior to the earnings report. Overall earnings results in the S&P 500 have been better than expected but in many cases investors are selling the news. Readers should stay cautious. You might want to take profits, scale back positions, or consider a hedge if you own calls on a company that's about to report earnings.

We're about to experience one of the busiest week for Q1 earnings season so expect a lot of individual stock volatility.

Note: We want to exit our BRK.B trade on Monday morning at the open.


Closed Plays


BRCM and TIVO hit our stops. As planned we closed FDX on Monday.


Play Updates


Archer-Daniels-Midland Company - ADM - close: 30.71

Comments:
04/21/12 update: ADM lost four cents for the week as the stock continues to churn sideways. I still think we're going to see ADM test the $30.00 level and possibly the simple 200-dma near $29.25.

I am not suggesting new positions at this time. ADM is scheduled to report earnings on May 1st.

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 $ 1.05/ 1.09

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

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


Allergan Inc. - AGN - close: 95.58

Comments:
04/21/12 update: AGN drifted higher last week. The stock is now approaching its all-time highs set in late March in the $96.00-96.50 area. A failure here could look like a bearish double top. If the market does correct AGN should find support near $90.00. 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 $ 4.80/ 5.20

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: 37.40

Comments:
04/21/12 update: Last week AKAM rallied to new seven-week highs before paring its gains on Thursday and Friday. The company is scheduled to report earnings on April 25th after the closing bell. Analysts are expecting a profit of 38 cents a share.

I am not suggesting new positions at this time. More conservative traders may want to raise their stop.

- Suggested Positions -
FEB 10, 2012 - entry price on AKAM @ 37.60, option @ 5.40
symbol:AKAM1319A40 2013 JAN $40 call - current bid/ask $ 4.30/ 4.40

2nd Position (enter on Monday, March 12th)
MAR 12, 2012 - entry price on AKAM @ 36.80, option @ 4.45
symbol:AKAM1319A40 2013 JAN $40 call - current bid/ask $ 4.30/ 4.40

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: 8.36

Comments:
04/21/12 update: BAC reported earnings on Thursday morning. The results did not appear to line up with Wall Street's estimates due to some of the one-time items the bank listed. However, revenues came in better than expected and shares of BAC actually rallied +2% on Thursday. Then the earnings pop ran out of steam and BAC has collapsed in the last day in a half. The move looks like a failed rally at the 300-dma and now a breakdown under its 50-dma. The close under $8.50 is bearish. Thus far BAC has seen a -16% correction from its recent highs near $10.00 a share.

The $8.00 area should offer some support but right now the trend is down. 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 $ 0.66/ 0.67
(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 $ 0.66/ 0.67
(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: 34.23

Comments:
04/21/12 update: Shares of BMY spiked to new three-month highs last week. Thursday's pop to $35 was fueled by news that BMY and partner Gilead Sciences had announced positive results for a new oral treatment to cure hepatitis C. I would not be surprised to see shares of BMY drift sideways up until its earnings report on April 26th. The company announces that morning before the opening bell. I am not suggesting new positions at this time.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.58/ 1.60

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

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


Berkshire Hathaway (B shares) - BRK.B - close: 78.90

Comments:
04/21/12 update: BRK.B was starting to show some strength early last week with a breakout back above $80 and several moving averages. Unfortunately the rally was squashed by news that Warren Buffett announced he has stage 1 prostrate cancer. At 82 years old Wall Street already knows that Buffett will step down eventually but the thought of losing Berkshire's beloved leader is naturally negative for the hordes of faithful investors in this company.

Technically last week looks like a new lower high and shares of BRK.B look poised to break down under support near $78.00 and its 100-dma, 200-ema, and 300-dma. I am suggesting we go ahead and exit this position early on Monday morning at the open. While I expect Buffett will remain the head of Berkshire for a few more years the recent action in the stock is worrisome.

- 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 $ 2.88/ 2.97

04/21/12 prepare to exit this position on Monday at the open.
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: 98.88

Comments:
04/21/12 update: CL has continued to show strength and the stock ended the week at new record highs. The $100 level will probably be short-term overhead round-number resistance. However, if CL can produce a positive earnings surprise then maybe shares can get past this level. CL is due to report earnings on April 26th. The announcement is scheduled for before the opening bell. More conservative investors will want to seriously consider taking profits prior to the announcement in order to avoid the risk of a post-earnings sell-off.

