New Watch List Entries
GILD - Gilead Sciences
HD - Home Depot
HUM - Humana Inc.
WYNN - Wynn Resorts Ltd.
Active Watch List Candidates
BVN - Compania de Minas Buenaventura
CHRW - CH Robinson Worldwide
NVDA - NVIDIA Corp.
V - Visa Inc.
VMED - Virgin Media
Dropped Watch List Entries
BUCY and PNRA have graduated to the play list.
New Watch List Candidates:
Gilead Sciences - GILD - close: 34.02 change: +0.87
Shares of GILD have been suffering since their April earnings report. Investors were very unhappy with the results and the stock gapped down sharply. Since then GILD has fallen almost 30% and hit levels not seen since early 2007. I suspect that shares may have found a bottom with investors buying GILD near the $32.00-31.75 zone. The stock has clearly been an underperformer in the biotech sector. However, I suspect it could outperform when the biotech sector rallies. If you check the BTK biotech index, the group looks poised to breakout from an inverse H&S pattern that is forecasting a move toward the 2010 highs. When that occurs GILD could see a little "catch up" with its peers.
Bear in mind this is an aggressive play. GILD is underperforming for a reason with a slow down in sales growth and worries about how the new health reform will affect its business. The current set up seems to offer a relatively low risk entry point. There is clear support at $31.75. I'm suggesting we buy calls (small positions only) on a dip at $33.00. We'll use a stop loss at $31.49. If triggered our long-term target is $41.75.
FYI: Readers may want to consider passing on this GILD play and focusing on the biotech sector instead. You could buy calls on the BBH biotech holders as an alternative. I would look for a dip in the 91.50-90.00 zone and use a tight stop in the $87-88 area.
Since 1987, Gilead Sciences has worked to discover, develop and commercialize medications to advance the care of patients suffering from life-threatening diseases in areas of unmet medical need. Headquartered in Foster City, California, the company has expanded rapidly over the past two decades, with annual revenues now exceeding $7 billion, operations spanning four continents and a staff of approximately 4,000 employees. Gileadâ€™s primary areas of focus include HIV/AIDS, liver disease and serious cardiovascular/metabolic and respiratory conditions. (source: company press release or website)
Buy-the-Dip trigger: $33.00
BUY the 2011 Jan $35 calls (GILD1122A35)
BUY the 2012 Jan $35 calls (GILD1221A35)
Chart of GILD:
Home Depot - HD - close: 29.85 change: +0.44
My outlook for the residential real estate market remains bearish. However, the dismal pace of home sales appears to have lost its impact on shares of HD. Shares of HD have been consolidating sideways in the $27-29 zone for several weeks now, which should now act as a new base or foundation, especially with the recent breakout higher. Since my opinion of the real estate and consumer spending is wary we want to keep our positions in HD pretty small. I am suggesting we buy calls on a dip at $29.00 and we'll use a relatively tight stop loss at $26.90. If triggered our long-term target is $33.90 and $36.00. We can expect to find resistance near $32.00. I prefer the 2012 calls over the 2011 calls.
The Home Depot is the world's largest home improvement specialty retailer, with 2,244 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China. In fiscal 2009, The Home Depot had sales of $66.2 billion and earnings from continuing operations of $2.6 billion. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.
(source: company press release or website)
Buy-the-Dip trigger: $29.00
BUY the 2011 Jan $30.00 calls (HD1122A30)
BUY the 2012 Jan $30.00 calls (HD1221A30)
Chart of HD:
Humana Inc. - HUM - close: 51.08 change: +1.27
Last week I mentioned HUM was on my personal watch list as a bullish candidate (it was in the editor's note in the new play section). The stock is still building on a large, bullish basing pattern over the last several months. I would prefer to buy calls on HUM with a dip to $49.00 and a stop loss at $46.49. However, more aggressive traders may want to consider buying a breakout past the January highs near $52.50. If we are triggered at $49.00 our first target is $59.50.
Humana Inc., headquartered in Louisville, Kentucky, is one of the nationâ€™s largest publicly traded health and specialty benefits companies, with approximately 10.3 million medical members and approximately 7.3 million specialty-benefit members. Humana is a full-service benefits solutions company, offering a wide array of health and specialty benefit plans for employer groups, government programs and individuals.
(source: company press release or website)
Buy-the-Dip trigger: $49.00
BUY the 2012 Jan. $55.00 calls (HUM1221A55)
Chart of HUM:
Wynn Resorts - WYNN - close: 87.81 change: +3.14
WYNN is another aggressive play. American consumers remain nervous with unemployment high and the housing market so weak so business in Vegas is probably not going to rebound too quickly. The real growth here is in Macau. The Chinese economy is humming along and tourists are flocking to WYNN's Macau destination. Through all of the market's ups and downs shares of WYNN have managed to maintain a bullish trend of higher lows.
The latest bounce from $80.00 looks like a potential entry point. There is still some resistance near $93-94 but I'd rather look for an entry point now than wait for a close over $94. I am suggesting we open small positions on a dip at $85.00. If triggered we'll use a stop loss at $79.00. Our first target to take profits is $99.00. Longer-term we'll consider a target at $109. I prefer the 2012 calls over the 2011s but if you're just aiming for $99 the 2011s can work. Remember, small positions to limit your risk. WYNN can be a volatile stock.
Wynn Resorts, Limited is traded on the Nasdaq Global Select Market under the ticker symbol WYNN and is part of the S&P 500 and NASDAQ-100 Indexes. Wynn Resorts owns and operates Wynn Las Vegas (www.wynnlasvegas.com), Encore (www.encorelasvegas.com) and Wynn Macau (www.wynnmacau.com). Wynn Las Vegas, a luxury hotel and destination casino resort located on the Las Vegas Strip features 2,716 luxurious guest rooms and suites, an approximately 111,000 square foot casino, 22 food and beverage outlets, an on-site 18-hole golf course, approximately 223,000 square feet of meeting space, an on-site Ferrari and Maserati dealership, and approximately 74,000 square feet of retail space. Encore, the new signature resort in the Wynn collection, opened December 22, 2008. Encore is located immediately adjacent to Wynn Las Vegas and features 2,034 suites, approximately 72,000 square foot casino, 12 food and beverage outlets, two nightclubs, a spa and salon, approximately 60,000 square feet of meeting space and approximately 27,000 square feet of upscale retail outlets. Wynn Macau is a destination casino resort in the Macau Special Administrative Region of the People's Republic of China and currently features 600 deluxe hotel rooms and suites, approximately 205,000 square foot casino, casual and fine dining in five restaurants, approximately 46,000 square feet of retail space, a health club, pool and spa, along with lounges and meeting facilities. (source: company press release or website)
Buy-the-Dip trigger: $85.00
BUY the 2011 Jan $90 calls (WYNN1122A90)
- or -
BUY the 2012 Jan $100 calls (WYNN1221A100)
Chart of WYNN:
Active Watch List Candidates:
Compania de Minas Buenaventura - BVN - close: 41.13 change: -0.57
BVN has continued to rally but shares started to run out of steam near resistance at the $42 level. The stock continues to look bullish given the breakout from the bull-flag pattern. I don't see any changes from my previous comments. We will use a trigger to buy calls at $38.50. If triggered we'll use a stop loss at $34.75. There is still resistance near $42.50 but long-term BVN looks poised to breakout. Our target is $47.50 but we might adjust it higher.
Buy-the-Dip trigger: $38.50
BUY the 2011 March $40 calls (BVN1119C40)
Chart of BVN:
CH Robinson Worldwide Inc. - CHRW - close: 67.56 change: +0.33
I am about ready to give up on CHRW and oddly enough it is because the stock is too strong. Shares have been consolidating sideways the last four weeks in a pennant shaped pattern. This past week CHRW has broken out higher and looks poised to rally past more significant resistance near $67.50-68.00. You could argue the breakout is forecasting a move toward $76.00 but I just don't want to chase CHRW at these levels. More aggressive traders may want to consider opening small positions if CHRW can close over $68.00. FYI: Keep in mind that the inverse H&S pattern formed from Q4 2009 through Q2 2010 is projecting a move from $62 to $72 so CHRW is half way there.
I am keeping our trigger to buy call LEAPS at $62 for now but I suspect we will drop CHRW as a long-term bullish candidate soon. More nimble traders may want to consider a short-term bullish trade instead (maybe target $72 on a breakout over $68).
Buy-the-Dip trigger: $62.00
NOTE: I prefer the 2012 calls!
BUY the 2011 January $65.00 calls (CHRW1122A65)
- or -
BUY the 2012 January $70.00 calls (CHRW1221A70)
Chart of CHRW:
NVIDIA Corp. - NVDA - close: 9.90 change: +0.33
Semiconductor stocks saw a nice bounce off their lows last week but they are still under performing the NASDAQ and the SOX index remains under prior support, which should be new resistance. Meanwhile NVDA is under performing and was late to participate in the market's widespread rally last week. The stock is struggling with resistance near $10.00 and the simple 50-dma. I don't see any changes from my prior comments. This remains an aggressive, higher-risk trade. NVDA has been struggling and sales growth has been slowing down but we are betting the worse has already been priced in for this stock. Keep your positions very small to limit our risk. I'm suggesting a trigger to buy calls at $10.55. If triggered we'll use a stop loss at $9.35. Our first target is $12.50. Our second, longer-term target is $14.00.
Breakout trigger: $10.55
BUY the 2011 Jan $10.00 calls (NVDA1122A10)
- or -
BUY the 2012 Jan $12.50 calls (NVDA1221A12.5)
Chart of NVDA:
Visa Inc. - V - close: $72.50 change: +0.52
The market is in rally mode and the breakdown under $70 in Visa appears to be a bear trap pattern. I am removing Visa from the watch list for now.
Virgin Media - VMED - close: 21.93 change: +0.17
Hmm... it looks like VMED might be trying to run away without us. Shares found support near the $19.40 area several times and was quick to rally higher last week. I am going to adjust our strategy on VMED. We will move the trigger to buy call LEAPS from $18.00 to $20.50. We'll move the stop loss to $18.90. Our first long-term target is $24.00.
I prefer the 2012 LEAPS over the 2011s. FYI: The Point & Figure chart is forecasting a long-term target of $36.
FYI: Moving the trigger higher raises our risk so keep your position size smaller!
Buy-the-Dip trigger: $20.50
BUY the 2011 Jan $22.50 call (VMED1122A22.5)
BUY the 2012 Jan $25.00 call (VMED1221A25)
Chart of VMED: