New Watch List Entries

JPM - JP Morgan Chase

NVDA - NVIDIA Corp

RHT - Red Hat Inc.


Active Watch List Candidates

EBAY - eBay Inc.

RAI - Reynolds American

TJX - TJX Cos. Inc.


Dropped Watch List Entries

BZH, CBG, CSC, GLW, and LTD all graduated to the active play list. MDR was removed.



New Watch List Candidates:


JP Morgan Chase - JPM - close: 36.69

Company Info

The market's reaction to the EU summit was bullish. Investors seem to be giving Europe the benefit of the doubt that they will be able to follow through on plans to bolster the banks, finalize a voluntary haircut for Greece debt, and leverage their EFSF rescue fund. Essentially they have taken the worst case scenario off the table and this should make investors more comfortable owning financials.

JPM is considered the best in breed for the banks. I am suggesting we buy calls on a dip at $34.25 with a stop loss at $31.45. Our long-term target is $46.00.

Buy-the-Dip trigger: $34.25

BUY the 2013 Jan. $40 call (JPM1319A40)

Chart of JPM:

Originally listed on the Watch List: 10/29/11


NVIDIA Corp. - NVDA - close: 15.60

Company Info

NVDA can be a very volatile stock but if you can catch it when the stock is trending you could rack up big gains. The stock is currently consolidating sideways in the $14-16 zone. On a short-term basis the stock market is overbought and due for a dip. That means we could see NVDA dip back toward $14.00 soon. Nimble traders may want consider a dip at $14.00 as their entry point. That's not the plan for the newsletter.

I am suggesting readers wait for a close over resistance at $16.0 and we'll start bullish positions the following morning with a stop loss at $13.90. Our long-term target is $22.50.

FYI: Earnings are November 10th, after the closing bell. Wall Street is looking for a profit of 31 cents a share.

NOTE: Due to NVDA's volatility this is an aggressive trade. We want to keep our position size small.

Wait for a close over $16.00 (small positions)

BUY the 2013 Jan. $20 call (NVDA1319A20)

Chart of NVDA

Originally listed on the Watch List: 10/29/11


Red Hat Inc. - RHT - close: 51.86

Company Info

It was a very bullish week for RHT. The stock broke through major resistance in the $48 zone and closed at new record highs. We do not want to chase it here. Broken resistance near $48.00 should be new support. I am suggesting a buy-the-dip entry point at $48.50. If triggered we'll use a stop loss at $43.95. Our long-term target is $59.75.

Buy-the-Dip trigger: $48.50

BUY the 2012 Jan. $60 call (RHT1319A60)

Chart of RHT:

Originally listed on the Watch List: 10/29/11


Active Watch List Candidates:



eBay Inc. - EBAY - close: 33.25

update 10/29: EBAY underperformed the market again but shares were starting to play catch up on Friday with a +2.9% gain. Shares remain inside their multi-month trading range with resistance near $35.00.

I am suggesting investors wait for a close over resistance at $35.00. If that occurs we'll open bullish positions the next day with a stop loss at $29.95. Our long-term target is $45.00.

Trigger: Buy a close over $35.00

BUY the 2013 Jan $40 call (EBAY1319A40)

Originally listed on the Watch List: 10/22/11


McDermott Intl. - MDR - close: 10.86

update 10/29: MDR was not supposed to report earnings until early November. Yet the company issued an earnings warning this past week. Shares gapped down sharply on Thursday with a drop toward the $10.00 area. Shares actually hit $9.34 intraday on Thursday morning. This is near the 2010 low. After a -25% correction on Thursday is all the bad news priced in? The $10 area has been significant support in the past. More aggressive traders might want to consider buying calls on MDR now with a stop loss under $9.30. We are choosing to remove MDR from watch list following this earnings warning. Our trigger to open positions (close over $15.25) was not hit.

Trigger: Buy a close over $15.25

Trade Did Not Open.

Originally listed on the Watch List: 10/22/11


Reynolds American Inc. - RAI - close: 39.13

update 10/29: RAI underperformed the market last week thanks to a disappointing earnings report on October 25th. Shares fell toward short-term support near $38.00 before starting to bounce back later in the week. I do not see any changes from my prior comments. We are waiting for a breakout past resistance at $40.00.

I am suggesting we wait for a close over $40.00. If that occurs we'll launch bullish positions the next morning with a stop loss at $37.85. Our long-term target is $49.00.

Trigger: Buy a close over $40.00

BUY the 2013 Jan $42.50 call (RAI1319A42.5)

Originally listed on the Watch List: 10/22/11


TJX Cos. Inc. - TJX - close: 60.37

update 10/29: TJX has rallied to new all-time highs with a breakout past resistance near $60.00. I would be tempted to buy calls now, however the stock market looks very overbought and due for a correction lower. Plus, TJX is due to report earnings on November 15th. Readers may want to wait and see how the market reacts to TJX's earnings report before considering new positions. A disappointing report could exacerbate any correction fueled by a market pull back.

We will go ahead and raise our buy-the-dip trigger to $55.00 and raise our stop loss to $51.75.

Buy-the-Dip trigger: $55.00

BUY the 2013 Jan $60 call (TJX1319A60)

10/29/11 adjusted trigger to $55.00, stop to $51.75
10/15/11 adjusted entry point to buy the dip at $54.00, stop at $51.45

Originally listed on the Watch List: 09/24/11