Editor's Note:

Stocks continue to march higher. The S&P 500 is already up +4% for 2012. We're seeing a lot of new relative highs and breakouts on our play list below. You'll also noticed that LXK, MMM, ONNN, and TEVA have all made the leap from our watch list to our play list.

We have several candidates that are due to report earnings this week. Readers should expect some post earnings announcement volatility. You may want to go ahead and take profits now. I'm suggesting we exit at least half our position in SHW on Monday morning.


Closed Plays


None. No closed plays this week.


Play Updates


Allergan Inc. - AGN - close: 87.77

Comments:
01/21/12 update: I cautioned readers a week ago that AGN look poised for a dip. The stock market's major indices hit new relative highs while AGN's rally reversed at resistance. I am still expecting a correction toward $85 or its 50-dma. I am not suggesting new positions at this time.

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

Earlier Comments:
Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

- Suggested Positions -
OCT 17, 2011 - entry price on AGN @ 85.46, option @ 5.10
symbol: AGN1319A100 2013 JAN $100 call - current bid/ask $ 2.20/ 3.60

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: 81.60
Play Entered on: 10/17/11
Originally listed on the Watch List: 09/24/11


Bank of America - BAC - close: 7.07

Comments:
01/21/12 update: BAC reported earnings on the 19th. The bottom line was a miss at 15 cents a share but the revenue number was a beat at $25.1 billion for the quarter. BAC continues to shore up its balance sheet with its Tier 1 equity ratio rising from 8.65% in Q3 to 9.8% in Q4. BAC also said its exposure to Europe's struggling countries (PIIGS) had declined to $14.4 billion. The stock rallied on the report with a spike toward the 150-dma before paring its gains. The high for the week was $7.29. BAC is now up +27% in the first there weeks of 2012. The trend is up but it might be time for a pull back.

I am not suggesting new positions at this time. Our 2012 January options have expired.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - expired @ 0.00 (-100%)
(no stop loss on this position)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.45/ 0.47
(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 $ 0.45/ 0.47
(no stop loss on this position)

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

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


Bristol Meyers Squibb - BMY - close: 32.65

Comments:
01/21/12 update: It was a down week for BMY. The stock dropped sharply on Thursday as investors reacted to news that the FDA wants more information. BMY and AstraZeneca (AZN) have partnered up to develop a diabetes pill but regulators want more data before they can approve it. Shares of BMY fell below what should have been support near $33.00 and its 50-dma. the next level of support should be $32.00 and its rising 100-dma. I am not suggesting new positions at this time.

NOTE: BMY is due to report earnings on January 26th, before the opening bell. Wall Street expects a profit of 55 cents a share.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 1.27/ 1.29

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: 31.45
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


Beazer Homes - BZH - close: 3.00

Comments:
01/21/12 update: The rally in BZH has stalled. The stock closed virtually flat for the week. The intraday reversal on Thursday looks a bit ominous. You could argue that BZH is creating a possible bearish double top with resistance near the $3.25 area. There has been a lot of analyst opinion on the homebuilder group since the industry has been such a strong outperformer in 2012. Most of them believe that the industry is seeing improvement but the stocks have gotten ahead of themselves. If BZH does see a pullback we can look for support near $2.75 and its 200-dma and 200-ema. Or on a serious pull back look for support near $2.50 and its 50-dma.

FYI: BZH is due to report earnings on Feb. 2nd.

- Suggested Positions -

(stock position)
OCT 28, 2011 - entry price on BZH @ $2.12

(option position)
OCT 28, 2011 - entry price on BZH @ 2.12, option @ 0.70
symbol: BZH1319A2.5 2013 JAN $2.50 call - current bid/ask $ 1.15/ 1.35

01/14/12 new stop loss @ 2.30, adjust exit target to $4.75
01/07/12 new stop loss @ 2.15
12/24/11 new stop loss @ 1.95
12/03/11 new stop loss @ 1.85
11/26/11 new stop loss at $1.75
11/15/11 BZH reports a loss of 57 cents a share, worse than expected
11/12 BZH has seen a big bounce. Cautious investors may want to take profits now before BZH reports earnings on Nov. 15th. (BZH +13.2%, option +21.4%)
10/28 trade begins: BZH opens @ $2.12
10/27 BZH meets our entry point requirement with a close over $2.05

Current Target: $4.75
Current Stop loss: 2.30
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/22/11


Cisco Systems - CSCO - close: 19.92

Comments:
01/21/12 update: CSCO displayed relative strength with a breakout past resistance and a +4.5% gain on the week. Shares are trading just under round-number, psychological resistance at the $20.00 level. CSCO's breakout from its recent consolidation is very bullish but I would not chase it here. There is a decent chance that shares will see a correction back to the $19.35 area. You could launch new positions on a bounce there. More conservative traders will want to wait and see how the market reacts to CSCO's earnings report on Feb. 8th.

Please note I am raising the stop loss to $17.20.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $2.13/2.15

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: $21.75
Current Stop loss: 17.20
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/08/11


CSX Corp. - CSX - close: 22.94

Comments:
01/21/12 update: Railroad stocks saw their rally stall last week. The DJUSRR railroad index is consolidating sideways near resistance at its all-time highs around the 850 area. Meanwhile CSX has been chopping sideways on either side of resistance near $23.00 and its simple 200-dma.

This could be another volatile week. CSX is due to report earnings on Monday, Jan. 23rd after the closing bell. Analysts are expecting a profit of 44 cents a share. Nimble traders might consider buying calls on a bounce in the $22.00-21.50 area. Otherwise readers may want to wait on launching new positions.

Earlier Comments:
I do see potential resistance at the $24.00 level and the $26.75-27.00 zone. Yet the Point & Figure chart for CSX is bullish with a $33.50 target.

- Suggested Positions -
NOV 14, 2011 - entry price on CSX @ 22.59, option @ 2.24
symbol: CSX1319A25 2013 JAN $25 call - current bid/ask $ 1.67/ 1.73

- or -

NOV 14, 2011 - entry price on CSX @ 22.59, option @ 3.30
symbol: CSX1418A25 2014 JAN $25 call - current bid/ask $ 2.68/ 2.86

12/17/11 CSX is starting to bounce from support near $20. This can be used as a new entry point
11/26/11 I had cautioned readers to expect a potential dip to $20.00. CSX hit this level on Friday.

Current Target: $29.75
Current Stop loss: 19.75
Play Entered on: 11/14/11
Originally listed in the New Plays 11/12/11


The Dow Chemical Co. - DOW - close: 33.39

Comments:
01/21/12 update: DOW has been a very strong performer. The stock broke out past resistance near $30 a couple of weeks ago and has not looked back. The stock is up more than +30% from its mid December low. I am growing concerned that DOW is overbought and should see a correction sooner rather than later. The $34.00 level appears to be overhead resistance. I would not be surprised to see a spike to $34.00 and then a reversal lower. A normal correction would mean a pull back toward the $31-30 zone so we do not want to launch positions now. Please note our new stop loss at $28.40.

NOTE: Active traders could exit (take profits) as DOW near resistance at $34.00 and then look to re-enter when we see the correction.

Earlier Comments:
The Point & Figure chart for DOW is bullish with a $46 target.

- Suggested Positions -
Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.40
symbol: DOW1319A35 2013 JAN $35 call - current bid/ask $ 3.35/ 3.45

- or -

Jan 09, 2012 - entry price on DOW @ 30.46, option @ 2.54
symbol: DOW1418A40 2013 JAN $40 call - current bid/ask $ 3.20/ 3.35

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: 28.40
Play Entered on: 01/09/12

Originally listed on the Watch List: 12/31/11


Enterprise Products Partners - EPD - close: 48.70

Comments:
01/21/12 update: EPD has been showing lots of relative strength. The stock is up five days in a row. Shares have sprinted to new highs. I would expect some profit taking soon. Please note that we will raise our stop loss to $43.40. I am not suggesting new positions at this time.