I am not suggesting new positions at this time.

- Suggested Positions -
MAR 16, 2012 - entry price on CL @ 95.48, option @ 2.92
symbol: CL1319A100 2013 JAN $100 call - current bid/ask $4.10/4.25

- or -

MAR 16, 2012 - entry price on CL @ 95.48, option @ 5.57
symbol: CL1418A100 2014 JAN $100 call - current bid/ask $6.60/7.40

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: 19.91

Comments:
04/21/12 update: After the sharp, early April correction lower shares of CSCO have been consolidating sideways the last couple of weeks. This past week saw its rally attempt fail at resistance near $20.30 and its 50-dma. I find the action this month to be bearish. More conservative traders may want to exit early now or raise their stop loss toward the $19.00-19.25 zone.

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 $1.73/1.74

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: 35.31

Comments:
04/21/12 update: DOW has been showing relative strength with a big bounce. The stock is up seven out of the last eight trading days. The stock is back above potential resistance at its 50-dma. While this big bounce is encouraging I remain cautious with earnings coming up. DOW is scheduled to report earnings before the opening bell on April 26th. Wall Street is looking for 59 cents a share.

More conservative investors will want to seriously consider taking profits now or exiting (some or all of) your positions prior to the earnings announcement. I'm not suggesting new positions at this time.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 3.50/ 3.55

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2014 JAN $40 call - current bid/ask $ 3.05/ 3.15

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: 40.29

Comments:
04/21/12 update: EBAY was a bright spot for the NASDAQ last week. The company reported earnings on April 18th and beat estimates by 4 cents with a profit of 55 cents a share. Revenues also beat estimates at $3.28 billion for the quarter. Helping fuel the big, post-earnings pop higher was EBAY's full year 2012 guidance in the $2.30-2.35 zone compared to analysts consensus estimates of $2.29. The news garnered three new upgrades for EBAY and shares rallied to $41.84 intraday on Thursday. Our long-term exit target is $44.50.

The stock is now short-term overbought and probably due for some profit taking. Speaking of profit taking our readers may want to consider taking profits on our call options below. I am not suggesting new positions at this time. I am moving our stop loss up to $34.90.

- Suggested Positions -
Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 2.85
symbol: EBAY1319A40 2013 JAN $40 call - current bid/ask $ 4.60/ 4.70

- or -

Mar 12, 2012 - entry price on EBAY @ 36.36, option @ 5.11
symbol: EBAY1418A40 2014 JAN $40 call - current bid/ask $ 7.35/ 7.50

04/21/12 new stop loss at $34.90
04/18/12 EBAY reports better than expected earnings and provides stronger 2012 earnings guidance. The stock spikes higher.
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: 34.90
Play Entered on: 03/12/12
Originally listed in the New Plays 03/10/12


Enterprise Products Partners - EPD - close: 52.10

Comments:
04/21/12 update: EPD has continue to bounce off its April 10th low. Shares have broken out back above its 50-dma and broken the multi-week trend of lower highs. Now the stock is approaching resistance at its 2012 highs near $52.50.

Our call option has doubled with the bid at $3.10 (+113%) and readers may want to go ahead and take profits early right now.

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 $ 3.10/ 3.30

04/21/12 readers may want to take profits now. The bid on our call option is at $3.10 (+113%)
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


Intel Corp. - INTC - close: 27.60

Comments:
04/21/12 update: INTC reported earnings on the 17th after the closing bell. The results were 3 cents better than expected. Revenues also beat expectations. Guidance and margins were generally in-line with estimates. The stock had rallied to new multi-year highs just prior to the report and investors sold the news on Wednesday morning. Intel remains above its 50-dma but the action last week has painted a bearish reversal candlestick on the weekly chart but this needs to see confirmation.

If the market does break down further I would expect INTC to dip toward the $26.50-26.00 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 $ 0.99/ 1.01

- or -

Feb 21, 2011 - entry price on INTC @ 27.34, option @ 2.11
symbol: INTC1418a30 2014 JAN $30 call - current bid/ask $ 2.07/ 2.13

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: 38.54

Comments:
04/21/12 update: The oversold bounce in KFT continued last week and shares are now challenging short-term resistance in the $38.75 area. Our exit target is $40.00 but readers may want to go ahead and lock in a profit now. 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 $ 4.30/ 4.35

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: 76.47

Comments:
04/21/12 update: It was a dramatic week for KMB with shares surging to new highs. The company reported earnings on April 20th and beat Wall Street estimates by 7 cents. Revenues were also significantly above expectations. Guidance was in-line. The stock spiked to $77.09 on Friday morning. Our exit target is $79.75 but more conservative traders may want to take profits now! I am raising our stop loss up to $69.95.

