New Watch List Entries

BA - Boeing Co.

PBR - Petrobras


Active Watch List Candidates

CACI - CACI International

Costco Wholesale - COST

JRCC - James River Coal Co.


Dropped Watch List Entries

PCAR and SMG graduated to the play list. HSIC was removed.


New Watch List Candidates:

Boeing Co. - BA - close: 73.34

Company Info

Airline stocks have been struggling with higher oil prices but that is not the case with aerospace giant Boeing. Traders bought the dip near support at BA's long-term trendline of higher lows and technical support at its 200-dma two weeks ago. Nimble traders may want to consider buying dips near the $70 area. I am suggesting we wait for a bullish breakout to new multi-year highs.

The high in 2010 was $75.59. Let's use a trigger at $76.00 to open bullish positions. We'll use a stop loss at $69.75. Our long-term targets are $89 and $104.

Breakout trigger: $76.00

BUY the 2012 Jan. $80 call (BA1221A80)

- or -

BUY the 2013 Jan. $90 call (BA1319A90)

Chart of BA:

Originally listed on the Watch List: 03/26/11


Petroleo Brasileiro (a.k.a. Petrobras) - PBR - close: 40.62

Company Info

High energy prices could be here to stay. One energy stock that was lagging its peers back in 2010 was PBR. That seems to be changing. PBR broke out past significant resistance back in late December. After a rocky consolidation it rallied again in late February. It looks like the trend has reversed and the Point & Figure chart for PBR is forecasting a target in the $50s.

I am suggesting we buy calls on a dip near the simple 50-dma. We'll use a trigger at $39.00 and if the play is opened we'll use a stop loss at $35.75, just under its 200-dma. I would keep our position size smaller because PBR can be a volatile stock. Our long-term target is $53.00. Buy-the-Dip trigger: $39.00

BUY the 2012 Jan. $40 calls (PBR1221A40) current ask $4.70

- or -

BUY the 2013 Jan. $45 calls (PBR1319A45) current ask $4.70

Chart of PBR:

Originally listed on the Watch List: 03/26/11


Active Watch List Candidates:


CACI International - CACI - close: 60.85

03/26 update: CACI has been stronger than expected and shares broke out past resistance at the $60.00 level this past week. Readers may want consider buying calls on this bullish breakout. Personally, I'm not quite ready to chase it yet. We will move our buy-the-dip entry point higher to the $58.00 level and move our stop loss to the $53.90 mark. 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: $58.00

BUY the 2011 September $60 calls (CACI1117I60)

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


Costco Wholesale - COST - close: 71.46

03/26 update: COST delivered a bounce this past week but I remain concerned. Shares appear to be forming a bear-flag pattern. If the stock fails at its 50-dma near $73 it will look like a short-term bearish entry point. I don't see any changes from my prior comments. 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: 67.46

03/26 update: HSIC also produced a bounce this last week but I'm not convinced the correction is over. If you're interested in following this stock as a candidate I would consider buying a dip in the $64.00-63.50 area or a breakout past $70.00. I've decided that the spreads on HSIC's options are not improving so we will remove it as a candidate.

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


James River Coal Co. - JRCC - close: 23.90

03/26 update: JRCC almost hit our buy-the-dip entry point at $22.00 this past week. I am still suggesting readers wait for a pull back into the $22.00-20.00 zone before launching positions and conservative traders will want to wait and buy a bounce from this area. There is some good news today. JRCC now has LEAP options and I've listed the 2012 January $25 call as our option to play.

If triggered at $22.00 we'll 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.

Buy-the-Dip trigger: $22.00

BUY the 2012 January $25 calls (JRCC1221A25) <-- new strike

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