Earlier Comments:
Our long-term target is $59.00 but bear in mind that EPD doesn't normally move very fast. FYI: The Point & Figure chart for EPD is bullish with a $69 target. I am listing the 2013 calls but there are also 2014s available (with a much wider spread).

- Suggested Positions -
Nov 21, 2011 - entry price on EPD @ 45.17, option @ 1.45
symbol: EPD1319A50 2013 JAN $50 call - current bid/ask $ 1.40/ 1.50

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: 43.40
Play Entered on: 11/21/11
Originally listed in the New Plays 11/19/11


FedEx Corp. - FDX - close: 91.57

Comments:
01/21/12 update: FDX continues to climb although shares saw some profit taking on Friday after hitting six-month highs the day before. FDX remains short-term overbought. The $90 level is probably short-term support but I am not suggesting new positions at this time. Please note our new stop loss at $83.40. FYI: The Point & Figure chart for FDX is bullish with a $101 target.

- Suggested Positions -
Jan 11, 2011 - entry price on FDX @ 88.08, option @ 5.52
symbol: FDX1319A100 2013 JAN $100 call - current bid/ask $ 6.25/ 6.45

01/21/12 new stop loss @ 83.40

Current Target: $98.00
Current Stop loss: 83.40
Play Entered on: 01/11/12
Originally listed on the Watch List: 12/31/11


CurrencyShares Euro ETF - FXE - close: 128.79

Comments:
01/21/12 update: There was a growing hope all week long that Greece might finally solidify a deal with private sector investors on the details of its 50% debt haircut. That helped buoy the euro currency bounce from oversold conditions. The FXE actually broke through some trend lines of lower highs. Yet it remains under what should be resistance at the $130.00 level.

This weekend it appears that negotiations between Greece and PSI have broken down yet again. This should be bearish for the euro. Readers can look for a failed rally in the $128-130 zone as a new entry point. FYI: The Point & Figure chart for the FXE is bearish with a $116 target.

- Suggested Positions - (This is a bearish PUT trade)

Jan 06, 2012 - entry price on FXE @ 127.01, option @ 5.60
symbol: FXE1319M120 2013 JAN $120 PUT - current bid/ask $ 3.90/ 4.20

Current Target: $120.00
Current Stop loss: 131.25
Play Entered on: 01/06/12

Originally listed on the Watch List: 12/31/11


Hewlett-Packard - HPQ - close: 28.13

Comments:
01/21/12 update: After almost three weeks of churning sideways in a narrow range shares of HPQ finally broke out higher. The stock surged on Friday with a +3.6% gain and a rally toward technical resistance at its simple 150-dma. The breakout from the trading range is bullish but I would not buy calls here. Look for short-term support near the $27 level.

- Suggested (SMALL) Positions -
Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 5.30/ 5.40
Stop Loss @ 24.75

12/03/11 new stop loss @ 24.75
11/19/11 Readers need to decide: Take profits now (+76%) or hold on and expect some volatility following HPQ's earnings report on Nov. 21st
10/31/11 scheduled exit for the remainder of our 2012 calls @ the open. Options opened at $5.40 (+100%), plus we sold half of our 2013 $25 calls, which opened at $5.70 (+52%).
10/29/11 new stop loss on 2013 calls at $23.90
10/29/11 prepare to exit remainder of 2012 position on Monday @ open
prepare to sell 1/2 (half) of 2013 position on Monday at open
10/17/11 Planned exit, sell 1/2 of 2012 position, bid @ 4.10 (+52.4%)
10/15/11 new stop loss for the 2012 position @ 22.85
10/15/11 Plan to sell 1/2 of 2012 calls on Monday
10/08/11 new stop loss (both positions) at $21.40

Current Target: 2013 call target: 32.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


Kraft Foods Inc. - KFT - close: 38.67

Comments:
01/21/12 update: KFT rallied to new nine-year highs last week. The relative strength is encouraging but shares do look overbought. I am not suggesting new positions at this time. Please note that I am raising our stop loss to $35.40.

