Editor's Note:

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

Company Info

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

03/19 update: 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

03/19 update: 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.

Prior Comments:
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

03/19 update: 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

03/19 update: 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