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 $ 3.40/ 3.60

04/21/12 new stop loss @ 69.95
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: 69.95
Play Entered on: 11/07/11
Originally listed in the New Plays 11/05/11


Coca-Cola Company - KO - close: 74.13

Comments:
04/21/12 update: KO reported earnings on the 17th before the opening bell. The results beat estimates by a penny with revenues coming in at $11.14 billion versus estimates of $10.8 billion. KO saw strong growth across the globe. At least one firm raised their price target on KO. Shares rallied toward their 2012 highs and then spent the rest of the week digesting its gains in a sideways move. 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 $ 4.40/ 4.50

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: 39.91

Comments:
04/21/12 update: LLY produced a strong two-day bounce on Monday and Tuesday and spent the rest of the week churning sideways. I would expect more sideways action until LLY reports earnings on April 25th. The results come out before the opening bell. I am not suggesting new positions at this time.

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

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.56/ 1.68

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

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

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


Las Vegas Sands - LVS - close: 57.91

Comments:
04/21/12 update: Our plan was to take profits and sell half of our position on Monday morning, Apri1 16th. The bid on our 2013 calls dropped from $8.30 the prior Friday to $7.45 on Monday (+69.3%). Shares of LVS delivered some volatility last week while trying to hold support at its rising 30-dma. I am expecting this support to fail. Odds are good LVS will see some profit taking when they report earnings on April 25th. The results come out before the opening bell and Wall Street is looking for 58 cents a share.

If you don't want to endure a correction then consider an early exit now. I'm expecting a dip toward the $53-50 zone.

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 $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 $ 6.45/ 6.60

04/16/12 Sold half of our position. Bid opened at $7.45 (+69.3%)
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: 87.48

Comments:
04/21/12 update: MMM produced a decent bounce last week but shares were unable to rally back above resistance near its 50-dma, just under the $88 level. I find this failure to breakthrough resistance a troubling sign. Now MMM's direction is going to depend on the company's earnings report. MMM reports on April 24th, before the opening bell. Cautious investors may want to exit early prior to earnings.

I am not suggesting new positions at this time.

- Suggested Positions -
Jan 19, 2012 - entry price on MMM @ 85.10, option @ 3.30
symbol: MMM1319A95 2013 JAN $95 call - current bid/ask $ 2.49/ 2.57

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: 49.01

Comments:
04/21/12 update: MSI garnered some positive analyst comments on Tuesday, which helped fuel the big bounce in the stock. Yet the rally stalled at its 50-dma. MSI has been drifting sideways since then. More conservative traders may want to raise their stop loss since the $47-48 area should be support. However, MSI could see some volatility following its earnings report on April 25th. The company reports before the opening bell. Aggressive traders might want to adjust their stop loss so it's under the $45.00 mark. I am not suggesting new positions at this time.

- Suggested Positions -
Feb 17, 2012 - entry price on MSI @ 49.35, option @ 2.27
symbol: MSI1319A55 2013 JAN $55 call - current bid/ask $ 1.52/ 1.60

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

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

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


NetEase.com - NTES - close: 58.54

Comments:
04/21/12 update: NTES was showing some relative strength midweek but the rally stalled at resistance near its 2012 highs around $60.00. I am not suggesting new positions at this time. Readers may want to consider a higher stop loss.

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 $ 6.90/ 7.30

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: 62.25

Comments:
04/21/12 update: Ouch! QCOM had a really ugly reaction to earnings, which was why we wanted to sell half of our position on Monday to lock in a gain. The bid on our calls fell from $10.05 the prior Friday to open at $9.60 on Monday (+95.9%).

QCOM chopped sideways until its earnings report on April 18th. Analysts were expecting 96 cents a share on revenues of $4.81 billion. QCOM delivered $101 a share on $4.94 billion. Management issued disappointing guidance for the next quarter but then raised their full year 2012 guidance.

The stock was due for some profit taking and investors chose to sell the news. QCOM gapped open lower on Thursday morning, saw an intraday spike toward resistance at its 50-dma, and then reversed lower again. Odds look pretty high at this point that QCOM will hit our stop loss at $61.50 soon. More conservative traders may want to exit immediately.