Our call option has doubled. Readers may want to exit early now with the bid up to $4.75 (+102%). FYI: The Point & Figure chart is forecasting a long-term target at $49.50.

Earlier Comments:
NOTE: 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).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 4.75/ 4.85

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: 35.40
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Kimberly-Clark Corp. - KMB - close: 73.83

Comments:
01/21/12 update: KMB managed to hit a new all-time high on Thursday but shares failed to really breakout past resistance at its late 2011 highs. The trend is up but shares could see some volatility this week. KMB is due to report earnings on Tuesday, Jan. 24th before the opening bell. Analysts are expecting a profit of $1.30 a share. I am not suggesting new positions at this time. More conservative traders might want to consider taking profits now prior to the earnings report.

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. NOTE: KMB does not move very fast. Investors may want to try and maximize their returns by changing this into a vertical (a.k.a. calendar) spread.

FYI: The P&F chart's bullish target has risen from $98 to $109.

- Suggested Positions -
(half sized position)
Nov 07, 2011 - entry price on KMB @ 69.50, option @ 2.05
symbol: KMB1319A75 2013 JAN $75 call - current bid/ask $ 2.85/ 2.95

12/24/11 New stops loss @ 68.25. KMB has broken out to all-time highs.

Current Target: $79.75
Current Stop loss: 68.25
Play Entered on: 11/07/11
Originally listed in the New Plays 11/05/11


LDK Solar Co. Ltd. - LDK - close: 5.00

Comments:
01/21/12 update: It was a disappointing week for LDK. The stock's rally has fizzled. Shares traded sideways only to slip lower on Thursday thanks to an analyst downgrade to "sell". Germany announced some changes to its feed-in tariff system and investors felt it undermined the stability of the solar-energy industry in Germany. Technically the trend from its 2011 lows is still up. We knew this was going to be a volatile trade. I am not suggesting new positions at this time. Wait for a dip or a bounce near the 50-dma around $4.20-4.25 before considering new positions.

- Suggested Positions -
(buy LDK stock)
Dec 23, 2011 - entry price on LDK @ 5.31

- or -

Dec 23, 2011 - entry price on LDK @ 5.31, option @ 0.89
symbol: LDK1319A5 2013 JAN $5 call - current bid/ask $ 0.80/ 0.96

01/14/12 new stop loss @ 3.90
01/07/12 new stop loss @ 3.60

Current Target: $ 9.00
Current Stop loss: 3.60
Play Entered on: 12/23/11

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


Eli Lilly - LLY - close: 39.81

Comments:
01/21/12 update: I am a bit concerned that LLY has not participated in the market's widespread rally. Shares spent last week consolidating sideways and underperformed on Friday. If the market does see a pull back I would expect LLY to slip toward prior resistance and what should be support near $39.00 and its 50-dma. I'm not suggesting new positions at this time. Keep in mind that LLY is due to report earnings on Jan. 31st.

- Suggested (SMALL) Positions -
Jan 05, 2012 - entry price on LLY @ 39.50, option @ 1.19
symbol: LLY1319A45 2013 JAN $45 call - current bid/ask $ 1.39/ 1.41

- or -

Jan 05, 2012 - entry price on LLY @ 39.50, option @ 2.75
symbol: LLY1418A45 2014 JAN $45 call - current bid/ask $ 1.92/ 2.24

Current Target: $44.75 & 48.00
Current Stop loss: 37.40
Play Entered on: 01/05/12

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


Lexmark Intl. Inc. - LXK - close: 35.49

Comments:
01/21/12 update: LXK has made the move from our watch list to active trade. The plan was to wait for LXK to close over $35.25 and then buy calls the next day. Shares rallied past significant resistance near $35.00 on Wednesday and closed at $35.41. Our trade opened on Thursday morning with LXK at $35.46 and the 2013 Jan $40 call at $3.40. I would still consider new positions now or nimble traders could try and buy a dip near the rising 10-dma.

