Option Investor
Newsletter

Daily Newsletter, Sunday, 12/1/2013

Table of Contents

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

Leaps Trader Commentary

Best Month of the Year Begins Now

by James Brown

Click here to email James Brown

Thanksgiving week tends to be bullish for stocks but gains were muted. Investors had little stomach left after feasting on stocks the last several weeks. The S&P 500 did manage to eke out a small gain for the week stretching its win streak to eight weeks in a row. That's the longest weekly win streak since January 2004.

It was a different story for the NASDAQ composite and the small cap Russell 2000 indices, both continue to set a string of new highs. Speaking of new highs the digital currency Bitcoin was making headlines with the value of a Bitcoin trading above $1,200 on Friday before paring its gains. Nine months ago the value of a Bitcoin was only $35.

Semiconductor and biotech stocks performed well with a +1.1% gains for each industry groups last week. Housing stocks were some of the strongest performers with a +2.7% gain. Energy stocks didn't do so hot. News that the US and EU were relaxing some sanctions on Iran sent the price of crude oil lower, which posted a -2.0% drop for the week. Oil-related stocks tumbled. The oil index fell -1.9% and the oil services index plunged -2.5% for the week.

Economic Data

The trend of uneven economic data in the U.S. continued. The November reading for the Consumer Confidence index fell from October's upward revised 72.4 down to 70.4. This is a new seven-month low. Economists were expecting an up tick to 72.6. Yet this news was overshadowed by headlines that the final November reading for the University of Michigan Consumer Sentiment survey rose from 72.0 to 75.1.

Another positive surprise was the Chicago PMI. Economist were expecting a drop from 65.9 in October to 60.0 in November but the November reading came in at 63.0. That's the first time in almost two years the Chicago PMI has held above the 60.0 level for two months in a row. Elsewhere the durable goods orders for October were a disappointment. The headline number fell from +4.1% growth in September to -2.0% in October. The core durable goods number came in worse than expected with a -1.2% drop following a -1.4% drop in September.

There were a number of data points for the real estate sector. Build permits are trending higher with the number of permits rising from an annual pace of 926,000 in August to 974,000 in September. The trend continued with a rise to 1.034 million in October, which marks the highest level in five years. Another positive surprise was the Case-Shiller 20-city Home Price index that came in better than expected with September's reading at +13.3% gain year over year. This sudden surge in home prices is starting to raise concern. Robert Shiller told CNBC that this year over year momentum in the housing market can't be trusted.

The pace of pending home sales was also a disappointment. The average rate for a 30-year fixed rate mortgage fell from 4.47% in September down to 4.25% in October yet pending home sales fell -0.6% in October. That's the fifth month in a row that pending home sales have fallen.

Overseas Data

The mixed economic data continued overseas. The Eurozone said their unemployment rate ticked down from its all-time high of 12.2% to 12.1%. Meanwhile consumer confidence in the Eurozone slipped from -14.5 to -15.0. Germany said their unemployment claims came in higher than expected but their unemployment rate was unchanged at 6.9%. Unfortunately consumer spending in Germany slipped -0.2% and retail sales in Germany inched down -0.8%, which was worse than expected. In positive news, after nine consecutive quarters of negative economic growth the country of Spain said their economy grew +0.1% in the third quarter. Ratings agency Standard & Poor's raised their outlook on Spain to "stable". S&P also commented on the Netherlands and lowered the Dutch credit rating from AAA to AA+.

Japan released a lot of economic data last week. The country's retail sales rose better than expected with +2.3% year over year gains. Japan's manufacturing PMI advanced from 54.1 to 55.1. Their CPI came in a +1.1% year over year. Yet their industrial production only rose +0.5%, which was significantly below expectations. Japan's NIKKEI index hit six month highs early last week after the Bank of Japan governor floated the idea of negative interest rates to deter saving and encourage more spending and investment (this would also encourage more money into the stock market).

One of the biggest stories of the week was the ongoing escalation between Japan and China over the Senkaku/Diaoyu islands. As discussed in last week's market commentary China unilaterally declared the air above these disputed islands as a new "air defense identification zone'. The countries have been bickering over these uninhabited islands for years. It's believed the sea around them is full of potential oil and gas on top of the fishing resources in the area. Both the U.S. and Japan ignored China's air defense zone. The U.S. flew unarmed B-52 bombers on Monday. Japan flew some fighter jets through the area as well. China scrambled military aircraft in response. This is a dangerous escalation. If someone pulls the trigger and sparks a military conflict between China and Japan the equity markets will suffer for it.

Holiday Shopping

In other news we are going to continue to hear about the retailers and estimates for the holiday shopping season. There seem to be two distinct camps. One side of analysts believes we could be facing one of the worst holiday shopping seasons in years thanks in part to six fewer shopping days and a tired U.S. consumer. The other side believes that this year will be healthy and much better than expected. There have been a number of consumer polls. One showed that the average consumer plans to spend about 10% less this year than last. Another forecast showed that foot traffic into brick and mortar stores is expected to fall -11% this year. Yet online sales are expected to hit another record. According to Forester Research we could see online sales in the U.S. hit $78.7 billion. That would be a +15% increase over 2012.

This year there were a number of headlines about major retailers opening up earlier and earlier on Thanksgiving night. A number of consumers found this distasteful and there seemed to be a growing backlash about retailers not respecting the Thanksgiving holiday. Yet estimates suggested that over 30 million people started their holiday shopping on Thanksgiving. That compares to almost 100 million people who were expected to shop on Black Friday. According to Wal-Mart consumers were hungry to start their shopping on Thursday. Between 5:00 p.m. and 10:00 p.m. on Thanksgiving night WMT said they had over 10.0 million registered sales across the U.S. and their website had over 400 million pages views on Thanksgiving.

Monday will be Cyber Monday, which is Black Friday for many online retailers. The idea is that everyone returns to work from their Thanksgiving holiday and uses their office high-speed Internet connection to order gifts online after window shopping all weekend. That may have been true back in 2005-2006 but with more and more homes with high-speed connections there is less of a need to wait to get to work to start shopping. Of course marketers will not let a new tradition like Cyber Monday go to waste and there will be plenty of promotions across the Internet.

Major Indices:

One point. The S&P 500 index added 1.1 points for the holiday shortened week. That was enough to stretch its gains to eight up weeks in a row. Lack of momentum could have been a factor of fewer market participants since so many investors were on vacation last week or it could be buyer exhaustion. The path of least resistance is still up but eventually the market will see another correction lower.

The 1800 level should be support but it's too close. I would look for support near 1780 and below that the 1750 level. If the rally resumes then we can watch for likely resistance near 1820 and 1850. Year to date the S&P 500 is up +26.6%.

chart of the S&P 500 index:

The NASDAQ composite continues to race higher. This index broke out past the 4,000 level last week and kept right on going. These are new 13-year highs. Broken resistance at 4,000 should be new support. If that level fails then look for 3950. Overhead resistance is probably the 4100 mark. Year to date the NASDAQ is up an incredible +34.4%.

chart of the NASDAQ Composite index:

The small cap Russell 2000 continues to show relative strength with a breakout to new all-time highs. The index high on Friday was a test of a new trend line of higher highs (see chart). The $RUT is probably short-term overbought here. Look for support near 1120. If that level fails then the 1100 level and its 50-dma should offer support. The 1160 and 1180 levels are potential resistance. Year to date the $RUT is up +34.5%.

chart of the Russell 2000 index



Economic Data & Event Calendar

It's the beginning of a new month. That means it's a busy week for economic data. Analysts are expecting the November reading for the national ISM manufacturing data to be flat. The nonmanufacturing ISM index due out on Wednesday is expected to rise. The ADP report on Wednesday is expected to improve. The real event this week is Friday's non-farm payrolls (jobs) report. Last month the jobs report surprised everyone with +204,000 new jobs in October. This time analysts are expecting +175,000 new jobs in November. Another big surprise over 200K could renew worries that the Federal Reserve may taper their QE program sooner than expected and that could be bearish for stocks.

We'll also see the newest estimate on U.S. Q3 GDP growth. Economists are expecting GDP growth to narrow from the first estimate of +2.85% down to +2.8%. Another big event for the week will be the European Central Bank's (ECB) decision on interest rates. Plus ECB President Mario Draghi will hold a press conference after their decision is released.

Economic and Event Calendar

- Monday, December 02 -
ISM index (for November)
construction spending
Eurozone manufacturing PMI data

- Tuesday, December 03 -
auto & truck sales for November

- Wednesday, December 04 -
weekly MBA mortgage application data
ADP Employment Change report
new home sales
ISM services index
Federal Reserve's Beige Book
Eurozone services PMI data

- Thursday, December 05 -
Weekly Initial Jobless Claims
European Central Bank (ECB) interest rate decision
Press conference for ECB President Draghi
U.S. Q3 GDP estimate (second estimate)
factory orders
Bank of England interest rate decision

- Friday, December 06 -
personal income and spending
Non-farm payrolls (jobs) report for November
University of Michigan Consumer Sentiment

Additional Events to be aware of:

Dec. 17th - FOMC meeting & economic forecasts update
Dec. 17th - post-FOMC meeting Ben Bernanke press conference
Dec. 24th - U.S. stock market closes early
Dec. 25th - U.S. stock market closed for Christmas




Looking Ahead:

Looking ahead the challenges for the market remain the same as last week. Investors are overwhelmingly bullish, which as a contrarian indicator is actually bearish. Fears that the Fed might taper sooner than expected hover in the background. A better than expected jobs report on Friday could inflame those fears. Congress is supposed to have a new budget deal done by Friday, December 13th. Odds of congress meeting that deadline is likely zero. The rhetoric out of Washington could put a damper on investor sentiment. The market also faces another FOMC meeting on December 17th. If the Fed does announce a taper at that meeting it will spark a sell off.

Fortunately the calendar does favor the bulls. The first couple of days in December tend to be flat or down but the next three weeks are usually up. The market expects a Santa Claus rally every year and that is supposed to start the first week of December. Historically December is the best month of the year for the markets. Of course this year we have the congressional budget deadline and FOMC meeting as potential land mines that could destroy any Santa Claus rally.

Another contrarian warning signal is margin debt. We've been hearing about record high margin debt for weeks. At $412.5 billion, the margin debt on the NYSE is an all-time record high. It's up +13.2% for the year but it is up +50% from January 2012. To help put this into some perspective current margin debt equals about 2.4% of U.S. GDP. That compares to margin debt hitting 2.6% in July 2007 and 2.8% in March 2000. We didn't pick those dates out of thin air. Both of those marked major market tops. That's why so many people are keeping a cautious eye on margin debt levels. The risk is that so many investors own stocks on borrowed money that when the market does see a decline it could be exaggerated as these traders rush to sell and lock in gains or reduce their losses.

Another worry is investor sentiment. Many have called the current rally one of the most hated rallies in history. Too many fund managers have underperformed the major indices. They will likely chase stocks higher into year end. However, bearish sentiment has been sinking as more and more investors turn bullish. The latest poll puts the number of bearish investors at the lowest level since 1987. That should be a worrisome indicator that traders are too bullish.

Do all these concerns mean we should sell now? Not necessarily. We still expect the market's overall trend to remain higher through year end. That's assuming the Fed does not taper at its mid December meeting. It's also assuming that geopolitical issues like the escalation between Japan and China or Iran's nuclear drama doesn't get any worse. It does mean that we should be aware that there are a number of factor flashing potential warning signals. After an eight-week rally in the S&P 500 we're definitely due for some profit taking. Can the index make it nine up weeks in a row? Of course it can.

James



Portfolio

Portfolio Update

by James Brown

Click here to email James Brown


Current Portfolio


Portfolio Comments:

The S&P 500 almost broke its weekly winning streak but managed to extend its gains to eight up weeks in a row. We only have about seven weeks left before 2014 January options expire.

Our plan was to exit our EMN and INTC trades on Monday morning, November 25th.

COF and HFC have graduated from our watch list to our active play list.

We want to exit our ODFL trade and the VRSN 2014 calls on Monday morning, December 2nd.

I have updated stop losses on: WYN

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

Chasing Stocks?

by James Brown

Click here to email James Brown


- New Trades -


Editor's Note:

(December 01, 2013)

The U.S. stock market continues to rally. Last week the NASDAQ and the small cap Russell 2000 index led the way higher while the S&P 500 lagged. Momentum seems to be stalling for the large cap index while the NASDAQ and the Russell both look a little bit overbought. We are overdue for a pullback. Yet at the same time we are entering the most bullish month of the year for stocks. Do we chase stocks higher or do we wait for a dip? The answer depends on your personal trading style.

I am not adding any new trades tonight. However, we did just see two of our watch list candidates graduate from to our active play list last week (COF and HFC). Plus, I'm adding three new candidates to our watch list tonight (CZR, HD, and YUM). All of them could be triggered this week.

Radar Screen:
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself:

GD, V, GM, HPQ, TSCO, WMT, FL, PHM, ESRX, JOY, NKE, USB, HBAN, STX, DECK, MDR, BBBY, TJX, ITW, TXN, MSFT, NAV, PAYX,



Play Updates

A Quiet Holiday Week

by James Brown

Click here to email James Brown

Editor's Note:

COF and HFC have graduated from our watch list to active plays below.