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 $ 6.45/ 6.55

04/18/12 QCOM reported earnings. Traders sold the news
04/16/12 sold half at the open. bid on calls @ 9.60 (+95.9%)
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: 41.80

Comments:
04/21/12 update: RAI delivered a quiet week with more sideways trading. If the market starts to sink then investors might seek refuge in high-dividend stocks like RAI. Shares currently offer a yield of 5.4%. Unfortunately, this will not protect RAI from short-term volatility. The company reports earnings on April 25th, before the opening bell. I am not suggesting new positions at this time.

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

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

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


Teva Pharmaceuticals - TEVA - close: 45.08

Comments:
04/21/12 update: TEVA managed a gain for the week but the Monday-Tuesday rally stalled at resistance near $46.00. Shares have been trading sideways the last four sessions. A breakout past $46.00 would be bullish but I'm not suggesting new positions ahead of earnings, which are due in early May.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 1.50/ 1.56

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 3.50/ 3.70

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


UnitedHealth Group - UNH - close: 59.51

Comments:
04/21/12 update: UNH quietly drifted sideways until the company reported earnings on April 19th. UNH beat estimates by 14 cents and raised guidance. There was a brief dip lower in spite of the good news then shares took off higher. UNH closed the week near its 2012 highs set two weeks ago. 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 $ 4.90/ 4.95

- or -

Feb 15, 2012 - entry price on UNH @ 54.53, option @ 5.00
symbol: UNH1418A60 2014 JAN $60 call - current bid/ask $ 8.15/ 8.40

04/19/12 UNH reported earnings that beat estimates and raised guidance
03/31/12 new stop loss @ 52.75. Adjust exit to $64.00
03/24/12 action this past week has turned bearish. expecting a correction toward the $50 area.

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

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


Verizon Communications - VZ - close: 38.73

Comments:
04/21/12 update: It is amazing the difference a week can make. VZ produced a strong bounce with gains in four of the last five days. Friday saw a breakout past resistance near $38.50 and its 100-dma and 50-dma. Helping fuel this rally was the company's better than expected earnings results on the 19th.

I am not suggesting new positions at this time as VZ still has a trend of lower highs it needs to break.

- Suggested Positions -
Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.17
symbol: VZ1319A40 2013 JAN $40 call - current bid/ask $ 1.28/ 1.30

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 2.17/ 2.26

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: 85.30

Comments:
04/21/12 update: XOM spent the first three days of the week rebounding higher but the rally stalled near $86.00. XOM is likely to churn sideways up to its earnings report on April 26th. The announcement comes out prior to the opening bell. We should expect more volatility following the report. Look for support in the $82-80 zone and resistance near $88.

I am not suggesting new positions at this time.

- Suggested Positions -
Dec 22, 2011 - entry price on XOM @ 83.56, option @ 4.63
symbol: XOM1319A90 2013 JAN $90 call - current bid/ask $ 2.91/ 2.97

- 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

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


Broadcom Corp. - BRCM - close: 34.77

Comments:
04/21/12 update: It was an ugly week for BRCM. The stock has broken down under multiple layers of support. Shares ended the week on technical support near its 200-dma. The stock hit our stop loss at $35.75 on April 19th.

- Suggested Positions -
Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 2.30
symbol:BRCM1319A45 2013 JAN $45 call - closed @ 1.39 (-39.5%)

- or -

Apr 02, 2012 - entry price on BRCM @ 39.11, option @ 4.50
symbol:BRCM1418A45 2014 JAN $45 call - closed @ 3.45 (-23.3%)

04/19/12 stopped out at $35.75
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

Chart of BRCM:

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


FedEx Corp. - FDX - close: 89.67

Comments:
04/21/12 update: Two Fridays ago shares of FDX looked pretty weak and the stock has set a new lower low. Last weekend I suggested we exit our FDX positions on Monday morning to cut our losses.

- Suggested Positions -
Jan 11, 2011 - entry price on FDX @ 88.08, option @ 5.52
symbol: FDX1319A100 2013 JAN $100 call - exit $3.50 (-36.5%)

04/16/12 early exit on Monday
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

Chart of FDX:

Current Target: $98.00
Current Stop loss: 85.75
Play Entered on: 01/11/12
Originally listed on the Watch List: 12/31/11


TiVo Inc. - TIVO - close: 10.76

Comments:
04/21/12 update: The correction lower in TIVO continued last week. The stock hit our stop loss at $10.75 on April 18th. Investors may want to keep an eye on it. A bounce near $9.00 or a close over $12.50 might be bullish entry points.