There is some resistance near $40 but our long-term target is $44.00. NOTE: LXK is scheduled to report earnings on January 31st, before the opening bell. More conservative traders might want to wait and see how the market reacts to LXK's results before considering new positions. FYI: The Point & Figure chart on LXK is bullish with a $51 target.

- Suggested Positions -
Jan 19, 2012 - entry price on LXK @ 35.46, option @ 3.40
symbol: LXK1319A40 2013 JAN $40 call - current bid/ask $ 3.20/ 3.40

Chart of LXK:

Current Target: $44.00
Current Stop loss: 31.75
Play Entered on: 01/19/12
Originally listed on the Watch List: 01/07/12


3M Co. - MMM - close: 85.65

Comments:
01/21/12 update: We have been patiently waiting for MMM to breakout past resistance near $85.00. That finally occurred last week. The plan was to buy calls when MMM closed over $85.00. Shares closed at $85.07 on Wednesday. Our trade opened on Thursday morning with MMM at $85.10 and the 2013 Jan $95 call at $3.30. MMM is also in the process of breaking out past its 200-dma.

If the market opens positive on Monday I would still consider new positions now. However, readers may want to wait until after we see MMM's earnings report on January 26th before considering new positions. Our long-term target is $97.00. We are listing the 2013 calls. MMM does have 2014s available.

- Suggested Positions -
Jan 19, 2012 - entry price on MMM @ 85.10, option @ 3.30
symbol: MMM1319A95 2013 JAN $95 call - current bid/ask $ 3.20/ 3.30

Chart of MMM:

Current Target: $97.00
Current Stop loss: 78.90
Play Entered on: 01/19/12
Originally listed on the Watch List: 12/03/11


Nike Inc. - NKE - close: 101.76

Comments:
01/21/12 update: After weeks of slowly churning higher shares of NKE finally started to see some momentum last week. The breakout past $100 is certainly encouraging since the $100 level could have been round-number resistance and should now off some short-term support. If you're looking for an entry point consider waiting for a dip near $100.00.

Earlier Comments:
FYI: The Point & Figure chart for NKE is bullish with a $115 target.

NOTE: 2014 calls are available but they're high-dollar options.

- Suggested Positions -
Jan 13, 2012 - entry price on NKE @ 98.39, option @ 4.95
symbol: NKE1319A110 2013 JAN $110 call - current bid/ask $ 6.00/ 6.15

Current Target: $119.00
Current Stop loss: 92.25
Play Entered on: 01/13/12
Originally listed on the Watch List: 12/24/11


ON Semiconductor Corp. - ONNN - close: 8.92

Comments:
01/21/12 update: The rally in semiconductor stocks fueled a breakout in ONNN. The stock surged past resistance near $8.50 and its simple 200-dma on Thursday. The rally hit $9.17 on Thursday morning and traders bought the dip near the 200-dma on Friday morning, leaving ONNN up +10% for the week. Our plan was to wait for ONNN to close over $8.50 and buy calls the next day. Shares met our requirement on Wednesday and the trade opened on Thursday morning with ONNN at $8.96 and our 2013 Jan $10 call at $1.00.

I would wait for a dip back toward $8.50 before considering new positions. Our long-term target is $11.45. I would keep our position size small.

- Suggested (small) Positions -
Jan 19, 2012 - entry price on ONNN @ 8.96, option @ 1.00
symbol:ONNN1319A10 2013 JAN $10 call - current bid/ask $ 1.05/ 1.20

Chart of ONNN:

Current Target: $11.45
Current Stop loss: 7.70
Play Entered on: 01/19/12
Originally listed on the Watch List: 12/10/11


Pepsico, Inc. - PEP - close: 66.28

Comments:
01/21/12 update: Soda drink stocks have started to recover after a painful two-week start to 2012. PEP is leading the group with a strong bounce higher in the last couple of session. You can see on the daily chart where PEP found technical support at its rising 50-dma. Shares just broke out past its 200-dma again late this week.

