Editor's Note:

I was considering a long-term trade on FMX, the beverage company that services Latin America, but the stock does not have LEAPS. If you're interested, look for a dip near $58.00 as a potential entry point.


New Watch List Entries

T - AT&T Inc.


Active Watch List Candidates

BA - Boeing Co.

HSY - Hershey Co.

JRCC - James River Coal Co.

PBR - Petrobras


Dropped Watch List Entries

COST and SWN graduated to the play list.


New Watch List Candidates:

AT&T - T - close: 30.71

Company Info

News that AT&T is trying to acquire T-Mobile to become the largest wireless service provider and bypass rival Verizon has given shares of T a significant boost. It's far from a done deal and AT&T will face plenty of red tape but Wall Street seems to like the combination. T has rallied to new two-year highs with the late March gains. Short-term traders could be tempted to buy the bounce from $30.00 last week. However, with the market's major indices looking poised for a correction I am suggesting we wait for a dip.

We will list a buy-the-dip entry point at $29.25. If triggered we'll use a stop loss at $26.95. FYI: AT&T is due to report earnings on April 20th (before the opening bell) and analysts are looking for a profit of 57 cents a share. Readers may want to wait until after we see the market's reaction to T's earnings report before considering new bullish positions. Our long-term target is the $36-40 zone.

Buy-the-Dip trigger: $29.25

BUY the 2012 January $30.00 call (T1221A30) current ask $2.07

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BUY the 2013 January $30.00 call (T1319A30) current ask $2.70

Chart of T:

Originally listed on the Watch List: 04/09/11


Active Watch List Candidates:


Boeing Co. - BA - close: 73.47

04/09 update: I heard a lot of negative analysts comments about Boeing following the news stories about a Southwest airliner having to make an emergency landing after a crack in the fuselage turned into a significant hole. The rip in the metal skin of the plane was due to stress fractures. BA said these were not supposed to show up until 60,000 hours of use. Yet the cracks appeared at 30,000 hours. Now Boeing's 737s around the globe are going under new examinations and tests.

In spite of all the bad news shares of BA barely budged. The stock has been consolidating sideways in the $73-75 zone. Now Friday's move looks like a bearish reversal but that's not due to the news but merely a reaction to the wider market weakness on Friday. Big picture I don't see any changes from my prior comments. The stress fracture story is worrisome but Wall Street doesn't seem concerned. We will adjust our trade by limiting our position size to one half or one quarter your normal trade.

Our trigger to open positions remains at $76.50. We'll use a stop loss at $69.75. Our long-term targets are $89 and $104.

FYI: BA is due to report earnings on April 27th.

Breakout trigger: $76.50 <--- Small Positions Only!

BUY the 2012 Jan. $80 call (BA1221A80)

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BUY the 2013 Jan. $90 call (BA1319A90)

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


Hershey Co. - HSY - close: 55.71

04/09 update: HSY continues to show relative strength. The stock has rallied (slowly) to new three-year highs. There is no change from my prior comments. I am suggesting we open small bullish positions on a dip back to $52.25. If triggered we'll use a stop loss at $48.40, under the 200-dma. Our long-term targets are $60 and $64.

Keep in mind that HSY is due to report earnings on April 26th. More conservative traders may want to wait and see how the market reacts to HSY's earnings before considering new positions (even if shares hit our trigger in the meantime). FYI: The Point & Figure chart for HSY is bullish with a $64 target.

Buy-the-Dip trigger: $52.25

BUY the 2012 $55 calls (HSY1221A55)

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BUY the 2013 $55 calls (HSY1319A55)

Originally listed on the Watch List: 04/02/11


James River Coal Co. - JRCC - close: 23.79

04/09 update: Coal stocks have been consolidating lower the last few days. We are still waiting for a dip. The plan is to buy call LEAPS on a dip at $22.50.

If triggered at $22.50 we'll use a stop loss at $19.90. Our long-term target is $29.50. We do want to keep our position size small to limit our risk.

Buy-the-Dip trigger: $22.50

BUY the 2012 January $25 calls (JRCC1221A25)

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BUY the 2013 January $27.50 calls (JRCC1319A27.5)

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


Petroleo Brasileiro (a.k.a. Petrobras) - PBR - close: 40.64

04/09 update: There energy sector has not seen much benefit from the steeply rising oil prices. Wall Street might be worried that if oil rises too fast then the industry could see demand destruction as consumers cut back on driving and organizations and governments start spending more money on alternative energies. Of course long-term the trend for oil and these oil companies is higher.

We are still waiting for PBR to dip under $40. I am suggesting a trigger at $39.00. More conservative traders could wait for a dip closer to $38.00 instead. 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

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

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