- Suggested Positions -
Mar 23, 2012 - entry price on TIVO @ 11.82, option @ 1.78
symbol: TIVO1319A12.50 2013 JAN $12.50 call - closed $1.05 (-41.0%)

04/18/12 stopped out at $10.75
03/23/12 trade is opened on Friday morning.
03/22/12 TIVO meets our entry requirement with a close over $11.75
03/10/12 adjust entry strategy to buy calls after TIVO closes over $11.75 with a stop at $10.75.

Chart of TIVO:

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



Watch

Healthcare, Drugs, & Retail

by James Brown

Click here to email James Brown


New Watch List Entries

CI - Cigna Corp.

PFE - Pfizer Inc.

WMT - Wal-Mart Stores


Active Watch List Candidates

ATVI - Activision Blizzard

AIG - American Intl. Group

AXP - American Express

CREE - Cree, Inc.

GLD - Gold ETF

HAS - Hasbro

JDSU - JDS Uniphase

LTD - Limited Brands

MCD - McDonald's Corp

MSFT - Microsoft Corp.

URBN - Urban Outfitters


Dropped Watch List Entries

JDSU has been removed from the watch list.



New Watch List Candidates:


Cigna Corp. - CI - close: 48.02

Company Info

CI is a healthcare company. In late March the stock broke out from a major trading range. Since then shares have consolidated sideways between prior resistance near $47 and new resistance near $50.

Big picture this breakout from the trading range is significant and the follow through has probably been muted due to the broader market weakness. I am suggesting we open bullish positions when CI closes above $50.25. We'll buy calls the next day with a stop loss at $46.40.

There is some long-term resistance near $57.00 but we'll set our target at $64.00. Currently the P&F chart is forecasting at $60 target.

FYI: CI is due to report earnings on May 3rd.

Breakout trigger: Close over $50.25, stop loss 46.40

BUY the 2013 $55 call (CI1319A55)

- or -

BUY the 2014 $55 call (CI1418A55)

Chart of CI:

Originally listed on the Watch List: 04/21/12


Pfizer Inc. - PFE - close: 22.56

Company Info

There has been a long-term worry that the large pharmaceutical companies like PFE would continue to lose market share to generic drug makers as more and more of their core products lose patent protection. This does remain a risk but shares of PFE, and MRK, and GSK have all reversed their long-term declines. PFE has a new bullish trend of higher lows and higher highs.

Currently the stock is hovering under resistance near $22.80. I am suggesting we wait for PFE to close over $23.20 and then launch positions the next morning with a stop loss at $20.65. Our long-term target is $28.00. I will list the 2013 calls but I prefer the 2014 because PFE does not move very fast.

FYI: PFE is due to report earnings on May 1st. More conservative traders may want to wait on launching positions until after we see the market's reaction to the earnings news.

Breakout trigger: Wait for a close over $23.20, use a stop at $20.65

BUY the 2013 Jan $22.50 call (PFE1319A22.5) current ask $1.31

- or -

BUY the 2014 Jan $25 call (PFE1418A25) current ask $1.09

Chart of PFE:

Originally listed on the Watch List: 04/21/12


Wal-Mart Stores - WMT - close: 62.45

Company Info

WMT is the largest retailer in the world. After years of churning sideways it seems the stock may have found it's mojo again. The stock seems to be unaffected by recent stories that the company used a massive bribery scheme to help its expansion across Mexico. Big picture shares have broken out into a new bullish trend but it's quickly approaching major resistance in the $63-64 area.

Aggressive traders may want to buy calls on a close over $62.75. I am suggesting we wait and buy calls when WMT closes over $64.00. We'll use a stop loss at $57.75 to start. Our long-term target is the $74.75 mark although we may adjust it higher. Currently the Point & Figure chart is forecasting a $91 target.

WMT does not move very fast so we'll need patience. I am listing the 2013 calls but I prefer the 2014 calls instead.

Breakout trigger: Wait for a close over $64.00, stop @ 57.75

BUY the 2013 Jan $65 call (WMT1319A65) current ask $1.86

- or -

BUY the 2014 Jan $65 call (PFE1418A65) current ask $3.55

Chart of WMT:

Originally listed on the Watch List: 04/21/12


Active Watch List Candidates:



American Intl. Group - AIG - close: 32.06

Comments:
04/21/12 update: The financial sector looks poised to correct lower and AIG will likely follow. The $30.00 level should be support but I am expecting AIG will actually overcorrect.

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: 12.20

Comments:
04/21/12 update: ATVI has dipped to technical support at its 200-dma. If the market does break down again we might see shares fall toward the $11.75-11.50 zone. If that happens then we'll consider buying a bounce near $11.50. However, currently we are 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.

FYI: ATVI is due to report earnings on May 9th.

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


American Express - AXP - close: 57.45

Comments:
04/21/12 update: AXP didn't see a lot of movement last week. While the trend is still higher I am expecting AXP will correct lower with the financials. Aggressive traders may want to buy calls on a dip near $54.00.

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)

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


Cree, Inc. - CREE - close: 30.49

Comments:
04/21/12 update: It was another choppy week for CREE. The stock remains inside its $28-33 trading range. Nimble traders might want to consider buying a bounce near $28.50with a tight stop loss. 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)

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


Gold ETF - GLD - close: 159.54

Comments:
04/21/12 update: The U.S. dollar has been drifting lower the last couple of weeks. Normally a weaker dollar would be bullish for gold but it's not helping the GLD. Instead the GLD is drifting lower and looks like it will test technical support at its simple 300-dma soon. If we see the GLD close under $156.50 we will drop it as a bullish candidate and aggressive traders might want to consider new bearish positions instead.

Currently 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 inverse 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)

- or -

BUY the 2014 Jan $190 call (GLD1418A190)

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


Hasbro Inc. - HAS - close: 35.92

Comments:
04/21/12 update: HAS' rival Mattel (MAT) reported earnings last Monday and missed both the top and bottom line estimates. Shares of MAT gapped down with a big loss on this news. HAS dipped to its 100-dma in reaction to MAT's announcement. This week HAS reports earnings on April 23rd.

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.

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: 12.95

Comments:
04/21/12 update: I am giving up on JDSU. The recent consolidation sideways is starting to look like a bear-flag pattern. Nimble traders may want to consider bearish positions on a drop below $12.00 and target $10.00. I am removing JDSU as a bullish candidate. It's unlikely shares will hit our entry point (close over $15.30) any time soon.

Breakout trigger: Wait for JDSU to close over $15.30

Our Trade Did Not Open

04/21/12 remove JDSU from the watch list.

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


JPMorgan Chase & Co - JPM - close: 42.72

Comments:
04/21/12 update: So far so good. We have been expecting JPM to correct lower. The stock closed on its low for the week.

I am suggesting we buy calls on a dip 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)

- or -

BUY the 2014 Jan $45 call (JPM1418A45)

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


Limited Brands, Inc. - LTD - close: 49.26

Comments:
04/21/12 update: LTD continues to show relative strength. While the strength is encouraging it's not helping our efforts to buy a significant dip in this stock. LTD should report earnings in about two or three weeks. We'll reconsider our entry point following the earnings announcement. Currently 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: 95.94

Comments:
04/21/12 update: MCD came oh so close to hitting our buy-the-dip trigger on Thursday. Shares spiked lower and hit $94.13 at its low just one day ahead of its earnings report. MCD reported on Friday morning and delivered results that were in-line with Wall Street's estimates. The company continues to see healthy same-store sales growth.

The trend is still lower so MCD should hit our buy-the-dip trigger at $94.00 soon. We have a stop loss at $88.50. More conservative traders may want to wait for a dip or a bounce in the $91-92 area instead. 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


Microsoft - MSFT - close: 32.42

Comments:
04/21/12 update: Hmm... after the super strong Q1 rally we were not expecting MSFT to rally on its earnings news. The company reported earnings on Thursday night and investors bought the news with a +4.5% rally on Friday. Shares still have resistance near $33.00.

At the moment I am unwilling to chase it. I suggest we give MSFT a couple of weeks and then we'll re-evaluate. Currently 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.

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

BUY the 2013 Jan $30 call (MSFT1319A30)

- or -

BUY the 2014 Jan $30 call (MSFT1418A30)

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


Urban Outfitters Inc. - URBN - close: 28.94

Comments:
04/21/12 update: It was another quiet week for shares of URBN with the stock consolidating sideways. We are still waiting for URBN to meet our entry point requirements. 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