I remain somewhat cautious here. No new positions at this time.

- Suggested (SMALL) Positions -
Dec 27, 2011 - entry price on PEP @ 66.47, option @ 2.70
symbol: PEP1319A70 2013 JAN $70 call - current bid/ask $ 1.82/ 1.90

01/14/12 PEP and its rivals are all showing weakness. Readers may want to raise their stop loss
12/27/11 launch positions at the open on Tuesday
12/23/11 PEP meets our entry point requirements at the closing bell.

Current Target: $71.75
Current Stop loss: 62.75
Play Entered on: 12/27/11
Originally listed on the Watch List: 12/10/11


QUALCOMM Inc. - QCOM - close: 57.73

Comments:
01/21/12 update: It seems that the QCOM accounting questions have been forgotten. The stock has continued to rally higher and briefly traded past its November 2011 high. QCOM is arguably short-term overbought here. Earnings are coming up on February 1st. I am not suggesting new positions in front of earnings. More conservative traders will want to seriously consider adjusting their stop loss higher.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $ 5.05/ 5.15

01/07/12 new stop loss @ 51.45. Investors may want to exit early. The worry of potential accounting risks have cast a shadow over QCOM.
11/23/11 QCOM hits our trigger @ 52.50

Current Target: $74.50
Current Stop loss: 51.45
Play Entered on: 11/23/11
Originally listed on the Watch List: 11/05/11


Reynolds American Inc. - RAI - close: 40.22

Comments:
01/21/12 update: Both PM and RAI have seen some profit taking lately. Shares RAI reversed at resistance near the top of its $42.00-40.00 trading range and is now testing the bottom of that range. Readers could use this dip to $40.00 as a new entry point but if you do I would seriously consider a tighter stop loss. Currently we have our stop loss at $37.85, which is under its 200-dma.

- 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 $ 1.30/ 1.45

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


Starbucks Corp. - SBUX - close: 48.15

Comments:
01/21/12 update: SBUX continues to drift higher and hit a new string of record highs. The stock is now up five weeks in a row and I suspect it's time for SBUX to see some profit taking. That profit taking will likely happen on its earnings report. The company announces on Jan. 26th after the closing bell. Look for a sell-off on the 27th. The 50-dma near $44.50ish should offer some support. I am not suggesting new positions at this time.

Wall Street is expecting a profit of $0.48 a share.

FYI: The Point & Figure chart for PEP is bullish with a long-term $75 target.

NOTE: 2014 calls are also available.

- Suggested (SMALL) Positions -
Dec 27, 2011 - entry price on SBUX @ 45.40, option @ 4.00
symbol: SBUX1319A50 2013 JAN $50 call - current bid/ask $ 4.50/ 4.60

12/27/11 launch positions at the open on Tuesday

Current Target: $55.00
Current Stop loss: 39.75
Play Entered on: 12/27/11
Originally listed on the Watch List: 12/10/11


Sherwin-Williams Co. - SHW - close: 95.59

Comments:
01/21/12 update: SHW has been a strong performer, riding the coattails of the rally in homebuilders. Shares have surged from $82.35 in mid December to $97.95 on Thursday this week. Looking at the weekly chart I am concerned that SHW may have just created a top. Last week I warned readers to expect some profit taking after the earnings report on Jan. 26th. Now I'm concerned that the profit taking might happen earlier.

We want to go ahead and take profits now by selling at least half of our position at the open on Monday morning. The bid on our 2013 Jan $100 call is at $6.30 (+61.5%). We'll raise our stop loss to $87.75 on the rest of our position. Our final exit target remains $99.00. I am not suggesting new positions at this time.

- Suggested Positions -
Dec 23, 2011 - entry price on SHW @ 88.92, option @ 3.90
symbol: SHW1319A100 2013 JAN $100 call - current bid/ask $ 6.30/ 7.10

01/21/12 sell half on Monday, Jan. 23rd at the open
01/21/12 new stop loss @ 87.75
01/14/12 new stop loss @ 86.75, adjust exit target to $99.00
01/07/12 new stop loss @ 84.40

Chart of SHW:

Current Target: $99.00
Current Stop loss: 86.75
Play Entered on: 12/23/11

Originally listed on the Watch List: 12/03/11


Teva Pharmaceuticals - TEVA - close: 45.83

Comments:
01/21/12 update: TEVA has continued to rally and shares broke out past resistance near $45.00 last week. Our plan was to wait for TEVA to close over $45.25 and then open positions the next morning. Shares hit our entry point on Wednesday and the play opened Thursday morning at $45.40. If you're still looking for an entry point you may want to consider waiting for a new dip near the rising 10-dma near $44.85. FYI: The Point & Figure chart for TEVA is bullish with a $57 target.

- Suggested Positions -
Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 2.49
symbol: TEVA1319A50 2013 JAN $50 call - current bid/ask $ 2.46/ 2.53

- or -

Jan 19, 2012 - entry price on TEVA @ 45.40, option @ 4.40
symbol: TEVA1418A50 2014 JAN $50 call - current bid/ask $ 4.45/ 4.70

Chart of TEVA:

Current Target: $54.00
Current Stop loss: 39.75
Play Entered on: 01/19/12

Originally listed on the Watch List: 01/14/12


Verizon Communications - VZ - close: 38.97

Comments:
01/21/12 update: It was a quiet week for VZ with the stock churning sideways on either side of the $39.00 level. That could change with VZ reporting earnings on Tuesday morning, Jan. 24th. Analysts are expecting a profit of 53 cents a share. I am not suggesting new positions ahead of the earnings report.

- Suggested Positions -
Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.17
symbol: VZ1319A40 2013 JAN $40 call - current bid/ask $ 1.74/ 1.80

- or -

Dec 23, 2011 - entry price on VZ @ 39.42, option @ 2.87
symbol: VZ1418A40 2014 JAN $40 call - current bid/ask $ 2.65/ 2.76

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

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


U.S. Steel Corp. - X - close: 27.82

Comments:
01/21/12 update: Shares of X just marked their third week in a row bouncing inside the $27-29 trading range. The stock does have a larger, bullish trend of higher lows but X may not see any progress until after the company reports earnings on Jan. 31st. I am not suggesting new positions ahead of the earnings report. More conservative traders may want to raise their stop closer to the $25.00 level.

Earlier Comments:
This is an aggressive trade because X can be volatile and we have a wide stop loss. That's why we're using small positions to limit our risk.

- Suggested (SMALL) Positions -
Nov 09, 2011 - entry price on X @ 25.50, option @ 5.00
symbol: X1319A30 2013 JAN $30 call - current bid/ask $ 4.65/ 4.75

01/14/12 new stop loss @ 23.60
12/03/11 new stop loss at $21.90
11/09/11 Trade opened at $25.50 (small positions)

Current Target: $37.50
Current Stop loss: 23.60
Play Entered on: 11/09/11
Originally listed on the Watch List: 11/05/11


Exxon Mobil - XOM - close: 87.49

Comments:
01/21/12 update: It was a bullish week for XOM with the stock up four days in a row. The stock is nearing potential resistance near $88 at its April 2011 highs. Earnings are coming up at the end of January. We do not want to open new positions at this time. Please note our new stop loss at $79.40. More conservative traders may want to use a stop near $81.50 or even $83.75 instead.

Earlier Comments:
There is potential resistance at $85 and $87.50 but our long-term target is $94.00.

- Suggested Positions -
Dec 22, 2011 - entry price on XOM @ 83.56, option @ 4.63
symbol: XOM1319A90 2013 JAN $90 call - current bid/ask $ 5.05/ 5.20

- or -

Dec 22, 2011 - entry price on XOM @ 83.56, option @ 6.25
symbol: XOM1418A95 2014 JAN $95 call - current bid/ask $ 6.20/ 6.50

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