New Watch List Entries

AXP - American Express Co

MCD - McDonald's Corp.


Active Watch List Candidates

HSY - Hershey Co.

INTC - Intel Corp.

PEP - Pepsico

T - AT&T Inc.

ZMH - Zimmer Holdings


Dropped Watch List Entries

DRI has graduated to the play list.



New Watch List Candidates:


American Express Co. - AXP - close: 51.19

Company Info

Bad debts and write offs for the credit card industry have been improving. Stocks like AXP, COF, and DFS have been showing relative strength lately. As a matter of fact AXP hit new two-and-a-half year highs this past week. After almost a year of trading sideways AXP could be at the start of a new long-term leg higher. However, short-term, weakness in the financials and the market at large could pull it lower. That's what we want to see - a short-term correction. The $48-47 area should be significant support. I am suggesting a buy-the-dip entry point at $47.50. If triggered we'll set our stop loss at $43.90, under the 200-dma. Our long-term targets are $55 and $65. Buy-the-Dip trigger: $47.50

BUY the 2012 Jan $50 call (AXP1221A50)

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BUY the 2013 Jan $50 call (AXP1319A50)

Chart of AXP:

Originally listed on the Watch List: 05/21/11


McDonald's Corp. - MCD - close: 82.33

Company Info

Maybe it's their dollar menu. Or maybe it's the extra-value meals. Whatever it is investors seem to love shares of MCD again. A number of the restaurant stocks have been showing strength. Consumers maybe watching their wallets but they're still going out to eat. MCD is a bonus winner because of its low price point menu. The stock has broken out to new all-time highs. Now normally I would expect prior resistance near $80.00 to act as new support. Yet I suspect that if the market accelerates lower we will see MCD trade under $80. That's why I'm suggesting a buy-the-dip trigger at $78.50. If triggered we'll use a stop loss at $75.75, under the simple 200-dma. Our long-term targets are $89 and $99. The P&F chart is suggesting a $113 target. Buy-the-Dip trigger: $78.50

BUY the 2012 Jan $80 call (MCD1221A80)

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BUY the 2013 Jan $85 call (MCD1319A85)

Chart of MCD:

Originally listed on the Watch List: 05/21/11


Active Watch List Candidates:



Hershey Co. - HSY - close: 56.14

05/21 update: HSY had big news this past week. The stock dropped sharply on news its CEO David West was leaving the company to run Del Monte Foods. There has been speculation that Mr. West's departure might mean HSY is now a takeover target, which could explain why there wasn't much follow through on the sell-off. HSY bounced twice near $55 this past week. I am still expecting a correction lower so nothing has changed for our strategy.

I'm suggesting a buy-the-dip entry point at $53.00. 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


Intel Corp. - INTC - close: 23.22

05/21 update: Shares of Intel are holding up pretty well considering Goldman Sachs just slapped a "sell" rating on the stock a couple of days ago. The downgrade failed to push INTC out of its $23-24 trading range. I do think upward momentum has stalled. INTC has been trading under resistance at $24 for almost three weeks now.

There is one change from my prior comments. We'll move our buy-the-dip trigger from $22.25 down to $22.00. More conservative traders could wait for a dip or a bounce from the 200-dma instead. Our long-term targets are the $26-28 zone. If triggered we'll use a stop loss at $20.45.

Buy-the-Dip trigger: $22.00

BUY the 2012 Jan. $22.50 call (INTC1221A22.5) current ask $2.26

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BUY the 2013 Jan. $22.50 call (INTC1319A22.5) current ask $3.20

Originally listed on the Watch List: 05/07/11


Pepsico, Inc. - PEP - close: $71.30

05/21 update: There has been little slow down in the rally for PEP. Shares hit new two-year highs this past week. We don't want to chase it. I am suggesting a buy-the-dip entry point at $68.00. That's between the 38.2% and 50% retracements of its March-May rally. If triggered we'll use a stop loss at $66.40 and use targets at $75 and $79. Buy-the-Dip trigger: $68.00

BUY the 2012 Jan. $70 call (PEP1221A70)

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BUY the 2013 Jan. $70 call (PEP1319A70)

Originally listed on the Watch List: 05/14/11


AT&T - T - close: 31.32

05/21 update: Not much has changed for AT&T. The stock is still consolidating sideways. However, if the market accelerates lower AT&T should follow. Furthermore I'm expecting it to overcorrect. While $30.00 should be support I am moving our buy-the-dip trigger even lower to $29.25. Essentially, we're looking for a dip to the simple 200-dma. I'm moving our stop loss to $27.90. Our long-term target is the $36-40 zone. AT&T doesn't move very fast so we will need lots of patience.

Buy-the-Dip trigger: $29.25 <-- new Trigger

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


Zimmer Holdings, Inc. - ZMH - close: 67.70

05/21 update: It looks like ZMH is finally starting to correct lower. Aggressive traders may want to buy a dip near $65.00, which should offer some support. I suspect that ZMH will correct lower that's why our trigger is at $64.00. If triggered we'll use a stop loss at $59.90. Our long-term targets are $78.50 and $88.50, although the high $80s might be a little optimistic.

Buy-the-Dip trigger: $64.00 <-- updated

BUY the 2012 Jan. $70 call (ZMH1221A70)

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BUY the 2013 Jan. $70 call (ZMH1319A70)

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