The entry point strategy has been adjusted on HSIC and JRCC.
I seriously considered bullish positions on Hershey Co. (HSY). The stock has been somewhat resistant to the market's recent weakness. After spending months in the $45-52 zone HSY has finally broken out. A couple of my concerns are the stock doesn't move that fast, which isn't necessarily a bad thing, and I'm wondering if we might get a better entry point down the road. Looking at the long-term, multi-year chart of HSY it appears the stock might have resistance near $57.50, $60, and $65. Here's a chart of HSY:
Weekly Chart of HSY:
New Watch List Entries
PCAR - PACCAR Inc.
Active Watch List Candidates
CACI - CACI International
Costco Wholesale - COST
HSIC - Henry Schein Inc
JRCC - James River Coal Co.
SMG - Scott's Miracle Gro
Dropped Watch List Entries
KEY and MON graduated to the play list.
New Watch List Candidates:
PACCAR Inc. - PCAR - close: 48.46
PCAR has corrected back down toward its long-term bullish trendline of support. It's make it or break it time. A bounce back above resistance at $50.00 and its 200-dma could spark some short covering and launch the next leg higher.
I am suggesting a trigger to buy calls at $50.75. We should expect a little resistance near $52.50-53.00 and the $55.00 levels. Our long-term target is $64.50. If triggered at $50.75 we'll use a stop loss at $46.25.
If looks like PCAR must have had some sort of special dividend to create these odd strike prices. Instead of a normal $55.00 strike price PCAR has $54.70 strikes.
Breakout trigger: $50.75
BUY the 2012 Jan. $54.70 call (PCAR1221A54.7)
- or -
BUY the 2013 Jan. $54.70 call (PCAR1319A54.7)
Daily Chart of PCAR:
Weekly Chart of PCAR:
Originally listed on the Watch List: 03/19/11
Active Watch List Candidates:
CACI International - CACI - close: 58.60
CACI posted a minor gain for the week but essentially churned sideways under short-term resistance at $59.00. Currently our plan is to buy calls on a dip at $56.50 with a stop loss at $52.45. However, we might want to consider buying a breakout past the $60.00 level.
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
BUY the 2011 September $60 calls (CACI1117I60)
Originally listed on the Watch List: 02/12/11
Costco Wholesale - COST - close: 70.66
The market's recent sell-off has dragged COST down toward support near $70 and its 100-dma. Short-term traders could buy this dip with a tight stop and look for a bounce back toward $75 but the 50-dma in the $72.50 area is probably short-term resistance. Currently our plan is to wait for a breakout past $75.00 and use a trigger at $76.00 to open bullish positions.
The all-time high is just under $75.50. If triggered we'll start with a stop at $69.95.
Buy-the-breakout trigger: $76.00
BUY the 2012 January $80 calls (COST1221A80)
- or -
BUY the 2013 January $85 calls (COST1319A85)
Originally listed on the Watch List: 01/29/11
Henry Schein Inc. - HSIC - close: 66.50
03/19 update: We are adjusting our entry point strategy on HSIC. Instead of waiting for a breakout past $70.00 we will look for a dip to $62.50 instead. Use a trigger at $62.50 and if we're triggered we'll use a stop loss at $58.75, under the 200-dma. FYI: HSIC does not have LEAPS and the spreads on the October options are still very wide. Let's use the July $65 calls.
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.
- Very Small Positions -
Buy-the-dip trigger: $62.50 <-- New Trigger
BUY the 2011 Jul $65 call (HSIC1116G65) <- New Strike
Originally listed on the Watch List: 02/05/11
James River Coal Co. - JRCC - close: 23.76
Coal stocks saw a rally last week as investors pondered the future of nuclear energy thanks to Japan's struggles to stop a meltdown. Shares of JRCC surged from support near $20.00 to $24.00. The stock looks short-term overbought here and I would expect a pull back.
We are going to adjust our entry point strategy. It looks like the $20.00 level is going to hold up better than previously expected. We will adjust our entry point strategy to buy calls on JRCC to $22.00 and use a stop loss at $19.45. Our long-term target is $29.50. We do want to keep our position size small to limit our risk.
JRCC doesn't have LEAPS so we'll have to settle for 2011 September calls.
Buy-the-Dip trigger: $22.00 <-- New Trigger
BUY the 2011 September $25 calls (JRCC1117I25) <- New Strike
Originally listed on the Watch List: 01/22/11
Scotts Miracle Grow Co. - SMG - close: 56.19
SMG continues to look healthy. The stock was resistant to profit taking and held support in the $55 area. Aggressive traders may want to buy calls now but otherwise there is no change from my prior comments.
The old 2007 high is $57.45. 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. 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
Originally listed on the Watch List: 03/05/11