We want to exit our ODFL trade on Monday morning, December 2nd. Plus we want to exit the VRSN 2014 calls on Monday morning.


Closed Plays


EMN and INTC were closed on Monday, November 25th.



Play Updates


American Intl. Group - AIG - close: 49.75

Comments:
12/01/13: The financial sector drifted sideways during the holiday shortened week. AIG was no different. The stock spent the week trying to breakout past round-number resistance at the $50.00 level. I am not suggesting new positions at this time. More conservative traders may want to raise their stops.

NOTE: We only have about seven weeks left on our 2014 January calls.

- Suggested Positions -
JUL 15, 2013 - entry price on AIG @ 46.99, option @ 2.50
symbol: AIG1418a50 2014 JAN $50 call - current bid/ask $1.33/1.37

- or -

JUL 15, 2013 - entry price on AIG @ 46.99, option @ 4.05
symbol: AIG1517a55 2015 JAN $55 call - current bid/ask $3.25/3.40

10/20/13 new stop loss @ 46.40
10/13/13 exit strategy update: exit 2014 calls at $54.50
adjust the exit target for the 2015 calls to $59.00
09/15/13 new stop loss @ 44.65
08/04/13 new stop loss @ 43.75
...please see earlier updates for more history...

Current Target:$ exit 2014 calls @ 54.50, exit 2015 calls @ 59.00
Current Stop loss: 46.40
Play Entered on: 07/15/13
Originally listed on the Watch List: 06/01/13


Avago Technologies - AVGO - close: 44.73

Comments:
12/01/13: AVGO produced a strong bounce before Thanksgiving. The rally higher managed to break through AVGO's short-term down trend of lower highs. While this is bullish I suspect that AVGO will drift sideways the next couple of days as investors wait to see the company's earnings report. AVGO is scheduled to report earnings on Wednesday, December 4th, after the closing bell. AVGO could be volatile on Thursday morning in reaction to earnings. More conservative investors might want to raise their stop loss closer to the $42.00 area to reduce their risk. I am not suggesting new positions at this time.

- Suggested Positions -
NOV 11, 2013 - entry price on AVGO @ 44.44, option @ 3.60
symbol: AVGO1517a50 2015 JAN $50 call - current bid/ask $3.00/3.80

11/24/13 AVGO is not participating in the market rally.
investors may want to exit early now to cut their losses.
11/11/13 trade opens.
11/10/13 promoted from watch list to new play.
11/03/13 adjust trigger to $43.00
10/27/13 removed the 2014 call
10/20/13 adjust the buy-the-dip trigger to $43.50
adjust the stop loss to $39.40 & adjust the option strikes
adjust the 2014 exit target to $49.50
adjust the 2015 exit target to $54.00
10/13/13 adjust the buy-the-dip trigger from $40.00 to $40.50

Current Target: $55.00
Current Stop loss: 39.40
Play Entered on: 11/11/13
Originally listed on the Watch List: 09/22/13


Bank of America - BAC - close: 15.82

Comments:
12/01/13: BAC spent most of the week trading sideways with the financial sector. However BAC did manage to eke out a weekly gain making it four up weeks in a row. The stock does look a bit over extended. Watch for potential support near $15.00 on any pullback.

- Suggested Positions -
(exit target hit on 07/23/13 @ $15.00)
MAR 18, 2013 - entry price on BAC @ 12.29, option @ 0.44
symbol: BAC1418a15 2014 JAN $15 call - exit $1.04 (+136.3%)

- or -

MAR 18, 2013 - entry price on BAC @ 12.29, option @ 1.13
symbol: BAC1517a15 2015 JAN $15 call - current bid/ask $2.25/2.29

11/24/13 new stop loss @ 13.70
11/17/13 new stop loss @ 13.35
07/23/13 $15.00 exit target hit for the 2014 Jan. $15 calls.
07/20/13 new stop loss @ 12.75. Adjust the exit target for the 2014 calls to exit when BAC hits $15.00. Our exit for the 2015 calls is $18.00 on BAC
07/07/13 new stop loss @ 11.35
05/04/13 BAC did not participate in the market's rally this past week. Investors should turn more defensive here.

Current Target: BAC @ 15.00 for 2014 calls. BAC @ $18 for 2015 call
Current Stop loss: 13.70
Play Entered on: 03/18/13

Originally listed on the Watch List: 03/09/13


Capital One Financial - COF - close: 71.63

Comments:
12/01/13: COF is a watch list candidate that has graduated to our active play list. Shares displayed relative strength and outperformed its peers in the financial sector last week. The plan was to wait for COF to close above $71.00 and then buy calls the next day. Shares closed at $71.51 on Wednesday, November 27th. Our trade opened on Friday morning at $71.69. I would still consider new positions now or you could wait for a likely dip back toward the $71.00 level as an alternative entry point.

- Suggested Positions -
NOV 29, 2013 - entry price on COF @ 71.69, option @ 5.80*
symbol: COF1517a75 2015 JAN $75 call - current bid/ask $5.55/5.75

*option entry price is an estimate since the option did not trade at the time our play was opened.

Chart of COF:

Current Target: COF @ 84.00 for 2015 calls
Current Stop loss: 66.95
Play Entered on: 11/29/13
Originally listed on the Watch List: 11/17/13


E.I. du Pont - DD - close: 61.38

Comments:
12/01/13: I am growing concerned with our DD trade. The major indices are still hitting new highs but DD has stalled two weeks in a row. Shares appear to be consolidating in a neutral pattern with higher lows but lower highs.

We only have about seven weeks left on our 2014 January calls.

- Suggested Positions -
OCT 25, 2013 - entry price on DD @ 62.57, option @ 0.74
symbol: DD1418a65 2014 JAN $65 call - current bid/ask $0.35/0.37

- or -

OCT 25, 2013 - entry price on DD @ 62.57, option @ 3.15
symbol: DD1517a65 2015 JAN $65 call - current bid/ask $3.05/3.20

10/25/13 trade opens. DD gaps higher a $62.57
10/24/13 DD closed above our trigger @ 60.75
09/22/13 adjust entry: wait for a close above $60.75
instead of a close above $60.50

Current Target: DD @ 69.00
Current Stop loss: 57.90
Play Entered on: 10/25/13
Originally listed on the Watch List: 08/11/13


Dollar General Corp. - DG - close: 56.94

Comments:
12/01/13: Hmm... the situation in shares of DG seems to be deteriorating. The stock has now created a second lower high and shares definitely underperformed the market last week. DG is testing short-term support near $57.00 and looks poised to breakdown below it.

Investors holding the 2014 January calls may want to consider an early exit right here to cut their losses early. We only have about seven weeks left before these 2014 options expire.

I am not suggesting new positions at this time. DG is due to report earnings on Thursday morning, December 5th. The stock could be extra volatile that Thursday as the market reacts to its results.

