New Watch List Entries
Active Watch List Candidates
AKAM - Akamai Technologies
FXB - CurrencyShares British Pound
MCD - McDonald's Corp.
MSFT - Microsoft Corp.
PETM - PETsMART
PNRA - Panera Bread Co.
WMT - Wal-Mart Stores Inc
Dropped Watch List Entries
BIIB and BWA graduated to our play list. PPDI was removed.
New Watch List Candidates:
We had two watch list candidates graduate to the play list last week. I hesitate to add too many more with so much uncertainty in the market right now. Instead of listing a full-fledged watch list entry I'm sharing a few stocks that have caught my eye.
CELG looks tempting right here. CTXS could be a candidate if it breaks out past $45.50. I still think CRS could have potential. Last week I also mentioned SAFM, which broke out over the $50 level. FXB is already on the watch list but aggressive traders could jump in early.
Active Watch List Candidates:
AKAMAI Tech. - AKAM - $25.89 +0.16
AKAM is trying to breakout past resistance near the 50-dma and the $26.00 level. The stock still looks overbought and due for a deeper, more significant correction. Currently our trigger to buy LEAPS is at $22.10.
If triggered our long-term target is $29.50. We'll start with a stop loss at $17.99.
Buy-the-Dip trigger: $22.10
BUY the 2011 January $25.00 calls (OMU1122A25)
Chart of AKAM:
FXB - CurrencyShares British Pound Sterling $154.00 -1.67
I hope we didn't miss our entry point. The FXB is falling just as expected. Unfortunately this currency ETF hasn't hit our entry point yet. I don't want to chase it and the currency markets are bound to see some volatility over the next couple of weeks, especially as Greece tries to sell more debt.
No change in our strategy for now. We want to buy LEAP puts if the FXB hits $158.50. If triggered we'll use a stop loss at $162.55. Our first target is $150.00. Our second target is $144.00.
Buy-the-Bounce trigger: $158.50
BUY the 2010 September $150 put (FWK1018U150)
Chart of FXB:
McDonald's Corp. - MCD - close: 64.74 change: +0.26
We may want to reconsider our entry point strategy if MCD continues to show relative strength. I still see potential resistance in the $65-66 zone so I'm not ready to jump in yet. Our preferred entry point is a dip to $60.00.
If triggered at $60 we'll use a stop loss at $53.95. Our long-term target is $74.50. I'm suggesting the 2011 LEAPS. You may want to buy the 2012 instead.
Buy-the-Dip trigger: $60.00
BUY the 2011 January $65 calls (VMD-AM)
Chart of MCD:
Microsoft - MSFT - close: $28.77 change: -0.20
MSFT is bouncing sooner than expected. Shares found support near $27.60. I would hesitate to buy this bounce with technical resistance in the $29-30 zone. We'll stick to our plan for now, which is wait for a dip to $25.00.
More aggressive traders may want to jump in early if MSFT finds support at its rising 200-dma (closer to $26.00). If triggered we'll use a stop loss at $22.75. Our long-term target is $35.00.
Buy-the-Dip trigger: $25.00
BUY the 2012 January $25 calls (WMF1221A25)
Chart of MSFT:
PETsMART Inc. - PETM - close: 27.34 change: +0.17
PETM has rallied back toward resistance at its 2009 highs. We don't want to chase it yet. Aggressive traders might want to reconsider and buy LEAPS on a close over $28.00 or $29.00 (the weekly chart shows some resistance near $29.00). I'd prefer to see a correction but we may not get it.
If triggered at $24.00 our stop loss will be $21.40. Our long-term target is the $34-35 zone but given the lack of LEAPS we'll aim for 29.00.
Buy-the-Dip trigger: $24.00
Readers may want to consider buying the stock. PETM doesn't have LEAPS. The longest-dated options are 2010 Julys.
BUY the 2010 July $25 calls (QPT-GE)
Chart of PETM:
Panera Bread Co. - PNRA - close: 73.84 change: +0.50
I don't see many changes from my prior comments on PNRA. The stock is still consolidating sideways. You could argue that PNRA is poised to breakout from this trading range with resistance in the $74-75 zone. I am more concerned that PNRA looks extremely overbought on its weekly chart. However, more aggressive traders may want to consider opening small bullish positions on a close over $75.00. Officially our plan is to buy LEAPS on a dip near $65.00.
If triggered we'll use a stop loss at $59.50. Our long-term target is the $84.50 level.
Buy-the-Dip trigger: $65.50
BUY the 2011 January $70 calls (ZGM-AN)
Chart of PNRA:
PPDI $21.20 +0.03 -- Pharmaceutical Product Development Inc.
I am dropping PPDI as a watch list candidate. The stock's oversold bounce is already rolling over. Shares look poised to retest the $20 region again. PPDI never hit our trigger to open positions at $24.25.
Wal-Mart Stores Inc. - WMT - close: 53.49 change: +0.02
WMT reported earnings this past week. The results failed to impress and management said Q1 sales could be challenging. Shares are still consolidating sideways. I'm suggesting readers buy call LEAPS at $50.50.
If triggered we'll use a stop loss at $46.75. Our first long-term target is $62.50. More aggressive traders may want to use the 2011 January calls (the $50 strike VWT-AJ).
Buy-the-Dip trigger: $50.50
BUY the 2012 January $50 calls (WWT-AJ)
Chart of WMT: