Editor's Note:

Tonight's new candidate has broken out to new multi-year highs after a four-month consolidation.


New Watch List Entries

SMG - Scott's Miracle Gro


Active Watch List Candidates

ATI - Allegheny Tech.

CACI - CACI International

Costco Wholesale - COST

HSIC - Henry Schein Inc

JRCC - James River Coal Co.

KEY - KeyCorp

LDK - LDK Solar

MON - Monsanto Co.

Teva Pharmaceuticals - TEVA


Dropped Watch List Entries

FSLR graduated to the play list.


New Watch List Candidates:

Scotts Miracle Grow Co. - SMG - close: 55.74

Company Info

On a short-term basis SMG looks like a bullish candidate right now. The breakout past resistance near $55.00 is bullish. After a four-month consolidation sideways the stock is ready for another leg higher. However, the old 2007 high was $57.45, just a couple of points away. I am suggesting we wait for a breakout to a new all-time high. Let's use a trigger at $58.00 to open small bullish positions. If triggered at $58.00 we'll use a stop at $53.75. Nimble traders could look for an alternative entry point on a dip near the bullish trendline of higher lows (currently a dip near $53.00 would suffice). We want to keep our position size small to limit our risk. SMG doesn't have LEAPS so we'll have to buy September calls.

Breakout trigger: $58.00

BUY the September $60 calls (SMG1117I60) current ask $2.25

Chart of SMG:

Originally listed on the Watch List: 03/05/11


Active Watch List Candidates:


Alleghney Technology - ATI - close: 65.43

03/05 update: ATI is still consolidating sideways. Aggressive traders might want to buy dips near $63 or a breakout over $67. I am suggesting we wait for the dip at $61.00. If triggered we'll use a stop loss at $55.75. Our long-term targets are $75 and $85.

Buy-the-Dip trigger: $61.00

BUY the 2012 January $70.00 calls (ATI1221A70)

- or -

BUY the 2013 January $70.00 calls (ATI1221A70)

Originally listed on the Watch List: 02/05/11


CACI International - CACI - close: 59.87

03/05 update: CACI has tested resistance near $60.00 three times and shares look poised to breakout higher soon. Aggressive traders might want to consider small bullish positions on a breakout. I don't want to chase it here. We will adjust our buy-the-dip entry point to $56.50 and adjust our stop loss to $52.45. Our targets are the $67.50-70.00 zone. CACI doesn't have LEAPS so we'll have to settle for September calls. FYI: The Point & Figure chart for CACI is bullish with a $65 target.

Buy-the-Dip trigger: $56.50 <-- new trigger

BUY the 2011 September $60 calls (CACI1117I60)

Originally listed on the Watch List: 02/12/11


Costco Wholesale - COST - close: 72.81

03/05 update: COST experienced some volatility last week with another failed rally at $75.00 and s sell-off on its earnings report. The earnings results were okay. Profits were in-line with estimates while revenues beat expectations. On a short-term basis the stock looks vulnerable. I'm still cautious about launching new positions. I want to wait another week and see what happens. Nimble traders could look at support near $70 or wait for a breakout over $75.00. Officially we don't have an entry point yet.

Trigger to enter positions: temporarily removed.

Originally listed on the Watch List: 01/29/11


Henry Schein Inc. - HSIC - close: 69.56

03/05 update: We have been waiting and watching for a correction back toward support but it does not look like HSIC is going to cooperate. Shares are consolidating under resistance at $70.00 and the stock is poised to breakout higher. I am concerned that HSIC is still very overbought and due for a correction but that doesn't mean shares can't run to $80 first in the meantime. I am changing up our strategy. Instead of waiting for a dip we will buy calls on a breakout higher. Please note this is an aggressive strategy for us and the option spreads are a little wide. Thus we want to keep our position size VERY small to really limit our risk but still participate if HSIC does breakout.

We'll use a breakout trigger at $70.55. If triggered we'll use a stop loss at $65.75. Our upside target is $79.75. I am suggesting the July calls (not the Octobers).

- Very Small Positions -

Buy-the-breakout trigger: $70.55 <-- new trigger

BUY the 2011 Jul $75 call (HSIC1116G75) <-- new strike

Chart of HSIC:

Originally listed on the Watch List: 02/05/11


James River Coal Co. - JRCC - close: 20.25

03/05 update: JRCC is underperforming its peers in the coal sector. That should make investors cautious. Currently our plan is to launch positions on a dip at $19.25 (near technical support at the 200-dma). More conservative traders may want to remove their triggers and wait to see how the market reacts to JRCC's earnings report due out sometime in the next week (date unconfirmed, estimated March 7th-11th).

If we are triggered at $19.25 we'll use a stop loss at $17.25. JRCC doesn't have LEAPS so we'll have to settle for 2011 September calls.

Buy-the-Dip trigger: $19.25

BUY the 2011 September $20 calls (JRCC1117I20)

Originally listed on the Watch List: 01/22/11


KeyCorp - KEY - close: 9.26

03/05 update: There is almost no change in the price of KEY from last week and I see no changes from my prior comments. I am suggesting we launch bullish positions on a dip at $8.60. Alternatively we can look for a breakout and close above round-number resistance at $10.00 as an entry point.

If we are triggered at $8.60 we want to use a stop loss at $7.85. Buy-the-Dip trigger: $8.60

BUY the 2012 January $10.00 call (KEY1221A10)

- or -

BUY the 2013 January $10.00 call (KEY1319A10)

Originally listed on the Watch List: 02/26/11


LDK Solar Co. Ltd. - LDK - close: 12.57

03/05 update: Solar stocks have struggled as the industry tries to decipher the recent regulatory changes in Italy, a growing section of the solar energy market. Investors have taken a sell-first ask questions later approach. LDK reversed at $15.00 and is now testing its 50-dma. Aggressive traders might want to buy a dip near $12.00. I am suggesting we wait for the breakout with a trigger at $15.55. If triggered our long-term targets are $19.75 and $24.50.

FYI: LDK is due to report earnings on March 29th but that date is not yet confirmed.

Breakout trigger: $15.55

BUY the 2012 January $17.50 calls (LDK1221A17.5)

- or -

BUY the 2013 January $20.00 calls (LDK1319A20)

Originally listed on the Watch List: 02/26/11


Monsanto Co. - MON - close: 73.06

03/05 update: MON has now bounced twice near the $69.00 level. This could be new support. Yet MON still looks vulnerable. Readers might want to consider buying a breakout past $76.00. I would rather wait for a correction. We'll keep our buy-the-dip entry point at $65.50 for now.

Buy-the-Dip trigger: $65.50

BUY the 2012 January $70 calls (MON1221A70)

- or -

BUY the 2013 January $75 calls (MON1319A75)

Originally listed on the Watch List: 01/08/11


Teva Pharmaceuticals - TEVA - close: 50.32

03/05 update: TEVA has been consolidating sideways near the $50 level. Aggressive traders could initiate positions now. I am suggesting we stick to our plan to buy a dip at $49.00. I would keep our position size small to limit our risk. If triggered we'll use a stop loss at $46.90.

Buy-the-Dip trigger: $49.00

BUY the 2012 January $55 calls (TEVA1221A55)

- or -

BUY the 2013 January $60 calls (TEVA1319A60)

Originally listed on the Watch List: 01/29/11