Earlier Comments:
Our long-term target is $64.00 for the 2014 calls. Our target is $69.00 for the 2015 calls. FYI: The point & figure chart is bullish with a $78.00 target.

- Suggested Positions -
SEP 06, 2013 - entry price on DG @ 57.61, option @ 2.58
symbol: DG1418a60 2014 JAN $60 call - current bid/ask $1.50/1.65

- or -

SEP 06, 2013 - entry price on DG @ 57.61, option @ 3.48
symbol: DG1517a70 2015 JAN $70 call - current bid/ask $2.70/2.95

11/17/13 new stop loss @ 54.75
09/22/13 new stop loss @ 53.60

Current Target: 64.00 for the 2014s, 69.00 for the 2015s
Current Stop loss: 54.75
Play Entered on: 09/06/13
Originally listed on the Watch List: 08/04/13


The Walt Disney Co. - DIS - close: 70.54

Comments:
12/01/13: DIS surged to new all-time highs before Thanksgiving. The stock has since seen a couple of days of profit taking. Nimble traders could use a dip or a bounce near $70.00 as a new, alternative entry point to launch positions.

- Suggested Positions -
OCT 23, 2013 - entry price on DIS @ 68.81, option @ 3.70
symbol: DIS1517a75 2015 JAN $75 call - current bid/ask $4.25/4.40

11/24/13 new stop loss @ 64.75

Current Target: DIS @ 84.00
Current Stop loss: 64.75
Play Entered on: 10/23/13
Originally listed on the Watch List: 10/13/13


Dick's Sporting Goods - DKS - close: 56.52

Comments:
12/01/13: DKS continues to bounce with the stock up six days in a row. Friday marks a new all-time closing high for the stock. Investors may want to start raising their stops.

Our long-term target is $65.00. More aggressive traders could aim higher. The point & figure chart is already bullish and forecasting at $71 target.

- Suggested Positions -
NOV 12, 2013 - entry price on DKS @ 54.73, option @ 4.00*
symbol: DKS1517a60 2015 JAN $60 call - current bid/ask $4.40/4.60

11/12/13 trade opens. DKS opens at $54.73
*option entry price is an estimate since the option did not trade at the time our play was opened.
11/11/13 closed about our suggested entry trigger (above 54.50)
10/27/13 removed the 2014 call.

Current Target: DKS @ 65.00
Current Stop loss: 49.95
Play Entered on: 11/12/13
Originally listed on the Watch List: 10/06/13


Dollar Tree, Inc. - DLTR - close: 55.65

Comments:
12/01/13: DLTR's performance is disappointing. The oversold bounce is already failing with shares down every day last week. DLTR looks poised to retest support near $55.00 soon. If shares can bounce at $55.00 again then I would be tempted to buy calls. Otherwise investors may want to just wait and watch. Currently our stop loss is at $52.40 but more conservative investors may want to raise theirs closer to $54.00 instead.

- Suggested Positions -
NOV 21, 2013 - entry price on DLTR @ 55.50, option @ 2.75*
symbol: DLTR1517a65 2015 JAN $65 call - current bid/ask $2.50/2.60

11/21/13 trade opened on gap down at $55.50. Trigger was $56.25.
gap down was a reaction to earnings news
10/27/13 removed the 2014 call
10/20/13 adjust the trigger to $56.25 and the stop to $52.40

Current Target: DLTR @ 65.00
Current Stop loss: 52.40
Play Entered on: 11/21/13
Originally listed on the Watch List: 09/22/13


Ford Motor Co. - F - close: 17.08

Comments:
12/01/13: Ford is still consolidating sideways. You'll notice the consolidation is narrowing and that would suggest that a breakout is probably imminent. Unfortunately the consolidation is neutral with lower highs and higher lows so the breakout could go either way.

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

- Suggested Positions -
(closed the 2014 calls on May 20th, at the open)
APR 29, 2013 - entry price on F @ 13.73, option @ 0.60
symbol: F1418a15 2014 JAN $15 call - exit $1.18 (+96.6%)

- or -

APR 29, 2013 - entry price on F @ 13.73, option @ 1.22
symbol: F1517a15 2015 JAN $15 call - current bid/ask $ 2.96/3.00

10/20/13 new stop loss @ 15.65
09/15/13 adjust exit target on 2015 calls to $19.50 (on Ford stock)
09/08/13 new stop loss @ 15.35
08/04/13 new stop loss @ 14.85
07/07/13 new stop loss @ 14.25
...please see earlier updates for more history...

Current Target:$ 19.50
Current Stop loss: 15.65
Play Entered on: 04/29/13
Originally listed on the Watch List: 04/20/13


Freeport-McMoRan - FCX - close: 34.69

Comments:
12/01/13: Prices for gold, silver, and copper trended lower last week. That pressured shares of FCX. A downgrade from Goldman Sachs on Tuesday didn't help either. Shares have broken through their 50-dma. The next level of likely support is the $34.00 level. More conservative investors may want to raise their stop loss. I am not suggesting new positions at this time.

- Suggested Positions -
NOV 13, 2013 - entry price on FCX @ 35.25, option @ 2.60*
symbol: FCX1517a39 2015 JAN $39 call - current bid/ask $2.14/2.20

11/13/13 FCX hits our buy-the-dip entry point at $35.25
*option entry price is an estimate since the option did not trade at the time our play was opened.
10/27/13 strategy update: removed the 2014 calls
adjust the buy-the-dip trigger to $35.25 and the stop to $32.25.
adjust the option strike to the 2015 Jan $39 call

Current Target:$ 42.50
Current Stop loss: 32.25
Play Entered on: 11/13/13
Originally listed on the Watch List: 09/15/13


Fluor Corp. - FLR - close: 77.81

Comments:
12/01/13: FLR might be in for a pullback. Shares produced another failed rally at resistance near $80.00 this past week. That could qualify as a bearish double top. At the moment FLR still has a bullish trend of higher lows but the stock will likely test that support soon. I am expecting FLR to find some support in the $74-76 area.

Earlier Comments:
We will plan to exit our 2015 calls when FLR trades at $88.00.

- Suggested Positions -
SEP 12, 2013 - entry price on FLR @ 67.14, option @ 2.90
symbol: FLR1418a70 2014 JAN $70 call - exit $9.30 (+220.6%)

- or -

SEP 12, 2013 - entry price on FLR @ 67.14, option @ 5.70*
symbol: FLR1517a75 2015 JAN $75 call - current bid/ask: 10.10/10.40

11/24/13 new stop loss @ 72.75
11/13/13 exit target hit for 2014 Jan. $70 calls
11/10/13 new stop loss @ 71.40
10/31/13 FLR reported earnings and management lowered guidance
10/20/13 new stop loss @ 68.80
adjust exit targets: Target for 2014 call is $79.00
target for 2015 call is $88.00
09/22/13 new stop loss @ 64.75
09/22/13 adjust exit target from $74.75 to $79.50
09/20/13 high for the day was $74.72
*option entry price is an estimate since the option did not trade at the time our play was opened.

Current Target:$ Target for 2014 call is $79.00,
Target for 2015 is $88.00
Current Stop loss: 72.75
Play Entered on: 09/12/13
Originally listed on the Watch List: 08/11/13


HollyFrontier Corp. - HFC - close: 47.98

Comments:
12/01/13: HFC is a watch list candidate that has graduated to our active play list. The stock had been coiling for a bullish breakout above resistance near $47.00 and its simple 200-dma. The plan was to wait for shares to close above $47.50 and then buy calls the next day. HFC met our requirement on November 25th with a close at $47.55. Our trade opened the next day with a gap down to $47.17. Traders pounced on the dip and HFC exploded higher on Wednesday. The stock pared its gains with a steep pullback on Friday but the overall trend remains higher.

I would consider new positions now or you could wait for a dip closer to $47.00, a level that should be new support.

NOTE: The options for HFC have changed. Due to a 50-cent special dividend the option strikes have all been adjusted down by 50 cents. Our listed option strike 2015 January $49.50 has become $49.00.

- Suggested Positions -
NOV 26, 2013 - entry price on HFC @ 47.17, option @ 5.00*
symbol: HFC1517a49 2015 JAN $49 call - current bid/ask $5.40/5.70

*option entry price is an estimate since the option did not trade at the time our play was opened.

Chart of HFC:

Current Target: HFC @ 59.00
Current Stop loss: 43.25
Play Entered on: 11/26/13
Originally listed on the Watch List: 11/24/13


Harley-Davidson - HOG - close: 67.02

Comments:
12/01/13: The holiday week was a quiet one for HOG. Shares drifted sideways in a narrow range. I don't see any changes from my prior comments. If the market dips we can watch for short-term support in the $65-66 zone. I am not suggesting new positions at this time.

NOTE: We only have about seven weeks left on our 2014 calls. Investors may want to exit now to lock in gains.

Earlier Comments:
I am adjusting our exit target for the 2015 calls to $74.50. We will still plan to exit our 2014 calls when HOG hits $69.00.

- Suggested Positions -
SEP 04, 2013 - entry price on HOG @ 61.01, option @ 2.36
symbol: HOG1418a65 2014 JAN $65 call - current bid/ask $ 3.05/3.15

- or -

SEP 04, 2013 - entry price on HOG @ 61.01, option @ 4.35*
symbol: HOG1517a70 2015 JAN $70 call - current bid/ask $ 5.70/5.90

11/17/13 new stop loss @ 61.45
adjust the exit target for 2015 calls to $74.50
10/20/13 do not be surprised to see some profit taking after HOG reports earnings on Oct. 22nd.
09/22/13 new stop loss @ 59.00
*note the entry price on our 2015 call is an estimate since the option did not trade at the time our play opened.

Current Target: exit 2014 calls @ 69.00, exit 2015 calls @ 74.50
Current Stop loss: 61.45
Play Entered on: 09/04/13
Originally listed on the Watch List: 08/25/13


Honeywell Intl. - HON - close: 88.51

Comments:
12/01/13: HON struggled to make any progress last week. Traders seemed to be selling the rallies. I would not be surprised to see another dip back into the $86-87 area soon.

Earlier Comments:
Our initial plan was to keep our position size small to limit risk.

- Suggested Positions -
(closed the 2014 calls on May 20th at the open)
MAY 07, 2013 - entry price on HON @ 76.20, option @ 2.68
symbol: HON1418a80 2014 JAN $80 call - exit $5.10 (+90.2%)

- or -

MAY 07, 2013 - entry price on HON @ 76.20, option @ 4.10
symbol: HON1517a85 2015 JAN $85 call - current bid/ask $ 9.00/9.20

11/24/13 new stop loss @ 83.75
11/17/13 new stop loss @ 82.75
11/10/13 new stop loss @ 81.75
10/20/13 new stop loss @ 79.40
10/13/13 investors might want to take profits on our 2015 calls, which have doubled in value.
...please see earlier newsletter for prior comments...

Current Target:$ 95.00
Current Stop loss: 83.75
Play Entered on: 05/07/13
Originally listed on the Watch List: 05/04/13



JPMorgan Chase & Co. - JPM - close: 57.22

Comments:
12/01/13: Shares of JPM seemed to peak on Monday, November 25th and spent the rest of the week drifting sideways and digesting its gains. The stock does still look short-term overbought here and due for a pullback. More conservative investors may want to raise their stop loss again. Actually more conservative investors with the 2014 calls might want to just exit early now to lock in gains. We only have about seven weeks left before the 2014 January options expire. I am not suggesting new positions at this time.

Please note that I am adjusting our exit strategy for the 2014 calls. If you don't exit now then plan to exit when JPM hits $59.50. Our exit target for the 2015 calls remains JPM at $64.00.

- Suggested Positions -
JUN 24, 2013 - entry price on JPM @ 50.25, option @ 1.60
symbol: JPM1418a55 2014 JAN $55 call - current bid/ask $ 2.97/3.05

- or -

JUN 24, 2013 - entry price on JPM @ 50.25, option @ 3.80
symbol: JPM1517a55 2015 JAN $55 call - current bid/ask $ 6.20/6.30

12/01/13 adjust exit target for the 2014 calls to exit when JPM hits $59.50
11/24/13 new stop loss @ 51.95
Consider taking profits on the 2014 calls now
09/01/13 adjust stop loss to $48.99
07/21/13 new stop loss @ 49.65
07/14/13 new stop loss @ 48.75
Current Target: exit 2014 calls when JPM hits $59.50
exit 2015 calls when JPM hits $64.00
Current Stop loss: 51.95
Play Entered on: 06/24/13
Originally listed on the Watch List: 05/25/13


Level 3 Communications - LVLT - close: 30.42

Comments:
12/01/13: LVLT is recovering with the stock rebounding higher most of last week. LVLT is nearing prior resistance in the $31.00 area. I am not suggesting new positions at this time.

- Suggested Positions -
OCT 31, 2013 - entry price on LVLT @ 29.39, option @ 4.40*
symbol:LVLT1517a30 2015 JAN $30 call - current bid/ask $ 4.50/4.90

11/24/13 new stop loss @ 26.75
*option entry price is an estimate since the option did not trade at the time our play was opened.
Current Target: $39.00
Current Stop loss: 26.75
Play Entered on: 10/31/13
Originally listed on the Watch List: 10/20/13


National Oilwell Varco - NOV - close: 81.50

Comments:
12/01/13: News that the U.S. and EU would lift some sanctions against Iran sparked a sell off in crude oil prices. This drop in oil fueled a decline across the oil stocks. NOV suffered with a drop toward its simple 50-dma. The overall trend remains higher. I am not suggesting new positions at this time.

Earlier Comments:
FYI: NOV is planning a spinoff of its oilfield production equipment business by late 2014. We will likely exit positions prior to the spinoff.

- Suggested Positions -
OCT 17, 2013 - entry price on NOV @ 81.00, option @ 5.00
symbol: NOV1517a90 2015 JAN $90 call - current bid/ask $ 4.65/4.85

Current Target: $89.75
Current Stop loss: 76.75
Play Entered on: 10/17/13
Originally listed on the Watch List: 10/13/13


NVIDIA Corp. - NVDA - close: 15.60

Comments:
12/01/13: NVDA produced a nice two-day bounce last Monday and Tuesday. The stock spent the rest of the week hovering above the $15.50 level and its 50-dma. I remain cautious here and more conservative traders may want to raise their stops again. I'm not suggesting new positions.

Don't forget that we only have about seven weeks left on the 2014 January options.

Earlier Comments:
Due to NVDA's recent volatility I am labeling this a more aggressive, higher-risk trade and thus suggest we use smaller positions to limit our risk. Our target to exit the 2014 calls is $18.00. Our target to exit the 2015 calls is $19.75. Currently the point & figure chart is bullish and forecasting at $23 target.

- Suggested *Small* Positions -
SEP 12, 2013 - entry price on NVDA @ 15.63, option @ 0.88
symbol: NVDA1418a16 2014 JAN $16 call - current bid/ask $0.36/0.38

- or -

SEP 12, 2013 - entry price on NVDA @ 15.63, option @ 1.54
symbol: NVDA1517a17 2015 JAN $17 call - current bid/ask $1.27/1.32

09/22/13 new stop loss @ 14.45

Current Target: exit for 2014 calls is $18.00, exit for 2015s is $19.75
Current Stop loss: 14.45
Play Entered on: 09/12/13
Originally listed on the Watch List: 08/18/13


Old Dominion Freight Line - ODFL - close: 51.53

Comments:
12/01/13: The last couple of weeks have seen ODFL display relative strength and breakout through the top of its bullish channel. The move is certainly bullish. Yet I'm worried that ODFL's move is getting a bit over extended. The action on Friday is starting to look a bit like a top. We only have about seven weeks left on our 2014 January options. I am suggesting an immediate exit on Monday morning, December 2nd, to lock in gains. More aggressive traders may want to hang on and just adjust your stop loss higher.

- Suggested Positions -
AUG 14, 2013 - entry price on ODFL @ 45.62, option @ 1.25
symbol: ODFL1418a50 2014 JAN $50 call - current bid/ask $2.35/2.60

12/01/13 prepare to exit on Monday, Dec. 2nd
11/24/13 new stop loss @ 46.75
11/17/13 investors may want to consider an early exit now to lock in a small gain.
10/27/13 new stop loss @ 44.75
10/20/13 new stop loss @ 43.75
09/15/13 What a difference two weeks can make.
09/01/13 conservative traders may want to cut their losses now
08/14/13 trade opens. ODFL opens at $45.62.
08/13/13 ODFL meets our entry requirement with close at $45.65
08/11/13 adjust the entry trigger. Wait for ODFL to close above $45.50 instead of $45.25.

Current Target: $54.00
Current Stop loss: 46.75
Play Entered on: 08/14/13
Originally listed on the Watch List: 07/28/13


QUALCOMM Inc. - QCOM - close: 73.58

Comments:
12/01/13: It was another volatile week for QCOM but shares recovered from their Monday, November 25th lows. The stock's rebound pushed QCOM to new 13-year highs. I am not suggesting new positions at current levels. More conservative traders may want to start raising their stops.

- Suggested Positions -
NOV 15, 2013 - entry price on QCOM @ 71.34, option @ 4.90
symbol: QCOM1517a75 2015 JAN $75 call - current bid/ask $5.85/6.00

11/15/13 trade opens. QCOM @ 71.34
11/14/13 QCOM closes above entry trigger (above 70.50)

Current Target: $85.00
Current Stop loss: 66.75
Play Entered on: 11/15/13
Originally listed on the Watch List: 11/03/13


VeriSign, Inc. - VRSN - close: 56.86

Comments:
12/01/13: VRSN spent most of the week consolidating sideways below the $57.00 level. Shares spiked on Friday and hit new 12-year highs before paring their gains. The trend is up but we only have about seven weeks left on our 2014 calls. I am suggesting we exit our 2014 January $55 calls immediately (Monday morning, December 2nd) to lock in gains. We were planning to exit these options when VRSN hit $57.50 and shares hit $57.30 on Friday before reversing. That's close enough.

We will still have the 2015 calls and our exit target remains $64.50 for this position.

Earlier Comments:
Our target to exit the 2014 calls is $57.50. Our target to exit the 2015 calls is $64.50. Currently the point & figure chart is bullish with a $76 target.

- Suggested Positions -
SEP 19, 2013 - entry price on VRSN @ 51.40, option @ 1.16
symbol:VRSN1418a55 2014 JAN $55 call - current bid/ask $ 2.70/2.78

- or -

SEP 19, 2013 - entry price on VRSN @ 51.40, option @ 4.25*
symbol:VRSN1517a55 2015 JAN $55 call - current bid/ask $ 6.65/6.90

12/01/13 prepare to exit our 2014 Jan. $55 calls on Monday, Dec. 2nd.
11/24/13 new stop loss @ 52.40
11/17/13 new stop loss @ 49.75
11/03/13 new stop loss @ 48.40
*option entry price is an estimate since the option did not trade at the time our play was opened.
09/15/13 adjust entry trigger: wait for a close over $50.50 instead of $50.25

Current Target:
Exit 2014 calls when VRSN hits $57.50, 2015 calls @ $64.50
Current Stop loss: 52.40
Play Entered on: 09/19/13
Originally listed on the Watch List: 08/18/13


Wyndham Worldwide - WYN - close: 71.71

Comments:
12/01/13: WYN continues to perform well with another week of record highs. Shares are starting to look short-term overbought here. It might be time for a pullback. I am not suggesting new positions at this time.

Please note our new stop loss at $65.40.

Earlier Comments:
The point & figure chart is bullish and currently forecasting a $93.00 target.

- Suggested Positions -
NOV 18, 2013 - entry price on WYN @ 68.97, option @ 4.20
symbol: WYN1517a75 2015 JAN $75 call - current bid/ask $ 5.20/5.70

12/01/13 new stop loss @ 65.40
11/24/13 new stop loss @ 64.75
11/18/13 trade opens. WYN opens @ 68.97

Current Target: 85.00
Current Stop loss: 65.40
Play Entered on: 11/18/13
Originally listed on the Watch List: 11/10/13



CLOSED Plays


Eastman Chemical Co. - EMN - close: 77.03

Comments:
12/01/13: EMN has not been performing well. Last weekend we decided to just exit the rest of this trade on Monday morning, November 25th. The stock saw a very small gap open higher on Nov. 25th at $76.51.

- Suggested Positions -
(2014 call position closed on Oct. 21st)
JUL 18, 2013 - entry price on EMN @ 75.34, option @ 3.60*
symbol: EMN1418a80 2014 JAN $80 call - exit $4.90 (+36.1%)

- or -


JUL 18, 2013 - entry price on EMN @ 75.34, option @ 4.90*
symbol: EMN1517a90 2015 JAN $90 call - exit $3.60 (-26.5%)

11/25/13 planned exit at the open
11/24/13 prepare to exit positions on Monday, Nov. 25th
11/17/13 the action this past week is worrisome!
10/21/13 planned exit for the 2014 calls. $4.90 (+36.1%)
10/20/13 prepare to exit the 2014 calls on Monday. Oct. 21st at the opening bell
08/04/13 new stop loss @ 74.40
07/18/13 Trade opened. EMN opens at $75.34
*option entry price is an estimate since the option did not trade at the time our play was opened.
07/17/13 EMN meets our entry requirement with a close above $75.25

Chart of EMN:

Current Target: 2014 calls: target $84 on EMN. 2015 calls: target $95
Current Stop loss: 74.40
Play Entered on: 07/18/13
Originally listed on the Watch List: 07/14/13


Intel Corp. - INTC - close: 23.84

Comments:
12/01/13: INTC has not been performing well. After its dramatic reversal lower on November 22nd we decided the best move was to exit positions immediately. Our plan was to exit on Monday morning, November 25th.

INTC was kind enough to gap open higher by 15 cents on Nov. 25th.

- Suggested Positions -
SEP 16, 2013 - entry price on INTC @ 23.63, option @ 0.93
symbol: INTC1418a24 2014 JAN $24 call - exit $0.69 (-25.8%)

- or -

SEP 16, 2013 - entry price on INTC @ 23.63, option @ 1.75
symbol: INTC1517a25 2015 JAN $25 call - exit $1.56 (-10.8%)

11/25/13 planned exit at the open
11/24/13 prepare to exit on Monday morning, Nov. 25th.
11/22/13 INTC plunged following its analyst meeting
10/27/13 new stop loss @ 22.40

Chart of INTC:

Current Target: $26-29 zone
Current Stop loss: 22.40
Play Entered on: 09/16/13
Originally listed on the Watch List: 09/08/13



Watch

Casinos, Retail, & Fast Food

by James Brown

Click here to email James Brown



New Watch List Entries

CZR - Caesars Entertainment

HD - Home Depot, Inc.

YUM - Yum! Brands Inc.


Active Watch List Candidates

ATI - Allegheny Tech.

C - Citigroup, Inc.

COP - ConocoPhillips

HP - Helmerich & Payne

SBUX - Starbucks

WAG - Walgreen Co.

WDC - Western Digital Corp.


Dropped Watch List Entries

COF and HFC have graduated to the active play list.



New Watch List Candidates:


Caesars Entertainment - CZR - close: 17.91

Company Info

CZR is in the services sector. The company owns over 50 casinos in seven countries. Overall domestic gambling revenues have been soft this past year. Yet the introduction of online gambling in the U.S. has revived interest in some of the gambling stocks. Online gambling in New Jersey just start this past week. CZR recently spun off Caesars Acquisition Co. (CACQ) to try and capture the online gambling business and allow investors a chance to participate. CZR still owns a 42% stake in CACQ.

CZR itself has struggled this year. The company recently reported earnings in late October that were a huge miss. Yet the terrible earnings news failed to have much of an impact on CZR's stock price, which was already down significantly from its mid September highs.

It would appear that the current softness in the U.S. gambling industry has been baked into CZR's share price. Shares found support near its rising 200-dma this past month. Now CRZ is on the rebound. The recent breakout past its 50-dma and the $20.00 mark is bullish. The point & figure chart has reversed as well and is now forecasting at $27.00 price target.

The high on Friday, Nov. 29th was $20.75. I am suggesting we wait for CZR to close above $21.00 and buy calls the next day. If triggered we'll start with a stop loss at $18.75. Our initial target is $26.00 but we'll adjust it as the play progresses.

Breakout trigger: Wait for a close above $21.00
then buy calls the next day with a stop loss at $18.75

BUY the 2015 Jan $25 call (CZR1517a25) current ask $4.50

Chart of CZR:

Originally listed on the Watch List: 12/01/13


Home Depot, Inc. - HD - close: 80.67

Company Info

HD is also in the services sector. The company is a major player in the do-it-yourself home improvement stores. The company currently has over 2,250 locations inside the U.S. HD last reported earnings on November 19th. The results were better than expected on both the top and bottom line. Management also raised their 2014 guidance. The initial reaction in the stock produced the intraday spike above $82.00. Traders have since bought the dip in HD at its rising 10-dma. The $81 area has been resistance for months and HD is on the verge of breaking out.

I am suggesting we wait for HD to close above $81.50 and buy calls the next morning with an initial stop loss at $76.75. Our long-term target is $99.00. FYI: The point & figure chart is bullish with a $97 target.

Breakout trigger: Wait for HD to close above $81.50
then buy calls the next morning.

BUY the 2015 Jan $90 call (HD1517a90) current ask $3.40

- or -

BUY the 2016 Jan $90 call (HD1615a90) current ask $6.30

Chart of HD:

Originally listed on the Watch List: 12/01/13


Yum! Brands - YUM - close: 77.68

Company Info

YUM is another service-sector candidate. The company operates about 39,000 fast-food restaurants in 125 countries (KFC, Pizza Hut, Taco Bell). There has been some concern over a slow down in YUM's sales in China but many analysts believe the worries are baked in and YUM is poised to recover in China. Technically the stock has broken out past major resistance near $75.00. The recent rally has helped produce a buy signal on its point & figure chart that is currently forecasting a long-term $105 target.

I would be tempted to buy calls on YUM now. However, this coming Thursday, December 5th, there is supposed to be a fast-food worker strike in 100 cities. The workers are striking for higher pay claiming they can't live on the fast-food chains low wages. There was a similar strike back in August. This time the workers are demanding $15 an hour, which is almost double what many make now (closer to $8). News of this protest could pressure the fast-food stocks lower. We want to take advantage of any short-term weakness.

