New Watch List Entries

UNH - UnitedHealth Group Inc.


Active Watch List Candidates

DSX - Diana Shipping Inc.

ORCL - Oracle Corp.


Dropped Watch List Entries

HON - Honeywell Intl., graduated to the play list.


New Watch List Candidates:

UNH $30.48 +0.17 -- UnitedHealth Group Inc.

Haggling over the healthcare bill is heating up again. The healthcare stocks are in rally mode because it seems like this time the government-run public option for healthcare is dead, really, we mean it this time. Obviously we don't know what the final shape of the bill will look like but right now the future for healthcare companies looks a lot brighter than it did a couple of months ago. Keep in mind that the debate could always change again making this a more aggressive, higher-risk trade. I'd keep positions relatively small to limit your risk.

Shares of UNH are breaking out past major resistance at the $30.00 level. Technically this looks like an entry point right now. However, UNH has flirted with the $30 level so much that I'd rather see a little more conviction this time before launching longer-term positions. I am suggesting traders buy LEAPS with a trigger at $31.55. That's about 50 cents from Friday's high. More conservative traders may want to wait for a close over $32.00. Our trigger is good on an intraday move at $31.50 or higher. If triggered our stop loss is $27.25. Our $42.50.

Company Info:
UnitedHealth Group is a diversified health and well-being company dedicated to making health care work better. Headquartered in Minneapolis, Minn., UnitedHealth Group offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, OptumHealth, Ingenix and Prescription Solutions. Through its family of businesses, UnitedHealth Group serves more than 70 millions individuals nationwide. (source: company press release or website)

Breakout trigger: $31.55

BUY the 2011 January $35 calls (symbol: VUH-AG)

Chart of UNH:


Active Watch List Candidates:


DSX $14.77 +0.01 - Diana Shipping Inc.

Last week we switched our strategy to buy a breakout with a trigger at $17.05. Unfortunately DSX has continued to fall. The stock is back under what should have been support at $15.00 but it is consolidating near its 50-dma. This level just happens to coincide with the 61.8% Fibonacci retracement of the November rally. I'm not willing to bet this support will hold, not with the Baltic Dry Goods index sliding lower.

I'm sticking to the plan and suggesting readers wait for a move over $17.00. We'll use the 2011 January $20 LEAP calls. If we're triggered at $17.05 I'm setting our long-term target at $24.00. We'll use a stop loss at $13.85.

Buy-the-Breakout trigger: $17.05 *new*

BUY the 2011 January $20.00 LEAPS (symbol: XDJ-AD)

Chart of DSX:


ORCL $22.78 change: +0.19 Oracle Corp.

This could be the week that ORCL hits our trigger. The company is due to report earnings on December 17th after the market's closing bell. Wall Street expects a profit of 36 cents a share. A positive report could send ORCL past resistance. I'm suggesting a trigger to buy LEAPS at $24.05. If triggered we'll use a stop loss at $21.75. Our long-term target is $29.75.

Shares of ORCL don't normally move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.

Breakout trigger: $24.05

BUY the 2011 January $25 LEAP call (VOC-AE)

Chart of ORCL: