Editor's Note:

We had two candidates (JPM & RHT) jump to the active trade list last week. I am adding four new candidates to the watch list tonight (ERTS, MCD, QCOM, and X).

- James



New Watch List Entries

ERTS - Electronic Arts

MCD - McDonald's Corp

QCOM - QUALCOMM

X - U.S. Steel


Active Watch List Candidates

EBAY - eBay Inc.

NVDA - NVIDIA Corp

RAI - Reynolds American

TJX - TJX Cos. Inc.


Dropped Watch List Entries

JPM and RHT graduated to our active trade list.



New Watch List Candidates:


Electronic Arts - ERTS - close: 25.20

Company Info

It has been years since ERTS has traded over the $25.00 level with any significant moves. Friday saw the stock rally to $26.13 before paring its gains. I blame the pull back on general market malaise and worried over what headlines the weekend might bring.

Bigger picture investors seem to be growing more confident with ERTS. The stock seems to have bottomed, just look at the weekly chart below. Nimble traders may want to consider buying a dip in the $24-23 zone. I am suggesting we wait for ERTS to close over $26.00 and we'll launch call LEAPS positions the next morning with a stop loss at $21.95.

Wait for ERTS to close over $26.00

BUY the 2013 Jan $30 call (ERTS1319A30)

Chart of ERTS:

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


McDonald's Corp. - MCD - close: 93.81

Company Info

Shares of MCD continues to be a very strong performer in the Dow Industrial Average. The stock is sitting just pennies away from a new all-time high. The stock is seen as a "safer" trade in these tough economic times given their low-price menu and consistent same-store sales.

More aggressive traders might want to consider buying calls on a breakout over $94.00. I am suggesting we wait for a dip and buy calls on a dip at $91.00. We'll use a stop loss at $86.75. The $100.00 level could be round-number, psychological resistance but the Point & Figure chart is bullish with a long-term target of $112 (which could grow). We will set our long-term target at $108.00.

Buy-the-Dip trigger: $91.00

BUY the 2013 Jan $100 call (MCD1319A100)

Chart of MCD:

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


QUALCOMM Inc. - QCOM - close: 56.50

Company Info

QCOM recently reported much better than expected earnings, beating both the top and bottom line estimates. Management raised their guidance looking ahead. The company is reaping the benefits from the booming smartphone market. The CEO said there is over 300 new devices in development that will use QCOM electronics inside. That sounds like there is a lot of potential for growth.

Shares exploded higher following the bullish earnings report. I am suggesting we wait and buy calls on a dip at $54.25, just above the simple 200-dma. If triggered we'll use a stop loss at $49.45. More conservative traders may want to wait and open positions when QCOM closes over resistance at the $60.00 level instead (and just adjust your stop loss higher). Our long-term target is $74.50.

Buy-the-Dip trigger: $54.25

BUY the 2013 Jan $60 call (QCOM1319A60)

Chart of QCOM

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


U.S. Steel Corp. - X - close: 27.92

Company Info

The situation in Europe could still unravel, which would throw the region into chaos and recession. However, until that happens, it looks like investors are growing more comfortable with shares of X, a steel company, which is very affected by economic growth here and abroad.

Looking at the weekly chart it seems that shares of X have found a bottom. Yet short-term the stock is overbought. I am suggesting we wait and buy calls on a dip at $25.50. Keep in mind that X can be a volatile stock so we want to keep our position size small to limit our risk. If triggered at $25.50 we'll use a stop loss at $21.40. Our long-term target is $37.50.

Buy-the-Dip trigger: $25.50 (small positions)

BUY the 2013 Jan $30 call (X1319A30)

Chart of X:

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


Active Watch List Candidates:



eBay Inc. - EBAY - close: 32.71

update 11/05: EBAY continues to churn sideways although the trading range seems to have narrowed. We are still waiting for a breakout past resistance.

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


NVIDIA Corp. - NVDA - close: 14.82

update 11/05: This could be a very big week for NVDA. The company is due to report earnings on Thursday, November 10th after the closing bell. Analysts are expecting a profit of 32 cents a share.

Currently we are waiting for a breakout past resistance near $16.00. I am suggesting we wait for a close over the $16.00 level and then open positions the next day. That might happen following the earnings report, which means we could see NVDA surge higher or plunge next Friday. Of course our plan is to open positions the next day. We'll start bullish positions with a stop loss at $13.90. Our long-term target is $22.50.

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)

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


Reynolds American Inc. - RAI - close: 38.11

update 11/05: Hmm... RAI seems to have lost its way. Shares are still in the $38-40 trading range. Yet the last two weeks have developed a trend of lower highs, which would suggest RAI is poised to breakdown.

At the moment 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.

Nimble traders may want to consider bullish positions on a dip or a bounce from the 200-dma near $36.00 instead.

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: 60.59

update 11/05: Shares of JTX continue to show strength. The stock rallied sharply from its early sell-off last week. Aggressive traders might want to consider buying a breakout past $61.50. Personally, I do not want to chase it, especially in front of earnings. TJX is due to report earnings on November 15th. There is always a chance that the stock will sell-off following its report.

I am leaving our buy-the-dip trigger unchanged at $55.00 with a stop loss at $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