I am suggesting we wait and buy calls on a dip at $75.25. If triggered we'll start with a stop loss at $71.90. Our long-term target is $95.00.

Buy-the-Dip trigger: $75.25

BUY the 2015 Jan $85 call (YUM1517a85) current ask $4.55

- or -

BUY the 2016 Jan $85 call (YUM1615a85) current ask $7.50

Chart of YUM:

Originally listed on the Watch List: 12/01/13


Active Watch List Candidates:



Allegheny Technologies - ATI - close: 33.22

Comments:
12/01/13: Resource-related names seemed to struggle this past week. ATI is flirting with a breakdown below its simple 30-dma. We're still waiting for a bullish breakout higher. I don't see any changes from my earlier comments.

I am suggesting we buy calls if ATI can close above $34.50. Wait for it to close above this level and buy calls the next day with a stop loss at $30.40. Our long-term target is $44.00.

Breakout trigger: Wait for a close above $34.50
then buy calls the next morning with a stop loss @ 30.40

BUY the 2015 Jan $40 call (ATI1517a40)

Originally listed on the Watch List: 11/03/13


Citigroup Inc. - C - close: 52.92

Comments:
12/01/13: Citigroup has been trying to breakout past resistance near $53.50 all week long. The intraday high on Friday was $53.59. I am adjusting our entry trigger from waiting for a close above $53.50 to waiting for a close above $53.60 and then buying calls the next morning. Our suggested stop is unchanged at $47.25. Our long-term target is the $70.00 area.

NOTE: I have added the 2016 call option as a possible trade.

Breakout trigger: Wait for C to close above $53.60
buy calls the next morning with a stop loss at $47.25

BUY the 2015 Jan $60 call (C1517a60) current ask $3.20

- or -

BUY the 2016 Jan $60 call (C1615a60) current ask $5.60

12/01/13 adjust the entry trigger: wait for a close above $53.60 instead of a close above $53.50

Originally listed on the Watch List: 11/24/13


ConocoPhillips - COP - close: 72.80

Comments:
12/01/13: News that the U.S. and EU would lift some sanctions against Iran sparked a drop in oil prices. This pressured oil stocks but the weakness in COP wasn't that bad. Shares are still consolidating sideways in the $72-74 area. I don't see any changes from my prior comments.

I am suggesting we wait for COP to close above $75.00 and then buy calls the next morning with a stop loss at $69.75. More conservative investors might want to use a stop closer to $72 instead. If triggered our long-term target is $95.00.

Breakout trigger: Wait for COP to close above $75.00
then buy calls the next day with a stop at $69.75

BUY the 2015 Jan $80 call (COP1517a80)

Originally listed on the Watch List: 11/24/13


Helmerich & Payne, Inc. - HP - close: 77.00

Comments:
12/01/13: HP displayed some relative weakness last week. The stock has broken down below its rising 30-dma for the first time in months. If shares don't recover soon we'll either drop it as a bullish candidate or re-evaluate a potential buy-the-dip scenario. Currently we are waiting for a breakout past $80.00.

Earlier Comments:
Wait for HP to close above $80.25 and then buy calls the next day with a stop loss at $74.75. If triggered our long-term target is $95.00.

Wait for a close above $80.25, stop loss @ 74.75

BUY the 2015 Jan $90 call (HP1517a90)

11/17/13 strategy change: Wait for HP to close above $80.25 and then buy calls the next day with a stop loss at $74.75. Our new long-term target is $95.00. New option strike at 2015 $90 call

Originally listed on the Watch List: 10/27/13


Starbucks - SBUX - close: 81.46

Comments:
12/01/13: SBUX has been slowly drifting higher. Readers might want to consider buying calls on a breakout above the November 6th high of $82.50. Tonight we are adjusting our buy-the-dip trigger to buy calls at $80.00 instead of $79.25. Our long-term target is $98.00.

Buy-the-Dip trigger: $80.00, stop loss @ 74.75

BUY the 2015 Jan $90 call (SBUX1517a90)

12/01/13 adjust the trigger to $80.00
11/24/13 adjust the trigger to $79.25
adjust the option strike to the 2015 January $90 call
11/17/13 adjust the trigger to $78.25
11/10/13 adjust the buy-the-dip entry to $78.00 and stop to $74.75
11/03/13 adjust buy-the-dip entry from $76 to $77.00

Originally listed on the Watch List: 10/27/13


Walgreen Co. - WAG - close: 59.20

Comments:
12/01/13: WAG hit some profit taking last week. Monday's move looks like a short-term bearish reversal and failed rally move. Three more days of declines only confirmed it. Yet WAG remains inside its recent $58-61 trading range. On the weekly chart last week's move has produced a bearish engulfing candlestick reversal pattern as well. At the moment our plan is unchanged. Wait for WAG to close above $61.00 and then buy calls the next day. If triggered we'll start with a stop loss at $56.75. Our long-term target is the $75 area.

FYI: WAG is scheduled to report earnings on December 20th. More conservative investors may want to wait until after we see how the market reacts to WAG's earnings on the 20th before initiating new positions.

Wait for WAG to close above $61.00,
then buy calls the next day with a stop at $56.75

BUY the 2015 Jan $65 call (WAG1517a65)

11/24/13 Strategy Update: new entry point to buy calls when WAG closes above $61.00. New stop loss @ 56.75.
11/17/13 new trigger at $56.00, up from $55.00
10/27/13 removed the 2014 calls
10/20/13 adjust the buy-the-dip trigger to $55.00 and move the stop loss to $49.75. Plus we will adjust our option strikes higher.
09/22/13 adjust entry strategy: move the trigger to $52.25
adjust the stop loss to $48.40
(previous trigger and stop was $51.50 & 47.40)

Originally listed on the Watch List: 09/15/13


Western Digital Corp. - WDC - close: 75.04

Comments:
12/01/13: WAG tagged a new all-time high on Friday morning but the stock reversed and gave back all of its gains. Technically Friday's move has created a bearish engulfing candlestick reversal pattern. We'll have to see if there is any follow through lower. Tonight I am adjusting our entry strategy. Wait for WDC to close above $76.50 and then buy calls the next morning. We'll start with a stop loss at $69.75.

If triggered our long-term target is $94.00. FYI: The Point & Figure chart is bullish with a $91 target.

NOTE: I am putting a condition on this entry point. We want to wait for a close above $76.50 but we do not want to launch positions if WDC closes above $77.50.

Breakout trigger: Wait for a close above $76.50
buy calls the next morning with a stop loss at $69.75

BUY the 2015 Jan $90 call (WDC1517a90)

12/01/13 adjust entry point to a close above $76.50 instead of 76.25
adjust the stop loss to $69.75

Originally listed on the Watch List: 11/17/13