New Watch List Entries

DOW - Dow Chemical

UNP - Union Pacific

ZMH - Zimmer Holdings


Active Watch List Candidates

HSY - Hershey Co.

T - AT&T Inc.


Dropped Watch List Entries

BA has graduated to the play list.


New Watch List Candidates:

Dow Chemical - DOW - close: $40.99

Company Info

Industrial names continue to lead the U.S. stock market higher. DOW is a very large diversified chemical company. After three months of consolidating sideways shares finally broke out past resistance near $39 several days ago. We want to buy call LEAPS on a dip. I am suggesting a trigger at the $39.00 level, which should new support. If triggered we'll use an initial stop loss at $35.90. Our long-term targets are $47.00 and $56.00.

Buy-the-Dip trigger: $39.00

BUY the 2012 Jan. $40 call (DOW1221A40)

- or -

BUY the 2013 Jan. $45 call (DOW1319A40)

Chart of DOW:

Originally listed on the Watch List: 04/30/11


Union Pacific Corp. - UNP - close: 103.47

Company Info

The railroad industry broke out to new all-time highs this past week due to very strong earnings results. UNP actually missed Wall Street's profit estimates by two cents but the stock rallied anyway. Management issued some positive comments about economic growth and improvement ahead. After four months of consolidating under resistance at the $100 level, shares of UNP finally broke out. Now broken resistance at $100 should be new support. I am suggesting we buy call LEAPS on a dip at $100.25. If triggered we'll use a stop loss at $94.45. Our long-term targets are $119.75 and $134.00.

Buy-the-Dip trigger: $100.25

BUY the 2013 Jan. $110 call (UNP1221A110)

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BUY the 2013 Jan. $120 call (UNP1319A120)

Chart of UNP:

Originally listed on the Watch List: 04/30/11


Zimmer Holdings, Inc. - ZMH - close: 65.25

Company Info

ZMH manufacturers a host of orthopedic implants and artificial joints. As the baby boomer population ages there will likely be a growing demand for these products. The stock rallied to new two-year highs this past week on stronger than expected earnings. I suspect that ZMH will fill the gap with a dip back to $63.00. I am suggesting we buy call LEAPS at the $63.00 level. An alternative entry point would be to wait for a dip or a bounce near the 50-dma. If we are triggered a $63.00 I am suggesting a stop loss at $59.35, under the April low. Our long-term targets are $78.50 and $88.50, although the high $80s might be a little optimistic. Buy-the-Dip trigger: $63.00

BUY the 2012 Jan. $70 call (ZMH1221A70)

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BUY the 2013 Jan. $70 call (ZMH1319A70)

Chart of ZMH:

Originally listed on the Watch List: 04/30/11


Active Watch List Candidates:


Hershey Co. - HSY - close: 57.71

04/30 update: HSY posted another gain for the week. Yet shares have spent the last four days churning in the $57-58 zone. HSY remains overbought and we don't want to chase it. I am leaving our buy-the-dip entry point at $53.00 but that could take a few weeks before HSY corrects that low.

If triggered at $53.00 we'll use a stop loss at $49.45. Our long-term targets are $60 and $64.

Buy-the-Dip trigger: $53.00

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


AT&T - T - close: 31.12

04/30 update: I was starting to worry that we may have missed the boat with T on Wednesday's breakout past $31.00. Yet the rally has reversed two days in a row now. The recent action looks like a failed rally/bearish reversal pattern. I'm going to leave our trigger to open positions at $29.25 for now.

If we are triggered at $29.25 we'll use a stop at $26.95. Our long-term target is the $36-40 zone.

Buy-the-Dip trigger: $29.25

BUY the 2012 January $30.00 call (T1221A30)

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BUY the 2013 January $30.00 call (T1319A30)

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